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<SEC-DOCUMENT>/in/edgar/work/20000602/0000950123-00-005553/0000950123-00-005553.txt : 20000919
<SEC-HEADER>0000950123-00-005553.hdr.sgml : 20000919
ACCESSION NUMBER:		0000950123-00-005553
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		18
FILED AS OF DATE:		20000602

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GABELLI GLOBAL MULTIMEDIA TRUST INC
		CENTRAL INDEX KEY:			0000921671
		STANDARD INDUSTRIAL CLASSIFICATION:	 [
]		IRS NUMBER:				133767317
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		N-2/A
			SEC ACT:		
			SEC FILE NUMBER:	333-33514
			FILM NUMBER:		648541
</FILING-VALUES>

			FILING VALUES:
				FORM TYPE:		N-2/A
				SEC ACT:		
				SEC FILE NUMBER:	811-08476
				FILM NUMBER:		648542
</FILING-VALUES>

				BUSINESS ADDRESS:	
					STREET 1:		ONE CORPORATE CENTER
					CITY:			RYE
					STATE:			NY
					ZIP:			10580
					BUSINESS PHONE:		9149215070
</BUSINESS-ADDRESS>

					MAIL ADDRESS:	
						STREET 1:		ONE CORPORATE CENTER
						CITY:			RYE
						STATE:			NY
						ZIP:			10580-1434
</MAIL-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>AMENDMENT #1 TO FORM N-2
<TEXT>

<PAGE>   1


      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 2, 2000
                                                                   --


                                              SECURITIES ACT FILE NO. 333-33514

                                        INVESTMENT COMPANY ACT FILE NO. 811-8476
================================================================================

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM N-2

           [X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                        [X] PRE-EFFECTIVE AMENDMENT NO. 1

                      [ ] POST-EFFECTIVE AMENDMENT NO.
                                                      ---
       [X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
                               [X] AMENDMENT NO. 5

                               --------------------

                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
             (Exact name of registrant as specified in its charter)

                                   ----------

                              ONE CORPORATE CENTER
                               RYE, NEW YORK 10580
                    (Address of principal executive offices)
                                 (914) 921-5070
              (Registrant's telephone number, including area code)

                                   ----------

                                 BRUCE N. ALPERT
                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                              ONE CORPORATE CENTER
                               RYE, NEW YORK 10580
                     (Name and address of agent for service)

                                   ----------

                                 With copies to:

                                JON S. RAND, ESQ.
                            WILLKIE FARR & GALLAGHER
                               787 SEVENTH AVENUE
                            NEW YORK, NEW YORK 10019

                                   ----------

       APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable
after the effective date of this Registration Statement.

       If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, other than securities offered in connection with a dividend reinvestment
plan, check the following box. [X]

       It is proposed that the filing will become effective when declared
       effective pursuant to Section 8(c). [ ]

       This amendment designates a new effective date for a previously filed
       registration statement. [ ]

       This Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act and the Securities Act
registration statement number of the earlier effective registration statement
for the same offering is ___________________. [ ]

                                   ----------

        CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933


<TABLE>
<CAPTION>
===============================================================================================================================
                                                                 PROPOSED MAXIMUM           PROPOSED MAXIMUM       AMOUNT OF
               TITLE OF SECURITIES            AMOUNT BEING            OFFERING                  AGGREGATE        REGISTRATION
                BEING REGISTERED              REGISTERED         PRICE PER UNIT              OFFERING PRICE(1)        FEE(2)
- -------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>             <C>                          <C>                   <C>
Shares of Common Stock, par value $.001
per share ...................................  3,598,938                 $                    $60,065,622         $    15,857
================================================================================================================================
</TABLE>


       (1) As calculated pursuant to Rule 457(c) under the Securities Act of
       1933, as amended. Based on the average of the high and low sales prices
       reported on the New York Stock Exchange on March 22, 2000.


       (2) Previously paid.


       THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

================================================================================
<PAGE>   2




Notice to Canadian Residents:
These Securities Have Not Been Approved
or Disapproved By Any Securities or
Regulatory Authority in Canada.


<PAGE>   3


                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                                    FORM N-2
                              CROSS-REFERENCE SHEET
                           PARTS A AND B OF PROSPECTUS

<TABLE>
<CAPTION>

    ITEM NO.                                           CAPTION                               LOCATION IN PROSPECTUS
    --------                                           -------                               ----------------------
<S>                <C>                                                                       <C>
        1.         Outside Front Cover...................................................    Front Cover Page

        2.         Inside Front and Outside Back Cover Page..............................    Front Cover Page

        3.         Fee Table and Synopsis................................................    Prospectus Summary: Fee Table

        4.         Financial Highlights..................................................    Financial Highlights

        5.         Plan of Distribution..................................................    Not Applicable

        6.         Selling Shareholders..................................................    Not Applicable

        7.         Use of Proceeds.......................................................    Use of Proceeds

        8.         General Description of the Registrant.................................    Front Cover Page; Prospectus Summary;
                                                                                                The Fund; Investment Objectives and
                                                                                                Policies; Risk Factors and Special
                                                                                                Considerations; Capital Stock and
                                                                                                Other Securities

        9.         Management............................................................    Management of the Fund; Portfolio
                                                                                                Transactions; Custodians and
                                                                                                Transfer, Dividend Disbursing
                                                                                                Agent and Registrar

       10.         Capital Stock, Long-Term Debt and Other Securities....................    The Offer; Capital Stock and Other
                                                                                                 Securities; Dividends and
                                                                                                 Distributions; Automatic Dividend
                                                                                                 Reinvestment and Voluntary Cash
                                                                                                 Purchase Plan; Taxation


       11.         Defaults and Arrears on Senior Securities.............................    Not Applicable

       12.         Legal Proceedings.....................................................    Not Applicable


       13.         Table of Contents of the Statement of Additional Information..........    Table of Contents of the Statement of
                                                                                             Additional Information

</TABLE>


<PAGE>   4



<TABLE>
<CAPTION>

                                                                                                   LOCATION IN
    ITEM NO.                                           CAPTION                              STATEMENT OF ADDITIONAL INFORMATION
    --------                                           -------                              -----------------------------------
<S>                <C>                                                                      <C>
       14.         Cover Page........................................................       Front Cover Page

       15.         Table of Contents.................................................       Front Cover Page

       16.         General Information and History...................................       Not Applicable

       17.         Investment Objectives and Policies................................       Investment Objectives and Policies;
                                                                                               Investment Restrictions

       18.         Management........................................................       Management of the Fund

       19.         Control Persons and Principal Holders of Securities...............       Beneficial Owners

       20.         Investment Advisory and Other Services............................       Management of the Fund

       21.         Brokerage Allocation and Other Practices..........................       Portfolio Transactions

       22.         Tax Status........................................................       Taxation

       23.         Financial Statements..............................................       Financial Statements

</TABLE>


PART C

       Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.


<PAGE>   5


- --------------------------------------------------------------------------------
The information in this Prospectus is not complete and may be changed. A
registration statement relating to the Securities has been filed with the
Securities and Exchange Commission. We may not sell these securities until this
registration statement is effective. This Prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer, solicitation or sale is not permitted.
- --------------------------------------------------------------------------------

              PROSPECTUS SUBJECT TO COMPLETION DATED JUNE 2, 2000
                     10,796,815 RIGHTS FOR 3,598,938 SHARES
                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                                  COMMON STOCK

- --------------------------------------------------------------------------------


      The Gabelli Global Multimedia Trust Inc. (the "Fund") is issuing
transferable rights ("Rights") to its shareholders. These Rights will allow you
to subscribe for new shares of common stock of the Fund. For every three Rights
that you receive, you may buy one new Fund share. You will receive one Right for
each outstanding Fund share you own on June 16, 2000 (the "Record Date"). The
number of Rights to be issued to a shareholder on the Record Date will be
rounded up to the nearest number of Rights evenly divisible by three. Also,
shareholders on the Record Date may purchase shares not acquired by other
shareholders in this Rights offering (the "Offer"), subject to limitations
discussed in this prospectus.




      The Rights are transferable and will be listed for trading on the New York
Stock Exchange ("NYSE") under the symbol "GGT RT." The Fund's shares of common
stock are also listed, and the shares issued pursuant to this Offer will be
listed, on the NYSE under the symbol "GGT." On June 1, 2000, the last reported
net asset value per share of the Fund's shares was $17.88 and the last reported
sales price of a share on the NYSE was $14.4375. THE PURCHASE PRICE PER SHARE
(the "Subscription Price") WILL BE $_____. THE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK TIME, ON July 19, 2000 unless the Offer is extended as described in
this prospectus (the "Expiration Date").




      The Fund is a non-diversified, closed-end management investment company.
The Fund's primary investment objective is long-term growth of capital,
primarily through investing in common stock and other securities of foreign and
domestic companies in the telecommunications, media, publishing and
entertainment industries. Income is a secondary objective of the Fund. An
investment in the Fund is not appropriate for all investors. No assurances can
be given that the Fund's objectives will be achieved. FOR A DISCUSSION OF
CERTAIN RISK FACTORS AND SPECIAL CONSIDERATIONS WITH RESPECT TO OWNING SHARES OF
THE FUND, SEE "RISK FACTORS AND SPECIAL CONSIDERATIONS" ON PAGE 22 OF THIS
PROSPECTUS. The address of the Fund is One Corporate Center, Rye, New York 10580
and its telephone number is (914) 921-5070.

- --------------------------------------------------------------------------------

       NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY SECURITIES
           COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR
             DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
                 ANY REPRESENTATION TO THE CONTRARY IS A CRIME.

<TABLE>
<CAPTION>
=======================================================================================================================
                                     SUBSCRIPTION PRICE            SALES LOAD              PROCEEDS TO FUND (1)
=======================================================================================================================
<S>                                  <C>                          <C>                      <C>
 Per Share....................           $                           None                       $
                                          --------                                               -------
- ------------------------------------------------------------------------------------------------------------------------
 Total........................           $                           None                       $
                                          --------                                               -------
=======================================================================================================================
</TABLE>



(1)   Before deduction of expenses incurred by the Fund, estimated at $445,000.



- --------------------------------------------------------------------------------


      Shareholders who do not exercise their Rights should expect that they
will, at the completion of the Offer, own a smaller proportional interest in the
Fund than if they exercised their Rights. As a result of the Offer you may
experience an immediate dilution, which could be substantial, of the aggregate
net asset value of your shares. This is because the Subscription Price per share
and/or the net proceeds to the Fund for each new share sold are likely to be
less than the Fund's net asset value per share on the Expiration Date. The Fund
cannot state precisely the extent of this dilution at this time because the Fund
does not know what the net asset value per share will be when the Offer expires
or what proportion of the Rights will be exercised. Gabelli Funds, LLC, the
Fund's investment adviser, may purchase through the primary subscription and the
over-subscription privilege Shares with an aggregate Subscription Price of up to
$10 million. Mr. Mario J. Gabelli, who may be deemed to control the Fund's
investment adviser, may also purchase additional Shares in such manner and on
the same terms as other shareholders.




- --------------------------------------------------------------------------------


      This prospectus sets forth concisely certain information about the Fund
that a prospective investor should know before investing. Investors are advised
to read and retain it for future reference. A Statement of Additional
Information dated ________, 2000 (the "SAI") containing additional information
about the Fund has been filed with the SEC and is incorporated by reference in
its entirety into this prospectus. A copy of the SAI, the table of contents of
which appears on page 38 of this prospectus, may be obtained without charge by
contacting the Fund at (800) GABELLI ((800) 422-3554) or (914) 921-5070. The SAI
will be sent within two business days of receipt of a request. Shareholder
inquiries should be directed to the Subscription Agent, EquiServe, at (800)
336-6983 or (781) 575-2000.

- --------------------------------------------------------------------------------
____________, 2000


<PAGE>   6



                               PROSPECTUS SUMMARY

      This summary highlights some information that is described more fully
elsewhere in this prospectus. It may not contain all of the information that is
important to you. To understand the Offer fully, you should read the entire
document carefully, including the risk factors.

PURPOSE OF THE OFFER

      The Board of Directors of the Fund has determined that it would be in the
best interests of the Fund and its existing shareholders to increase the assets
of the Fund so that the Fund may be in a better position to take advantage of
investment opportunities that may arise. The Offer seeks to reward existing
shareholders by giving them the opportunity to purchase additional shares at a
price that may be below market and/or net asset value without incurring any
commission charge. The distribution of the Rights, which themselves may have
intrinsic value, will also give nonparticipating shareholders the potential of
receiving a cash payment upon the sale of their rights which may be viewed as
partial compensation for the possible dilution of their interests in the Fund as
a result of the Offer.


      The Board of Directors believes that increasing the size of the Fund may
lower the Fund's expenses as a proportion of average net assets because the
Fund's fixed costs can be spread over a larger asset base. There can be no
assurance that by increasing the size of the Fund, the Fund's expense ratio will
be lowered. The Board of Directors also believes that a larger number of
outstanding shares and a larger number of beneficial owners of shares could
increase the level of market interest in and visibility of the Fund and improve
the trading liquidity of the Fund's shares on the NYSE.






IMPORTANT TERMS OF THE OFFER


<TABLE>
<CAPTION>
<S>                                                                                    <C>
              Total number of shares available for primary
              subscription............................................                 3,598,938

              Number of Rights you will receive for each out-
                standing share you own on the Record Date.............                 One Right for every one share*

              Number of shares you may purchase with your
                Rights at the Subscription Price per share............                 One share for every three Rights

              Subscription Price......................................                 $
                                                                                        -------------
</TABLE>

      -----------------------


      *  The number of Rights to be issued to a shareholder on the Record Date
will be rounded up to the nearest number of Rights evenly divisible by three.


================================================================================
                 Shareholders' inquiries should be directed to:
                                   EquiServe
                        (800) 336-6983 or (781) 575-2000
================================================================================


                                       2


<PAGE>   7


OVER-SUBSCRIPTION PRIVILEGE

      Shareholders on the Record Date who fully exercise all Rights initially
issued to them (other than those Rights which cannot be exercised because they
represent the right to acquire less than one Share) are entitled to buy those
shares which were not bought by other Rights holders. If enough shares are
available, all shareholder requests to buy shares that were not bought by other
Rights holders will be honored in full. If the requests for shares exceed the
shares available, the available shares will be allocated pro rata among those
shareholders on the Record Date who over-subscribe based on the number of Rights
originally issued to them by the Fund. Shares acquired pursuant to the
over-subscription privilege are subject to allotment, which is more fully
discussed under "The Offer--Over-Subscription Privilege."

METHOD FOR EXERCISING RIGHTS

      Except as described below, subscription certificates evidencing the Rights
("Subscription Certificates") will be sent to Record Date shareholders or their
nominees. If you wish to exercise your Rights, you may do so in the following
ways:

      (1) Complete and sign the Subscription Certificate. Mail it in the
envelope provided or deliver it, together with payment in full to EquiServe,
Boston, Massachusetts (the "Subscription Agent") at the address indicated on the
Subscription Certificate. Your completed and signed Subscription Certificate and
payment must be received by the Expiration Date.

      (2) Contact your broker, banker or trust company, which can arrange, on
your behalf, to guarantee delivery of payment and delivery of a properly
completed and executed Subscription Certificate pursuant to a notice of
guaranteed delivery ("Notice of Guaranteed Delivery") by the close of business
on the third business day after the Expiration Date. A fee may be charged for
this service. The Notice of Guaranteed Delivery must be received by the
Expiration Date.

      Rights holders will have no right to rescind a purchase after the
Subscription Agent has received payment.  See "The Offer--Method of Exercise of
Rights" and "The Offer--Payment for Shares."

SALE OF RIGHTS


      The Rights are transferable until the Expiration Date and have been
admitted for trading on the NYSE. Although no assurance can be given that a
market for the Rights will develop, trading in the Rights on the NYSE will begin
three Business Days prior to the Record Date and may be conducted until the
close of trading on the last NYSE trading day prior to the Expiration Date. The
value of the Rights, if any, will be reflected by the market price. Rights may
be sold by individual holders or may be submitted to the Subscription Agent for
sale. Any Rights submitted to the Subscription Agent for sale must be received
by the Subscription Agent on or before July 18, 2000, one business day prior to
the Expiration Date, due to normal settlement procedures. Trading of the Rights
on the NYSE will be conducted on a when issued basis until and including the
date on which the Subscription Certificates are mailed to Record Date
shareholders and thereafter will be conducted on a regular way basis until and
including the last NYSE trading day prior to the Expiration Date. The shares
will begin trading ex-Rights two Business Days prior to the Record Date. If the
Subscription Agent receives Rights for sale in a timely manner, it will use its
best efforts to sell the Rights on the NYSE. Any commissions will be paid by the
selling Rights holders. Neither the Fund nor the Subscription Agent will be
responsible if Rights cannot be sold and neither has guaranteed any minimum
sales price for the Rights. For purposes of this prospectus, a "Business Day"
shall mean any day on which trading is conducted on the NYSE.


================================================================================
 Shareholders are urged to obtain a recent trading price for the Rights on the
   New York Stock Exchange from their broker, bank, financial advisor or the
                                financial press.
================================================================================

OFFERING FEES AND EXPENSES

      Offering expenses incurred by the Fund are estimated to be $445,000.


                                       3


<PAGE>   8

RESTRICTIONS ON FOREIGN SHAREHOLDERS


      The Fund will not mail Subscription Certificates to shareholders whose
record addresses are outside the United States and Canada or who have an APO or
FPO address. Shareholders whose addresses are outside the United States and
Canada or who have an APO or FPO address and who wish to subscribe to the Offer
either partially or in full should contact the Subscription Agent, EquiServe, by
written instruction or recorded telephone conversation no later than three
Business Days prior to the Expiration Date. If the Subscription Agent has
received no instruction by such date, the Subscription Agent will attempt to
sell all Rights and remit the net proceeds, if any, to such shareholders. If the
Rights can be sold, sales of these Rights will be deemed to have been effected
at the weighted average price received by the Subscription Agent on the day the
Rights are sold, less any applicable brokerage commissions, taxes and other
expenses.


USE OF PROCEEDS

      We estimate the net proceeds of the Offer to be approximately $_________.
This figure is based on the Subscription Price per share of $___ and assumes all
shares offered are sold and that the expenses related to the Offer estimated at
approximately $445,000 are paid.

      Gabelli Funds, LLC ("the Investment Adviser") anticipates that it will
take approximately six months for the Fund to invest these proceeds in
accordance with its investment objective and policies under current market
conditions. Pending investment, the proceeds will be invested in certain
short-term debt instruments.

IMPORTANT DATES TO REMEMBER

      Please note that the dates in the table below may change if the Offer is
extended.

<TABLE>
<CAPTION>

      EVENT                                                                               DATE
      -----                                                                               ----
<S>                                                                    <C>
Record Date........................................................                      June 16, 2000
Subscription Period................................................     June 16, 2000 to July 19, 2000
Expiration of the Offer...........................................                       July 19, 2000*
Payment for Guarantees of Delivery Due ...........................                       July 24, 2000*
Confirmation to Participants.......................................                     August 2, 2000*
</TABLE>

- ------------

*     Unless the Offer is extended to a date no later than August 2, 2000.

INFORMATION REGARDING THE FUND


      The Fund has been engaged in business as a non-diversified, closed-end
management investment company since November 15, 1994. The Fund's primary
investment objective is long-term growth of capital. The Fund pursues this
objective primarily through investment in a portfolio of common stocks and other
securities, including convertible securities, preferred stock, options and
warrants, of foreign and domestic companies involved in the telecommunications,
media, publishing and entertainment industries, which industries we collectively
define as "multimedia." Income is a secondary objective of the Fund. No
assurance can be given that the Fund's investment objectives will be achieved.
See "Investment Objectives and Policies". The Fund's outstanding common stock is
listed and traded on the NYSE. The average weekly trading volume of the Fund's
common stock on the NYSE during the period from January 1, 1999 through December
31, 1999 was 79,149 shares. As of June 1, 2000, the net assets of the Fund
were approximately $224.4 million.


INFORMATION REGARDING THE INVESTMENT ADVISER

       Gabelli Funds, LLC (together with its predecessor, Gabelli Group
Capital Partners, Inc., formerly named Gabelli Funds, Inc., the "Investment
Adviser") has served as the investment adviser to the Fund since its inception.
The Investment Adviser also provides certain administrative services to the
Fund. Mr. Mario J. Gabelli, the Chairman of the Board, President, Chief
Executive Officer, Chief Investment Officer and indirect majority shareholder
of the Investment Adviser, has been engaged in the business of providing
investment advisory and portfolio management services for over 23 years and is
currently affiliated with investment advisers which, as of June 1, 2000,

                                       4



<PAGE>   9

managed total assets of approximately $22.6 billion. The Fund pays the
Investment Adviser a monthly fee at the annual rate of 1.00% of the Fund's
average weekly net assets. See "Management of the Fund--Investment Adviser."
Since the Investment Adviser's fees are based on the net assets of the Fund,
the Investment Adviser will benefit from the Offer. In addition, two Directors
who are "interested persons" of the Fund could benefit indirectly from the
Offer because of their interests in the Investment Adviser. See "The
Offer--Purpose of the Offer."

RISK FACTORS AND SPECIAL CONSIDERATIONS

      The following summarizes some of the matters that you should consider
before investing in the Fund through the Offer.



Dilution........................ Shareholders who do not exercise their Rights
                                 should expect that they will, at the
                                 completion of the Offer, own a smaller
                                 proportional interest in the Fund than if they
                                 exercised their Rights. As a result of the
                                 Offer you may experience an immediate
                                 dilution, which could be substantial, of the
                                 aggregate net asset value of your shares. This
                                 is because the Subscription Price per share
                                 and/or the net proceeds to the Fund for each
                                 new share sold are likely to be less than the
                                 Fund's net asset value per share on the
                                 Expiration Date. The Fund cannot state
                                 precisely the extent of this dilution at this
                                 time because the Fund does not know what the
                                 net asset value per share will be when the
                                 Offer expires or what proportion of the Rights
                                 will be exercised. For example, assuming that
                                 all Rights are exercised and the Subscription
                                 Price is $_____, which is ____% below the
                                 Fund's net asset value per share of $_________
                                 per share as of __________, 2000, the Fund's
                                 net asset value per share (after payment of
                                 soliciting fees and estimated offering
                                 expenses) would be reduced by approximately
                                 $_______ per share (or __%). See "Risk Factors
                                 and Special Considerations--Dilution."

                                 If you do not wish to exercise your Rights,
                                 you should consider selling these Rights as
                                 set forth in this prospectus. Any cash you
                                 receive from selling your Rights should serve
                                 as partial compensation for any possible
                                 dilution of your interest in the Fund. The
                                 Fund cannot give any assurance, however, that
                                 a market for the Rights will develop or that
                                 the Rights will have any marketable value.

Discount From Net Asset Value... Shares of closed-end funds frequently trade at
                                 a market price that is less then the value of
                                 the net assets attributable to those shares.
                                 The possibility that shares of the Fund will
                                 trade at a discount from net asset value is a
                                 risk separate and distinct from the risk that
                                 the Fund's net asset value will decrease.  The
                                 risk of purchasing shares of a closed-end fund
                                 that might trade at a discount is more
                                 pronounced for investors who wish to sell
                                 their shares in a relatively short period of
                                 time because, for those investors, realization
                                 of a gain or loss on their investments is
                                 likely to be more dependent upon the existence
                                 of a premium or discount than upon portfolio
                                 performance.  Since inception, the Fund's
                                 shares have generally traded on the NYSE at a
                                 discount to net asset value.  See "Capital
                                 Stock and Other Securities."


                                       5


<PAGE>   10



Repurchase and Charter
   Provisions..................  You will be free to dispose of your shares on
                                 the NYSE or other markets on which the shares
                                 may trade, but, because the Fund is a
                                 closed-end fund, you do not have the right to
                                 redeem your Shares. The Fund is authorized to
                                 repurchase its shares on the open market when
                                 the shares are trading at a discount of 10% or
                                 more from net asset value. In addition,
                                 certain provisions of the Fund's Articles of
                                 Incorporation and By-Laws may be regarded as
                                 "anti-takeover" provisions. These provisions
                                 consist of a system in which only one of three
                                 classes of Directors is elected each year and
                                 the requirement that the affirmative vote of
                                 the holders of 66-2/3% of each class of the
                                 outstanding shares of the Fund is necessary to
                                 authorize the conversion of the Fund from a
                                 closed-end to an open-end investment company
                                 or generally to authorize certain business
                                 transactions with the beneficial owner of more
                                 than 5% of the outstanding shares of the Fund.
                                 The overall effect of these provisions is to
                                 render more difficult the accomplishment of a
                                 merger or the assumption of control by a
                                 principal shareholder. These provisions may
                                 have the effect of depriving you of an
                                 opportunity to sell your shares at a premium
                                 above the prevailing market price. See
                                 "Capital Stock and Other Securities--Certain
                                 Provisions of the Articles of Incorporation
                                 and By-Laws."




Non-Diversified Status.......... As a non-diversified investment company under
                                 the Investment Company Act of 1940, as amended
                                 (the "1940 Act"), the Fund is not limited in
                                 the proportion of its assets that may be
                                 invested in securities of a single issuer. As
                                 a result of investing a greater proportion of
                                 its assets in the securities of a smaller
                                 number of issuers, the Fund may be more
                                 vulnerable to events affecting a single issuer
                                 and therefore subject to greater volatility
                                 than a fund that is more broadly diversified.
                                 Accordingly, an investment in the Fund may
                                 present greater risk to an investor than an
                                 investment in a diversified company. See "Risk
                                 Factors and Special Considerations--
                                 Non-Diversified Status."


Industry Risks.................. The Fund invests a significant portion of its
                                 assets in companies in the telecommunications,
                                 media, publishing and entertainment industries
                                 and, as a result, the value of the Fund's
                                 shares will be more susceptible to factors
                                 affecting those particular types of companies,
                                 including government regulation, greater price
                                 volatility for the overall market, rapid
                                 obsolescence of products and services, intense
                                 competition and strong market reactions to
                                 technological developments. See "Risk Factors
                                 and Special Considerations--Industry Risks."

Smaller Companies............... The Fund invests in smaller companies which
                                 may benefit from the development of new
                                 products and services. These smaller companies
                                 may present greater opportunities for capital
                                 appreciation, and may also involve greater
                                 investment risk than large, established
                                 issuers.  See "Risk Factors and Special
                                 Considerations--Smaller Companies."

Foreign Securities.............. There is no limitation on the amount of
                                 foreign securities in which the Fund may
                                 invest. Investing in securities of foreign
                                 companies and foreign governments, which
                                 generally are denominated in foreign
                                 currencies, may involve certain risk and
                                 opportunity considerations not typically
                                 associated with investing in domestic
                                 companies and could cause the Fund to be
                                 affected favorably or unfavorably by changes
                                 in currency exchange rates and revaluation of
                                 currencies. See "Risk Factors and Special
                                 Considerations--Foreign Securities."

                                       6

<PAGE>   11

Dependence on Key Personnel..... The Investment Adviser is dependent upon the
                                 expertise of Mr. Mario J. Gabelli in providing
                                 advisory services with respect to the Fund's
                                 investments. If the Investment Adviser were to
                                 lose the services of Mr. Gabelli, its ability
                                 to service the Fund could be adversely
                                 affected. There can be no assurance that a
                                 suitable replacement could be found for Mr.
                                 Gabelli in the event of his death,
                                 resignation, retirement or inability to act on
                                 behalf of the Investment Adviser.

      You should carefully consider your ability to assume the foregoing risks
before making an investment in the Fund.  An investment in shares of the Fund
is not appropriate for all investors.




                                       7


<PAGE>   12


                                    FEE TABLE

            The following table sets forth certain fees and expenses of the
Fund.


<TABLE>
<CAPTION>

SHAREHOLDER TRANSACTION EXPENSES
<S>                                                                                                 <C>
Sales Load (as a percentage of offering price)..............................................             0%
Automatic Dividend Reinvestment and Cash Purchase Plan Fees(a)..............................          $0.75
ANNUAL EXPENSES (as a percentage of net assets attributable to common shares)
Management Fees.............................................................................          1.00%
Other Expenses..............................................................................           .56%
TOTAL ANNUAL EXPENSES.......................................................................          1.56%
</TABLE>


- --------------

(a)   A fee of $0.75 is charged with respect to each purchase by a Participant
      in the Fund's Automatic Dividend Reinvestment and Voluntary Cash Purchase
      Plan (the "Plan"). A fee of $2.50 is charged in connection with the sale
      of shares that are held in book-entry form, such as shares held by a
      shareholder through the Plan. See "Dividends and Distributions; Automatic
      Dividend Reinvestment and Voluntary Cash Purchase Plan."


<TABLE>
<CAPTION>

EXAMPLE                                                    1 YEAR        3 YEARS        5 YEARS        10 YEARS
- -------                                                    ------        -------        -------        --------

<S>                                                        <C>           <C>             <C>           <C>
You would pay the following expenses
on a $1,000 investment assuming a 5%
annual return(b).....................................        $16             $49            $85            $186

</TABLE>


- --------------

(b) Amounts are exclusive of fees discussed in Note (a) above.

      The purpose of the foregoing table and example is to assist Rights holders
in understanding the various costs and expenses that an investor in the Fund
bears, directly or indirectly, BUT SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OR RATES OF RETURN. THE ACTUAL EXPENSES OF THE FUND MAY
BE GREATER OR LESS THAN THOSE SHOWN. The figures provided under "Other Expenses"
are based upon estimated amounts for the current fiscal year. For more complete
descriptions of certain of the Fund's cost and expenses, see "Management of the
Fund" in this prospectus and the SAI.


                                       8


<PAGE>   13


                              FINANCIAL HIGHLIGHTS

      The table below sets forth selected financial data for a share of Common
Stock outstanding throughout the period presented. The per share operating
performance and ratios for the period ended December 31, 1999 has been audited
by PricewaterhouseCoopers LLP, the Fund's independent accountants, as stated in
their report which is incorporated by reference into the SAI. The following
information should be read in conjunction with the Financial Statements and
Notes thereto, which are incorporated by reference into the SAI.

  SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>

                                                                -------------------------------------------------------------------
                                                                     1999        1998           1997           1996           1995
                                                                     ----        ----           ----           ----           ----
<S>                                                             <C>          <C>           <C>            <C>            <C>
OPERATING PERFORMANCE:
   Net asset value, beginning of period......................... $ 12.20      $  9.91      $   8.10          $ 7.81         $ 7.51
   Net investment income/(loss).................................   (0.05)       (0.03)         0.01            0.01           0.08
   Net realized and unrealized gain in investments..............   11.54         3.33          2.85            0.63           0.98
   Total from investment operations.............................   11.49         3.30          2.86            0.64           1.06
   Increase/(decrease) in net asset value from share
      transactions..............................................    0.06         0.02          0.06            0.02          (0.46)
   Offering expenses charged to capital surplus.................      --           --         (0.13)            --           (0.05)

DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
   Net investment income........................................      --           --         (0.01)          (0.01)         (0.08)
   Net realized gains...........................................   (3.62)       (0.80)        (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)
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
   Net investment income........................................      --           --        (0.00)(a)          --             --
   Net realized gains...........................................   (0.23)       (0.23)        (0.13)            --             --
   Total distributions..........................................   (3.85)       (1.03)        (0.98)          (0.37)         (0.25)
NET ASSET VALUE, END OF PERIOD.................................. $ 19.90      $ 12.20      $  9.91          $ 8.10         $ 7.81
   Market value, end of period.................................. $ 18.750     $ 10.938     $  8.750          $6.875         $6.760
   Net Asset Value Total Return+................................   96.6%        33.0%         34.4%            9.4%          14.1%
TOTAL INVESTMENT RETURN+........................................  106.6%        35.1%         39.6%            7.4%           0.4%
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON STOCK
   SHAREHOLDERS/SUPPLEMENTAL DATA:
   Net assets, end of period (in 000's)......................... $246,488   $163,742     $140,416            $91,462        $89,580
   Net assets attributable to common shares, end of period
   (in 000's)................................................... $215,238   $132,492     $109,166            $91,462        $89,580
   Ratio of net investment income/(loss) to average
   net assets...................................................  (0.30)%      (0.32)%         0.07%          0.13%         1.24%++
   Ratio of operating expenses to average net assets
   attributable to common stock.................................    1.56%        2.53%         2.09%          1.87%         2.04%++
   Ratio of operating expenses to average total net assets......    1.32%        2.01%         1.77%          1.87%            --
   Portfolio turnover rate......................................   43.1%        44.6%         96.1%          32.1%          86.0%
PREFERRED STOCK:
   Liquidation value, end of period (in 000's)..................   $31,250      $31,250       $31,250           --             --
   Total shares outstanding (in 000's)..........................     1,250        1,250          1,250          --             --
   Asset coverage...............................................    789%         524%          443%             --             --
   Liquidation preference per share.............................   $25.00       $25.00        $25.00            --             --
   Average market value (b).....................................   $25.13       $25.96        $25.59            --             --
                                                                                                                --             --
</TABLE>

- ------------

+       Total return represents aggregate total return of a hypothetical $1,000
        investment at the beginning of the period and sold at the end of the
        period including reinvestment of dividends.

++      Annualized.

(a)     Amount represents less than $0.005 per share.

(b)     Based on weekly prices.


                                       9


<PAGE>   14


                                    THE OFFER

TERMS OF THE OFFER


      The Fund is issuing to shareholders on the Record Date ("Record Date
Shareholders") Rights to subscribe for the shares (the "Shares") of the Fund's
Common Stock ("Common Stock"). Each Record Date Shareholder is being issued one
transferable Right for each share of Common Stock owned on the Record Date. The
Rights entitle the holder to acquire at the Subscription Price one Share for
each three Rights held. The number of Rights to be issued to a Record Date
Shareholder will be rounded up to the nearest number of Rights evenly divisible
by three. Rights may be exercised at any time during the period (the
"Subscription Period"), which commences on June 16, 2000 and ends at 5:00
p.m., New York time, on July 19, 2000, unless extended by the Fund to a date
not later than August 2, 2000, 5:00 p.m., New York time. See "Expiration of
the Offer." The Right to acquire one additional Share for each three Rights held
during the Subscription Period at the Subscription Price is hereinafter referred
to as the "Primary Subscription."


      In addition, any Record Date Shareholder who fully exercises all Rights
initially issued to him (other than those Rights that cannot be exercised
because they represent the right to acquire less than one Share) is entitled to
subscribe for Shares which were not otherwise subscribed for by others on
Primary Subscription (the "Over-Subscription Privilege"). For purposes of
determining the maximum number of Shares a Record Date Shareholder may acquire
pursuant to the Offer, broker-dealers whose shares are held of record by Cede &
Co., Inc. ("Cede"), nominee for The Depository Trust Company, or by any other
depository or nominee, will be deemed to be the holders of the Rights that are
issued to Cede or such other depository or nominee on their behalf. Shares
acquired pursuant to the Over-Subscription Privilege are subject to allotment,
which is more fully discussed below under "Over-Subscription Privilege."


      The Investment Adviser, as a Record Date Shareholder, has advised the Fund
that its members have authorized it to purchase through the Primary Subscription
and the Over-Subscription Privilege underlying Shares with an aggregate
Subscription Price of up to $10 million to the extent the Shares become
available to it in accordance with the Primary Subscription and the allotment
provisions of the Over-Subscription Privilege. In addition, Mario J. Gabelli
individually, as a Record Date Shareholder, may also purchase Shares through the
Primary Subscription and the Over-Subscription Privilege. Such
over-subscriptions by the Investment Adviser and Mr. Gabelli may
disproportionately increase their already existing ownership resulting in a
higher percentage ownership of outstanding shares of the Fund. Any Shares so
acquired by the Investment Adviser or Mr. Gabelli, as "affiliates" of the Fund
as that term is defined under the Securities Act of 1933, as amended (the
"Securities Act"), may only be sold in accordance with Rule 144 under the
Securities Act or another applicable exemption or pursuant to an effective
registration statement under the Securities Act. In general, under Rule 144, as
currently in effect, an "affiliate" of the Fund is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the then outstanding shares of Common Stock or the average weekly reported
trading volume of the Common Stock during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to certain restrictions on the
manner of sale, to notice requirements and to the availability of current public
information about the Fund. In addition, any profit resulting from the sale of
Shares so acquired, if the Shares are held for a period of less than six months,
will be returned to the Fund.


      Rights will be evidenced by Subscription Certificates. The number of
Rights issued to each holder will be stated on the Subscription Certificates
delivered to the holder. The method by which Rights may be exercised and Shares
paid for is set forth below in "Method of Exercise of Rights" and "Payment for
Shares." A Rights holder will have no right to rescind a purchase after the
Subscription Agent has received payment. See "Payment for Shares" below. Shares
issued pursuant to an exercise of Rights will be listed on the NYSE.

      The Rights are transferable until the Expiration Date and have been
admitted for trading on the NYSE. Assuming a market exists for the Rights, the
Rights may be purchased and sold through usual brokerage channels and sold
through EquiServe, Boston, Massachusetts (the "Subscription Agent"). Although no
assurance can be given that a market for the Rights will develop, trading in the
Rights on the NYSE will begin three Business Days before the Record Date and may
be conducted until the close of trading on the last Exchange trading day prior
to the Expiration Date. Trading of the Rights on the NYSE will be conducted on a
when issued basis until and including the date on which the Subscription
Certificates are mailed to Record Date Shareholders and thereafter will be


                                       10


<PAGE>   15


conducted on a regular way basis until and including the last Exchange
trading day prior to the Expiration Date. The method by which Rights may be
transferred is set forth below in "Method of Transferring Rights." The
underlying Shares will also be admitted for trading on the NYSE and will begin
trading Rights two Business Days (as defined below) prior to the Record Date.
For purposes of this prospectus, a "Business Day" shall mean any day on which
trading is conducted on the NYSE.


PURPOSE OF THE OFFER

      The Board of Directors of the Fund has determined that it would be in the
best interests of the Fund and the shareholders to increase the assets of the
Fund available for investment thereby permitting the Fund to be in a better
position to more fully take advantage of investment opportunities that may
arise. The Offer seeks to reward existing shareholders by giving them the right
to purchase additional shares at a price that may be below market and/or net
asset value without incurring any commission charge. The distribution to
shareholders of transferable Rights, which themselves may have intrinsic value,
will also afford non-subscribing shareholders the potential of receiving a cash
payment upon sale of such Rights, receipt of which may be viewed as partial
compensation for the possible dilution of their interests in the Fund.

      The Fund's Investment Adviser and PFPC, Inc., its sub-administrator (the
"Sub-Administrator"), will benefit from the Offer because the Investment
Adviser's fee and the Sub-Administrator's fee are based on the average net
assets of the Fund. See "Management of the Fund." It is not possible to state
precisely the amount of additional compensation the Investment Adviser or
Sub-Administrator will receive as a result of the Offer because the proceeds of
the Offer will be invested in additional portfolio securities which will
fluctuate in value. However, assuming all Rights are exercised and that the Fund
receives the maximum proceeds of the Offer, the annual compensation to be
received by the Investment Adviser and the Sub-Administrator would be increased
by approximately $_______ and $_______, respectively. Two of the Fund's
Directors who voted to authorize the Offer are "interested persons" of the
Investment Adviser within the meaning of the 1940 Act. Both of these Directors,
Mario J. Gabelli and Karl Otto Pohl, could benefit indirectly from the Offer
because of their interest in the Investment Adviser. The other seven Directors
are not "interested persons" of the Fund. See "Management of the Fund" in the
SAI. While it was cognizant of the possible participation of the Investment
Adviser and Mr. Gabelli in the Offer as shareholders, the Fund's Board of
Directors nevertheless concluded that the Offer was in the best interest of
shareholders, since all shareholders of the Fund are treated equally under the
terms of the Offer.

      The Fund may, in the future and at its discretion, choose to make
additional rights offerings from time to time for a number of shares and on
terms which may or may not be similar to the Offer. Any such future rights
offering will be made in accordance with the 1940 Act. Under the laws of
Maryland, the state in which the Fund is incorporated, the Board of Directors is
authorized to approve rights offerings without obtaining shareholder approval.
The staff of the SEC has interpreted the 1940 Act as not requiring shareholder
approval of a rights offering at a price below the then current net asset value
so long as certain conditions are met, including a good faith determination by
the fund's board of directors that such offering would result in a net benefit
to existing shareholders.

OVER-SUBSCRIPTION PRIVILEGE

       If all of the Rights initially issued are not exercised, any Shares for
which subscriptions have not been received will be offered, by means of the
Over-Subscription Privilege, to Record Date Shareholders who have exercised all
the Rights initially issued to them and who wish to acquire more than the number
of Shares for which the Rights issued to them are exercisable. Record Date
Shareholders who exercise all the Rights initially issued to them will have the
opportunity to indicate on the Subscription Certificate how many Shares they are
willing to acquire pursuant to the Over-Subscription Privilege. If sufficient
Shares remain after the Primary Subscriptions have been exercised, all
over-subscriptions will be honored in full. If sufficient Shares are not
available to honor all over-subscriptions, the available Shares will be
allocated among those who over-subscribe based on the number of Rights
originally issued to them by the Fund. The percentage of remaining Shares each
over-subscribing shareholder may acquire will be rounded down to result in
delivery of whole Shares. The allocation process may involve a series of
allocations in order to assure that the total number of Shares available for
over-subscriptions is distributed on a pro rata basis.




                                       11


<PAGE>   16

      The method by which Shares will be distributed and allocated pursuant to
the Over-Subscription Privilege is as follows. Shares will be available for
purchase pursuant to the Over-Subscription Privilege only to the extent that the
maximum number of Shares is not subscribed for through the exercise of the
Primary Subscription by the Expiration Date. If the Shares so available ("Excess
Shares") are not sufficient to satisfy all subscriptions pursuant to the
Over-Subscription Privilege, the Excess Shares will be allocated pro rata
(subject to the elimination of fractional Shares) among those holders of Rights
exercising the Over-Subscription Privilege, in proportion, not to the number of
Shares requested pursuant to the Over-Subscription Privilege, but to the number
of shares held on the Record Date; provided, however, that if this pro rata
allocation results in any holder being allocated a greater number of Excess
Shares than the holder subscribed for pursuant to the exercise of such holder's
Over-Subscription Privilege, then such holder will be allocated only such number
of Excess Shares as such holder subscribed for and the remaining Excess Shares
will be allocated among all other holders exercising Over-Subscription
Privileges. The formula to be used in allocating the Excess Shares is as
follows:

       Holder's Record Date Position
       -----------------------------                         Excess Shares
        Total Record Date Position              X              Remaining
         of All Over-Subscribers

      The Fund will not offer or sell any Shares which are not subscribed for
under the Primary Subscription or the Over-Subscription Privilege.

THE SUBSCRIPTION PRICE

      The Subscription Price for the Shares to be issued pursuant to the Rights
will be $____.


      The Fund announced the Offer on February 18, 2000. The net asset value
per share of Common Stock at the close of business on February 17, 2000 and
June 1, 2000 was $20.71 and $17.88, respectively. The last reported sale price
of a share of the Fund's Common Stock on the NYSE on those dates was $18.4375
and $14.4375, respectively, representing a 10.97% and a 19.25% discount,
respectively, in relation to the net asset value per share of Common Stock at
the close of business on these dates.


SALES BY SUBSCRIPTION AGENT


      Holders of Rights who do not wish to exercise any or all of their Rights
may instruct the Subscription Agent to sell any unexercised Rights. The
Subscription Certificates representing the Rights to be sold by the Subscription
Agent must be received on or before July 18, 2000. Upon the timely receipt of
appropriate instructions to sell Rights, the Subscription Agent will use its
best efforts to complete the sale and will remit the proceeds of sale, net of
commissions, to the holders. If the Rights can be sold, sales of the Rights will
be deemed to have been effected at the weighted average price received by the
Subscription Agent on the day such Rights are sold. The selling Rights holder
will pay all brokerage commissions incurred by the Subscription Agent. These
sales may be effected by the Subscription Agent through Gabelli & Company, Inc.,
a registered broker-dealer and an affiliate of the Investment Adviser, for up to
$0.03 per Right, provided that, if the Subscription Agent is able to negotiate a
lower brokerage commission with an independent broker, the Subscription Agent
will execute these sales through the broker. Gabelli & Company, Inc. may also
act on behalf of its clients to purchase or sell Rights in the open market and
be compensated therefor. The Subscription Agent will attempt to sell all Rights
that remain unclaimed as a result of Subscription Certificates being returned by
the postal authorities as undeliverable as of the fourth Business Day prior to
the Expiration Date. These sales will be made net of commissions on behalf of
the nonclaiming shareholders. Proceeds from those sales will be held by State
Street Bank and Trust Company, in its capacity as the Fund's transfer agent, for
the account of the nonclaiming shareholder until the proceeds are either claimed
or escheat. There can be no assurance that the Subscription Agent will be able
to complete the sale of any of these Rights and neither the Fund nor the
Subscription Agent has guaranteed any minimum sales price for the Rights. All of
these Rights will be sold at the market price, if any, on the NYSE.





                                       12


<PAGE>   17
METHOD OF TRANSFERRING RIGHTS

      The Rights evidenced by a single Subscription Certificate may be
transferred in whole by endorsing the Subscription Certificate for transfer in
accordance with the accompanying instructions. A portion of the Rights evidenced
by a single Subscription Certificate (but not fractional Rights) may be
transferred by delivering to the Subscription Agent a Subscription Certificate
properly endorsed for transfer, with instructions to register the portion of the
Rights evidenced thereby in the name of the transferee (and to issue a new
Subscription Certificate to the transferee evidencing the transferred Rights).
In this event, a new Subscription Certificate evidencing the balance of the
Rights will be issued to the Rights holder or, if the Rights holder so
instructs, to an additional transferee.

      Holders wishing to transfer all or a portion of their Rights (but not
fractional Rights) should allow at least three Business Days prior to the
Expiration Date for (i) the transfer instructions to be received and processed
by the Subscription Agent, (ii) a new Subscription Certificate to be issued and
transmitted to the transferee or transferees with respect to transferred Rights,
and to the transferor with respect to retained rights, if any, and (iii) the
Rights evidenced by the new Subscription Certificates to be exercised or sold by
the recipients thereof. Neither the Fund nor the Subscription Agent shall have
any liability to a transferee or transferor of Rights if Subscription
Certificates are not received in time for exercise or sale prior to the
Expiration Date.

      Except for the fees charged by the Subscription Agent (which will be paid
by the Fund as described below), all commissions, fees and other expenses
(including brokerage commissions and transfer taxes) incurred in connection with
the purchase, sale or exercise of Rights will be for the account of the
transferor of the Rights, and none of these commissions, fees or expenses will
be paid by the Fund or the Subscription Agent.

      The Fund anticipates that the Rights will be eligible for transfer
through, and that the exercise of the Primary Subscription (but not the
Over-Subscription Privilege) may be effected through, the facilities of The
Depository Trust Company ("DTC"; Rights exercised through DTC are referred to as
"DTC Exercised Rights"). The holder of a DTC Exercised Right may exercise the
Over-Subscription Privilege in respect of such DTC Exercised Right by properly
executing and delivering to the Subscription Agent, at or prior to 5:00 p.m.,
New York time, on the Expiration Date, a DTC Participant Over-Subscription Form,
together with payment of the Subscription Price for the number of Shares for
which the Over-Subscription Privilege is to be exercised. Copies of the DTC
Participant Over-Subscription Form may be obtained from the Subscription Agent.

EXPIRATION OF THE OFFER

      The Offer will expire at 5:00 p.m., New York time, on July 19, 2000,
unless extended by the Fund to a date not later than August 2, 2000, 5:00 p.m.,
New York time (the Expiration Date). Rights will expire on the Expiration Date
and thereafter may not be exercised.

SUBSCRIPTION AGENT


      The Subscription Agent is EquiServe, Att: Corporate Actions, P.O. Box
9573, Boston, Massachusetts 02205-9573. The Subscription Agent will receive from
the Fund an amount estimated to be $125,000, comprised of the fee for its
services and the reimbursement for certain expenses related to the Offer.
INQUIRIES BY ALL HOLDERS OF RIGHTS SHOULD BE DIRECTED TO P.O. BOX 9573, BOSTON,
MASSACHUSETTS 02205-9573 (TELEPHONE (800) 336-6983 OR (781) 575-2000); HOLDERS
MAY ALSO CONSULT THEIR BROKERS OR NOMINEES.


METHOD OF EXERCISE OF RIGHTS

      Rights may be exercised by filling in and signing the reverse side of the
Subscription Certificate and mailing it in the envelope provided, or otherwise
delivering the completed and signed Subscription Certificate to the Subscription
Agent, together with payment for the Shares as described below under "Payment
for Shares." Rights may also be exercised through a Rights holder's broker, who
may charge the Rights holder a servicing fee in connection with such exercise.


                                       13


<PAGE>   18

      Completed Subscription Certificates must be received by the Subscription
Agent prior to 5:00 p.m., New York time, on the Expiration Date (unless payment
is effected by means of a notice of guaranteed delivery as described below under
"Payment for Shares"). The Subscription Certificate and payment should be
delivered to EquiServe at the following address:

If By Mail:      EquiServe
                 Att:  Corporate Actions
                 P.O. Box 9573
                 Boston, MA 02205-9573

If By Hand:      Securities Transfer and Reporting Services, Inc.
                 c/o EquiServe
                 100 Williams St. Galleria
                 New York, NY 10038

If By Overnight Courier:      EquiServe
                              Att:  Corporate Actions
                              40 Campanelli Drive
                              Braintree, MA 02184

PAYMENT OF SHARES

      Holders of Rights who acquire Shares on Primary Subscription or pursuant
to the Over-Subscription Privilege may choose between the following methods of
payment:

           (1) A subscription will be accepted by the Subscription Agent if,
      prior to 5:00 p.m., New York time, on the Expiration Date, the
      Subscription Agent has received a notice of guaranteed delivery by
      telegram or otherwise from a bank, a trust company, or a NYSE member,
      guaranteeing delivery of (i) payment of the full Subscription Price for
      the Shares subscribed for on Primary Subscription and any additional
      Shares subscribed for pursuant to the Over-Subscription Privilege and (ii)
      a properly completed and executed Subscription Certificate. The
      Subscription Agent will not honor a notice of guaranteed delivery if a
      properly completed and executed Subscription Certificate and full payment
      is not received by the Subscription Agent by the close of business on the
      third Business Day after the Expiration Date. The notice of guaranteed
      delivery may be delivered to the Subscription Agent in the same manner as
      Subscription Certificates at the addresses set forth above, or may be
      transmitted to the Subscription Agent by facsimile transmission (telecopy
      number (781) 575-4826; telephone number to confirm receipt (781)
      575-4816).

           (2) Alternatively, a holder of Rights can send the Subscription
      Certificate together with payment in the form of a check for the Shares
      subscribed for on Primary Subscription and additional Shares subscribed
      for pursuant to the Over-Subscription Privilege to the Subscription Agent
      based on the Subscription Price of $______ per Share. To be accepted, the
      payment, together with the executed Subscription Certificate, must be
      received by the Subscription Agent at the addresses noted above prior to
      5:00 p.m., New York time, on the Expiration Date. The Subscription Agent
      will deposit all stock purchase checks received by it prior to the final
      due date into a segregated interest-bearing account pending proration and
      distribution of Shares. The Subscription Agent will not accept cash as a
      means of payment for Shares. EXCEPT AS OTHERWISE SET FORTH BELOW, A
      PAYMENT PURSUANT TO THIS METHOD MUST BE IN UNITED STATES DOLLARS BY MONEY
      ORDER OR CHECK DRAWN ON A BANK LOCATED IN THE CONTINENTAL UNITED STATES,
      MUST BE PAYABLE TO THE GABELLI GLOBAL MULTIMEDIA TRUST INC., AND MUST
      ACCOMPANY AN EXECUTED SUBSCRIPTION CERTIFICATE TO BE ACCEPTED. If the
      aggregate Subscription Price paid by a Record Date Shareholder is
      insufficient to purchase the number of shares of Common Stock that the
      holder indicates are being subscribed for, or if a Record Date Shareholder
      does not specify the number of shares of Common Stock to be purchased,
      then the Record Date Shareholder will be deemed to have exercised first,
      the Primary Subscription Rights (if not already fully exercised) and
      second, the Over-Subscription Privilege to the full extent of the payment
      tendered. If the aggregate Subscription Price paid by a Record Date
      Shareholder is greater than the shares he has indicated an intention to
      subscribe, then the


                                       14


<PAGE>   19


      Record Date Shareholder will be deemed to have exercised first, the
      Primary Subscription Rights (if not already fully subscribed) and second,
      the Over-Subscription Privilege to the full extent of the excess payment
      tendered.


      Within ten Business Days following the Expiration Date (the "Confirmation
Date"), a confirmation will be sent by the Subscription Agent to each holder of
Rights (or, if the Fund's shares are held by Cede or any other depository or
nominee, to Cede or such other depository or nominee), showing (i) the number of
Shares acquired pursuant to the Primary Subscription, (ii) the number of Shares,
if any, acquired pursuant to the Over-Subscription Privilege, (iii) the per
Share and total purchase price for the Shares and (iv) any excess to be refunded
by the Fund to such holder as a result of payment for Shares pursuant to the
Over-Subscription Privilege which the holder is not acquiring. Any payment
required from a holder of Rights must be received by the Subscription Agent on
the Expiration Date, or if the Rights holder has elected to make payment by
means of a notice of guaranteed delivery, on the third Business Day after the
Expiration Date. Any excess payment to be refunded by the Fund to a holder of
Rights, or to be paid to a holder of Rights as a result of sales of Rights on
his behalf by the Subscription Agent or exercises by Record Date Shareholders of
their Over-Subscription Privileges, and all interest accrued on the holder's
excess payment will be mailed by the Subscription Agent to the holder within
fifteen Business Days after the Expiration Date. Interest on the excess payment
will accrue through the date that is one Business Day prior to the mail date of
the reimbursement check. All payments by a holder of Rights must be in United
States dollars by money order or check drawn on a bank located in the
continental United States of America and payable to The Gabelli Global
Multimedia Trust Inc. except that holders of Rights who are residents of Canada
may make payment in U.S. dollars by money order or check drawn on a bank located
in Canada.


      Whichever of the two methods described above is used, issuance and
delivery of certificates for the Shares purchased are subject to collection of
checks and actual payment pursuant to any notice of guaranteed delivery.

      A Rights holder will have no right to rescind a purchase after the
Subscription Agent has received payment either by means of a notice of
guaranteed delivery or a check.

      If a holder of Rights who acquires Shares pursuant to the Primary
Subscription or the Over-Subscription Privilege does not make payment of any
amounts due, the Fund reserves the right to take any or all of the following
actions: (i) find other purchasers for such subscribed-for and unpaid-for
Shares; (ii) apply any payment actually received by it toward the purchase of
the greatest whole number of Shares which could be acquired by such holder upon
exercise of the Primary Subscription or the Over-Subscription Privilege; (iii)
sell all or a portion of the Shares purchased by the holder, in the open market,
and apply the proceeds to the amounts owed; and (iv) exercise any and all other
rights or remedies to which it may be entitled, including, without limitation,
the right to set off against payments actually received by it with respect to
such subscribed Shares and to enforce the relevant guaranty of payment.

      Holders who hold shares of Common Stock for the account of others, such as
brokers, trustees or depositaries for securities, should notify the respective
beneficial owners of the shares as soon as possible to ascertain the beneficial
owners' intentions and to obtain instructions with respect to the Rights. If the
beneficial owner so instructs, the record holder of the Rights should complete
Subscription Certificates and submit them to the Subscription Agent with the
proper payment. In addition, beneficial owners of Common Stock or Rights held
through such a holder should contact the holder and request the holder to effect
transactions in accordance with the beneficial owner's instructions.

      The instructions accompanying the Subscription Certificates should be read
carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO THE
FUND.

      THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF
THE RIGHTS HOLDERS, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT THE CERTIFICATES
AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE DELIVERY TO
THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE
AT


                                       15


<PAGE>   20


LEAST FIVE BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY URGED TO PAY, OR ARRANGE
FOR PAYMENT, BY MEANS OF A CERTIFIED OR CASHIER'S CHECK OR MONEY ORDER.

      All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by the Fund, whose determinations will
be final and binding. The Fund in its sole discretion may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within such
time as it may determine, or reject the purported exercise of any Right.
Subscriptions will not be deemed to have been received or accepted until all
irregularities have been waived or cured within such time as the Fund determines
in its sole discretion. Neither the Fund nor the Subscription Agent will be
under any duty to give notification of any defect or irregularity in connection
with the submission of Subscription Certificates or incur any liability for
failure to give such notification.

DELIVERY OF STOCK CERTIFICATES

      Certificates representing Shares purchased pursuant to the Primary
Subscription will be delivered to subscribers as soon as practicable after the
corresponding Rights have been validly exercised and full payment for the Shares
has been received and cleared. Certificates representing Shares purchased
pursuant to the Over-Subscription Privilege will be delivered to subscribers as
soon as practicable after the Expiration Date and after all allocations have
been effected. Participants in the Fund's Automatic Dividend Reinvestment and
Voluntary Cash Purchase Plan (the "Plan") will be issued Rights for the shares
held in their accounts in the Plan. Participants wishing to exercise these
Rights must exercise the Rights in accordance with the procedures set forth
above in "Method of Exercise of Rights" and "Payment for Shares." These Rights
will not be exercised automatically by the Plan. Plan participants exercising
their Rights will receive their Primary and Over-Subscription Shares via an
uncertificated credit to their existing account. To request a stock certificate,
participants in the Plan should check the appropriate box on the Subscription
Certificate. These Shares will remain subject to the same investment option as
previously selected by the Plan participant.

FOREIGN RESTRICTIONS


      Subscription Certificates will only be mailed to Record Date Shareholders
whose addresses are within the United States and Canada (other than an APO or
FPO address). Record Date Shareholders whose addresses are outside the United
States and Canada or who have an APO or FPO address and who wish to subscribe to
the Offer either partially or in full should contact the Subscription Agent,
EquiServe, by written instruction or recorded telephone conversation no later
than three Business Days prior to the Expiration Date. If the Subscription Agent
has received no instruction by such date, the Subscription Agent will attempt to
sell all Rights and remit the net proceeds, if any, to such shareholders. If the
Rights can be sold, sales of these Rights will be deemed to have been effected
at the weighted average price received by the Subscription Agent on the day the
Rights are sold, less any applicable brokerage commissions, taxes and other
expenses.


      Under the securities laws of the Province of Quebec, investors residing in
Quebec may, subject to compliance with all applicable regulatory requirements,
transfer either the Rights or the Shares to be acquired upon the exercise of
these Rights to other subscribers of the Offer, to persons with whom they are
related or to persons residing outside of Quebec in a transaction effected on an
organized market.

      Under the securities laws of the Province of Ontario, investors residing
in Ontario may, subject to compliance with all applicable regulatory
requirements, transfer either the Rights or the Shares to be acquired upon the
exercise of such Rights (i) through a dealer registered in Ontario that effects
the transaction through the facilities of the NYSE or (ii) through certain other
means as provided under and in compliance with Ontario securities laws.

FEDERAL INCOME TAX CONSEQUENCES

      The following is a general summary of the significant federal income tax
consequences of the receipt of Rights by a Record Date Shareholder and a
subsequent lapse, exercise or sale of such Rights. The discussion also addresses
the significant federal income tax consequences to a holder that purchases
Rights in a secondary-market transaction (e.g., on the NYSE). The discussion is
based upon applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury Regulations promulgated thereunder and other
authorities currently in effect,


                                       16


<PAGE>   21

and does not address state or local tax consequences. Moreover, the discussion
assumes that the fair market value of the Rights distributed to all of the
Record Date Shareholders will, upon the date of such distribution, be less than
15% of the total fair market value of all of the Fund's Common Stock on such
date.

RECORD DATE SHAREHOLDERS

      For federal income tax purposes, neither the receipt nor the exercise of
Rights by a Record Date Shareholder will result in taxable income to such
shareholder, and no taxable loss will be realized by a Record Date Shareholder
who allows his Rights to expire without exercise. A taxable gain or loss
recognized by a Record Date Shareholder upon a sale of a Right will be a capital
gain or loss (assuming the Right is held as a capital asset at the time of sale)
and will be a short-term capital gain or loss. A Record Date Shareholder's
holding period for a share of Common Stock acquired upon exercise of a Right (a
"New Share") begins with the date of exercise of the Right. A taxable gain or
loss recognized by a Record Date Shareholder upon a sale of a New Share will be
a capital gain or loss (assuming the New Share is held as a capital asset at the
time of sale) and will be a long-term capital gain or loss if the New Share has
been held at the time of sale for more than one year.

      Unless a Record Date Shareholder makes the election described in the
following paragraph, his basis for determining gain or loss upon the sale of a
Right will be zero and his basis for determining gain or loss upon the sale of a
New Share will be equal to the sum of the Subscription Price for the New Share
and any servicing fee charged to the shareholder by his broker, bank or trust
company. Moreover, unless a Record Date Shareholder makes the election described
in the following paragraph, the receipt of a Right and the lapse, sale or
exercise thereof will have no effect on the federal income tax basis of those
shares of Common Stock of the Fund that such shareholder originally owned
("Original Shares").

      A Record Date Shareholder may make an election to allocate the federal
income tax basis of his Original Shares between such Original Shares and all of
the Rights that he receives pursuant to the Offer in proportion to their
respective fair market values as of the date of distribution of the Rights.
Thus, if such an election is made and the Record Date Shareholder sells or
exercises his Rights, the shareholder's basis in his Original Shares will be
reduced by an amount equal to the basis allocated to the Rights. This election
is irrevocable and must be made in a statement attached to the shareholder's
federal income tax return for the taxable year in which the Rights are
distributed. If an electing Record Date Shareholder exercises his Rights, the
basis of his New Shares will be equal to the sum of the Subscription Price for
such New Shares (as increased by any servicing fee charged to the shareholder by
his broker, bank or trust company) plus the basis allocated to such Rights as
described above. Accordingly, Record Date Shareholders should consider the
advisability of making the above-described election if they intend to exercise
their Rights. However, if an electing Record Date Shareholder does not sell or
exercise his Rights, no taxable loss will be realized as a result of the lapse
of such Rights and no portion of the shareholder's basis in his Original Shares
will be allocated to the unexercised Rights.

PURCHASERS OF RIGHTS

      For federal income tax purposes, the exercise of Rights by a purchaser who
acquires such Rights on the NYSE or in another secondary-market transaction will
not result in taxable income to such purchaser, and a taxable loss will be
realized by a purchaser who allows his Rights to expire without exercise. Such
taxable loss will be a short-term capital loss if the purchaser holds the Rights
as capital assets at the time of their expiration. A taxable gain or loss
recognized by a purchaser upon a sale of a Right will be a capital gain or loss
(assuming the Right is held as a capital asset at the time of sale) and will be
a short-term capital gain or loss. A purchaser's basis for determining gain or
loss upon the sale of a New Share acquired through the exercise of a Right will
be equal to the sum of the Subscription Price for the New Share plus the
purchase price of the Right or Rights that were exercised in order to acquire
such New Share (with such Subscription Price and purchase price each being
increased by any applicable servicing fees charged to the purchaser by his
broker, bank or trust company). A purchaser's holding period for a New Share
acquired upon exercise of a Right begins with the date of exercise of the Right.
A taxable gain or loss recognized by a purchaser upon a sale of a New Share will
be a capital gain or loss (assuming the New Share is held as a capital asset at
the time of sale) and will be a long-term capital gain or loss if the New Share
has been held at the time of sale for more than one year.


                                       17


<PAGE>   22


EMPLOYEE PLAN CONSIDERATIONS

      Shareholders that are employee benefit plans subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including
corporate savings and 401(k) plans, Keogh Plans of self-employed individuals and
Individual Retirement Accounts (collectively, "Benefit Plans"), should be aware
that additional contributions of cash in order to exercise Rights would be
treated as Benefit Plan contributions and, when taken together with
contributions previously made, may subject a Benefit Plan to excise taxes for
excess or nondeductible contributions. In the case of Benefit Plans qualified
under Section 401(a) of the Code, additional cash contributions could cause the
maximum contribution limitations of Section 415 of the Code or other
qualification rules to be violated. Benefit Plans contemplating making
additional cash contributions to exercise Rights should consult with their
counsel prior to making such contributions.

      Benefit Plans and other tax exempt entities, including governmental plans,
should also be aware that if they borrow in order to finance their exercise of
Rights, they may become subject to the tax on unrelated business taxable income
("UBTI") under Section 511 of the Code. If any portion of an Individual
Retirement Account ("IRA") is used as security for a loan, the portion so used
is also treated as distributed to the IRA depositor.

      ERISA contains prudence and diversification requirements and ERISA and the
Code contain prohibited transaction rules that may impact the exercise of
Rights. Among the prohibited transaction exemptions issued by the Department of
Labor that may exempt a Benefit Plan's exercise of Rights are Prohibited
Transaction Exemption 84-24 (governing purchases of shares in investment
companies) and Prohibited Transaction Exemption 75-1 (covering sales of
securities).

      Due to the complexity of these rules and the penalties for noncompliance,
Benefit Plans should consult with their counsel regarding the consequences of
their exercise of Rights under ERISA and the Code.


                                       18


<PAGE>   23


RISK FACTORS AND SPECIAL CONSIDERATIONS

      An immediate dilution of the aggregate net asset value of the shares owned
by shareholders who do not fully exercise their Rights is likely to be
experienced as a result of the Offer because the Subscription Price is likely to
be less than the then net asset value per share, and the number of shares
outstanding after the Offer is likely to increase in greater percentage than the
increase in the size of the Fund's assets. In addition, as a result of the terms
of the Offer, shareholders who do not fully exercise their Rights should expect
that they will, at the completion of the Offer, own a smaller proportional
interest in the Fund than would otherwise be the case. Although it is not
possible to state precisely the amount of such a decrease in value, because it
is not known at this time what the net asset value per share will be at the
Expiration Date, this dilution could be substantial. For example, assuming that
all Rights are exercised and that the Subscription Price of $____ is ___% below
the Fund's then net asset value per share, the Fund's net asset value per share
(before deduction of expenses incurred in connection with the Offer) would be
reduced by approximately $___ per share.

                                    THE FUND

      The Fund, incorporated in Maryland on March 31, 1994, is a
non-diversified, closed-end management investment company registered under the
1940 Act.  The Fund's Common Stock is traded on the NYSE under the symbol
"GGT."

      The Fund 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.
On November 15, 1994, The Gabelli Equity Trust Inc. contributed $64,382,764 in
exchange for 8,587,702 shares of the Fund and immediately thereafter distributed
to its shareholders all the shares it held of the Fund. The Fund's investment
operations commenced on November 15, 1994.






                                 USE OF PROCEEDS


      The net proceeds of the Offer, assuming all Shares offered hereby are
sold, are estimated to be approximately $_______, after deducting expenses
payable by the Fund estimated at approximately $445,000. The Investment Adviser
anticipates that investment of the proceeds, in accordance with the Fund's
investment objectives and policies, will be invested promptly as investment
opportunities are identified, depending on market conditions and the
availability of appropriate securities, and is anticipated to take approximately
six months. Pending investment in accordance with the Fund's investment
objectives and policies, the proceeds will be held in obligations of the United
States Government, its agencies or instrumentalities ("U.S. Government
Securities") and other short-term money market instruments.



                       INVESTMENT OBJECTIVES AND POLICIES


INVESTMENT OBJECTIVES


      The Fund's primary investment objective is long-term growth of capital.
The Fund pursues its objective by investing primarily in the common stock and
other securities, including convertible securities, preferred stock, options and
warrants, of foreign and domestic companies involved in the telecommunications,
media, publishing and entertainment industries. Income is the secondary
investment objective. The investment objectives of long-term growth of capital
and income are fundamental policies of the Fund. The Fund's policy of
concentration in multimedia companies is also a fundamental policy of the Fund.
These fundamental policies and the investment limitations described in the SAI
under the caption "Investment Restrictions" cannot be changed without the
approval of the holders of a "majority of the Fund's outstanding voting
securities." As used herein, a "majority of the Fund's outstanding voting
securities" means the lesser of (i) 67% of the shares of the Fund's voting
securities represented at a meeting at which more than 50% of the outstanding
shares of the Fund's voting securities are represented, whether in person or by
proxy, or (ii) more than 50% of the outstanding shares of voting securities. No
assurance can be given that the Fund's investment objectives will be achieved.



      Under normal market conditions, the Fund will invest at least 65% of its
total assets in common stock and other securities, including convertible
securities, preferred stock, options and warrants, of companies in the




                                       19


<PAGE>   24



telecommunications, media, publishing and entertainment industries. Such
multimedia businesses are often involved in emerging technological advances in
interactive services and products that are accessible to individuals in their
homes or offices through consumer electronics devices such as telephones,
televisions, radios and personal computers.

      The telecommunications companies in which the Fund may invest are engaged
in the development, manufacture or sale of communications services or equipment
throughout the world including the following products or services: regular
telephone service; wireless communications services and equipment, including
cellular telephone, microwave and satellite communications, paging, and other
emerging wireless technologies; equipment and services for both data and voice
transmission, including computer hardware and software; electronic components
and communications equipment; video conferencing; electronic mail; local and
wide area networking, and linkage of data and word processing systems;
publishing and information systems; video text and teletext; emerging
technologies combining television, telephone and computer systems; broadcasting,
including television and radio via VHF, UHF, satellite and microwave
transmission and cable television.

      The entertainment, media and publishing companies in which the Fund may
invest are engaged in providing the following products or services: the
creation, packaging, distribution, and ownership of entertainment programming
throughout the world including prerecorded music, feature-length motion
pictures, made-for-TV movies, television series, documentaries, animation, game
shows, sports programming and news programs; live events such as professional
sporting events or concerts, theatrical exhibitions; television and radio
broadcasting via VHF, UHF, satellite and microwave transmission, cable
television systems and programming, broadcast and cable networks, wireless cable
television and other emerging distribution technologies, home video, interactive
and multimedia programming including home shopping and multiplayer games;
publishing, including newspapers, magazines and books, advertising agencies and
niche advertising mediums such as in-store or direct mail, emerging technologies
combining television, telephone and computer systems, computer hardware and
software, and equipment used in the creation and distribution of entertainment
programming such as that required in the provision of broadcast, cable or
telecommunications services.

      Under normal circumstances the Fund will invest in securities of issuers
located in at least three countries, which may include the United States.
Investing in securities of foreign issuers, which generally are denominated in
foreign currencies, may involve certain risk and opportunity considerations not
typically associated with investing in domestic companies and could cause the
Fund to be affected favorably or unfavorably by changes in currency exchange
rates and revaluations of currencies.

      There is no limitation on the amount of foreign securities in which the
Fund may invest. Among the foreign securities in which the Fund may invest are
those issued by companies located in developing countries, which are countries
in the initial stages of their industrialization cycles. Investing in the equity
and debt markets of developing countries involves exposure to economic
structures that are generally less diverse and less mature, and to political
systems that can be expected to have less stability, than those of developed
countries. The markets of developing countries historically have been more
volatile than the markets of the more mature economies of developed countries,
but often have provided higher rates of return to investors. The Fund may also
invest in debt securities of foreign governments. For a further discussion of
the risks associated with investing in foreign securities and a description of
other risks inherent in the Fund's investment objectives and policies, see "Risk
Factors and Special Considerations."

      The Investment Adviser believes that at the present time investment by the
Fund in the securities of companies located throughout the world presents great
potential for accomplishing the Fund's investment objectives. While the
Investment Adviser expects that a substantial portion of assets may be invested
in the securities of domestic companies, a significant portion of the Fund's
portfolio may also be comprised of the securities of issuers headquartered
outside the United States.


INVESTMENT METHODOLOGY OF THE FUND


      In selecting securities for the Fund, the Investment Adviser normally will
consider the following factors, among others: (1) the Investment Adviser's own
evaluations of the private market value, cash flow, earnings per share and other
fundamental aspects of the underlying assets and business of the company, (2)
the potential for capital



                                       20


<PAGE>   25


appreciation of the securities; (3) the interest or dividend income generated by
the securities; (4) the prices of the securities relative to other comparable
securities; (5) with respect to convertible and fixed-income securities, whether
the securities are entitled to the benefits of call protection or other
protective covenants; (6) the existence of any anti-dilution protections or
guarantees of the security; and (7) the diversification of the portfolio of the
Fund as to issuers. The Investment Adviser's investment philosophy with respect
to equity securities seeks to identify securities of companies that are selling
in the public market at a discount to their private market value, which the
Investment Adviser defines as the value informed purchasers are willing to pay
to acquire a company with similar characteristics. The Investment Adviser also
normally evaluates the issuers' free cash flow and long-term earnings trends.
Finally, the Investment Adviser looks for a catalyst--something in the company's
industry or indigenous to the company or country itself that will surface
additional value.

CERTAIN OTHER INVESTMENT PRACTICES

      Temporary Investments. Although under normal market conditions at least
65% of the Fund's assets will consist of common stock and other securities,
including convertible securities, preferred stock, options and warrants, of
foreign and domestic companies involved in the telecommunications, media,
publishing and entertainment industries, when a temporary defensive posture is
believed by the Investment Adviser to be warranted ("temporary defensive
periods"), the Fund may without limitation hold cash or invest its assets in
money market instruments and repurchase agreements in respect of those
instruments. The Fund may also invest up to 10% of the market value of its total
assets during temporary defensive periods in shares of money market mutual funds
that invest primarily in U.S. Government Securities and repurchase agreements in
respect of those securities. For a further description of such transactions, see
"Investment Objectives and Policies--Investment Practices" in the SAI.

      Repurchase Agreements. The Fund may engage in repurchase agreement
transactions involving money market instruments with banks, registered
broker-dealers and government securities dealers approved by the Investment
Adviser under the supervision of the Board of Directors. The Fund will not enter
into repurchase agreements with the Investment Adviser or any of its affiliates.
Under the terms of a typical repurchase agreement, the Fund would acquire 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 Fund to
resell, the obligation at an agreed price and time, thereby determining the
yield during its holding period. Thus, repurchase agreements may be seen to be
loans by the Fund collateralized by the underlying debt obligation. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the holding period. The value of the underlying securities
will be at least equal at all times to the total amount of the repurchase
obligation, including interest. The Fund bears a risk of loss in the event that
the other party to a repurchase agreement defaults on its obligations and the
Fund is delayed in 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 in which it seeks to assert these
rights. The Investment Adviser, acting under the supervision of the Fund's Board
of Directors, reviews the creditworthiness of those banks and dealers with which
the Fund enters into repurchase agreements to evaluate these risks and monitors
on an ongoing basis the value of the securities subject to repurchase agreements
to ensure that the value is maintained at the required level.

      Lower Rated Securities. The fund may invest up to 10% of its total assets
in fixed-income securities issued by U.S. and foreign corporations, governments
and agencies that are rated below investment grade by primary rating services
such as Standard & Poor's Rating Services and Moody's Investors Service. These
high-yield, higher-risk securities are commonly known as "junk bonds." These
debt securities are predominantly speculative and involve major risk exposure to
adverse conditions.

      Other Investments. The Fund is permitted to invest in special situations,
options and futures contracts, engage in forward currency transactions and enter
into forward commitments for the purchase or sale of securities, including on a
"when issued" or "delayed delivery" basis, and the Fund may make short sales of
securities. See the SAI for a discussion of these investments and techniques and
the risks associated with them.




                                       21


<PAGE>   26


      RISK FACTORS AND SPECIAL CONSIDERATIONS

      Please consider the matters set forth below.  You should read the entire
prospectus and the statement of additional information before you decide
whether to exercise your Rights.


PRINCIPAL RISKS ASSOCIATED WITH THE FUND


DILUTION

      If you do not exercise all of your Rights, when the Offer is over you will
own a smaller proportional interest in the Fund. In addition, whether or not you
exercise your Rights, the per share net asset value of your shares will be
diluted (reduced) immediately as a result of the Offer because:

      -      the shares offered will be sold at less than their current net
             asset value

      -      you will indirectly bear the expenses of the Offer

      -      the number of shares outstanding after the Offer will have
             increased proportionately more than the increase in the size of
             the Fund's net assets

      The Fund cannot state precisely the amount of any dilution because it is
not known at this time what the net asset value per share will be on the
Expiration Date or what proportion of the Rights will be exercised. The dilution
may be substantial and will increase if the share price declines in relation to
the net asset value as shown by the following examples:

      Scenario 1:  Shares trade above per share net asset value (premium)(1)


<TABLE>
<CAPTION>
<S>                                                                                               <C>
            Share Price...........................................................................$
                                                                                                    --------
            NAV...................................................................................$
                                                                                                    --------
            Subscription Price....................................................................$
                                                                                                    --------
            Reduction in NAV($)(2)................................................................$(        )
                                                                                                    --------
            Reduction in NAV(%)................................................................... (        )%
                                                                                                    --------

      Scenario 2:  Shares trade below per share net asset value at the time the offer expires (discount)(1)

            Share Price...........................................................................$
                                                                                                    --------
            NAV...................................................................................$
                                                                                                    --------
            Subscription Price....................................................................$
                                                                                                    --------
            Reduction in NAV($)(3)................................................................$(        )
                                                                                                    --------
            Reduction in NAV(%)................................................................... (        )%
                                                                                                    --------
- ------------------
</TABLE>


(1)   Both examples assume full primary and over-subscription privilege
      exercised.  Actual amounts may vary due to rounding.

(2)   Assumes $                in estimated offering expenses.
               ---------------


(3)   Assumes $               in estimated offering expenses.
               --------------






      You will incur a greater dilution in net asset value per share if you do
not exercise your Rights than if you do.

      If you do not wish to exercise your Rights, you should consider selling
these Rights as set forth in this prospectus. Any cash you receive from selling
your Rights should serve as partial compensation for any possible



                                       22


<PAGE>   27



dilution of your interest in the Fund. The Fund cannot give assurance, however,
that a market for the Rights will develop or that the Rights will have any
marketable value.

INDUSTRY RISKS

      The Fund invests a significant portion of its assets in the
telecommunications, media, publishing and entertainment industries. As a result,
the value of the Fund's shares is susceptible to factors affecting companies in
those particular industries, including

      -     governmental regulation

      -     greater price volatility than the overall market

      -     rapid obsolescence of products and services

      -     intense competition and strong market reactions to technological
            developments

      -     ownership restrictions

            Various types of ownership restrictions are imposed by the Federal
            Communications Commission ("FCC") on investments in mass media
            companies, such as broadcasters and cable operators, as well as in
            common carrier companies, such as the providers of local telephone
            service and cellular radio.

            For example, the FCC's broadcast multiple ownership rules, which
            apply to the radio and television industries, provide that
            investment advisers are deemed to have an "attributable" interest
            whenever the adviser has the right to determine how more than five
            percent of the issued and outstanding voting stock of a broadcast
            licensee may be voted. These same broadcast rules limit the holding
            of attributable interests, on a nationwide basis, in AM radio
            broadcast stations, FM radio broadcast stations and television
            stations. Similar types of restrictions apply to the mass media and
            common carrier industries.

            The attributable interest that results from the role of the
            Investment Adviser and its principals in connection with other
            funds, managed accounts and companies may limit the investments of
            the Fund.


MARKET RISK



      The market value of a security may move up and down, sometimes rapidly and
unpredictably. These fluctuations, which are often referred to as "volatility,"
may cause a security to be worth less than it was worth at an earlier time.
Market risk may effect a single issuer, industry, sector of the economy or the
market as a whole. Market risk is common to most investments, including stocks
and bonds and the mutual funds that invest in them.


SMALLER COMPANIES

      While not the Fund's focus, the Fund may invest in smaller companies that
may benefit from the development of new products and services. These smaller
companies may involve greater investment risk than large, established issuers,
because of the following factors, among others:

      -     limited product lines

      -     limited markets

      -     limited financial resources

      -     infrequent trading and low trading volume of smaller companies'
            securities


                                       23


<PAGE>   28

      -     fluctuating price of securities






NON-DIVERSIFIED STATUS

      The Fund is classified as a "non-diversified" investment company under the
1940 Act, which means the Fund is not limited by the 1940 Act in the proportion
of its assets that may be invested in the securities of a single issuer.
However, the Fund has in the past conducted and intends to conduct its
operations so as to qualify as a "regulated investment company" for purposes of
the Code, which will relieve it of any liability for federal income tax to the
extent its earnings are distributed to shareholders. To qualify as a "regulated
investment company," among other requirements, the Fund will limit its
investments so that, at the close of each quarter of the taxable year:

      -     not more than 25% of the market value of its total assets will be
            invested in the securities of a single issuer, and

      -     at least 50% of the market value of the Fund's assets is
            represented by cash, securities of other regulated investment
            companies, U.S. Government Securities and other securities that do
            not amount to more than 5% of a single issuer and not more than 10%
            of a single issuer's voting securities. The investments of the Fund
            in U.S. Government Securities are not subject to these limitations.


            As a non-diversified investment company, the Fund may invest in the
securities of individual issuers to a greater degree than a diversified
investment company. As a result, the Fund may be more vulnerable to events
affecting a single issuer and therefore subject to greater volatility than a
fund that is more broadly diversified. Accordingly, an investment in the Fund
may present greater risk to an investor than an investment in a diversified
company.



FOREIGN SECURITIES



      The risks which the Fund faces when it invests in securities of foreign
companies and foreign governments include:



      -      fluctuations in exchange rates between the U.S. dollar and foreign
             currencies


      -      unavailable or deficient key information about an issuer, security
             or market


      -      lack of uniform financial reporting standards and other regulatory
             requirements


      -      expropriations, capital or currency controls, punitive taxes or
             nationalizations


      -      economic policy changes, social and political instability,
             military action and war


      -      changed circumstances in dealings between nations


      -      greater volatility and illiquidity of foreign securities


      -      costs incurred in connection with conversion between various
             currencies


      -      higher foreign brokerage commissions


      -      possible extended settlement period


      -      revaluations of currencies


      -      transfer taxes or transaction charges



                                       24

<PAGE>   29


      -      greater difficulty in protecting and enforcing the Fund's rights



      Each of the above risks is more pronounced with respect to the Fund's
investments in securities of companies and governments in the world's emerging
(less developed) markets. For a further description of the Fund's investments in
foreign securities, see "Investment Objectives and Policies--Certain Other
Investment Practices--Foreign Securities."



MARKET VALUE AND NET ASSET VALUE



      The shares of closed-end investment companies frequently trade at a
discount from net asset value. This characteristic of shares of a closed-end
fund is a risk separate and distinct from the risk that the Fund's net asset
value may decrease. Since the commencement of the Fund's operations, the Fund's
shares have generally traded in the market at a discount to net asset value. See
"Capital Stock and Other Securities." The risk of purchasing shares of a
closed-end fund that might trade at a discount is more pronounced if you wish to
sell your shares in a relatively short period of time. If you do so, realization
of a gain or loss on your investment is likely to be more dependent upon the
existence of a premium or discount than upon portfolio performance. The Fund's
shares are not subject to redemption. Investors desiring liquidity may, subject
to applicable securities laws, trade their shares in the Fund on any exchange
where such shares are then trading at current market value, which may differ
from the then current net asset value.



LONG-TERM OBJECTIVE



      The Fund is intended for investors seeking long-term capital growth. The
Fund is not meant to provide a vehicle for those who wish to play short-term
swings in the stock market. You should not consider an investment in shares of
the Fund as a complete investment program. You should take into account your
investment objectives as well as your other investments when considering whether
or not to participate in the Offer.



CERTAIN ADDITIONAL RISKS ASSOCIATED WITH THE FUND


LOWER RATED SECURITIES

      High yield securities, also sometimes referred to as "junk bonds,"
generally pay a premium above the yields of U.S. Government Securities or mature
corporate issuers because they are subject to greater risks than these
securities. Hence, high yield securities usually carry a medium-grade or below
investment grade rating, which reflect their speculative character and the
following risks:

      -      greater volatility

      -      greater credit risk

      -      potentially greater sensitivity to general economic or industry
             conditions

      -      potential lack of attractive resale opportunities (illiquidity)

      -      additional expenses to seek recovery from issuers who default

      The market value of lower-rated securities may be more volatile than the
market value of higher-rated securities and generally tends to reflect the
market's perception of the creditworthiness of the issuer and short-term market
developments to a greater extent than more highly rated securities, which
reflect primarily fluctuations in general levels of interest rates.

      Ratings are relative and subjective and not absolute standards of quality.
Securities ratings are based largely on the issuer's historical financial
condition and the rating agencies' analysis at the time of rating. Consequently,
the rating assigned to any particular security is not necessarily a reflection
of the issuer's current financial condition.


                                       25


<PAGE>   30


      For a further description of lower rated securities and the risks
associated therewith, see "Investment Objectives and Policies--Investment
Practices" in the SAI. For a description of the ratings categories of certain
recognized statistical ratings agencies, see Appendix A.

TEMPORARY INVESTMENTS

      During temporary defensive periods the Fund may invest in U.S. Government
Securities and in money market mutual funds not affiliated with the Investment
Adviser that invest in those securities. While certain U.S. Government
Securities are supported by the "full faith and credit" of the U.S. Government,
others are supported only by the credit of the issuing instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored instrumentalities if it is not obligated to do so
by law. For a further description of such investments, see "Investment
Objectives and Policies--Investment Practices" in the SAI.

      To the extent that the Fund holds temporary investments, it will not be
pursuing its investment objectives.

REPURCHASE AGREEMENTS

      The Fund may engage in repurchase agreement transactions with banks,
registered broker-dealers and government securities dealers approved by the
Investment Adviser under the supervision of the Board of Directors. The Fund
bears a risk of loss in the event that the other party to a repurchase agreement
defaults on its obligations and the Fund is delayed in 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 in which it seeks to assert these rights. For a further description of
these transactions, see "Investment Objectives and Policies--Certain
Practices--Repurchase Agreements."




HEDGING

      If the expectations about the changes in the interest rates or evaluations
of the normal yield relationship between two securities proves to be incorrect,
the Fund's income, net asset value and potential capital gains may be decreased
or its potential capital losses may be increased. The Fund's use of hedging
strategies will result in the loss of principal under certain market conditions
and will involve certain other risks.

FUTURES TRANSACTIONS

      Futures and options on futures entail certain risks, including:

      -      no assurance that futures contracts or options on futures can be
             offset at favorable prices

      -      reduction of the yield of the Fund due to the use of hedging

      -      reduction in value of both the securities hedged and the hedging
             instrument

      -      illiquidity due to daily limits on price fluctuations

      -      imperfect correlation between the contracts and the securities
             being hedged

      -      losses from investing in futures transactions that are potentially
             unlimited and the segregation requirements for such transactions

      For a further description, see "Investment Objectives and
Policies--Investment Practices" in the SAI.

FORWARD CURRENCY TRANSACTIONS

      The use of forward currency contracts may involve certain risks,
including:


                                       26


<PAGE>   31
      -      default of the counter-party under the contract,

      -      incomplete hedge because of an imperfect correlation between
             movements in the prices of the contracts and the prices of
             the currencies hedged or used for cover

      For a further description of such investments, see "Investment Objectives
and Policies--Investment Practices" in the SAI.





DEPENDENCE ON KEY PERSONNEL

       The Investment Adviser is dependent upon the expertise of Mr. Mario J.
Gabelli in providing advisory services with respect to the Fund's investments.
If the Investment Adviser were to lose the services of Mr. Gabelli, its ability
to service the Fund could be adversely affected. There can be no assurance that
a suitable replacement could be found for Mr. Gabelli in the event of his death,
resignation, retirement or inability to act on behalf of the Investment Adviser.



                                       27


<PAGE>   32






                             MANAGEMENT OF THE FUND

DIRECTORS AND OFFICERS

      The business and affairs of the Fund are managed under the direction of
the Fund's Board of Directors, and the day to day operations of the Fund are
conducted through or under the direction of the officers of the Fund. Although
the Fund is a Maryland corporation, Karl Otto Pohl, one of its Directors, is a
resident of Germany, and substantially all of his assets are located outside of
the United States. Mr. Pohl has not authorized an agent for service of process
in the United States. Consequently, it may be difficult for investors to effect
service of process upon him within the United States or to enforce, in United
States courts, judgments against him obtained in such courts predicated on the
civil liability provisions of the United States securities laws. In addition,
there is doubt as to the enforceability in German courts of liabilities
predicated solely upon the United States securities laws, whether or not such
liabilities are based upon judgments of courts in the United States. For certain
information regarding the Directors and officers of the Fund, see "Management of
the Fund" in the SAI.

INVESTMENT ADVISER


            Gabelli Funds, LLC is a New York limited liability company which
also serves as an investment adviser to other closed-end investment companies
and open-end investment companies with aggregate assets in excess of $10.6
billion as of December 31, 1999. The Investment Adviser is a registered
investment adviser under the 1940 Act. Mr. Mario J. Gabelli may be deemed a
"controlling person" of the Investment Adviser on the basis of his controlling
interest in Gabelli Group Capital Partners, Inc., the parent company of Gabelli
Asset Management Inc., an NYSE-listed company which owns 100% of the Investment
Adviser. The Investment Adviser has several affiliates that provide investment
advisory services: GAMCO Investors, Inc. ("GAMCO"), an affiliate of the Adviser,
acts as investment adviser for individuals, pension trusts, profit-sharing
trusts and endowments, and had assets under management of approximately $9.4
billion under its management as of December 31, 1999; Gabelli Advisers, Inc.
acts as investment adviser to the Gabelli Westwood Funds with assets under
management of approximately $390 million as of December 31, 1999; Gabelli
Securities, Inc. acts as general partner or investment manager to certain
alternative investments products, consisting primarily of risk arbitrage and
merchant banking limited partnerships and offshore companies, with assets under
management of approximately $230 million as of December 31, 1999; and Gabelli
Fixed Income LLC acts as investment adviser for the three portfolios of The
Treasurer's Fund and separate accounts having assets under management of
approximately $1.4 billion as of December 31, 1999.


      The Investment Adviser has sole investment discretion for the Fund with
respect to the Fund's portfolio under the supervision of the Fund's Board of
Directors and in accordance with the Fund's stated policies. The Investment
Adviser will select investments for the Fund and will place purchase and sale
orders on behalf of the Fund. For its services, the Investment Adviser is paid a
fee computed daily and paid monthly at an annual rate of 1.00% of the average
weekly net assets of the Fund. For additional information regarding the
Investment Adviser, see "The Adviser" in the SAI.


      Canadian shareholders should note, to the extent applicable, that there
may be difficulty enforcing any legal rights against the Investment Adviser
because it is resident outside of Canada and all of its assets are situated
outside Canada.


PORTFOLIO MANAGEMENT


      Mario J. Gabelli, who is Chief Investment Officer of the Investment
Adviser, has managed the Fund's assets since its inception. In addition, over
the past five years, Mr. Gabelli has served as Chairman of the Board and Chief
Executive Officer of Gabelli Asset Management Inc.; Chief Investment Officer of
GAMCO Investors, Inc.; Chairman of the Board and Chief Executive Officer of
Lynch Corporation, a diversified manufacturing company, and Lynch Interactive
Corporation, a multimedia and communications services company; and Director of
Spinnaker Industries, Inc., a manufacturing company.


SUB-ADMINISTRATOR


                                       28


<PAGE>   33



      The Investment Adviser has certain administrative responsibilities to the
Fund under its advisory agreement with the Fund. The Investment Adviser has
retained PFPC, Inc. as Sub-Administrator to provide certain administrative
services necessary for the Fund's operations but which do not concern the
investment advisory and portfolio management services provided by the Investment
Adviser. These services include the preparation and distribution of materials
for meetings of the Fund's Board of Directors, compliance testing of the Fund's
activities and assistance in the preparation of proxy statements, reports to
shareholders and other documentation. For such services and the related expenses
borne by the Sub-Administrator, the Investment Adviser pays the
Sub-Administrator a monthly fee at the annual rate of (i) 0.0275% of the average
daily net assets of the total aggregate assets managed by the Investment Adviser
and administered by the Sub-Administrator up to $10 billion; (ii) 0.0125% of
such assets from $10 billion to $15 billion and (iii) 0.01% if such assets
exceed $15 billion which, together with the services to be rendered, is subject
to negotiation between the parties. Both parties retain the right unilaterally
to terminate the arrangement on 60 days' written notice. The Sub-Administrator
has its principal office at 101 Federal Street, Boston, MA 02110.

PAYMENT OF EXPENSES

      For purposes of the calculation of the fees payable to the Investment
Adviser by the Fund, average weekly net assets of the Fund are determined at the
end of each month on the basis of its average net assets for each week during
the month. The assets for each weekly period are determined by averaging the net
assets at the end of a week with the net assets at the end of the prior week.

      The Investment Adviser will be obligated to pay expenses associated with
providing the services contemplated by the Advisory Agreement including
compensation of and office space for its officers and employees connected with
investment and economic research, trading and investment management and
administration of the Fund, as well as the fees of all Directors of the Fund who
are affiliated with the Investment Adviser or any of its affiliates. The Fund
pays all other expenses incurred in its operation including, among other things,
expenses for legal and independent accountants' services, costs of printing
proxies, stock certificates and shareholder reports, charges of the custodian,
any subcustodian and transfer and dividend paying agent, expenses in connection
with the Plan, SEC fees, fees and expenses of unaffiliated Directors, accounting
and pricing costs, membership fees in trade associations, fidelity bond coverage
for its officers and employees, directors' and officers' errors and omission
insurance coverage, interest, brokerage costs, taxes, stock exchange listing
fees and expenses, expenses of qualifying its shares for sale in various states,
litigation and other extraordinary or non-recurring expenses, and other expenses
properly payable by the Fund.

                             PORTFOLIO TRANSACTIONS

      Principal transactions are not entered into with affiliates of the Fund.
However, Gabelli & Company, Inc., an affiliate of the Investment Adviser, may
execute transactions in the over-the-counter markets on an agency basis and
receive a stated commission therefrom. For a more detailed discussion of the
Fund's brokerage allocation practice, see the SAI under "Portfolio
Transactions."

                 DIVIDENDS AND DISTRIBUTIONS; AUTOMATIC DIVIDEND
                  REINVESTMENT AND VOLUNTARY CASH PURCHASE PLAN

      The Fund distributes substantially all of its annual net investment income
and capital gains to shareholders at year end. The dividend policy of the Fund
may be modified from time to time by the Board of Directors. As a regulated
investment company under the Code, the Fund will not be subjected to U.S.
federal income tax on its investment company taxable income that it distributes
to shareholders, provided that at least 90% of its taxable income for the
taxable year is distributed to its shareholders.


      The Fund, along with other registered investment companies advised by the
Investment Adviser, has obtained an exemption from Section 19(b) of the 1940 Act
and Rule 19b-1 thereunder permitting the Fund to maintain distribution policies
("periodic pay-out policies") with respect to the Common Stock and Preferred
Stock calling for periodic (e.g., quarterly or semi-annually, but in no event
more frequently than quarterly, except that the Fund may elect to pay a dividend
pursuant to Section 855 of the Code in addition to the four quarterly payments)
distributions in an amount equal to a fixed percentage of the Fund's average net
asset value over a specified period of time or




                                       29


<PAGE>   34


market price per share of Common Stock or a fixed percentage of the Preferred
Stock's liquidation preference at or about the time of distribution or pay-out
or a fixed dollar amount. If the total distributions required by the proposed
periodic pay-out policy exceed the Fund's net investment income and net capital
gains, the excess will be treated as a return of capital. If the Fund's net
investment income, net short-term capital gains and net long-term capital gains
for any year exceed the amount required to be distributed under the proposed
periodic pay-out policy, the Fund generally intends to pay such excess once a
year, but may, in its discretion, retain and not distribute net long-term
capital gains to the extent of such excess.



      The Fund has outstanding 1,235,700 shares of 7.92% Cumulative Preferred
Stock, liquidation preference $25 per share (the "Cumulative Preferred Stock")
as of May 25, 2000, which are senior securities of the Fund. Dividends on the
Cumulative Preferred Stock accrue at an annual rate of 7.92% of the liquidation
preference per share, are cumulative from the date of original issuance thereof
and are payable quarterly on March 26, June 26, September 26 and December 26 in
each year.


      Under the Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan
adopted by the Fund, a shareholder whose Common Stock is registered in his own
name will have all distributions reinvested automatically by State Street Bank
and Trust Company ("State Street"), which is the agent under the Plan, unless
the shareholder elects to receive cash and has so instructed State Street either
in writing at the address set forth below or by telephone at (800) 336-6983.
Distributions with respect to shares registered in the name of a broker-dealer
or other nominee (that is, in "street name") will be reinvested by the broker or
nominee in additional shares under the Plan, unless the service is not provided
by the broker or nominee or the shareholder elects to receive distributions in
cash. Under the Plan, whenever the market price of the 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 dividend or capital
gains distribution, participants in such plan 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 Common Stock. 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 Fund, valued at
market price. If the Fund should declare a dividend or capital gains
distribution payable only in cash, State Street will, as agent for the
participants, buy Fund shares in the open market, on the NYSE or elsewhere, for
the participants' accounts, except that State Street will endeavor to terminate
purchases in the open market and cause the Fund to issue shares at net asset
value if, following the commencement of such purchases, the market value of the
Common Stock exceeds net asset value.

      Participants in the Plan have the option of making additional cash
payments to State Street, on or about the 1st and 15th of each month, for
investment in the shares as applicable. Such payments may be made in any amount
from $250 to $10,000.

      There is no charge to participants for reinvesting dividends or capital
gains distributions payable in either stock or cash. State Street's fees for
handling the reinvestment of such dividends and capital gains distributions are
paid by the Fund. There are no brokerage charges with respect to shares issued
directly by the Fund as a result of dividends or capital gains distributions
payable in stock or in cash. However, each participant bears a pro rata share of
brokerage commissions incurred with respect to State Street's open market
purchases in connection with the reinvestment of dividends or capital gains
distributions.

      With respect to purchases from voluntary cash payments, State Street will
charge $0.75 for each such purchase for a participant, plus a pro rata share of
the brokerage commissions. A fee of $2.50 per transaction is charged in
connection with the sale of shares that are held in book-entry form, such as
shares of Common Stock held by a shareholder through the Plan. Commissions may
also be charged on such transactions.

      The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax which may be payable on such dividends or
distributions.

      Participants in the Plan may terminate their accounts under the Plan by
notifying State Street in writing. Upon termination, participants may request to
receive a certificate for the number of full shares then held in their Plan
account along with a check in payment for any fractional share interest they may
have. The payment for the fractional share interest will be valued at the
opening price of the Fund on the date their discontinuance is effective. In the
alternative, participants may liquidate their reinvestment shares. If a
participant wishes to liquidate his or her


                                       30


<PAGE>   35

reinvestment shares, the cost 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.

      All correspondence concerning the Plan should be directed to State Street
at P.O. Box 8200, Boston, Massachusetts 02266-8200. For a further description of
the Plan, see "Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan"
in the SAI.

                                    TAXATION

TAXATION

      The Fund has qualified, and intends to continue to qualify, each year as a
"regulated investment company" under the Code. Accordingly, the Fund will not be
liable for federal income taxes to the extent its taxable net investment income
and net realized capital gain, if any, are distributed to shareholders, provided
that at least 90% of its investment company taxable income (i.e., 90% of the
Fund's taxable income minus the excess, if any, of its net realized long-term
capital gain over its net realized short-term capital loss (including any
capital loss carryovers) plus or minus certain other adjustments as specified in
section 852 of the Code) for the taxable year is distributed to shareholders.
The Fund will be subject to tax at regular corporate rates on any income or
gains that it does not distribute. Furthermore, the Fund is subject to a 4%
nondeductible federal excise tax on certain undistributed amounts of ordinary
income and capital gains. The Fund intends to make such distributions as are
necessary to avoid the application of this excise tax.

      The Fund reserves the right, but does not currently intend, to retain for
reinvestment net long-term gains in excess of net short-term capital losses and
the Fund will be subject to a corporate tax (currently at a rate of 35%) on the
retained amount, if any. The Fund would designate such retained amounts as
undistributed capital gains. As a result, such amounts would be taxed to
shareholders as long-term capital gains and shareholders would be able to claim
their proportionate shares of the federal income taxes paid by the Fund on such
gains as a credit against their own federal income tax liabilities, and would be
entitled to increase the adjusted tax basis of their shares of the Fund by 65%
of their undistributed capital gains. Qualified pension and profit sharing
funds, certain trusts and other organizations or persons not subject to federal
income tax on capital gains and certain non-resident alien individuals and
foreign corporations would be entitled to a refund of their pro rata share of
such taxes paid by the Fund upon filing appropriate returns or claims for refund
with the proper tax authorities. Failure by such entities and their sponsors or
responsible fiduciaries to properly account for such refund could result in
adverse federal income tax consequences.

      The Fund sends its written statements and notices to its respective
shareholders regarding the tax status of all dividends and distributions made
during each calendar year.

      Dividend and capital gain distributions may also be subject to state and
local taxes. Shareholders are urged to consult their attorneys or tax advisors
regarding specific questions as to federal, state or local taxes. Non-U.S.
shareholders are urged to consult their own tax advisors concerning the
applicability of the United States withholding tax. For a more detailed
discussion of tax matters affecting the Fund and its shareholders, see
"Taxation" in the SAI.

                       CAPITAL STOCK AND OTHER SECURITIES


      Common Stock. The Fund, which was incorporated under the laws of the State
of Maryland on March 31, 1994, is authorized to issue 198,750,000 shares of
Common Stock, par value $.001 per share. Each share of Common Stock has equal
voting, dividend, distribution and liquidation rights. The shares of Common
Stock outstanding are fully paid and non-assessable. Shares of the Common Stock
are not redeemable and have no preemptive, conversion or cumulative voting
rights.


      The Fund's shares of Common Stock are listed and traded on the NYSE under
the symbol "GGT." The average weekly trading volume of the Common Stock on the
NYSE for the period from November 14, 1994 (commencement of the Fund's
operations) through December 31, 1999 was 100,903 shares. The following table
sets



                                       31



<PAGE>   36

forth for the quarters indicated the high and low closing prices on the NYSE
per share of the Common Stock and the net asset value and the premium or
discount from net asset value at which the Common Stock was trading, expressed
as a percentage of net asset value, at each of the high and low closing prices
provided.


<TABLE>
<CAPTION>

                                                                                                          PREMIUM OR DISCOUNT
                                             MARKET PRICE(1)                NET ASSET VALUE(2)                AS % OF NAV
                                       --------------------------     --------------------------     --------------------------
           QUARTER ENDED                  HIGH              LOW           HIGH              LOW          HIGH              LOW
           -------------                  ----              ---           ----              ---          ----              ---
<S>                                    <C>              <C>            <C>              <C>           <C>               <C>
3/31/98.............................   $10.1875          $ 8.3125      $11.64            $ 9.82       -12.48%           -15.35%
6/30/98.............................   $10.5625          $ 9.4375      $11.76            $11.38       -10.18%           -17.07%
9/30/98.............................   $10.875           $ 8.00        $12.60            $10.01       -13.69%           -20.08%
12/31/98............................   $10.9375          $ 8.00        $12.20            $ 9.46       -10.35%           -15.43%
3/31/99.............................   $12.25            $10.50        $13.82            $12.44       -11.36%           -15.59%
6/30/99.............................   $15.00            $11.75        $16.79            $14.31       -10.66%           -17.89%
9/30/99.............................   $15.3125          $13.625       $17.74            $16.46       -13.68%           -17.22%
12/31/99............................   $19.50            $14.625       $21.24            $16.64        -8.19%           -12.11%
3/31/00.............................   $19.4375          $16.25        $21.47            $17.92        -1.23%           -20.96%
</TABLE>


- --------------------
(1)   As reported on the NYSE.
(2)   Based on the Fund's computations.





      Preferred Stock. The Fund's Board of Directors authorized the issuance of
a series of 1,250,000 shares of preferred stock, par value $.001 per share, of
the Fund designated as 7.92% Cumulative Preferred Stock, liquidation preference
$25 per share ("Cumulative Preferred Stock"). The terms of such Cumulative
Preferred Stock are fixed by the Board of Directors and may materially limit
and/or qualify the rights of the holders of the Fund's Common Stock. As of May
25, 2000, the Fund has outstanding 1,235,700 shares of Cumulative Preferred
Stock, which are senior securities of the Fund. Dividends on the Cumulative
Preferred Stock accrue at an annual rate of 7.92% of the liquidation preference
per share, are cumulative from the date of original issuance thereof and are
payable quarterly on March 26, June 26, September 26 and December 26 in each
year.


      It was a condition to the issuance of the Cumulative Preferred Stock that
it be rated 'aaa' by Moody's Investors Service, Inc. ("Moody's"). In connection
with the receipt of such rating, the composition of the Fund's portfolio must
reflect guidelines established by Moody's and the Fund is required to maintain a
minimum discounted asset coverage with respect to the Cumulative Preferred
Stock. See "Moody's Discount Factors" in the SAI.

      The Cumulative Preferred Stock is subject to mandatory redemption in whole
or in part by the Fund for cash at a price equal to $25 per share plus
accumulated but unpaid dividends (whether or not earned or declared) (the
"Redemption Price") if the Fund fails to maintain either of the minimum asset
coverages required by Moody's and the 1940 Act. Commencing June 1, 2002 and
thereafter, the Fund at its option may redeem the Cumulative Preferred Stock in
whole or in part for cash at a price equal to the Redemption Price. Prior to
June 1, 2002, the Cumulative Preferred Stock may be redeemed, at the option of
the Fund, for a cash price equal to the Redemption Price, only to the extent
necessary for the Fund to continue to qualify for tax treatment as a regulated
investment company.

      All shares of Cumulative Preferred Stock are fully paid and nonassessable.


      Set forth below is information with respect to the Fund's capital stock as
of May 25, 2000.



                                       32


<PAGE>   37



<TABLE>
<CAPTION>

                                                               AMOUNT HELD BY FUND FOR
        CLASS OF STOCK             AMOUNT AUTHORIZED                ITS OWN ACCOUNT                  AMOUNT OUTSTANDING
- ---------------------------   --------------------------   -------------------------------   -------------------------------
<S>                               <C>                           <C>                                <C>
       Common Stock               198,750,000 shares                      N/A*                        10,796,185 shares
       Preferred Stock             1,250,000 shares                       N/A*                        1,235,700 shares
</TABLE>

- --------------------------


* The Fund repurchased 679,733 shares of Common Stock and 14,300 shares of
Preferred Stock through May 25, 2000. Pursuant to Section 2-310(a)(2) of the
Maryland General Corporation Law, such shares are deemed to be authorized but
unissued shares.


EFFECTS OF LEVERAGE

      The only obligation that the Fund has to the Preferred Shareholders is to
pay the stated dividend rate of 7.92%. Any return earned in excess of the stated
dividend rate, which is less than the Fund'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. The following
table is designed to assist you in understanding the effects of leverage on your
investment in the Fund. The figures appearing in the table are hypothetical and
actual returns may be greater or less than those appearing in the table.

<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>           <C>               <C>           <C>
   Assumed return on
       portfolio
   (net of expenses)                      -10%           -5%             0%              5%            10%

- ------------------------------------------------------------------------------------------------------------------
    Corresponding
   return to common                     -12.57%        -6.85%         -1.13%           4.58%         10.30%
     stockholder
- ------------------------------------------------------------------------------------------------------------------
</TABLE>


      The following factors associated with leveraging could increase the
investment risk and volatility of the price of the Fund's shares: (1) leveraging
exaggerates any increase or decrease in the value of the Fund's shares; (2) the
costs of borrowing may exceed the income from the portfolio securities purchased
with the borrowed money; (3) a decline in net asset value results if the
investment performance of the additional securities purchased fails to cover
their cost to the Fund (including any interest paid on the money borrowed or
dividend requirements of preferred stock) to the Fund; (4) a decline in net
asset value could affect the ability of the Fund to make common stock dividend
payments; (5) a failure to pay dividends or make distributions could result in
the Fund's ceasing to qualify as a regulated investment company under the
Internal Revenue Code; and (6) if the asset coverage for preferred stock or debt
securities declines to less than two hundred percent or three hundred percent,
respectively (as a result of market fluctuations or otherwise), the Fund may be
required to sell a portion of its investments when it may be disadvantageous to
do so.


VOTING RIGHTS

      Except as otherwise stated in this prospectus and as otherwise required by
applicable law, holders of shares of Cumulative Preferred Stock will be entitled
to one vote per share on each matter submitted to a vote of shareholders and
will vote together with holders of shares of Common Stock and of any other
Preferred Stock then outstanding as a single class.

      In connection with the election of the Fund's directors, holders of shares
of Cumulative Preferred Stock and any other Preferred Stock, voting as a single
class, will be entitled at all times to elect two of the Fund's directors, and
the remaining directors will be elected by holders of shares of Common Stock and
holders of shares of Cumulative Preferred Stock and any other Preferred Stock,
voting together as a single class. In addition, if at any time dividends on
outstanding shares of Cumulative Preferred Stock and/or any other Preferred
Stock are unpaid in an amount equal to at least two full years' dividends
thereon or if at any time holders of any shares of Preferred Stock are entitled,
together with the holders of shares of Cumulative Preferred stock to elect a
majority of the directors of the Fund


                                       33


<PAGE>   38


under the 1940 Act, then the number of directors constituting the Board of
Directors automatically will be increased by the smallest number that, when
added to the two directors elected exclusively by the holders of shares of
Cumulative Preferred Stock and any other Preferred Stock as described above,
would constitute a majority of the Board of Directors as so increased by such
smallest number. Such additional directors will be elected by the holders of
Cumulative Preferred Stock and any other Preferred Stock, voting as a separate
class, at a special meeting of shareholders which will be called and held as
soon as practicable, and at all subsequent meetings at which directors are to
be elected, the holders of shares of Cumulative Preferred Stock and any other
Preferred Stock, voting as a single class, will be entitled to elect the
smallest number of additional directors that, together with the two directors
which such holders in any event will be entitled to elect, constitutes a
majority of the total number of directors of the Fund as so increased. The
Articles of Incorporation currently limits the maximum number of directors of
the Fund to twelve. In the event that an increase in the number of directors
elected solely by the holders of shares of Cumulative Preferred Stock and any
other Preferred Stock would cause the total number of directors to exceed
twelve, one or more directors, other than the two previously elected by the
holders of shares of Cumulative Preferred Stock and Preferred Stock, voting as
a separate class, would resign so that the result would be that a majority of
the Board of Directors had been elected by the holders of the Cumulative
Preferred Stock and any other Preferred Stock, voting as a separate class.
Except as otherwise provided in the immediately preceding sentence, the terms
of office of the persons who are directors at the time of that election will
continue. If the Fund thereafter pays, or declares and sets apart for payment
in full, all dividends payable on all outstanding shares of Cumulative
Preferred Stock and any other Preferred Stock for all past dividend periods,
the additional voting rights of the holders of shares of Cumulative Preferred
Stock and any other Preferred Stock as described above will cease, and the
terms of office of all of the additional directors elected by the holders of
shares of Cumulative Preferred Stock and any other Preferred Stock (but not of
the directors with respect to whose election the holders of shares of Common
Stock were entitled to vote or the two directors the holders of shares of
Cumulative Preferred stock and any other Preferred Stock have the right to
elect as a separate class in any event) will terminate automatically.


      So long as shares of the Cumulative Preferred Stock are outstanding, the
Fund will not, without the affirmative vote of the holders of a majority of the
shares of Preferred Stock outstanding at the time, voting separately as one
class, amend, alter or repeal the provisions of the Articles of Incorporation,
as amended and supplemented (including the Articles Supplementary) of the Fund
(the "Articles of Incorporation"), whether by merger, consolidation or
otherwise, so as to materially adversely affect any of the contract rights
expressly set forth in the Articles of Incorporation of holders of shares of the
Cumulative Preferred Stock or any other Preferred Stock. To the extent permitted
under the 1940 Act, in the event shares of more than one series of Preferred
Stock are outstanding, the Fund will not approve any of the actions set forth in
the preceding sentence which materially adversely affects the contract rights
expressly set forth in the Articles of Incorporation of a holder of shares of a
series of Preferred Stock differently than those of a holder of shares of any
other series of Preferred Stock without the affirmative vote of at least a
majority of votes entitled to be cast by holders of the Preferred Stock of each
series materially adversely affected and outstanding at such time (each such
materially adversely affected series voting separately as a class). Unless a
higher percentage is provided for under the Articles of Incorporation, the
affirmative vote of a majority of the votes entitled to be cast by holders of
outstanding shares of the Cumulative Preferred stock and any other Preferred
Stock, voting as a separate class, will be required to approve any plan of
reorganization adversely affecting such shares or any action requiring a vote of
security holders under Section 13(a) of the 1940 Act, including, among other
things, open-ending the Fund and changes in the Fund's investment objective or
changes in the investment restrictions described as fundamental policies under
"Investment Objectives and Policies" and "Investment Restrictions" in the
Prospectus and the SAI. The class vote of holders of shares of the Cumulative
Preferred Stock and any other Preferred Stock described above in each case will
be in addition to a separate vote of the requisite percentage of shares of
Common Stock and Cumulative Preferred Stock and any other Preferred Stock,
voting together as a single class, necessary to authorize the action in
question.


                                       34


<PAGE>   39


      The foregoing voting provisions will not apply to any shares of Cumulative
Preferred Stock if, at or prior to the time when the act with respect to which
such vote otherwise would be required will be effected, such shares will have
been (i) redeemed or (ii) called for redemption and sufficient deposit assets
provided to the dividend-disbursing agent to effect such redemption. The holders
of Cumulative Preferred Stock will have no preemptive rights or rights to
cumulative voting.

REPURCHASE OF SHARES

      The Fund is a closed-end, management investment company and as such its
shareholders do not, and will not, have the right to redeem its shares. The
Fund, however, may repurchase its shares from time to time as and when it deems
such a repurchase advisable. Such repurchases may be made when the Fund's shares
are trading at a discount of 10% or more (or such other percentage as the Board
of Directors of the Fund may determine from time to time) from the net asset
value of the shares. Pursuant to the 1940 Act, the Fund may repurchase its
shares on a securities exchange (provided that the Fund has informed its
shareholders within the preceding six months of its intention to repurchase such
shares) or as otherwise permitted in accordance with Rule 23c-1 under the 1940
Act. Under that Rule, certain conditions must be met regarding, among other
things, distribution of net income for the preceding fiscal year, identity of
the sellers, price paid, brokerage commissions, prior notice to shareholders of
an intention to purchase shares and purchasing in a manner and on a basis which
does not discriminate unfairly against the other shareholders through their
interest in the Fund.

      The Fund may incur debt, in an amount not exceeding 10% of its total
assets, to finance share repurchase transactions. See "Investment Restrictions"
in the SAI. Any gain in the value of the investments of the Fund during the term
of the borrowing that exceeds the interest paid on the amount borrowed would
cause the net asset value of its shares to increase more rapidly than in the
absence of borrowing. Conversely, any decline in the value of the investments of
the Fund would cause the net asset value of its shares to decrease more rapidly
than in the absence of borrowing. Borrowing money thus creates an opportunity
for greater capital gain but at the same time increases exposure to capital
risk.

      When the Fund repurchases its shares for a price below their net asset
value, the net asset value of those shares that remain outstanding will be
enhanced, but this does not necessarily mean that the market price of those
outstanding shares will be affected, either positively or negatively. Further,
interest on borrowings to finance share repurchase transactions will reduce the
net income of the Fund.


      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 Fund's outstanding
shares. On February 26, 1997, the Board voted to increase the authorized shares
which may be repurchased to 750,000 and on May 13, 1998, the Board increased the
authorized shares which may be repurchased by another 250,000 shares to
1,000,000 shares. In total, through May 25, 2000, 679,733 shares were
repurchased in the open market.


      The Fund does not currently have an established tender offer program or
established schedule for considering tender offers. No assurance can be given
that the Board of Directors of the Fund will decide to undertake any such tender
offers in the future, or, if undertaken, that they will reduce any market
discount.

      Although the Fund's shares have at times traded in the market above net
asset value, since the commencement of the Fund's operations, the Fund's shares
have generally traded in the market at a discount to net asset value.

      For the net asset value per share and the reported sales price of a share
of the Fund's Common Stock on the NYSE as of a recent date, see "The
Offer--Subscription Price."

CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BY-LAWS

      The Fund presently has provisions in its Articles of Incorporation and
By-Laws (together, in each case, its "Governing Documents") which could have the
effect of limiting, in each case, (i) the ability of other entities or persons
to acquire control of the Fund, (ii) the Fund's freedom to engage in certain
transactions, or (iii) the ability of the Fund's Directors or shareholders to
amend the Governing Documents or effectuate changes in the Fund's


                                       35


<PAGE>   40


management. These provisions of the Governing Documents of the Fund may be
regarded as "anti-takeover" provisions. The Board of Directors of the Fund is
divided into three classes, each having a term of no more than three years.
Each year the term of one class of Directors will expire. Accordingly, only
those Directors in one class may be changed in any one year, and it would
require two years to change a majority of the Board of Directors. Such system
of electing Directors may have the effect of maintaining the continuity of
management and, thus, make it more difficult for the shareholders of the Fund
to change the majority of Directors. See "Management of the Fund" in the SAI. A
Director of the Fund may be removed, but only with cause and by a vote of a
majority of the votes entitled to be cast for the election of Directors of the
Fund. In addition, the affirmative vote of the holders of 66 2/3% of each class
of its outstanding shares is required to authorize the conversion of the Fund
from a closed-end to an open-end investment company or generally to authorize
any of the following transactions:


      (i)      merger or consolidation of the Fund with or into any other
               corporation;

     (ii)      issuance of any securities of the Fund to any person or entity
               for cash;

    (iii)      sale, lease or exchange of all or any substantial part of the
               assets of the Fund to any entity or person (except assets having
               an aggregate fair market value of less than $1,000,000); or

      (v)      sale, lease or exchange to the Fund, in exchange for securities
               of the Fund, of any assets of any entity or person (except
               assets having an aggregate fair market value of less than
               $1,000,000);

if such corporation, person or entity is directly, or indirectly through
affiliates, the beneficial owner of more than 5% of the outstanding shares of
the Fund. However, such vote would not be required when, under certain
conditions, the Board of Directors approves the transaction. Reference is made
to the Governing Documents of the Fund, on file with the SEC; for the full text
of these provisions, see "Further Information."

      The provisions of the Governing Documents described above could have the
effect of depriving the owners of shares in the Fund of opportunities to sell
their shares at a premium over prevailing market prices, by discouraging a third
party from seeking to obtain control of the Fund in a tender offer or similar
transaction. The overall effect of these provisions is to render more difficult
the accomplishment of a merger or the assumption of control by a principal
shareholder. The Board of Directors has determined that the foregoing voting
requirements, which are generally greater than the minimum requirements under
Maryland law and the 1940 Act, are in the best interests of the shareholders
generally.

         CUSTODIAN AND TRANSFER, DIVIDEND DISBURSING AGENT AND REGISTRAR

      State Street, located at 225 Franklin Street, Boston, Massachusetts 02110,
serves as the custodian of the Fund's assets pursuant to a custody agreement.
Under the custody agreement, State Street holds the Fund's assets in compliance
with the 1940 Act. For its custody services, State Street will receive a monthly
fee based upon the average weekly value of the total assets of the Fund, plus
certain charges for securities transactions.

      State Street also serves as the Fund's dividend disbursing agent, as agent
under the Fund's Plan and as transfer agent and registrar for shares of the
Fund.

                                  LEGAL MATTERS

      With respect to matters of United States law, the validity of the shares
offered hereby will be passed on for the Fund by Willkie Farr & Gallagher, New
York, New York. Willkie Farr & Gallagher also serves as counsel to the
Investment Adviser. Counsel for the Fund will rely, as to matters of Maryland
law, on Venable, Baetjer and Howard, LLP, Baltimore, Maryland.

                                     EXPERTS

      The financial statements of the Fund as of December 31, 1999 have been
incorporated by reference into the SAI in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that


                                       36



<PAGE>   41


firm as experts in accounting and auditing. PricewaterhouseCoopers LLP is
located at 1177 Avenue of the Americas, New York, New York 10036.

                               FURTHER INFORMATION

      The Fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports, proxy statements
and other information with the SEC. Such reports, proxy statements and other
information filed by the Fund can be inspected and copied at public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549; Seven World Trade Center, 13th Floor, New York, New York 10048; and 500
West Madison Street, Chicago, Illinois 60661. The Fund's Common Stock is listed
on the NYSE. Reports, proxy statements and other information concerning the Fund
can be inspected and copied at the Library of the NYSE at 20 Broad Street, New
York, New York 10005.

      This Prospectus constitutes a part of a registration statement on Form N-2
(together with the SAI and all the exhibits and the appendix thereto, the
"Registration Statement") filed by the Fund with the SEC under the Securities
Act and the 1940 Act. This Prospectus and the SAI do not contain all of the
information set forth in the Registration Statement. Reference is hereby made to
the Registration Statement and related exhibits for further information with
respect to the Fund and the Shares offered hereby. Statements contained herein
concerning the provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the SEC.



                                       37


<PAGE>   42
                                TABLE OF CONTENTS
                                       OF
                       STATEMENT OF ADDITIONAL INFORMATION



                                                                            PAGE

Investment Objectives and Policies...................................        2
Investment Restrictions..............................................       11
Management of the Fund...............................................       12
The Adviser..........................................................       17
Portfolio Transactions...............................................       18
Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan.....       20
Taxation.............................................................       21
Moody's Discount Factors.............................................       25
Net Asset Value......................................................       28
General Information..................................................       29
Beneficial Owners....................................................       29
Financial Statements.................................................       29





                                       38



<PAGE>   43


                                                                      APPENDIX A

                             CORPORATE BOND RATINGS

MOODY'S INVESTORS SERVICE, INC.

Aaa         Bonds that are rated Aaa are judged to be of the best quality. They
            carry the smallest degree of investment risk and are generally
            referred to as "gilt edge." Interest payments are protected by a
            large or exceptionally stable margin and principal is secure. While
            the various protective elements are likely to change, such changes
            as can be visualized are most unlikely to impair the fundamentally
            strong position of such issues.

Aa          Bonds that are rated Aa are judged to be of high quality by all
            standards. Together with the Aaa group they comprise what are
            generally known as high grade bonds. They are rated lower than the
            best bonds because margins of protection may not be as large as in
            Aaa securities or fluctuation of protective elements may be of
            greater amplitude or there may be other elements present which make
            the long-term risk appear somewhat larger than in Aaa Securities.

A           Bonds that are rated A possess many favorable investment attributes
            and are to be considered as upper-medium-grade obligations. Factors
            giving security to principal and interest are considered adequate,
            but elements may be present which suggest a susceptibility to
            impairment some time in the future.

Baa         Bonds that are rated Baa are considered as medium-grade obligations
            i.e., they are neither highly protected nor poorly secured. Interest
            payments and principal security appear adequate for the present. but
            certain protective elements may be lacking or may be
            characteristically unreliable over any great length of time. Such
            bonds lack outstanding investment characteristics and in fact have
            speculative characteristics as well.

Ba          Bonds that are rated Ba are judged to have speculative elements;
            their future cannot be considered as well assured. Often the
            protection of interest and principal payments may be very moderate
            and thereby not well safeguarded during both good and bad times over
            the future. Uncertainty of position characterizes bonds in this
            class.

B           Bonds that are rated B generally lack characteristics of the
            desirable investment. Assurance of interest and principal payments
            or of maintenance of other terms of the contract over any long
            period of time may be small. Moody's applies numerical modifiers (1,
            2, and 3) with respect to the bonds rated "Aa" through "B." The
            modifier 1 indicates that the company ranks in the higher end of its
            generic rating category; the modifier 2 indicates a mid-range
            ranking; and the modifier 3 indicates that the company ranks in the
            lower end of its generic rating category.

Caa         Bonds that are rated Caa are of poor standing. These issues may be
            in default or there may be present elements of danger with respect
            to principal or interest.

Ca          Bonds that are rated Ca represent obligations which are speculative
            in a high degree. Such issues are often in default or have other
            marked shortcomings.

C           Bonds that are rated C are the lowest rated class of bonds and
            issues so rated can be regarded as having extremely poor prospects
            of ever attaining any real investment standing.


                                      A-1



<PAGE>   44

STANDARD & POOR'S RATINGS GROUP

AAA         This is the highest rating assigned by S&P to a debt obligation and
            indicates an extremely strong capacity to pay interest and repay
            principal.

AA          Debt rated AA has a very strong capacity to pay interest and repay
            principal and differs from AAA issues only in small degree.

A           Principal and interest payments on bonds in this category are
            regarded as safe. Debt rated A has a strong capacity to pay interest
            and repay principal although they are somewhat more susceptible to
            the adverse effects of changes in circumstances and economic
            conditions than debt in higher rated categories.

BBB         This is the lowest investment grade. Debt rated BBB has an adequate
            capacity to pay interest and repay principal. Whereas it normally
            exhibits adequate protection parameters, adverse economic conditions
            or changing circumstances are more likely to lead to a weakened
            capacity to pay interest and repay principal for debt in this
            category than in higher rated categories.

Speculative Grade

            Debt rated BB, CCC, CC and C are regarded, on balance, as
            predominantly speculative with respect to capacity to pay interest
            and repay principal in accordance with the terms of the obligation.
            BB indicates the lowest degree of speculation, and C the highest
            degree of speculation. While such debt will likely have some quality
            and protective characteristics, these are outweighed by large
            uncertainties or major exposures to adverse conditions. Debt rated
            C1 is reserved for income bonds on which no interest is being paid
            and debt rated D is in payment default.

            In July 1994, S&P initiated an "r" symbol to its ratings. The "r"
            symbol is attached to derivatives, hybrids and certain other
            obligations that S&P believes may experience high variability in
            expected returns due to noncredit risks created by the terms of the
            obligations.

"AA" to "CCC" may be modified by the addition of a plus or minus sign to show
relative standing within the major categories.

"NR" indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.


                                      A-2


<PAGE>   45






<TABLE>
<S>                                                             <C>
========================================================        ========================================================

      NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE FUND OR THE FUND'S INVESTMENT ADVISERS.  THIS                                  THE GABELLI GLOBAL
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR                                MULTIMEDIA TRUST INC.
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY SHARES OF                                    3,598,938 SHARES
COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH                                  OF COMMON STOCK
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER                       ISSUABLE UPON EXERCISE OF RIGHTS
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE                              TO SUBSCRIBE TO SUCH SHARES
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
FACTS AS SET FORTH IN THE PROSPECTUS OR IN THE
AFFAIRS OF THE FUND SINCE THE DATE HEREOF.


                      -------------

                    TABLE OF CONTENTS

                                                 PAGE
                                                 ----

PROSPECTUS SUMMARY.................................... 2
FEE TABLE............................................. 8
FINANCIAL HIGHLIGHTS.................................. 9
THE OFFER.............................................10
THE FUND..............................................19
USE OF PROCEEDS.......................................19
INVESTMENT OBJECTIVES AND POLICIES....................19
RISK FACTORS AND SPECIAL CONSIDERATIONS...............22                             --------------
MANAGEMENT OF THE FUND................................28                               PROSPECTUS
PORTFOLIO TRANSACTIONS................................29                             --------------
DIVIDENDS AND DISTRIBUTIONS; AUTOMATIC
DIVIDEND REINVESTMENT AND VOLUNTARY
CASH PURCHASE PLAN....................................29
TAXATION..............................................31
CAPITAL STOCK AND OTHER SECURITIES....................31
CUSTODIAN AND TRANSFER, DIVIDEND
DISBURSING AGENT AND REGISTRAR........................36
LEGAL MATTERS.........................................36
EXPERTS...............................................36
FURTHER INFORMATION...................................37
TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION................................38                         ----------------------
Appendix A...........................................A-1                             _________, 2000
========================================================        ========================================================
</TABLE>

<PAGE>   46


Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may any
offers to buy be accepted prior to the time the registration statement becomes
effective. This Statement of Additional Information does not constitute a
prospectus.






                    SUBJECT TO COMPLETION DATED June 2, 2000
                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.


                              ONE CORPORATE CENTER
                            RYE, NEW YORK 10580-1434
                    TELEPHONE 1-800-GABELLI (1-800-422-3554)

                       STATEMENT OF ADDITIONAL INFORMATION

                                 ________, 2000

        This Statement of Additional Information (the "SAI") relates to The
Gabelli Global Multimedia Trust Inc. (the "Fund"), and is not a prospectus. This
SAI contains additional and more detailed information and should be read in
conjunction with the balance of the Fund's registration statement. Additional
copies of the SAI may be obtained without charge by writing or telephoning the
Fund at the address and telephone number set forth above.


        The prospectus dated ___________, 2000 (the "Prospectus") and this SAI
omit certain of the information contained in the registration statement filed
with the Securities and Exchange Commission, Washington, D.C. The registration
statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed, or inspected at the Securities and Exchange
Commission's office at no charge.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THE PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                  ----

<S>                                                                                <C>
INVESTMENT OBJECTIVES AND POLICIES...................................................2
INVESTMENT RESTRICTIONS.............................................................11
MANAGEMENT OF THE FUND..............................................................12
THE ADVISER.........................................................................17
PORTFOLIO TRANSACTIONS..............................................................18
AUTOMATIC DIVIDEND REINVESTMENT AND VOLUNTARY CASH AND PURCHASE PLAN................20
TAXATION............................................................................21
MOODY'S DISCOUNT FACTORS............................................................25
NET ASSET VALUE.....................................................................28
GENERAL INFORMATION.................................................................29
BENEFICIAL OWNERS...................................................................29
FINANCIAL STATEMENTS................................................................29
</TABLE>




<PAGE>   47

                       INVESTMENT OBJECTIVES AND POLICIES

INVESTMENT OBJECTIVES


        The Fund's primary investment objective is long-term growth of capital.
Income is a secondary objective. Under normal market conditions, the Fund will
invest at least 65% of its total assets in common stock and other securities,
including convertible securities, preferred stock, options and warrants, of
companies in the telecommunications, media, publishing and entertainment
industries, which industries are collectively referred to as "multimedia." See
"Investment Objectives and Policies" in the Prospectus.


INVESTMENT PRACTICES


        SPECIAL SITUATIONS. Subject to the Fund's policy of investing at least
65% of its total assets in companies involved in the telecommunications, media,
publishing and entertainment industries, the Fund from time to time may, as a
non-principal investment strategy, invest in companies that are determined by
Gabelli Funds, LLC (the "Adviser") to possess "special situation"
characteristics. In general, a special situation company is a company whose
securities are expected to increase in value solely by reason of a development
particularly or uniquely applicable to the company. Developments that may create
special situations include, among others, a liquidation, reorganization,
recapitalization or merger, material litigation, technological breakthrough or
new management or management policies. The principal risk associated with
investments in special situation companies is that the anticipated development
thought to create the special situation may not occur and the investment
therefore may not appreciate in value or may decline in value.



        TEMPORARY INVESTMENTS. Although under normal market conditions at least
65% of the Fund's assets will consist of common stock and other securities,
including convertible securities, preferred stock, options and warrants, of
foreign and domestic companies involved in the telecommunications, media,
publishing and entertainment industries, when a temporary defensive posture is
believed by the Investment Adviser to be warranted ("temporary defensive
periods"), the Fund may hold without limitation cash or invest its assets in
money market instruments and repurchase agreements in respect of those
instruments. The money market instruments in which the Fund may invest are
obligations of the United States government, its agencies or instrumentalities
("U.S. Government Securities"); commercial paper rated A-1 or higher by Standard
& Poor's Corporation ("S&P") or Prime-1 by Moody's Investors Service, Inc.
("Moody's"); and certificates of deposit and bankers' acceptances issued by
domestic branches of U.S. banks that are members of the Federal Deposit
Insurance Corporation. For a description of such ratings, see Appendix A to the
Prospectus. The Fund may also invest up to 10% of the market value of its total
assets during temporary defensive periods in shares of money market mutual funds
that invest primarily in U.S. Government Securities and repurchase agreements in
respect of those securities. Money market mutual funds are investment companies
and the investments by the Fund in those companies are subject to certain other
limitations. See "Investment Restrictions." As a shareholder in a mutual fund,
the Fund will bear its ratable share of the fund's expenses, including
management fees, and will remain subject to payment of the fees to the
Investment Advisers with respect to assets so invested.


        LOWER RATED SECURITIES. The Fund may invest up to 10% of its total
assets in fixed-income securities rated in the lower rating categories of
recognized statistical rating agencies, such as securities rated "CCC" or lower
by S&P or "Caa" or lower by Moody's, or non-rated securities of comparable
quality. These debt securities are predominantly speculative and involve major
risk exposure to adverse conditions and are often referred to in the financial
press as "junk bonds."

        Generally, such lower rated securities and unrated securities of
comparable quality offer a higher current yield than is offered by higher rated
securities, but also (i) will likely have some quality and protective
characteristics that, in the judgment of the rating organizations, are
outweighed by large uncertainties or major risk exposures to adverse conditions
and (ii) are predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obligation.
The market values of certain of these securities also tend to be more sensitive
to individual corporate developments and changes in economic conditions than
higher quality bonds. In addition, such lower rated securities and comparable
unrated securities generally present a higher degree of credit risk. The risk of
loss due to default by these issuers is significantly greater because




                                       2



<PAGE>   48

such lower rated securities and unrated securities of comparable quality
generally are unsecured and frequently are subordinated to the prior payment of
senior indebtedness. In light of these risks, the Adviser, in evaluating the
creditworthiness of an issue, whether rated or unrated, will take various
factors into consideration, which may include, as applicable, the issuer's
financial resources, its sensitivity to economic conditions and trends, the
operating history of and the community support for the facility financed by the
issue, the ability of the issuer's management and regulatory matters.

        In addition, the market value of securities in lower rated categories is
more volatile than that of higher quality securities, and the markets in which
such lower rated or unrated securities are traded are more limited than those in
which higher rated securities are traded. The existence of limited markets may
make it more difficult for the Fund to obtain accurate market quotations for
purposes of valuing its portfolio and calculating its net asset value. Moreover,
the lack of a liquid trading market may restrict the availability of securities
for the Fund to purchase and may also have the effect of limiting the ability of
the Fund to sell securities at their fair market value to respond to changes in
the economy or the financial markets.

        Lower rated debt obligations also present risks based on payment
expectations. If an issuer calls the obligation for redemption (often a typical
feature of fixed income securities), the Fund may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
Also, as the principal value of bonds moves inversely with movements in interest
rates, in the event of rising interest rates the value of the securities held by
the Fund may decline proportionately more than a portfolio consisting of higher
rated securities. Investments in zero coupon bonds may be more speculative and
subject to greater fluctuations in value due to changes in interest rates than
bonds that pay interest currently.

        The Fund may invest in securities of issuers in default. The Fund will
invest in securities of issuers in default only when the Adviser believes that
such issuers will honor their obligations or emerge from bankruptcy protection
and the value of these securities will appreciate. By investing in securities of
issuers in default, the Fund bears the risk that these issuers will not continue
to honor their obligations or emerge from bankruptcy protection or that the
value of the securities will not appreciate.

        In addition to using recognized rating agencies and other sources, the
Adviser also performs its own analysis in seeking investments that it believes
to be underrated (and thus higher-yielding) in light of the financial condition
of the issuer. Its analysis of issuers may include, among other things, current
and anticipated cash flow and borrowing requirements, value of assets in
relation to historical cost, strength of management, responsiveness to business
conditions, credit standing and current anticipated results of operations. In
selecting investments for the Fund, the Adviser may also consider general
business conditions, anticipated changes in interest rates and the outlook for
specific industries.

        Subsequent to its purchase by the Fund, an issue of securities may cease
to be rated or its rating may be reduced. In addition, it is possible that
statistical rating agencies might not change their ratings of a particular issue
or reflect subsequent events on a timely basis. Moreover, such ratings do not
assess the risk of a decline in market value. None of these events will require
the sale of the securities by the Fund, although the Adviser will consider these
events in determining whether the Fund should continue to hold the securities.

        The market for certain lower rated and comparable unrated securities has
in the past experienced a major economic recession. The recession adversely
affected the value of such securities as well as the ability of certain issuers
of such securities to repay principal and pay interest thereon. The market for
those securities could react in a similar fashion in the event of any future
economic recession.

        As a result of all these factors, the net asset value of the Fund to the
extent it invests in high yield bonds, is expected to be more volatile than the
net asset value of funds which invest solely in higher rated debt securities.

        OPTIONS. A call option is a contract that, in return for a premium,
gives the holder of the option the right to buy from the writer of the call
option the security or currency underlying the option at a specified exercise
price at any time during the term of the option. The writer of the call option
has the obligation, upon exercise of the option, to deliver the underlying
security or currency upon payment of the exercise price during the option
period. A put




                                       3



<PAGE>   49

option is the reverse of a call option, giving the holder the right to sell the
security or currency to the writer and obligating the writer to purchase the
underlying security or currency from the holder.

        A call option is "covered" if the Fund owns the underlying instrument
covered by the call or has an absolute and immediate right to acquire that
instrument without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon conversion or
exchange of other instrument held in its portfolio. A call option is also
covered if the Fund holds a call on the same instrument as the call written
where the exercise price of the call held is (1) equal to or less than the
exercise price of the call written or (2) greater than the exercise price of the
call written if the difference is maintained by the Fund in cash, U.S.
Government Securities or other high grade short-term obligations in a segregated
account held with its custodian. A put option is "covered" if the Fund maintains
cash or other high grade short-term obligations with a value equal to the
exercise price in a segregated account held with its custodian, or else holds a
put on the same instrument as the put written where the exercise price of the
put held is equal to or greater than the exercise price of the put written.

        If the Fund has written an option, it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by purchasing an
option of the same series as the option previously written. However, once it has
been assigned an exercise notice, the Fund will be able to effect a closing
purchase transaction. Similarly, if the Fund is the holder of an option it may
liquidate its position by effecting a closing sale transaction. This is
accomplished by selling an option of the same series as the option previously
purchased. There can be no assurance that a closing purchase or sale transaction
can be effected when the Fund so desires.

        The Fund will realize a profit from a closing transaction if the price
of the transaction is less than the premium received from writing the option or
is more than the premium paid to purchase the option; the Fund will realize a
loss from a closing transaction if the price of the transaction is more than the
premium received from writing the option or is less than the premium paid to
purchase the option. Since call option prices generally reflect increases in the
price of the underlying security, any loss resulting from the repurchase of a
call option may also be wholly or partially offset by unrealized appreciation of
the underlying security. Other principal factors affecting the market value of a
put or a call option include supply and demand, interest rates, the current
market price and price volatility of the underlying security and the time
remaining until the expiration date. Gains and losses on investments in options
depend, in part, on the ability of the Investment Adviser to predict correctly
the effect of these factors. The use of options cannot serve as a complete hedge
since the price movement of securities underlying the options will not
necessarily follow the price movements of the portfolio securities subject to
the hedge.

        An option position may be closed out only on an exchange which provides
a secondary market for an option of the same series. Although the Fund will
generally purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option. In such event, it might not be
possible to effect closing transactions in particular options, so that the Fund
would have to exercise its options in order to realize any profit and would
incur brokerage commissions upon the exercise of call options and upon the
subsequent disposition of underlying securities for the exercise of put options.
If the Fund, as a covered call option writer, is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise or otherwise covers the position.

        In addition to options on securities, the Fund may also purchase and
sell call and put options on securities indices. A stock index reflects in a
single number the market value of many different stocks. Relative values are
assigned to the stocks included in an index and the index fluctuates with
changes in the market values of the stocks. The options give the holder the
right to receive a cash settlement during the term of the option based on the
difference between the exercise price and the value of the index. By writing a
put or call option on a securities index, the Fund is obligated, in return for
the premium received, to make delivery of this amount. The Fund may offset its
position in the stock index options prior to expiration by entering into a
closing transaction on an exchange or it may let the option expire unexercised.

        The Fund also may buy or sell and call options on foreign currencies. A
put option on a foreign currency gives the purchaser of the option the right to
sell a foreign currency at the exercise price until the option expires. A




                                       4



<PAGE>   50

call option on a foreign currency gives the purchaser of the option the right to
purchase the currency at the exercise price until the option expires. Currency
options traded on U.S. or other exchanges may be subject to position limits
which may limit the ability of the Fund to reduce foreign currency risk using
such options. Over-the-counter options differ from exchange-traded options in
that they are two-party contracts with price and other terms negotiated between
buyer and seller and generally do not have as much market liquidity as
exchange-traded options. Over-the-counter options are illiquid securities.

        Use of options on securities indices entails the risk that trading in
the options may be interrupted if trading in certain securities included in the
index is interrupted. The Fund will not purchase these options unless the
Adviser is satisfied with the development, depth and liquidity of the market and
the Adviser believes the options can be closed out.

        Price movements in the portfolio of the Fund may not correlate precisely
with movements in the level of an index and, therefore, the use of options on
indexes cannot serve as a complete hedge and will depend, in part, on the
ability of the Adviser to predict correctly movements in the direction of the
stock market generally or of a particular industry. Because options on
securities indexes require settlement in cash, the Adviser may be forced to
liquidate portfolio securities to meet settlement obligations.

        Although the Adviser will attempt to take appropriate measures to
minimize the risks relating to the Fund's writing of put and call options, there
can be no assurance that the Fund will succeed in any option writing program it
undertakes.

        FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Fund will not enter into
futures contracts or options on futures contracts unless (i) the aggregate
initial margins and premiums do not exceed 5% of the fair market value of its
assets and (ii) the aggregate market value of its outstanding futures contracts
and the market value of the currencies and futures contracts subject to
outstanding options written by the Fund, as the case may be, do not exceed 50%
of the market value of its total assets. It is anticipated that these
investments, if any, will be made by the Fund solely for the purpose of bona
fide 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 Fund. In this regard, the Fund may enter into futures
contracts or options on futures for the purchase or sale of securities indices
or other financial instruments including but not limited to U.S. Government
Securities.

        A "sale" of a futures contract (or a "short" futures position) means the
assumption of a contractual obligation to deliver the assets underlying the
contract at a specified price at a specified future time. A "purchaser" of a
futures contract (or a "long" futures position) means the assumption of a
contractual obligation to acquire the assets underlying the contract at a
specified future time. Certain futures contracts, including stock and bond index
futures, are settled on a net cash payment basis rather than by the sale and
delivery of the assets underlying the futures contracts.

        No consideration will be paid or received by the Fund upon the purchase
or sale of a futures contract. Initially, the Fund will be required to deposit
with the broker an amount of cash or cash equivalents equal to approximately 1%
to 10% of the contract amount (this amount is subject to change by the exchange
or board of trade on which the contract is traded and brokers or members of such
board of trade may charge a higher amount). This amount is known as "initial
margin" and is in the nature of a performance bond or good faith deposit on the
contract. Subsequent payments, known as "variation margin," to and from the
broker will be made daily as the price of the index or security underlying the
futures contract fluctuates. At any time prior to the expiration of a futures
contract, the Fund may elect to close the position by taking an opposite
position, which will operate to terminate its existing position in the contract.

        An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract at a specified
exercise price at any time to the expiration of the option. Upon exercise of an
option, the delivery of the futures position by the writer of the option to the
holder of the option will be accompanied by delivery of the accumulated balance
in the writer's futures margin account attributable to that contract, which
represents the amount by which the market price of the futures contract exceeds,
in the case of a call,




                                       5



<PAGE>   51

or is less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of an option on
futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option purchased is fixed at the
point of sale, there are no daily cash payments by the purchaser to reflect
changes in the value of the underlying contract; however, the value of the
option does change daily and that change would be reflected in the net assets of
the Fund.

        Futures and options on futures entail certain risks, including but not
limited to the following: no assurance that futures contracts or options on
futures can be offset at favorable prices, possible reduction of the yield of
the Fund due to the use of hedging, possible reduction in value of both the
securities hedged and the hedging instrument, possible lack of liquidity due to
daily limits on price fluctuations, imperfect correlation between the contracts
and the securities being hedged, losses from investing in futures transactions
that are potentially unlimited and the segregation requirements described below.

        In the event the Fund sells a put option or enters into long futures
contracts, under current interpretations of the Investment Company Act of 1940,
as amended (the "1940 Act") an amount of cash, U.S. Government Securities or
other high grade debt securities equal to the market value of the contract must
be deposited and maintained in a segregated account with the custodian of the
Fund to collateralize the positions, thereby ensuring that the use of the
contract is unleveraged. For short positions in futures contracts and sales of
call options, the Fund may establish a segregated account (not with a futures
commission merchant or broker) with cash, U.S. Government Securities or other
high grade debt securities that, when added to amounts deposited with a futures
commission merchant or a broker as margin, equal the market value of the
instruments or currency underlying the futures contract or call options,
respectively (but are not less than the stock price of the call option or the
market price at which the short positions were established).

        Interest Rate Futures Contracts and Options Thereon. The Fund may
purchase or sell interest rate futures contracts to take advantage of or to
protect the Fund against fluctuations in interest rates affecting the value of
debt securities which the Fund holds or intends to acquire. For example, if
interest rates are expected to increase, the Fund might sell futures contracts
on debt securities, the values of which historically have a high degree of
positive correlation to the values of the Fund's portfolio securities. Such a
sale would have an effect similar to selling an equivalent value of the Fund's
portfolio securities. If interest rates increase, the value of the Fund's
portfolio securities will decline, but the value of the futures contracts to the
Fund will increase at approximately an equivalent rate thereby keeping the net
asset value of the Fund from declining as much as it otherwise would have. The
Fund could accomplish similar results by selling debt securities with longer
maturities and investing in debt securities with shorter maturities when
interest rates are expected to increase. However, since the futures market may
be more liquid than the cash market, the use of futures contracts as a risk
management technique allows the Fund to maintain a defensive position without
having to sell its portfolio securities.

        Similarly, the Fund may purchase interest rate futures contracts when it
is expected that interest rates may decline. The purchase of futures contracts
for this purpose constitutes a hedge against increases in the price of debt
securities (caused by declining interest rates) which the Fund intends to
acquire. Since fluctuations in the value of appropriately selected futures
contracts should approximate that of the debt securities that will be purchased,
the Fund can take advantage of the anticipated rise in the cost of the debt
securities without actually buying them. Subsequently, the Fund can make its
intended purchase of the debt securities in the cash market and currently
liquidate its futures position. To the extent the Fund enters into futures
contracts for this purpose, it will maintain in a segregated asset account with
the Fund's custodian, assets sufficient to cover the Fund's obligations with
respect to such futures contracts, which will consist of cash or other liquid
securities from its portfolio in an amount equal to the difference between the
fluctuating market value of such futures contracts and the aggregate value of
the initial margin deposited by the Fund with its custodian with respect to such
futures contracts.

        The purchase of a call option on a futures contract is similar in some
respects to the purchase of a call option on an individual security. Depending
on the pricing of the option compared to either the price of the futures
contract upon which it is based or the price of the underlying debt securities,
it may or may not be less risky than ownership of the futures contract or
underlying debt securities. As with the purchase of futures contracts, when the
Fund is not fully invested it may purchase a call option on a futures contract
to hedge against a market advance due to declining interest rates.




                                       6



<PAGE>   52

        The purchase of a put option on a futures contract is similar to the
purchase of protective put options on portfolio securities. The Fund will
purchase a put option on a futures contract to hedge the Fund's portfolio
against the risk of rising interest rates and consequent reduction in the value
of portfolio securities.

        The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the securities which are deliverable upon
exercise of the futures contract. If the futures price at expiration of the
option is below the exercise price, the Fund will retain the full amount of the
option premium which provides a partial hedge against any decline that may have
occurred in the Fund's portfolio holdings. The writing of a put option on a
futures contract constitutes a partial hedge against increasing prices of the
securities which are deliverable upon exercise of the futures contract. If the
futures price at expiration of the option is higher than the exercise price, the
Fund will retain the full amount of the option premium which provides a partial
hedge against any increase in the price of debt securities which the Fund
intends to purchase. If a put or call option the Fund has written is exercised,
the Fund will incur a loss which will be reduced by the amount of the premium it
received. Depending on the degree of correlation between changes in the value of
its portfolio securities and changes in the value of its futures positions, the
Fund's losses from options on futures it has written may to some extent be
reduced or increased by changes in the value of its portfolio securities.

        Currency Futures and Options Thereon. Generally, foreign currency
futures contracts and options thereon are similar to the interest rate futures
contracts and options thereon discussed previously. By entering into currency
futures and options thereon, the Fund will seek to establish the rate at which
it will be entitled to exchange U.S. dollars for another currency at a future
time. By selling currency futures, the Fund will seek to establish the number of
dollars it will receive at delivery for a certain amount of a foreign currency.
In this way, whenever the Fund anticipates a decline in the value of a foreign
currency against the U.S. dollar, the Fund can attempt to "lock in" the U.S.
dollar value of some or all of the securities held in its portfolio that are
denominated in that currency. By purchasing currency futures, the Fund can
establish the number of dollars it will be required to pay for a specified
amount of a foreign currency in a future month. Thus, if the Fund intends to buy
securities in the future and expects the U.S. dollar to decline against the
relevant foreign currency during the period before the purchase is effected, the
Fund can attempt to "lock in" the price in U.S. dollars of the securities it
intends to acquire.

        The purchase of options on currency futures will allow the Fund, for the
price of the premium and related transaction costs it must pay for the option,
to decide whether or not to buy (in the case of a call option) or to sell (in
the case of a put option) a futures contract at a specified price at any time
during the period before the option expires. If the Adviser, in purchasing an
option, has been correct in its judgment concerning the direction in which the
price of a foreign currency would move as against the U.S. dollar, the Fund may
exercise the option and thereby take a futures position to hedge against the
risk it had correctly anticipated or close out the option position at a gain
that will offset, to some extent, currency exchange losses otherwise suffered by
the Fund. If exchange rates move in a way the Fund did not anticipate, however,
the Fund will have incurred the expense of the option without obtaining the
expected benefit; any such movement in exchange rates may also thereby reduce
rather than enhance the Fund's profits on its underlying securities
transactions.

        Securities Index Futures Contracts and Options Thereon. Purchases or
sales of securities index futures contracts are used for hedging purposes to
attempt to protect the Fund's current or intended investments from broad
fluctuations in stock or bond prices. For example, the Fund may sell securities
index futures contracts in anticipation of or during a market decline to attempt
to offset the decrease in market value of the Fund's securities portfolio that
might otherwise result. If such decline occurs, the loss in value of portfolio
securities may be offset, in whole or part, by gains on the futures position.
When the Fund is not fully invested in the securities market and anticipates a
significant market advance, it may purchase securities index futures contracts
in order to gain rapid market exposure that may, in part or entirely, offset
increases in the cost of securities that the Fund intends to purchase. As such
purchases are made, the corresponding positions in securities index futures
contracts will be closed out. The Fund may write put and call options on
securities index futures contracts for hedging purposes.

        LIMITATIONS ON THE PURCHASE AND SALE OF FUTURES CONTRACTS AND OPTIONS ON
FUTURES CONTRACTS. Subject to the guidelines of the Board of Directors, the Fund
may engage in transactions in futures contracts and options hereon only for bona
fide hedging, yield enhancement and risk management purposes, in each case in
accordance with the rules and regulations of the CFTC, and not for speculation.




                                       7



<PAGE>   53

        Regulations of the CFTC applicable to the Fund permit the Fund's futures
and options on futures transactions to include (i) bona fide hedging
transactions without regard to the percentage of the Fund's assets committed to
margin and option premiums, and (ii) non-hedging transactions, provided that the
Fund not enter into such non-hedging transactions if, immediately thereafter,
the sum of the amount of initial margin deposits on the Fund's existing futures
positions and option premiums would exceed 5% of the market value of the Fund's
liquidating value, after taking into account unrealized profits and unrealized
losses on any such transactions.

        FORWARD CURRENCY EXCHANGE CONTRACTS. The Fund may engage in currency
transactions otherwise than on futures exchanges to protect against future
changes in the level of future currency exchange rates. The Fund will conduct
such currency exchange transactions either on a spot, i.e., cash, basis at the
rate then prevailing in the currency exchange market or on a forward basis, by
entering into forward contracts to purchase or sell currency. A forward contract
on foreign currency involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days agreed upon by
the parties from the date of the contract, at a price set on the date of the
contract. The risk of shifting of a forward currency contract will be
substantially the same as a futures contract having similar terms. The Fund's
dealing in forward currency exchange will be limited to hedging involving either
specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of forward currency with respect to specific receivables or
payables of the Fund generally arising in connection with the purchase or sale
of its portfolio securities and accruals of interest receivable and Fund
expenses. Position hedging is the forward sale of currency with respect to
portfolio security positions denominated or quoted in that currency or in a
currency bearing a high degree of positive correlation to the value of that
currency.

        The Fund may not position hedge with respect to a particular currency
for an amount greater than the aggregate market value (determined at the time of
making any sale of forward currency) of the securities held in its portfolio
denominated or quoted in, or currently convertible into, such currency. If the
Fund enters into a position hedging transaction, the Fund's custodian or
subcustodian will place cash or other liquid securities in a segregated account
of the Fund in an amount equal to the value of the Fund's total assets committed
to the consummation of the given forward contract. If the value of the
securities placed in the segregated account declines, additional cash or
securities will be placed in the account so that the value of the account will,
at all times, equal the amount of the Fund's commitment with respect to the
forward contract.

        At or before the maturity of a forward sale contract, the Fund may
either sell a portfolio security and make delivery of the currency, or retain
the security and offset its contractual obligations to deliver the currency by
purchasing a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency which it is obligated to
delivery. If the Fund retains the portfolio security and engages in an
offsetting transaction, the Fund, at the time of execution of the offsetting
transaction, will incur a gain or a loss to the extent that movement has
occurred in forward contract prices. Should forward prices decline during the
period between the Fund's entering into a forward contract for the sale of a
currency and the date it enters into an offsetting contract for the purchase of
the currency, the Fund will realize a gain to the extent the price of the
currency it has agreed to purchase is less than the price of the currency it has
agreed to sell. Should forward prices increase, the Fund will suffer a loss to
the extent the price of the currency it has agreed to purchase exceeds the price
of the currency it has agreed to sell. Closing out forward purchase contracts
involves similar offsetting transactions.

        The cost to the Fund of engaging in currency transactions varies with
factors such as the currency involved, the length of the contract period and the
market conditions then prevailing. Because forward transactions in currency
exchange are usually conducted on a principal basis, no fees or commissions are
involved. The use of foreign currency contracts does not eliminate fluctuations
in the underlying prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. In addition, although forward
currency contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result if the
value of the currency increases.

        If a decline in any currency is generally anticipated by the Adviser,
the Fund may not be able to contract to sell the currency at a price above the
level to which the currency is anticipated to decline.

        SPECIAL RISK CONSIDERATIONS RELATING TO FUTURES AND OPTIONS THEREON. The
Fund's ability to establish and close out positions in futures contracts and
options thereon will be subject to the development and maintenance




                                       8



<PAGE>   54

of liquid markets. Although the Fund generally will purchase or sell only those
futures contracts and options thereon for which there appears to be a liquid
market, there is no assurance that a liquid market on an exchange will exist for
any particular futures contract or option thereon at any particular time. In the
event no liquid market exists for a particular futures contract or option
thereon in which the Fund maintains a position, it will not be possible to
effect a closing transaction in that contract or to do so at a satisfactory
price and the Fund would have to either make or take delivery under the futures
contract or, in the case of a written option, wait to sell the underlying
securities until the option expires or is exercised or, in the case of a
purchased option, exercise the option. In the case of a futures contract or an
option thereon which the Fund has written and which the Fund is unable to close,
the Fund would be required to maintain margin deposits on the futures contract
or option thereon and to make variation margin payments until the contract is
closed.

        Successful use of futures contracts and options thereon and forward
contracts by the Fund is subject to the ability of the Adviser to predict
correctly movements in the direction of interest and foreign currency rates. If
the Adviser's expectations are not met, the Fund will be in a worse position
than if a hedging strategy had not been pursued. For example, if the Fund has
hedged against the possibility of an increase in interest rates which would
adversely affect the price of securities in its portfolio and the price of such
securities increases instead, the Fund will lose part or all of the benefit of
the increased value of its securities because it will have offsetting losses in
its futures positions. In addition, in such situations, if the Fund has
insufficient cash to meet daily variation margin requirements, it may have to
sell securities to meet the requirements. These sales may be, but will not
necessarily be, at increased prices which reflect the rising market. The Fund
may have to sell securities at a time when it is disadvantageous to do so.

        ADDITIONAL RISKS OF FOREIGN OPTIONS, FUTURES CONTRACTS, OPTIONS ON
FUTURES CONTRACTS AND FORWARD CONTRACTS. Options, futures contracts and options
thereon and forward contracts on securities and currencies may be traded on
foreign exchanges. Such transactions may not be regulated as effectively as
similar transactions in the U.S., may not involve a clearing mechanism and
related guarantees, and are subject to the risk of governmental actions
affecting trading in, or the prices of, foreign securities. The value of such
positions also could be adversely affected by (i) other complex foreign
political, legal and economic factors, (ii) lesser availability than in the U.S.
of data on which to make trading decisions, (iii) delays in the Fund's ability
to act upon economic events occurring in the foreign markets during non-business
hours in the U.S., (iv) the imposition of different exercise and settlement
terms and procedures and margin requirements than in the U.S. and (v) lesser
trading volume.

        Exchanges on which options, futures and options on futures are traded
may impose limits on the positions that the Fund may take in certain
circumstances.

        RISKS OF CURRENCY TRANSACTIONS. Currency transactions are also subject
to risks different from those of other portfolio transactions. Because currency
control is of great importance to the issuing governments and influences
economic planning and policy, purchases and sales of currency and related
instruments can be adversely affected by government exchange controls,
limitations or restrictions on repatriation of currency, and manipulation, or
exchange restrictions imposed by governments. These forms of governmental action
can result in losses to the Fund if it is unable to deliver or receive currency
or monies in settlement of obligations and could also cause hedges it has
entered into to be rendered useless, resulting in full currency exposure as well
as incurring transaction costs.

        WHEN ISSUED, DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. The
Fund may enter into forward commitments for the purchase or sale of securities,
including on a "when issued" or "delayed delivery" basis, in excess of customary
settlement periods for the type of security involved. In some cases, a forward
commitment may be conditioned upon the occurrence of a subsequent event, such as
approval and consummation of a merger, corporate reorganization or debt
restructuring, i.e., a when, as and if issued security. When such transactions
are negotiated, the price is fixed at the time of the commitment, with payment
and delivery taking place in the future, generally a month or more after the
date of the commitment. While it may only enter into a forward commitment with
the intention of actually acquiring the security, the Fund may sell the security
before the settlement date if it is deemed advisable.

        Securities purchased under a forward commitment are subject to market
fluctuation, and no interest (or dividends) accrues to the Fund prior to the
settlement date. The Fund will segregate with its custodian cash or liquid




                                       9



<PAGE>   55

high-grade debt securities in an aggregate amount at least equal to the amount
of its outstanding forward commitments.

        SHORT SALES. The Fund may make short sales of securities. A short sale
is a transaction in which the Fund sells a security it does not own in
anticipation that the market price of that security will decline. The market
value of the securities sold short of any one issuer will not exceed either 5%
of the Fund's total assets or 5% of such issuer's voting securities. The Fund
will not make a short sale, if, after giving effect to such sale, the market
value of all securities sold short exceeds 25% of the value of its assets or the
Fund's aggregate short sales of a particular class of securities exceeds 25% of
the outstanding securities of that class. The Fund may also make short sales
"against the box" without respect to such limitations. In this type of short
sale, at the time of the sale, the Fund owns, or has the immediate and
unconditional right to acquire at no additional cost, the identical security.

        The Fund expects to make short sales both to obtain capital gains from
anticipated declines in securities and as a form of hedging to offset potential
declines in long positions in the same or similar securities. The short sale of
a security is considered a speculative investment technique.

        When the Fund makes a short sale, it must borrow the security sold short
and deliver it to the broker-dealer through which it made the short sale in
order to satisfy its obligation to deliver the security upon conclusion of the
sale. The Fund may have to pay a fee to borrow particular securities and is
often obligated to pay over any payments received on such borrowed securities.

        The Fund's obligation to replace the borrowed security will be secured
by collateral deposited with the broker-dealer, usually cash, U.S. Government
Securities or other highly liquid debt securities. The Fund will also be
required to deposit similar collateral with its custodian to the extent, if any,
necessary so that the value of both collateral deposits in the aggregate is at
all times equal to the greater of the price at which the security is sold short
or 100% of the current market value of the security sold short. Depending on
arrangements made with the broker-dealer from which it borrowed the security
regarding payment over of any payments received by the Fund on such security,
the Fund may not receive any payments (including interest) on its collateral
deposited with such broker-dealer. If the price of the security sold short
increases between the time of the short sale and the time the Fund replaces the
borrowed security, the Fund will incur a loss; conversely, if the price
declines, the Fund will realize a capital gain. Any gain will be decreased, any
loss increased, by the transaction costs described above. Although the Fund's
gain is limited to the price at which it sold the security short, its potential
loss is theoretically unlimited.

        To secure its obligations to deliver the securities sold short, the Fund
will deposit in escrow in a separate account with its custodian, State Street
Bank and Trust Company ("State Street"), an amount at least equal to the
securities sold short or securities convertible into, or exchangeable for, the
securities. The Fund may close out a short position by purchasing and delivering
an equal amount of securities sold short, rather than by delivering securities
already held by the Fund, because the Fund may want to continue to receive
interest and dividend payments on securities in its portfolio that are
convertible into the securities sold short.

        RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to a total of
15% of its net assets in securities that are subject to restrictions on resale
and securities the markets for which are illiquid, including repurchase
agreements with more than seven days to maturity. Illiquid securities include
securities the disposition of which is subject to substantial legal or
contractual restrictions. The sale of illiquid securities often requires more
time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. Restricted
securities may sell at a price lower than similar securities that are not
subject to restrictions on resale. Unseasoned issuers are companies (including
predecessors) that have operated less than three years. The continued liquidity
of such securities is not as well assured as that of publicly traded securities,
and accordingly the Board of Directors will monitor their liquidity. The Board
will review pertinent factors such as trading activity, reliability of price
information and trading patterns of comparable securities in determining whether
to treat any such security as liquid for purposes of the foregoing 15% test. To
the extent the Board treats such securities as liquid, temporary impairments to
trading patterns of such securities may adversely affect the Fund's liquidity.




                                       10



<PAGE>   56

        To the extent it can do so consistent with the foregoing limitations,
the Fund may invest in non-publicly traded securities, including securities that
are not registered under the Securities Act of 1933, as amended, but that can be
offered and sold to qualified institutional buyers under Rule 144A under that
Act. The Board of Directors has adopted guidelines and delegated to the Adviser,
subject to the supervision of the Board of Directors, the daily function of
determining and monitoring the liquidity of Rule 144A securities. Rule 144A
securities may become illiquid if qualified institutional buyers are not
interested in acquiring the securities.

                             INVESTMENT RESTRICTIONS

        The Fund operates under the following restrictions that constitute
fundamental policies that cannot be changed without the affirmative vote of the
holders of a majority of the outstanding voting securities of the Fund (as
defined in the 1940 Act). All percentage limitations set forth below apply
immediately after a purchase or initial investment and any subsequent change in
any applicable percentage resulting from market fluctuations does not require
elimination of any security from the portfolio.

        The Fund may not:

                1. Invest 25% or more of its total assets, taken at market value
        at the time of each investment, in the securities of issuers in any
        particular industry other than the telecommunications, media, publishing
        and entertainment industries. This restriction does not apply to
        investments in U.S. Government Securities.

                2. Purchase securities of other investment companies, except in
        connection with a merger, consolidation, acquisition or reorganization,
        if more than 10% of the market value of the total assets of the Fund
        would be invested in securities of other investment companies, more than
        5% of the market value of the total assets of the Fund would be invested
        in the securities of any one investment company or the Fund would own
        more than 3% of any other investment company's securities; provided,
        however, this restriction shall not apply to securities of any
        investment company organized by the Fund that are to be distributed pro
        rata as a dividend to its shareholders.

                3. Purchase or sell commodities or commodity contracts except
        that the Fund may purchase or sell futures contracts and related options
        thereon if immediately thereafter (i) no more than 5% of its total
        assets are invested in margins and premiums and (ii) the aggregate
        market value of its outstanding futures contracts and market value of
        the currencies and futures contracts subject to outstanding options
        written by the Fund do not exceed 50% of the market value of its total
        assets. The Fund may not purchase or sell real estate, provided that the
        Fund may invest in securities secured by real estate or interests
        therein or issued by companies which invest in real estate or interests
        therein.

                4. Purchase any securities on margin, except that the Fund may
        obtain such short-term credit as may be necessary for the clearance of
        purchases and sales of portfolio securities.

                5. Make loans of money, except by the purchase of a portion of
        publicly distributed debt obligations in which the Fund may invest, and
        repurchase agreements with respect to those obligations, consistent with
        its investment objectives and policies. The Fund reserves the authority
        to make loans of its portfolio securities to financial intermediaries in
        an aggregate amount not exceeding 20% of its total assets. Any such
        loans may only be made upon approval of, and subject to any conditions
        imposed by, the Board of Directors of the Fund. Because these loans
        would at all times be fully collateralized, the risk of loss in the
        event of default of the borrower should be slight.

                6. Borrow money, except that the Fund may borrow from banks and
        other financial institutions on an unsecured basis, in an amount not
        exceeding 10% of its total assets, to finance the repurchase of its
        shares. The Fund also may borrow money on a secured basis from banks as
        a temporary measure for extraordinary or emergency purposes. Temporary
        borrowings may not exceed 5% of the value of the total assets of the
        Fund at the time the loan is made. The Fund may pledge up to 10% of the
        lesser of the cost or value of its total assets to secure temporary
        borrowings. The Fund will not borrow for investment purposes.
        Immediately after any borrowing, the Fund will maintain asset coverage
        of not less than 300%




                                       11



<PAGE>   57

        with respect to all borrowings. While the borrowing of the Fund exceeds
        5% of its respective total assets, the Fund will make no further
        purchases of securities, although this limitation will not apply to
        repurchase transactions as described above.

                7. Issue senior securities, except to the extent permitted by
        applicable law.

                8. Underwrite securities of other issuers except insofar as the
        Fund may be deemed an underwriter under the Securities Act of 1933, as
        amended, in selling portfolio securities; provided, however, this
        restriction shall not apply to securities of any investment company
        organized by the Fund that are to be distributed pro rata as a dividend
        to its shareholders.

                9. Invest more than 15% of its total assets in illiquid
        securities, such as repurchase agreements with maturities in excess of
        seven days, or securities that at the time of purchase have legal or
        contractual restrictions on resale.

                             MANAGEMENT OF THE FUND

DIRECTORS AND OFFICERS

        Overall responsibility for management and supervision of the Fund rests
with its Board of Directors. The Board of Directors approves all significant
agreements between the Fund and the companies that furnish the Fund with
services, including agreements with the Adviser, the Fund's custodian and the
Fund's transfer agent. The day-to-day operations of the Fund are delegated to
the Adviser.

        The names and business addresses of the Directors and Officers of the
Fund are set forth in the following table, together with their positions with
the Fund and their principal business occupations during the past five years and
their affiliations, if any, with the Adviser or the Administrator. Directors who
are "interested persons" of the Fund, as defined by the 1940 Act, are indicated
by an asterisk. Cumulative Preferred Stock directors are indicated by a "+".

        As of March 6, 2000 the Directors and Officers of the Fund as a group
beneficially owned 391,783 shares of the Fund equaling 3.62% of the Fund's
outstanding shares.

<TABLE>
<CAPTION>
                                        POSITION WITH                           PRINCIPAL OCCUPATION DURING
NAME AND BUSINESS ADDRESS                 THE FUND                                 PAST FIVE YEARS; AGE
- -------------------------               -------------           ----------------------------------------------------------
<S>                                     <C>                     <C>
Dr. Thomas E. Bratter.................  Director                Director, President and Founder, The John Dewey Academy
  One Corporate Center                                          (residential college preparatory therapeutic high
  Rye, New York 10580-1434                                      school).  Dr. Bratter is 60 years old. (6) (7) (16)

Felix J. Christiana+..................  Director                Retired; formerly Senior Vice President of Dollar Dry Dock
  One Corporate Center                                          Savings Bank.  Mr. Christiana is 74 years old. (l) (4) (5)
  Rye, New York 10580-1434                                      (6) (7) (8) (10) (13) (16) (17) (19)

James P. Conn+........................  Director                Former Managing Director and Chief Investment Officer of
  One Corporate Center                                          Financial Security Assurance Holdings Ltd. (1992-1998);
  Rye, New York 10580-1434                                      Director of Meditrust Corporation (real estate investment
                                                                trust) and First Republic Bank. Mr. Conn is 62 years old.
                                                                (1) (6) (7) (10) (16) (18)
</TABLE>




                                       12



<PAGE>   58

<TABLE>
<CAPTION>
                                        POSITION WITH                           PRINCIPAL OCCUPATION DURING
NAME AND BUSINESS ADDRESS                 THE FUND                                 PAST FIVE YEARS; AGE
- -------------------------               -------------           ----------------------------------------------------------
<S>                                     <C>                     <C>
Frank J. Fahrenkopf, Jr...............  Director                President and Chief Executive Officer of the American
  One Corporate Center                                          Gaming Association since June 1995; Partner of Hogan and
  Rye, New York 10580-1434                                      Hartson (law firm); Chairman of International Trade
                                                                Practice Group; Co-Chairman of the Commission on
                                                                Presidential Debates; Former Chairman of the Republican
                                                                National Committee.  Mr. Fahrenkopf is 60 years old.  (6)
                                                                (7) (16)

Mario J. Gabelli*.....................  Chairman of the Board,  Chairman of the Board and Chief Executive Officer of
  One Corporate Center                  President and Chief     Gabelli Asset Management Inc. and Chief Investment Officer
  Rye, New York 10580-1434              Investment Officer      of the Adviser and GAMCO Investors, Inc.  Chairman of the
                                                                Board of Lynch Corporation (diversified manufacturing
                                                                company) and Chairman of the Board and Chief
                                                                Executive Officer of Lynch Interactive Corporation
                                                                (a multimedia and services company); Director of
                                                                Spinnaker Industries, Inc. (manufacturing company).  Mr.
                                                                Gabelli is 57 years old. (1) (2) (3) (4) (5) (6) (7) (8)
                                                                (9) (10) (11) (12) (13) (14) (15) (16) (17)

Karl Otto Pohl*.......................  Director                Member of the Shareholder Committee of Sal Oppenheim Jr. &
  One Corporate Center                                          Cie (private investment bank); Director of Gabelli Asset
  Rye, New York 10580-1434                                      Management Inc. (investment management), Zurich Allied
                                                                (insurance company), and TrizecHahn Corp. (real estate
                                                                company); Former President of the Deutsche Bundesbank and
                                                                Chairman of its Central Bank Council from 1980 through
                                                                1991.  Mr. Pohl is 70 years old.  (1) (2) (3) (4) (5) (6)
                                                                (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
                                                                (19)

Anthony R. Pustorino..................  Director                Certified Public Accountant.  Professor of Accounting,
  One Corporate Center                                          Pace University, since 1965. Director.  Mr. Pustorino is
  Rye, New York 10580-1434                                      74 years old. (1) (3) (4) (5) (6) (7) (10) (13) (16) (17)
                                                                (19)

Werner J. Roeder......................  Director                Medical Director, Lawrence Hospital and practicing private
  One Corporate Center                                          physician.  Mr. Roeder is 58 years old. (2) (3) (7) (8)
  Rye, New York 10580-1434                                      (9) (11) (12) (13) (15) (18) (19)
</TABLE>




                                       13



<PAGE>   59

<TABLE>
<CAPTION>
                                        POSITION WITH                           PRINCIPAL OCCUPATION DURING
NAME AND BUSINESS ADDRESS                 THE FUND                                 PAST FIVE YEARS; AGE
- -------------------------               -------------           ----------------------------------------------------------
<S>                                     <C>                     <C>
Salvatore J. Zizza....................  Director                Chairman of The Bethlehem Corp.; Board Member of Hollis
  One Corporate Center                                          Eden Pharmaceuticals; Former Executive Vice President of
  Rye, New York 10580-1434                                      FMG Group (a healthcare provider); Former President and
                                                                Chief Executive Officer of the Lehigh Group Inc. (an
                                                                electrical supply wholesaler); Former Chairman of the
                                                                Executive Committee and Director of Binnings Buildings
                                                                Products, Inc. until 1997; Adviser to The Gabelli Growth
                                                                Fund.  Mr. Zizza is 54 years old. (1) (4) (6) (7) (16)

Bruce N. Alpert.......................  Vice President and      Officer of the Trust since its inception.  Executive Vice
  One Corporate Center                  Treasurer               President and Chief Operating Officer of the Adviser;
  Rye, New York 10580-1434                                      Director and President of Gabelli Advisers, Inc.; Vice
                                                                President of the Treasurer's Fund, Inc. and Vice President
                                                                of The Gabelli Westwood Funds; Officer of all registered
                                                                investment companies advised by the Adviser.  Mr. Alpert
                                                                is 48 years old.

James E. McKee........................  Secretary               Secretary of the Trust since August 1995; Vice President,
  One Corporate Center                                          General Counsel and Secretary of Gabelli Asset Management
  Rye, New York 10580-1434                                      Inc. since 1999 and GAMCO Investors, Inc. since 1993;
                                                                Secretary of all registered investment companies advised
                                                                by the Adviser and Gabelli Advisers, Inc.  Mr. McKee is 37
                                                                years old.

Peter W. Latartara....................  Vice President          Vice President of the Trust since 1998.  Assistant Vice
  One Corporate Center                                          President of the Trust since May 1997 and officer of The
  Rye, New York 10580-1434                                      Gabelli Convertible Securities Fund, Inc.  Formerly,
                                                                Assistant Vice President of Gabelli & Company, Inc. since
                                                                1996.  Prior to 1996, Mr. Latartara was with the
                                                                government relations firm of Black, Manafort, Stone and
                                                                Kelly in Washington, D.C.  Mr. Latartara is 32 years old.
</TABLE>


*     "Interested person" of the Fund, as defined in the 1940 Act.  Mr. Gabelli
      is an "interested person" of the Fund as a result of his employment as an
      officer of the Fund and the Adviser.  Mr. Gabelli is also a registered
      representative of an affiliated broker-dealer.  Mr. Pohl is a Director of
      the parent company of the Adviser.


(1)   Trustee of The Gabelli Asset Fund

(2)   Trustee of The Gabelli Blue Chip Value Fund

(3)   Director of Gabelli Capital Series Fund, Inc.

(4)   Director of The Gabelli Convertible Securities Fund, Inc.

(5)   Director of Gabelli Equity Series Funds, Inc.




                                       14



<PAGE>   60

(6)   Director of The Gabelli Equity Trust Inc.

(7)   Director of The Gabelli Global Multimedia Trust Inc.

(8)   Director of Gabelli Global Series Funds, Inc.

(9)   Director of Gabelli Gold Fund, Inc.

(10)  Trustee of The Gabelli Growth Fund

(11)  Director of Gabelli International Growth Fund, Inc.

(12)  Director of The Gabelli Investor Funds, Inc.

(13)  Trustee of The Gabelli Mathers Fund

(14)  Trustee of The Gabelli Money Market Funds

(15)  Trustee of The Gabelli Utilities Fund

(16)  Trustee of The Gabelli Utility Trust

(17)  Director of The Gabelli Value Fund Inc.

(18)  Trustee of The Gabelli Westwood Funds

(19)  Director of The Treasurer's Fund, Inc.





                                       15



<PAGE>   61


        The Board of Directors of the fund are divided into three classes, with
a class having a term of no more than three years. Each year the term of office
of one class of directors expires. See "Certain Provisions of the Charter and
By-Laws" in the Prospectus.


        The Fund and the Adviser have adopted a code of ethics (the "Code of
Ethics") under Rule 17J-1 of the 1940 Act. The Code of Ethics permits personnel,
subject to the Code of Ethics and its restrictive provisions, to invest in
securities, including securities that may be purchased or held by the Fund.


REMUNERATION OF DIRECTORS AND OFFICERS


        The Fund pays each Director who is not affiliated with the Investment
Adviser or its affiliates a fee of $6,000 per year plus $500 per Directors'
meeting attended and $500 per committee meeting attended in person if held on a
day other than a regularly scheduled Directors' meeting, together with each
Director's actual out-of-pocket expenses relating to attendance at such
meetings. The aggregate remuneration accrued by the Fund during the year ended
December 31, 1999 amounted to $52,776.


        The following table shows certain compensation information for the
Directors of the Fund for the year ended December 31, 1999. None of the Fund's
executive officers and Directors who are also officers or directors of the
Adviser received any compensation from the Fund for such period.

<TABLE>
<CAPTION>

                                                AGGREGATE                     TOTAL
                                              COMPENSATION               COMPENSATION FROM
                                                FROM FUND                   FUND AND FUND
NAME OF DIRECTOR OR OFFICER                   (FISCAL YEAR)                COMPLEX PAID*
- ---------------------------                 ----------------             -----------------
<S>                                          <C>                          <C>
Mario J. Gabelli.......................      $            0               $          0(17)
Dr. Thomas E. Bratter..................      $       10,500               $     33,750(3)
Felix J. Christiana....................      $        7,500               $     99,250(11)
James P. Conn..........................      $       11,000               $     53,625(6)
Frank J. Fahrenkopf, Jr................      $        3,217               $     26,577(3)
Peter W. Latartara.....................      $       62,500               $    125,000(2)
Karl Otto Pohl.........................      $          325               $      7,042(19)
Anthony R. Pustorino...................      $        8,000               $    107,250(11)
Werner J. Roeder.......................      $        1,234               $     34,859(11)
Salvatore J. Zizza.....................      $       11,000               $     58,750(5)+
</TABLE>

- ---------------

*  Represents the total compensation paid to such persons during the calendar
   year ended December 31, 1999 by portfolios of investment companies (including
   the Fund) from which such person receives compensation that are considered
   part of the same fund complex as the Fund because they have common or
   affiliated investment advisers. The parenthetical number represents the
   number of such investment companies from which such person received
   compensation.

+  Includes compensation received from serving as an adviser of The Gabelli
   Growth Fund during 1999.

LIMITATION OF OFFICERS' AND DIRECTORS' LIABILITY

        The By-Laws of the Fund provide that the Fund will indemnify its
Directors and officers and may indemnify its employees or agents against
liabilities and expenses incurred in connection with litigation in which they
may be involved because of their offices with the Fund, to the fullest extent
permitted by law. In addition, the Articles of Incorporation of the Fund provide
that the Fund's Directors and officers will not be liable to shareholders for
money damages, except in limited instances. However, nothing in the Articles of
Incorporation or the By-Laws protects or indemnifies a Director, officer,
employee or agent of the Fund against any liability to which such person would
otherwise be subject in the event of such person's active or deliberate
dishonesty which is material to the cause of action or to the extent that the
person received an improper benefit or profit in money, property or services to
the extent of such money, property or services. In addition, indemnification is
not permitted for any act or




                                       16



<PAGE>   62

omission committed in bad faith which is material to the cause of action or,
with respect to any criminal proceeding, if the person had reasonable cause to
believe that the act or omission was unlawful. In addition, indemnification may
not be provided in respect of any proceeding in which the person had been
adjudged to be liable to the Fund.

                                   THE ADVISER


        The Adviser is a New York limited liability company which also serves as
an investment adviser to other closed-end investment companies and open-end
investment companies with aggregate assets in excess of $10.6 billion as of
December 31, 1999. The Adviser is a registered investment adviser under the 1940
Act. Mr. Mario J. Gabelli may be deemed a "controlling person" of the Adviser on
the basis of his controlling interest in Gabelli Group Capital Partners, Inc.,
the parent company of Gabelli Asset Management Inc., a New York Stock Exchange
("NYSE")-listed company which owns 100% of the Investment Adviser. The Adviser
has several affiliates that provide investment advisory services: GAMCO
Investors, Inc. ("GAMCO") acts as investment adviser for individuals, pension
trusts, profit-sharing trusts and endowments, and had assets under management of
approximately $9.4 billion under its management as of December 31, 1999; Gabelli
Advisers, Inc. acts as to the Gabelli Westwood Funds with assets under
management of approximately $390 million as of December 31, 1999; Gabelli
Securities, Inc. acts as general partner or investment manager to certain
alternative investments products, consisting primarily of risk arbitrage and
merchant banking limited partnerships and offshore companies, with assets under
management of approximately $230 million as of December 31, 1999; and Gabelli
Fixed Income LLC acts as investment adviser for the three portfolios of The
Treasurer's Fund and separate accounts having assets under management of
approximately $1.4 billion as of December 31, 1999.


        Affiliates of the Adviser may, in the ordinary course of their business,
acquire for their own account or for the accounts of their advisory clients,
significant (and possibly controlling) positions in the securities of companies
that may also be suitable for investment by the Fund. The securities in which
the Fund might invest may thereby be limited to some extent. For instance, many
companies in the past several years have adopted so-called "poison pill" or
other defensive measures designed to discourage or prevent the completion of
non-negotiated offers for control of the company. Such defensive measures may
have the effect of limiting the shares of the company which might otherwise be
acquired by the Fund if the affiliates of the Adviser or their Advisory accounts
have or acquire a significant position in the same securities. However, the
Adviser does not believe that the investment activities of its affiliates will
have a material adverse effect upon the Fund in seeking to achieve its
investment objectives. Securities purchased or sold pursuant to contemporaneous
orders entered on behalf of the investment company accounts of the Adviser or
the advisory accounts managed by its affiliates for their unaffiliated clients
are allocated pursuant to principles believed to be fair and not disadvantageous
to any such accounts. In addition, all such orders are generally accorded
priority of execution over orders entered on behalf of accounts in which the
Adviser or its affiliates have a substantial pecuniary interest. The Adviser may
on occasion give advice or take action with respect to other clients that differ
from the actions taken with respect to the Fund. The Fund may invest in the
securities of companies which are investment management clients of GAMCO. In
addition, portfolio companies or their officers or directors may be minority
shareholders of the Adviser or its affiliates.

        Pursuant to an Advisory Agreement (the "Advisory Agreement"), the
Adviser manages the portfolio of the Fund in accordance with its stated
investment objectives and policies, makes investment decisions for the Fund,
places orders to purchase and sell securities on behalf of the Fund and manages
its other business and affairs, all subject to the supervision and direction of
the Fund's Board of Directors. In addition, under the Advisory Agreement, the
Investment Adviser oversees the administration of all aspects of the Fund's
business and affairs and provides, or arranges for others to provide, at the
Adviser's expense, certain enumerated services, including maintaining the Fund's
books and records, preparing reports to the Fund's shareholders and supervising
the calculation of the net asset value of its shares. All expenses of computing
the net asset value of the Fund, including any equipment or services obtained
solely for the purpose of pricing shares or valuing its investment portfolio,
are considered to be an expense of the Fund under its Advisory Agreement.

        The Advisory Agreement combines investment advisory and administrative
responsibilities in one agreement. The Adviser has in turn retained PFPC, Inc.,
101 Federal Street, Boston, MA 02110, to act as sub-administrator to the Fund.
See "Management of the Fund -- Sub-Administrator" in the Prospectus.




                                       17



<PAGE>   63

        For services rendered by the Adviser on behalf of the Fund under the
Advisory Agreement, the Fund pays the Adviser a fee computed daily and paid
monthly at the annual rate of 1.00% of the average weekly net assets of the
Fund. The fees payable under the Advisory Agreement are higher than the fees
payable by most registered investment companies. Notwithstanding the foregoing,
the Adviser will waive the portion of its investment advisory fee attributable
to an amount of assets of the Fund equal to the aggregate stated value of the
Cumulative Preferred Stock for any calendar year in which the total return of
the Fund, including distributions and the advisory fee subject to potential
waiver, allocable to common stock is less than the stated dividend rate of the
Cumulative Preferred Stock.

        The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard for its
obligations and duties thereunder, the Adviser is not liable for any error or
judgment or mistake of law or for any loss suffered by the Fund. As part of the
Advisory Agreement, the Fund has agreed that the name "Gabelli" is the Adviser's
property, and that in the event the Adviser ceases to act as an investment
adviser to the Fund, the Fund will change its name to one not including the word
"Gabelli."


        The Advisory Agreement was initially approved by the Board of Directors
at a meeting held on April 6, 1994 and was approved most recently by the Board
of Directors on May 17, 2000. The Advisory Agreement is terminable without
penalty by the Fund on not more than sixty days' written notice when authorized
by the Board of Directors of the Fund, by the holders of a majority of the
outstanding voting securities of the Fund, as defined in the 1940 Act, or by the
Adviser. The Advisory Agreement will automatically terminate in the event of its
assignment, as defined in the 1940 Act. The Advisory Agreement provides that,
unless terminated, it will remain in effect so long as continuance of the
Advisory Agreement is approved annually by the Board of Directors of the Fund,
or the shareholders of the Fund and in either case, by a majority vote of the
Directors who are not parties to the Advisory Contract or "interested persons"
as defined in the 1940 Act of any such person cast in person at a meeting called
specifically for the purpose of voting on the continuance of the Advisory
Agreement.



        For each of the years ended December 31, 1997, December 31, 1998 and
December 31, 1999, the Adviser was paid $1,203,809, $1,519,278 and $2,073,889,
respectively, for advisory and administrative services rendered to the Fund.


FOREIGN CUSTODIAL ARRANGEMENTS

        Rules adopted under the 1940 Act permit the Fund to maintain its foreign
securities in the custody of certain eligible foreign banks and securities
depositories. Pursuant to those rules, any foreign securities in the portfolio
of the Fund may be held by subcustodians approved by the Directors of the Fund
in accordance with the regulations of the Commission.

        Selection of any such subcustodians will be made by the Directors of the
Fund following a consideration of a number of factors, including but not limited
to the reliability and financial stability of the institution, the ability of
the institution to perform capably custodial services for the Fund, the
reputation of the institution in its national market, the political and economic
stability of the country or countries in which the subcustodians are located,
and risks of potential nationalization or expropriation of assets of the Fund.
In addition, the 1940 Act requires that certain foreign subcustodians, among
other things, have shareholders' equity in excess of $200 million, have no lien
on the Fund's assets and maintain adequate and accessible records.

                             PORTFOLIO TRANSACTIONS

        Subject to policies established by the Board of Directors of the Fund,
the Investment Adviser is responsible for placing purchase and sale orders and
the allocation of brokerage on behalf of the Fund. Transactions in equity
securities are in most cases effected on U.S. stock exchanges and involve the
payment of negotiated brokerage commissions. In general, there may be no stated
commission in the case of certain debt securities and securities traded in
over-the-counter markets, but the prices of those securities may include
undisclosed commissions or mark-ups. Principal transactions are not entered into
with affiliates of the Fund. However, Gabelli & Company, Inc. ("Gabelli &
Company") may execute transactions in the over-the counter markets on an agency
basis and receive a stated commission therefrom. To the extent consistent with
applicable provisions of the 1940 Act and the rules and




                                       18



<PAGE>   64

exemptions adopted by the Commission thereunder, as well as other regulatory
requirements, the Fund's Board of Directors have determined that portfolio
transactions may be executed through Gabelli & Company and its broker-dealer
affiliates if, in the judgment of the Investment Adviser, the use of those
broker-dealers is likely to result in price and execution at least as favorable
as those of other qualified broker-dealers, and if, in particular transactions,
those broker-dealers charge the Fund a rate consistent with that charged to
comparable unaffiliated customers in similar transactions. The Fund has no
obligation to deal with any broker or group of brokers in executing transactions
in portfolio securities. In executing transactions, the Investment Adviser seeks
to obtain the best price and execution for the Fund, taking into account such
factors as the price, size of order, difficulty of execution and operational
facilities of the firm involved and the firm's risk in positioning a block of
securities. While the Investment Adviser generally seeks reasonably competitive
commission rates, the Fund does not necessarily pay the lowest commission
available.


        For the fiscal years ended December 31, 1997, December 31, 1998 and
December 31, 1999, the Fund paid a total of $174,208, $138,256, $135,583,
respectively, in brokerage commissions, of which Gabelli & Company received
$48,118, $57,841 and $83,090, respectively. The amount received by Gabelli &
Company, Inc. from the Fund in respect of brokerage commissions for the fiscal
year ended December 31, 1999 represented 61.3% of the aggregate dollar amount
of brokerage commissions paid by the Fund for such period. In addition, for the
fiscal year ended December 31, 1999, the Fund paid brokerage commissions to
Gabelli & Company, Inc. with respect to 56.4% of the aggregate dollar amount of
transactions by the Fund.


        Subject to obtaining the best price and execution, brokers who provide
supplemental research, market and statistical information to the Investment
Adviser or its affiliates may receive orders for transactions by the Fund. The
term "research, market and statistical information" includes advice as to the
value of securities, and advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities, and furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts. Information so received will be in addition to and not in lieu of
the services required to be performed by the Investment Adviser under the
Advisory Agreement and the expenses of the Investment Adviser will not
necessarily be reduced as a result of the receipt of such supplemental
information. Such information may be useful to the Investment Adviser and its
affiliates in providing services to clients other than the Fund, and not all
such information is used by the Investment Adviser in connection with the Fund.
Conversely, such information provided to the Investment Adviser and its
affiliates by brokers and dealers through whom other clients of the Investment
Adviser and its affiliates effect securities transactions may be useful to the
Investment Adviser in providing services to the Fund.

        Although investment decisions for the Fund are made independently from
those of the other accounts managed by the Investment Adviser and its
affiliates, investments of the kind made by the Fund may also be made by those
other accounts. When the same securities are purchased for or sold by the Fund
and any of such other accounts, it is the policy of the Investment Adviser and
its affiliates to allocate such purchases and sales in the manner deemed fair
and equitable to all of the accounts, including the Fund.

PORTFOLIO TURNOVER

        The Fund's portfolio turnover rate for the fiscal years ended December
31, 1998 and December 31, 1999 was 44.6% and 43.1%, respectively. Portfolio
turnover rate is calculated by dividing the lesser of the Fund's annual sales or
purchases of portfolio securities by the monthly average value of securities in
its portfolio during the year, excluding portfolio securities the maturities of
which at the time of acquisition were one year or less. However, portfolio
turnover will not otherwise be a limiting factor in making investment decisions
for the Fund. A high rate of portfolio turnover involves correspondingly greater
brokerage commission expense than a lower rate, which expense must be borne by
the Fund and its shareholders.

        AUTOMATIC DIVIDEND REINVESTMENT AND VOLUNTARY CASH PURCHASE PLAN

        Under the Fund's Automatic Dividend Reinvestment and Voluntary Cash
Purchase Plan (the "Plan"), a shareholder whose shares of the Fund's common
stock, par value $.001 per share (the "Common Stock") is registered in his own
name will have all distributions reinvested automatically by State Street, which
is agent under




                                       19



<PAGE>   65

the Plan, unless the shareholder elects to receive cash. Distributions with
respect to shares registered in the name of a broker-dealer or other nominee
(that is, in "street name") will be reinvested by the broker or nominee in
additional shares under the Plan, unless the service is not provided by the
broker or nominee or the shareholder elects to receive distributions in cash.
Investors who own Common Stock registered in street name should consult their
broker-dealers for details regarding reinvestment. All distributions to
investors who do not participate in the Plan will be paid by check mailed
directly to the record holder by State Street as dividend disbursing agent.


        Under the Plan, whenever the market price of the 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 dividend or capital
gains distribution, participants in the Plan 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 Common Stock. The valuation
date is the dividend or distribution payment date or, if that date is not a NYSE
trading day, the next preceding 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 Fund, valued at market price.
If the Fund should declare a dividend or capital gains distribution payable only
in cash, State Street will buy the Common Stock for such Plan in the open
market, on the NYSE or elsewhere, for the participants' accounts, except that
State Street will endeavor to terminate purchases in the open market and cause
the Fund to issue shares at net asset value if, following the commencement of
such purchases, the market value of the Common Stock exceeds 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 Voluntary Cash Purchase Plan is another vehicle for shareholders of
the Fund to increase their investment in the Fund. 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 for investments in the
Fund's shares at the then current market price. Shareholders may send an amount
from $250 to $10,000. State Street Bank will use these funds to purchase shares
in the open market on or about the 1st and 15th of each month. State Street will
charge each shareholder who participates $0.75, plus a pro rata share of the
brokerage commissions. Brokerage charges for such purchases are expected to be
less than the usual brokerage charge for such transactions. It is suggested that
any voluntary cash payments be sent to State Street Bank such that State Street
receives such payments approximately 10 days before the investment date. Funds
not received at least five days before the investment date shall be held for
investment until the next purchase date. A payment may be withdrawn without
charge if notice is received by State Street at least 48 hours before such
payment is to be invested.

        State Street maintains all shareholder accounts in the Plan and
furnishes written confirmations of all transactions in the account, including
information needed by shareholders for personal and tax records. Shares in the
account of each Plan participant will be held by State Street in noncertificated
form in the name of the participant. A Plan participant may send its share
certificates to State Street so that the shares represented by such certificates
will be held by State Street in the participant's shareholder account under the
Plan.

        In the case of shareholders such as banks, brokers or nominees, which
hold shares for others who are the beneficial owners, State Street will
administer the Plan on the basis of the number of shares certified from time to
time by the shareholder as representing the total amount registered in the
shareholder's name and held for the account of beneficial owners who participate
in the Plan.

        Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund 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 Plan members 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




                                       20



<PAGE>   66

least 90 days' written notice to the Plan participants. All correspondence
concerning the Plan should be directed to State Street at P.O. Box 8200, Boston,
Massachusetts 02266-8200.

                                    TAXATION

        The following discussion is a brief summary of certain United States
federal income tax considerations affecting the Fund and its shareholders. No
attempt is made to present a detailed explanation of all federal, state, local
and foreign tax concerns, and the discussions set forth here and in the
Prospectus do not constitute tax advice. Investors are urged to consult their
own tax advisers with any specific questions relating to federal, state, local
and foreign taxes. The discussion reflects applicable tax laws of the United
States as of the date of this SAI, which tax laws may be changed or subject to
new interpretations by the courts or the Internal Revenue Service retroactively
or prospectively.

GENERAL

        The Fund intends to continue to qualify as a regulated investment
company (a "RIC") under Subchapter M of the Code. If it so qualifies, the Fund
will not be subject to federal income tax on the portion of its net investment
income (i.e., income other than its net realized long-term and short-term
capital gains and on its net realized long-term and short-term capital gains, if
any, which it distributes to its shareholders in each taxable year, provided
that an amount equal to at least 90% of the sum of its investment company
taxable income (i.e., 90% of its taxable income minus the excess, if any, of its
net realized long-term capital gains over its net realized short-term capital
losses (including any capital loss carryovers), plus or minus certain other
adjustments as specified in the Code) and any net tax-exempt income for the
taxable year is distributed to its shareholders, but will be subject to tax at
regular corporate rates on any taxable income or gains that it does not
distribute.

        Qualification as a RIC requires, among other things, that the Fund: (a)
derive at least 90% of its gross income in each taxable year from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock, securities, foreign currencies or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in such stock, securities or currencies and
(b) diversify its holdings so that, at the end of each quarter of each of the
Fund's taxable years, (i) at least 50% of the market value of the Fund's assets
is represented by cash, cash items, U.S. government securities, securities of
other RICs and other securities with such other securities limited, in respect
of any one issuer, to an amount not greater than 5% of the value of the Fund's
assets and 10% of the outstanding voting securities of such issuer, and (ii) not
more than 25% of the value of its assets is invested in the securities (other
than U.S. government securities or the securities of other RICs) of any one
issuer or any two or more issuers that the Fund controls and which are
determined to be engaged in the same or similar trades or businesses or related
trades or businesses.

TAXATION OF THE FUND

        If the Fund were unable to satisfy the 90% distribution requirement or
otherwise were to fail to qualify as a RIC in any year, it would be taxed in the
same manner as an ordinary corporation and distributions to the Fund's
shareholders would not be deductible by the Fund in computing its taxable
income. To qualify again to be taxed as a RIC in a subsequent year, the Fund
would be required to distribute to Cumulative Preferred Shareholders and Common
Shareholders as a net investment income dividend, its earnings and profits
attributable to non-RIC years reduced by an interest charge payable by the Fund
to the IRS. In addition, if the Fund failed to qualify as a RIC for a period
greater than one taxable year, then the Fund would be required to recognize and
pay tax on any net built-in gains with respect to certain of the Fund's assets
(the excess of aggregate gains, including items of income, over aggregate losses
with respect to such assets that would have been realized if the Fund had been
liquidated) in order to qualify as a RIC in a subsequent year.

        Under the Code, amounts not distributed by a RIC on a timely basis in
accordance with a calendar-year distribution requirement are subject to a 4%
excise tax. To avoid the tax, the Fund must distribute during each calendar year
an amount at least equal to the sum of (1) 98% of its ordinary income for the
calendar year, (2) 98% of its capital gain net income (both long-term and
short-term) for the one-year period ending on October 31 of such year (unless an
election is made by a fund with a November or December year-end to use the
fund's fiscal year), and




                                       21



<PAGE>   67

(3) all ordinary income and capital gain net income for previous years that were
not previously distributed. A distribution will be treated as paid during the
calendar year if it is paid during the calendar year or declared by the Fund in
October, November or December of the year, payable to shareholders of record on
a date during such month and paid by the Fund during January of the following
year. Any such distributions paid during January of the following year will be
deemed to be received on December 31 of the year the distributions are declared,
rather than when the distributions are received. While the Fund intends to
distribute its ordinary income and capital gain net income in the manner
necessary to minimize imposition of the 4% excise tax, there can be no assurance
that sufficient amounts of the Fund's ordinary income and capital gain net
income will be distributed to avoid entirely the imposition of the tax. In such
event, the Fund will be liable for the tax only on the amount by which it does
not meet the foregoing distribution requirements.

        Gain or loss on the sales of securities by the Fund will be long-term
capital gain or loss if the securities have been held by the Fund for more than
one year. Gain or loss on the sale of securities held for one year or less will
be short-term capital gain or loss.

        Foreign currency gain or loss on non-U.S. dollar denominated bonds and
other similar debt instruments and on any non-U.S. dollar denominated futures
contracts, options and forward contracts that are not section 1256 contracts (as
defined below) generally will be treated as net investment income and loss.

        If the Fund invests in stock of a passive foreign investment company (a
"PFIC"), the Fund may be subject to federal income tax on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock even if such income is distributed as a taxable dividend by the Fund to
its shareholders. The tax would be determined by allocating such distribution or
gain ratably to each day of the Fund's holding period for the stock. The amount
so allocated to any taxable year of the Fund prior to the taxable year in which
the excess distribution or disposition occurs would be taxed to the Fund at the
highest marginal federal corporate income tax rate in effect for the year to
which it was allocated, and the tax would be further increased by an interest
charge. The amount allocated to the taxable year of the distribution or
disposition would be included in the Fund's net investment income and,
accordingly, would not be taxable to the Fund to the extent distributed by the
Fund as taxable dividends to shareholders.

        If the Fund invests in stock of a PFIC, the Fund may be able to elect to
be a "qualified electing fund," in lieu of being taxable in the manner described
in the above paragraph and to include annually in income its pro rata share of
the ordinary earnings and net capital gain of the PFIC, even if not distributed
to the Fund, and such amounts would be subject to the 90% and excise tax
distribution requirements described above. In order to make this election, the
Fund would be required to obtain annual information from the PFICs in which it
invests, which may be difficult or impossible to obtain. Alternatively, the Fund
may be able to elect to mark to market its PFIC stock, resulting in the stock
being treated as sold and repurchased at fair market value on the last business
day of each taxable year. Any resulting gain would be reported as ordinary
income, and any resulting loss would be an ordinary loss that could only be
deducted to the extent of previously recognized gains.

        The Fund may invest in debt obligations purchased at a discount, with
the result that the Fund may be required to accrue income for federal income tax
purposes before amounts due under the obligation are paid. The Fund may also
invest in securities rated in the medium to lower rating categories of
nationally recognized rating organizations, and in unrated securities ("high
yield securities"). A portion of the interest payments on such high yield
securities may be treated as dividends for federal income tax purposes.

        As a result of investing in stock of PFICs or securities purchased at a
discount or any other investment that produces income that is not matched by a
corresponding cash distribution to the Fund, the Fund could be required to
include in current income, income it has not yet received. Any such income would
be treated as income earned by the Fund and therefore would be subject to the
distribution requirements of the Code. This might prevent the Fund from
distributing 90% of its net investment income, as is required in order to avoid
Fund-level federal income taxation, or might prevent the Fund from distributing
enough ordinary income and capital gain net income to avoid completely the
imposition of the excise tax. To avoid this result, the Fund may be required to
borrow money or dispose of other securities to be able to make distributions to
its shareholders.




                                       22



<PAGE>   68

        If the Fund does not meet the asset coverage requirements of the 1940
Act and the Articles Supplementary, the Fund will be required to suspend
distributions to the holders of the common stock until the asset coverage is
restored. See "Description of Cumulative Preferred Stock -- Dividends" and
"Description of Capital Stock and Other Securities." Such a suspension of
distributions might prevent the Fund from distributing 90% of its net investment
income, as is required in order to avoid Fund-level federal income taxation, or
might prevent the Fund from distributing enough income and capital gain net
income to avoid completely imposition of the excise tax. Upon any failure to
meet the asset coverage requirements of the 1940 Act or the Articles
Supplementary, the Fund may, and in certain circumstances will, be required to
partially redeem the shares of Cumulative Preferred Stock in order to restore
the requisite asset coverage and avoid the adverse consequences to the Fund and
its shareholders of failing to qualify as a RIC. If asset coverage were
restored, the Fund would again be able to pay dividends and might be able to
avoid Fund-level federal income taxation on the Fund's undistributed income.

HEDGING TRANSACTIONS

        Certain options, futures contracts and options on futures contracts are
"section 1256 contracts." Any gains or losses on section 1256 contracts are
generally considered 60% long-term and 40% short-term capital gains or losses
("60/40"). Also, section 1256 contracts held by the Fund at the end of each
taxable year are "marked-to-market" with the result that unrealized gains or
losses are treated as though they were realized and the resulting gain or loss
is treated as 60/40 gain or loss.

        Hedging transactions undertaken by the Fund may result in "straddles"
for federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by the Fund. In addition, losses realized by the Fund
on positions that are part of a straddle may be deferred under the straddle
rules, rather than being taken into account in calculating the taxable income
for the taxable year in which such losses are realized. Further, the Fund may be
required to capitalize, rather than deduct currently, any interest expense on
indebtedness incurred or continued to purchase or carry any positions that are
part of a straddle.

        The Fund may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions may be determined under rules that vary according to
the election(s) made. The rules applicable under certain of the elections
accelerate the recognition of gain or loss from the affected straddle positions.

        Because application of the straddle rules may affect the character and
timing of the Fund's gains, losses and deductions, the amount which must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a fund that did not engage in such hedging transactions.

FOREIGN TAXES

        Since the Fund may invest in foreign securities, its income from such
securities may be subject to non-U.S. taxes. If the Fund satisfies the
distribution requirements to be taxed as a RIC during a taxable year, and if 50%
of the Fund's total assets at the end of its taxable year consist of stock or
securities of foreign corporations, it may elect to "pass-through" to its
shareholders the ability to use the foreign tax deduction or credit for foreign
taxes paid with respect to qualifying foreign taxes. If the Fund makes such an
election, a shareholder would be required to include in income its proportionate
share of the qualifying foreign taxes paid by the Fund and would be allowed to
either deduct the amount of such taxes from its taxable income or to use such
taxes as a credit against its U.S. federal income tax liability. In general, it
will be more beneficial for a taxpayer to use its proportionate share of such
taxes paid by the Fund as a foreign tax credit. If the Fund elects to pass
through the benefit of the deduction or credit allowed for qualifying foreign
taxes it has paid in a given year, it will send each shareholder a written
notice of the portion of the Fund's dividends that represents income from
sources within each foreign country and the amount of such shareholder's
proportionate share of foreign taxes paid to each foreign country.




                                       23



<PAGE>   69

TAXATION OF SHAREHOLDERS

        The Fund will determine either to distribute or to retain for
reinvestment all or part of its net capital gain. If any such gains are
retained, the Fund will be subject to a tax of 35% of such amount. In that
event, the Fund expects to designate the retained amount as undistributed
capital gains in a notice to its shareholders, each of whom (1) will be required
to include in income for tax purposes as long-term capital gains its share of
such undistributed amount, (2) will be entitled to credit its proportionate
share of the tax paid by the Fund against its federal income tax liability and
to claim refunds to the extent that the credit exceeds such liability, and (3)
will increase its basis in its shares of the Fund by an amount equal to 65% of
the amount of undistributed capital gains included in such shareholder's gross
income.

        Distributions of Ordinary Income Dividends are Taxable to a U.S.
shareholder as ordinary income, whether paid in cash or shares. Ordinary Income
Dividends paid by the Fund may qualify for the dividends received deduction
available to corporations, but only to the extent that the Fund's income
consists of qualified dividends received from U.S. corporations. The amount of
any dividend distribution eligible for the dividends received deduction will be
designated by the Fund in a written notice to shareholders within 60 days of the
close of the taxable year. Distributions of net capital gains designated as
capital gain dividends ("Capital Gain Dividends"), if any, are taxable as
long-term capital gains, whether paid in cash or in shares, regardless of how
long the shareholder has held the Fund's shares, and are not eligible for the
dividends received deduction.

        Shareholders receiving distributions in the form of newly issued shares
of the Fund will have a basis in such shares equal to the fair market value of
such shares on the distribution date. If the net asset value of shares is
reduced below a shareholder's cost as a result of a distribution by the Fund,
such distribution will be taxable even though it represents a return of invested
capital. The price of shares purchased at any time may reflect the amount of a
forthcoming distribution. Those purchasing shares just prior to a distribution
will receive a distribution which will be taxable to them, even though it
represents in part a return of invested capital.

        Upon a sale or exchange of shares, a shareholder will realize a taxable
gain or loss depending upon his or her basis in the shares. Such gain or loss
will be treated as capital gain or loss if the shares have been held for more
than one year. Any loss realized on a sale or exchange will be disallowed to the
extent the shares disposed of are replaced within a 61-day period beginning 30
days before and ending 30 days after the day that the shares are disposed of. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.

        Any loss realized by a shareholder on the sale of Fund shares held by
the shareholder for six months or less will be treated for tax purposes as a
long-term capital loss to the extent of any Capital Gain Dividends received by
the shareholder within the prior six months with respect to such shares.

        Ordinary Income Dividends and Capital Gains Dividends also may be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions about the U.S. federal, state, local
or foreign tax consequences to them of investing in the Fund.

BACKUP WITHHOLDING

        The Fund may be required to withhold federal income tax at a rate of 31%
on all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder's federal
income tax liability.

        THE FOREGOING IS A GENERAL AND ABBREVIATED SUMMARY OF THE APPLICABLE
PROVISIONS OF THE CODE AND TREASURY REGULATIONS PRESENTLY IN EFFECT. FOR THE
COMPLETE PROVISIONS, REFERENCE SHOULD BE MADE TO THE PERTINENT CODE SECTIONS AND
THE TREASURY REGULATIONS PROMULGATED THEREUNDER. THE CODE AND THE TREASURY
REGULATIONS ARE SUBJECT TO CHANGE BY LEGISLATIVE, JUDICIAL OR ADMINISTRATIVE
ACTION, EITHER PROSPECTIVELY OR RETROACTIVELY.





                                       24



<PAGE>   70


                            MOODY'S DISCOUNT FACTORS

        The following table identifies the Moody's Discount Factors used to
discount particular Moody's Eligible Assets, as defined in the Prospectus, for a
two-week exposure period.

<TABLE>
<CAPTION>
                                                                                                                MOODY'S
TYPE OF MOODY'S ELIGIBLE ASSET:                                                                             DISCOUNT FACTOR:
- -------------------------------                                                                             ----------------
<S>                                                                                                              <C>
  Short Term Money Market Instruments (other than U.S. Government Obligations set forth below)
   and other commercial paper:
   Demand or time deposits, certificates of deposit and bankers' acceptances includible in Moody's
      Short Term Money Market Instruments................................................................         1.00
   Commercial paper rated P-1 by Moody's maturing in 30 days or less.....................................         1.00
   Commercial paper rated P-1 by Moody's maturing in more than 30 days but in 270 days or less...........         1.15
   Commercial paper rated A-1+ by S&P maturing in 270 days or less.......................................         1.25
   Repurchase obligations includible in Moody's Short Term Money Market Instruments if term is
      less than 30 days and counterparty is rated at least A2............................................         1.00
   Other repurchase obligations..........................................................................          *

   ---------
   * Discount Factors applicable to underlying assets.
  Common stocks..........................................................................................         3.00
  Convertible preferred stocks...........................................................................         3.00
  Preferred stocks:
   Auction rate preferred stocks.........................................................................         3.50
   Other preferred stocks issued by issuers in the financial and industrial industries...................         1.62
   Other preferred stocks issued by issuers in the utilities industry....................................         1.40
  U.S. Government Obligations (other than U.S. Treasury Securities Strips set forth below) with
   remaining terms of maturity of:
      1 year or less.....................................................................................         1.04
      2 years or less....................................................................................         1.09
      3 years or less....................................................................................         1.12
      4 years or less....................................................................................         1.15
      5 years or less....................................................................................         1.18
      7 years or less....................................................................................         1.21
      10 years or less...................................................................................         1.24
      15 years or less...................................................................................         1.25
      20 years or less...................................................................................         1.26
      30 years or less...................................................................................         1.26
  U.S. Treasury Securities Strips with remaining terms to maturity of:
      1 year or less.....................................................................................         1.04
      2 years or less....................................................................................         1.10
      3 years or less....................................................................................         1.14
      4 years or less....................................................................................         1.18
      5 years or less....................................................................................         1.21
      7 years or less....................................................................................         1.27
      10 years or less...................................................................................         1.34
      15 years or less...................................................................................         1.45
</TABLE>




                                       25



<PAGE>   71

<TABLE>
<CAPTION>
                                                                                                                MOODY'S
TYPE OF MOODY'S ELIGIBLE ASSET:                                                                             DISCOUNT FACTOR:
- -------------------------------                                                                             ----------------
<S>                                                                                                              <C>
      20 years or less...................................................................................         1.54
      30 years or less...................................................................................         1.66
Corporate evidences of indebtedness:
  Corporate evidences of indebtedness rated Aaa3 with remaining terms to maturity of:
      1 year or less.....................................................................................         1.10
      2 years or less....................................................................................         1.13
      3 years or less....................................................................................         1.18
      4 years or less....................................................................................         1.21
      5 years or less....................................................................................         1.23
      7 years or less....................................................................................         1.27
      10 years or less...................................................................................         1.30
      15 years or less...................................................................................         1.31
      20 years or less...................................................................................         1.32
      30 years or less...................................................................................         1.33
  Corporate evidences of indebtedness rated Aa3 with remaining terms to maturity of:
      1 year or less.....................................................................................         1.15
      2 years or less....................................................................................         1.20
      3 years or less....................................................................................         1.23
      4 years or less....................................................................................         1.27
      5 years or less....................................................................................         1.29
      7 years or less....................................................................................         1.33
      10 years or less...................................................................................         1.36
      15 years or less...................................................................................         1.37
      20 years or less...................................................................................         1.38
      30 years or less...................................................................................         1.39
  Corporate evidences of indebtedness rated A3 with remaining terms to maturity of:
      1 year or less.....................................................................................         1.20
      2 years or less....................................................................................         1.26
      3 years or less....................................................................................         1.29
      4 years or less....................................................................................         1.33
      5 years or less....................................................................................         1.35
      7 years or less....................................................................................         1.39
      10 years or less...................................................................................         1.42
      15 years or less...................................................................................         1.43
      20 years or less...................................................................................         1.45
      30 years or less...................................................................................         1.45
  Corporate evidences of indebtedness rated at least Baa3 with remaining terms of maturity of:
      1 year or less.....................................................................................         1.25
      2 years or less....................................................................................         1.31
      3 years or less....................................................................................         1.35
      4 years or less....................................................................................         1.38
      5 years or less....................................................................................         1.41
</TABLE>




                                       26



<PAGE>   72

<TABLE>
<CAPTION>
                                                                                                                MOODY'S
TYPE OF MOODY'S ELIGIBLE ASSET:                                                                             DISCOUNT FACTOR:
- -------------------------------                                                                             ----------------
<S>                                                                                                              <C>
      7 years or less....................................................................................         1.45
      10 years or less...................................................................................         1.48
      15 years or less...................................................................................         1.50
      20 years or less...................................................................................         1.51
      30 years or less...................................................................................         1.52
  Corporate evidences of indebtedness rated at least Ba3 with remaining terms of maturity of:
      1 year or less.....................................................................................         1.36
      2 years or less....................................................................................         1.42
      3 years or less....................................................................................         1.46
      4 years or less....................................................................................         1.50
      5 years or less....................................................................................         1.53
      7 years or less....................................................................................         1.57
      10 years or less...................................................................................         1.61
      15 years or less...................................................................................         1.62
      20 years or less...................................................................................         1.64
      30 years or less...................................................................................         1.64
  Corporate evidences of indebtedness rated at least B1 and B2 with remaining terms of
      maturity of:
      1 year or less.....................................................................................         1.46
      2 years or less....................................................................................         1.53
      3 years or less....................................................................................         1.57
      4 years or less....................................................................................         1.61
      5 years or less....................................................................................         1.65
      7 years or less....................................................................................         1.70
      10 years or less...................................................................................         1.73
      15 years or less...................................................................................         1.75
      20 years or less...................................................................................         1.76
      30 years or less...................................................................................         1.77
  Convertible corporate evidences of indebtedness rated with senior debt securities rated Aa3
      issued by the following type of issuers:
      Utility ...........................................................................................         1.28
      Industrial ........................................................................................         1.75
      Financial .........................................................................................         1.53
      Transportation ....................................................................................         2.13
  Convertible corporate evidences of indebtedness rated with senior debt securities rated A3
      issued by the following type of issuers:
      Utility ...........................................................................................         1.33
      Industrial ........................................................................................         1.80
      Financial .........................................................................................         1.58
      Transportation ....................................................................................         2.18
  Convertible corporate evidences of indebtedness rated with senior debt securities rated Baa3
      issued by the following type of issuers:
      Utility ...........................................................................................         1.48
</TABLE>




                                       27



<PAGE>   73

<TABLE>
<CAPTION>
                                                                                                                MOODY'S
TYPE OF MOODY'S ELIGIBLE ASSET:                                                                             DISCOUNT FACTOR:
- -------------------------------                                                                             ----------------
<S>                                                                                                              <C>
      Industrial ........................................................................................         1.95
      Financial .........................................................................................         1.73
      Transportation ....................................................................................         2.33
  Convertible corporate bonds with senior debt securities rated Ba3 issued by
      the following type of issuers:
      Utility ...........................................................................................         1.49
      Industrial ........................................................................................         1.96
      Financial .........................................................................................         1.74
      Transportation ....................................................................................         2.34
  Convertible corporate bonds with senior debt securities rated B1 or B2 issued
      by the following type of issuers:
      Utility ...........................................................................................         1.59
      Industrial ........................................................................................         2.06
      Financial .........................................................................................         1.84
      Transportation ....................................................................................         2.44
</TABLE>
                                 NET ASSET VALUE


        The net asset value of the Fund's common shares is computed based on the
market value of the securities it holds and determined daily as of the close of
regular trading on the NYSE and reported in financial newspapers of general
circulation as of the last day of each week.


        Portfolio securities which are traded only on stock exchanges are valued
at the last sale price as of the close of regular trading on the day the
securities are being valued, or lacking any sales, at the mean between closing
bid and asked prices. Securities traded in the over-the-counter market which are
Nasdaq National Market securities are valued at the last sale price as of the
close of regular trading on the day the securities are being valued. Other
over-the-counter securities are valued at the most recent bid prices as obtained
from one or more dealers that make markets in the securities. Portfolio
securities which are traded both in the over-the counter market and on a stock
exchange are valued according to the broadest and most representative market, as
determined by the Investment Adviser. Securities traded primarily on foreign
exchanges are valued at the closing values of such securities on their
respective exchanges as of the day the securities are being valued. Securities
and assets for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the direction of the Board of
Directors of the Fund. Short-term investments that mature in 60 days or less are
valued at amortized cost, unless the Board of Directors of the Fund determines
that such valuation does not constitute fair value.

        Net asset value per share is calculated by dividing the value of the
securities held plus any cash or other assets minus all liabilities, including
accrued expenses, and less the liquidation value of any preferred stock
outstanding by the total number of shares outstanding at such time.





                                       28



<PAGE>   74


                               GENERAL INFORMATION

COUNSEL AND INDEPENDENT ACCOUNTANTS

        Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019,
serves as the Fund's Legal counsel.

        PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New
York 10036, has been selected as independent accountants for the Fund.

                                BENEFICIAL OWNERS

        There are no persons known to the Fund who may be deemed beneficial
owners of 5% or more of shares of the Fund's Common Stock because they possessed
or shared voting or investment power with respect to shares of the Fund's Common
Stock. As of March 6, 2000, the Directors and Officers of the Fund as a group
beneficially owned approximately 3.62% of the outstanding shares of the Fund's
Common Stock.

                              FINANCIAL STATEMENTS

        The audited financial statements included in the Annual Report to the
Fund's Shareholders for the fiscal year ended December 31, 1999, together with
the report of PricewaterhouseCoopers LLP thereon, are incorporated herein by
reference from the Fund's Annual Report to Shareholders filed with the
Securities and Exchange Commission on March 7, 2000. All other portions of the
Annual Report to Shareholders are not incorporated herein by reference and are
not part of the Registration Statement. A copy of the Annual Report to
Shareholders may be obtained without charge by writing to the Fund at its
address at One Corporate Center, Rye, New York 10580-1434 or by calling the Fund
toll-free at 800-GABELLI (422-3554).





                                       29



<PAGE>   75


                                     PART C

                                OTHER INFORMATION

ITEM 24.   FINANCIAL STATEMENTS AND EXHIBITS

           (1)   Financial Statements
                   (i)    --   Portfolio of Investments as of December 31,
                               1999(1)
                   (ii)   --   Statement of Assets and Liabilities as of
                               December 31, 1999(1)
                   (iii)  --   Statement of Operations for the year ended
                               December 31, 1999(1)
                   (iv)   --   Statement of Changes in Net Assets for the years
                               ended December 31, 1998 and 1999(1)
                   (v)    --   Financial highlights for a share of capital stock
                               outstanding throughout the periods ended
                               December 31, 1995, 1996, 1997, 1998 and 1999(1)
                   (vi)   --   Notes to Financial Statements(1)
                   (vii)  --   Report of Independent Accountants(1)
- -----------------

(1)     Incorporated by reference to the Fund's Annual Report for 1999, filed on
        March 7, 2000 (EDGAR Accession No. 0000935069-00-000128).



                                      C-1


<PAGE>   76


           (2)   Exhibits
                 (a) (1)  --  Articles of Incorporation(1)
                     (2)  --  Articles Supplementary(2)

                     (3)  --  Certificates of Correction


                 (b) (1)  --  Amended and Restated By-Laws(3)


                     (2)  --  Amendments to By-Laws

                 (c)      --  Not applicable
                 (d) (1)  --  Specimen certificate for Common Stock, par value
                              $.001 per share(4)

                     (2)  --  Form of Subscription Certificate


                     (3)  --  Form of Notice of Guaranteed Delivery


                     (4)  --  Form of DTC Participant Oversubscription Exercise
                              Form


                     (5)  --  Form of Nominee Holder Over-Subscription
                              Certification


                     (6)  --  Form of Subscription, Distribution and Escrow
                              Agency Agreement(3)


                     (7)  --  Form of Beneficial Owner Certification


                     (8)  --  Form of Subscription Rights Broker Split Requests


                     (9)  --  Form of Certificate and Request for Additional
                              Rights


                 (e)      --  Automatic Dividend Reinvestment and Voluntary Cash
                              Purchase Plan

                 (f)      --  Not applicable

                 (g)      --  Investment Advisory Agreement between the Fund and
                              Gabelli Funds, Inc.

                 (h)      --  Not applicable
                 (i)      --  Not applicable

                 (j) (1)  --  Custodial Contract between the Fund and State
                              Street Bank and Trust Company


                     (2)  --  Custodial Fee Schedule between the Fund and State
                              Street Bank and Trust Company(3)


                 (k) (1)  --  Registrar, Transfer Agency and Service Agreement
                              between the Fund and State Street Bank and Trust
                              Company(3)


                     (2)  --  Transfer Agent and Registrar Services Fee
                              Agreement between the Fund and State Street Bank
                              and Trust Company


                 (l) (1)  --  Opinion and consent of Willkie Farr & Gallagher


                     (2)  --  Opinion and consent of Venable, Baetjer and
                              Howard, LLP

                 (m)      --  Not applicable

                 (n)      --  Consent of PricewaterhouseCoopers LLP

                 (o)      --  Not applicable
                 (p)      --  Purchase Agreement between the Fund and The
                              Gabelli Equity Trust Inc.(1)
                 (q)      --  Not applicable

                 (r)      --  Code of Ethics


- ------------------
(1)     Incorporated by reference from the Registrant's Registration Statement
        on Form N-2, File Nos. 33-60407 and 811-8476, as filed with the
        Securities and Exchange Commission on June 20, 1995.
(2)     Incorporated by reference from the Registrant's Registration Statement
        on Form N-2, File Nos. 33-25487 and 811-8476, as filed with the
        Securities and Exchange Commission on May 30, 1997.
(3)     Incorporated by reference from Amendment No. 1 to the Registrant's
        Registration Statement on Form N-2, File Nos. 33-60407 and 811-8476, as
        filed with the Securities and Exchange Commission on August 7, 1995.
(4)     Incorporated by reference to the Registrant's Registration Statement on
        Form N-2, Exhibit 2(d), File No. 811-8476, as filed with the Securities
        Exchange Commission on July 8, 1994.








                                      C-2


<PAGE>   77


ITEM 25.  MARKETING ARRANGEMENTS

        Not applicable

ITEM 26.  OTHER EXPENSES OF ISSUANCE

        The following table sets forth the estimated expenses to be incurred in
connection with the Offer described in this Registration Statement:




<TABLE>
<CAPTION>
<S>                                                                                <C>
        Registration fees.................................                          $       15,857
                                                                                    --------------
        New York Stock Exchange
        listing fee.......................................                                  44,300
                                                                                    --------------
        Printing (other than stock
        certificates).....................................                                  34,000
                                                                                    --------------
        Engraving and printing
        stock certificates................................                                   6,000
                                                                                    --------------

        Fees and expenses of
        qualification under state securities laws
        (including fees of counsel).......................                                  10,000
                                                                                    --------------
        Auditing fees and expenses........................                                   7,500
                                                                                    --------------
        Legal fees and expenses...........................                                 140,000
                                                                                    --------------
        Subscription Agent's fees
        and expenses......................................                                 125,000
                                                                                    --------------
        Postage and  delivery.............................                                  64,500
                                                                                    --------------

        Miscellaneous.....................................                                   7,843
                                                                                    --------------
        Total                                                                       $      455,000
                                                                                    ==============
</TABLE>








ITEM 27.    PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH

            REGISTRANT

            None.





ITEM 28.    NUMBER OF HOLDERS OF SECURITIES



            Common Stock, par value $.001 per share: 38,587 record holders as of
            May 17, 2000.

            Cumulative Preferred Stock, par value $.001 per share: 1,933 record
            holders as of May 17, 2000.

ITEM 29.    INDEMNIFICATION

            The response of this Item is incorporated by reference to the
caption "Capital Stock and Other Securities -- Limitation of Officers' and
Directors' Liability" set forth in the Prospectus.

            Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), may be permitted to Directors,
officers and controlling persons of the Fund, pursuant to the



                                      C-3


<PAGE>   78

foregoing provisions or otherwise, the Fund has been advised that in the opinion
of the Securities and Exchange Commission (the "SEC") such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Fund of expenses incurred or paid by a Director, officer
or controlling person of the Fund in the successful defense of any action, suit
or proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Fund will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

ITEM 30.    BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

        Registrant is fulfilling the requirement of this Item 30 to provide a
list of the officers and directors of its investment adviser, together with
information as to any other business, profession, vocation or employment of a
substantial nature engaged in by that entity or those of its officers and
directors during the past two years, by incorporating by reference the
information contained in the Form ADV filed with the SEC pursuant to the
Investment Advisers Act of 1940 by Gabelli Funds, Inc. (SEC File No.
[801-26202]).

ITEM 31.    LOCATION OF ACCOUNTS AND RECORDS

        Gabelli Funds, LLC
        One Corporate Center
        Rye, New York  10580

        (with respect to its services as Investment Adviser)

        State Street Bank and Trust Company
        Two Heritage Drive
        North Quincy, Massachusetts  02171

        (with respect to its services as custodian, transfer agent, dividend
        disbursing agent and registrar)

        PFPC, Inc.
        101 Federal Street
        Boston, Massachusetts  02110

        (with respect to its services as Sub-Administrator)

ITEM 32.    MANAGEMENT SERVICES

            Not applicable.

ITEM 33.    UNDERTAKINGS

        (a)     Registrant undertakes to suspend offering its shares until it
amends its prospectus contained herein if (1) subsequent to the effective date
of its Registration Statement, the net asset value per share declines more than
10 percent from its net asset value per share as of the effective date of this
Registration Statement, or (2) the net asset value per share increases to an
amount greater than its net proceeds as stated in the prospectus contained
herein.

        (b)     Registrant hereby undertakes:

                (1)     to file, during any period in which offers or sales are
        being made, a post-effective amendment to this Registration Statement:

                        (i)     to include any prospectus required by Section
                10(a)(3) of the Act;

                                      C-4


<PAGE>   79

                        (ii)    to reflect in the prospectus any facts or events
                arising after the effective date of the Registration Statement
                (or the most recent post-effective amendment thereof) which,
                individually or in the aggregate, represent a fundamental change
                in the information set forth in the Registration Statement.
                Notwithstanding the foregoing, any increase or decrease in
                volume of securities offered (if the total dollar value of
                securities offered would not exceed that which was registered)
                and any deviation from the low or high end of the estimated
                maximum offering range may be reflected in the form of
                prospectus filed with the Commission pursuant to Rule 424(b)
                (Section 230.424(b) of this chapter) if, in the aggregate, the
                changes in volume and price represent no more than a 20% change
                in the maximum aggregate offering price set forth in the
                "Calculation of Registration Fee" table in the effective
                Registration Statement; or

                        (iii)   to include any material information with respect
                to the plan of distribution not previously disclosed in the
                Registration Statement or any material change to such
                information in the Registration Statement.

                (2)     that, for the purpose of determining any liability under
        the Act, each such post-effective amendment shall be deemed to be a new
        registration statement relating to the securities offered therein, and
        the offering of such securities at that time shall be deemed to be the
        initial bona fide offering thereof.

                (3)     to remove from registration by means of a post-effective
        amendment any of the securities being registered which remain unsold at
        the termination of the offering.

        (c)     Registrant hereby undertakes that:

                (1)     For purposes of determining any liability under the
        Securities Act of 1933, the information omitted from the form of
        prospectus filed as part of this Registration Statement in reliance upon
        Rule 430A and contained in a form of prospectus filed by the Registrant
        pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
        shall be deemed to be part of this Registration Statement as of the time
        it was declared effective.

                (2)     For the purpose of determining any liability under the
        Securities Act of 1933, each post-effective amendment that contains a
        form of prospectus shall be deemed to be a new registration statement
        relating to the securities offered therein, and the offering of such
        securities at that time shall be deemed to be the initial bona fide
        offering thereof.

        (d)     Registrant hereby undertakes to send by first class mail or
other means designed to ensure equally prompt delivery, within two business days
of receipt of a written or oral request, a Statement of Additional Information.


                                      C-5


<PAGE>   80


                                   SIGNATURES



        Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Rye, State of New York, on the 2nd
day of June, 2000.

                                        THE GABELLI GLOBAL MULTIMEDIA TRUST INC.


                                        By  /s/ Bruce N. Alpert
                                            ------------------------------------
                                            Bruce N. Alpert
                                            Vice President and Treasurer



        Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated.




SIGNATURE                     TITLE
- ---------                     -----

             *                Chairman of the Board, President and
- --------------------------    Chief Investment Officer
Mario J. Gabelli

             *                Director
- --------------------------
Thomas E. Bratter

             *                Director
- --------------------------
Felix J. Christiana

             *                Director
- --------------------------
James P. Conn

             *                Director
- --------------------------
Frank J. Fahrenkopf, Jr.

             *                Director
- --------------------------
Karl Otto Pohl

             *                Director
- --------------------------
Anthony R. Pustorino

             *                Director
- --------------------------
Werner Roeder

             *                Director
- --------------------------
Salvatore J. Zizza

/s/ Bruce N. Alpert           Treasurer (Principal Financial and
- --------------------------    Accounting Officer)
Bruce N. Alpert

* /s/ Bruce N. Alpert
- --------------------------
Bruce N. Alpert
   as Attorney-In-Fact


                                      C-6


<PAGE>   81

                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
  EXHIBIT                                                                                               PAGE
  NUMBER                                                 EXHIBIT                                       NUMBER
  ------                                                 -------                                       ------

<S>                <C>                                                                                 <C>
Exhibit A          (1) Articles of Incorporation*...................................................
                   (2) Articles Supplementary*......................................................
                   (3) Certificates of Correction...................................................
Exhibit B          (1) Amended and Restated By-Laws*................................................
                   (2) Amendments to By-Laws........................................................
Exhibit C          Not applicable...................................................................
Exhibit D          (1) Specimen Stock Certificate*..................................................
                   (2) Form of Subscription Certificate.............................................
                   (3) Form of Notice of Guaranteed Delivery........................................
                   (4) Form of DTC Participant Oversubscription Exercise Form.......................
                   (5) Form of Nominee Holder Over-Subscription Certification.......................
                   (6) Form of Subscription, Distribution and Escrow Agency Agreement*..............
                   (7) Form of Beneficial Owner Certification.......................................
                   (8) Form of Subscription Rights Broker Split Requests............................
                   (9) Form of Certificate and Request for Additional Rights........................
Exhibit E          Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan.................
Exhibit F          Not applicable...................................................................
Exhibit G          Investment Advisory Agreement between the Fund and Gabelli Funds, Inc............
Exhibit H          Not applicable...................................................................
Exhibit I          Not applicable...................................................................
Exhibit J          (1) Custodial Contract between the Fund and State Street Bank and Trust
                   Company..........................................................................
                   (2) Custodial Fee Schedule between the Fund and State Street Bank and Trust
                   Company*.........................................................................
Exhibit K          (1) Registrar, Transfer Agency and Service Agreement between the Fund and State
                   Street Bank and Trust Company*...................................................
                   (2) Transfer Agent and Registrar Services Fee Agreement between the Fund and
                   State Street Bank and Trust Company..............................................
Exhibit L          (1) Opinion and consent of Willkie Farr & Gallagher..............................
                   (2) Opinion and consent of Venable, Baetjer and Howard, LLP......................
Exhibit M          Not applicable...................................................................
Exhibit N          Consent of PricewaterhouseCoopers LLP............................................
Exhibit O          Not applicable...................................................................
Exhibit P          Purchase Agreement between the Fund and The Gabelli Equity Trust Inc.*...........
Exhibit Q          Not applicable...................................................................
Exhibit R          Code of Ethics...................................................................
</TABLE>


- ------------------
*   Previously filed.


                                      C-7


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.3
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>CERTIFICATES OF CORRECTION
<TEXT>

<PAGE>   1


                                                                         EX A(3)



                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.

                            CERTIFICATE OF CORRECTION


       FIRST: The title of the document being corrected by this Certificate of
Correction is the Articles Supplementary of the Fund which created and
established the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of the shares of the 7.92% Cumulative Preferred Stock
of the Fund.

       SECOND: The name of the only party to such Articles Supplementary is: The
Gabelli Global Multimedia Trust Inc.

       THIRD: The Articles Supplementary being corrected by this Certificate of
Correction were filed with and approved by the Department on June 4, 1997 and
corrected on June 5, 1997.

       FOURTH: The fifth clause of the definition of "Moody's Eligible Assets"
in Article I of such Articles Supplementary as originally filed read as follows:

              "v. common stocks (A) which are traded on the New York Stock
       Exchange, the American Stock Exchange or in the over-the-counter market,
       (B) which, if cash dividend paying, pay cash dividends in U.S. dollars,
       (C) which may be sold without restriction by the Corporation; provided,
       however, that (l) common stock which, while a Moody's Eligible Asset
       owned by the Corporation, ceases paying any regular cash dividend will no
       longer be considered a Moody's Eligible Asset until 71 days following the
       date of the announcement of such cessation, unless the issuer of the
       common stock has senior debt securities rated at least A3 by Moody's and
       (2) the aggregate Market Value of the Corporation's holdings of the
       common stock of any issuer in excess of 4% in the case of utility common
       stock and 6% in the case of non-utility common stock of the number of
       Outstanding shares times the Market Value of such common stock shall not
       be a Moody's Eligible Asset and (D) which are securities denominated in
       any currency other than the U.S. dollar or securities of issuers formed
       under the laws of jurisdictions other


<PAGE>   2


       than the United States, its states and the District of Columbia for which
       there are dollar-denominated American Depository Receipts ("ADRs") or
       their equivalents which are traded in the United States on exchanges or
       over-the-counter and are issued by banks formed under the laws of the
       United States, its states or the District of Columbia; provided, however,
       that the aggregate Market Value of the Corporation's holdings of
       securities denominated in currencies other than the U.S. dollar and ADRs
       in excess of 6% of the aggregate Market Value of the Outstanding shares
       of common stock of such issuer or in excess of 10% of the Market Value of
       the Corporation's Moody's Eligible Assets with respect to issuers formed
       under the laws of any single such non-U.S. jurisdiction shall not be a
       Moody's Eligible Asset;"

       The fifth clause of the definition of "Moody's Eligible Assets" in
Article I of such Articles Supplementary as corrected hereby should read as
follows:

       "v. common stocks (A) which are traded on the New York Stock Exchange,
       the American Stock Exchange or in the over-the-counter market and (B)
       which may be sold without restriction by the Corporation; provided,
       however, that (1) common stock which, while a Moody's Eligible Asset
       owned by the Corporation, ceases paying any regular cash dividend will no
       longer be considered a Moody's Eligible Asset until 71 days following the
       date of the announcement of such cessation, unless the issuer of the
       common stock has senior debt securities rated at least A3 by Moody's and
       (2) the aggregate Market Value of the Corporation's holdings of the
       common stock of any issuer in excess of 4% in the case of utility common
       stock and 6% in the case of non-utility common stock of the number of
       Outstanding shares times the Market Value of such common stock shall not
       be a Moody's Eligible Asset or (C) which are securities denominated in
       any currency other than the U.S. dollar or securities of issuers formed
       under the laws of jurisdictions other than the United States, its states
       and the District of Columbia for which there are dollar-denominated
       American Depository Receipts ("ADRs") or their equivalents which are
       traded in the United States on exchanges or over-the-counter


                                        2


<PAGE>   3



       and are issued by banks formed under the laws of the United States, its
       states or the District of Columbia; provided, however, that the aggregate
       Market Value of the Corporation's holdings of securities denominated in
       currencies other than the U.S. dollar and ADRs in excess of 6% of the
       aggregate Market Value of the Outstanding shares of common stock of such
       issuer or in excess of l0% of the Market Value of the Corporation's
       Moody's Eligible Assets with respect to issuers formed under the laws of
       any single such non-U.S. jurisdiction shall not be a Moody's Eligible
       Asset;"

       FIFTH: The foregoing correction will not affect any right or liability
accrued or incurred before its filing.

       SIXTH: The undersigned has executed this Certificate of Correction in the
manner in which the Articles Supplementary being corrected by this Certificate
of Correction were required to be executed.


                      [THIS SPACE INTENTIONALLY LEFT BLANK]


                                       3
<PAGE>   4

IN WITNESS WHEREOF, THE GABELLI GLOBAL MULTIMEDIA TRUST INC. Inc has caused
these presents to be signed in its name and on its behalf by a duly authorized
officer, and its corporate seal to be hereunto affixed and attested by its
Secretary, and the said officers of the Corporation further acknowledge said
instrument to be the corporate act of the Corporation, and state that to the
best of their knowledge, information and belief the matters and facts herein set
forth with respect to approval are true in all material respects, all on July
25, 1997, under the penalties of perjury.

                                          THE GABELLI GLOBAL MULTIMEDIA
                                          TRUST INC.

                                          By /s/ BRUCE N. ALPERT
                                             ---------------------------------
                                             Name:  Bruce N. Alpert
                                             Title: Vice President
                                                    and Treasurer


Attest:

/s/ JAMES E. MCKEE
- -----------------------------
Name:  James E. McKee
Title: Secretary



                                       4

<PAGE>   5


                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                           CERTIFICATE OF CORRECTION

       FIRST: The title of the document being corrected by this Certificate of
Correction is the Articles Supplementary of the Fund which created and
established the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of the shares of the 7.92% Cumulative Preferred Stock
of the Fund.

       SECOND: The name of the only party to such Articles Supplementary is: The
Gabelli Global Multimedia Trust Inc.

       THIRD: The Articles Supplementary being corrected by this Certificate of
Correction were filed with and approved by the Department on June 4, 1997.

       FOURTH: The third clause of Article II, Section 4(e) of such Articles
Supplementary as origina1ly filed read as follows:

       "(iii) The terms of office of all persons who are directors of the
       Corporation at the time of a special meeting of holders of Preferred
       Stock, including Cumulative Preferred Stock, to elect directors shall
       continue, notwithstanding the election at such meeting by such holders of
       the number of directors that they are entitled to elect, and the persons
       so elected by such holders, together with the two incumbent directors
       elected by the holders of Preferred Stock, including Cumulative Preferred
       Stock, and the remaining incumbent directors elected by the holders of
       the Common Stock and Preferred Stock, shall constitute the duly elected
       directors of the Corporation."

       The third clause of Article II, Section 4(e) of such Articles
Supplementary hereby should read as follows:

       "(iii) Unless inconsistent with the provisions of paragraph 4(b) of
Article II hereof, the terms of office of all persons who are directors of the
Corporation at the time of a special meeting of holders of Preferred Stock,
including Cumulative Preferred Stock, to elect


<PAGE>   6

directors shall continue, and the persons so elected by such holders of
Cumulative Preferred Stock, together with the two incumbent directors elected by
the holders of Preferred Stock, including Cumulative Preferred Stock, and the
remaining incumbent directors elected by the holders of the Common Stock and
Preferred Stock, shall constitute the duly elected directors of the
Corporation."

       FIFTH: The foregoing correction will not affect any right or liability
accrued or incurred before its filing.

       SIXTH: The undersigned has executed this Certificate of Correction in
the manner in which the Articles Supplementary being corrected by this
Certificate of Correction were required to be executed.



                     [THIS SPACE INTENTIONALLY LEFT BLANK]




                                        2

<PAGE>   7

       IN WITNESS WHEREOF, THE GABELLI GLOBAL MULTIMEDIA TRUST INC. Inc has
caused these presents to be signed in its name and on its behalf by a duly
authorized officer, and its corporate seal to be hereunto affixed and attested
by its Secretary, and the said officers of the Corporation further acknowledge
said instrument to be the corporate act of the Corporation, and state that to
the best of their knowledge, information and belief the matters and facts herein
set forth with respect to approval are true in all material respects, all on
June 2, 1997.

                                             THE GABELLI GLOBAL MULTIMEDIA
                                             TRUST INC.


                                             By /s/ BRUCE N. ALPERT
                                               --------------------------
                                               Name:  Bruce N. Alpert
                                               Title: Vice President
                                                      and Treasurer


Attest:

/s/ JAMES E. MCKEE
- ---------------------------
Name:  James E. McKee
Title: Secretary





                                       3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.B.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>AMENDMENTS TO BY-LAWS
<TEXT>

<PAGE>   1

                                                                    EXHIBIT B(2)


                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                              AMENDMENT TO BY-LAWS


      The first sentence of Article I, Section 1 of the Trust's By-Laws is
hereby deleted in its entirety and the following sentence is substituted
therefor:

            "Section 1. Annual Meetings. The annual meeting of stockholders of
            the Gabelli Global Multimedia Trust Inc. (the "Corporation") shall
            be held on a date fixed from time to time by the Board of Directors
            within the thirty-one (31) day period ending five months after the
            end of the Corporation's fiscal year."




Approved by the Board of Directors on February 22, 1995
<PAGE>   2
                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                              AMENDMENT TO BY-LAWS


      Article 1. Section 1. of the By-Laws is hereby deleted and the following
      is substituted in its place:

      ARTICLE 1. SECTION 1. Annual Meetings. The annual meeting of the
stockholders of The Gabelli Global Multimedia Trust Inc. (the "Corporation")
shall be held on a DATE NOT LESS THAN NINETY (90) NOR MORE THAN ONE HUNDRED
EIGHTY TWO (182) DAYS after the end of the Corporation's fiscal year fixed from
time to time by the Board of Directors. An annual meeting may be held at any
place in or out of the State of Maryland as may be determined by the Board of
Directors as shall be designated in the notice of the meeting and at the time
specified by the Board of Directors. Any business of the Corporation may be
transacted at an annual meeting without being specifically designated in the
notice unless otherwise provided by statute, the Corporation's Charter or these
By-Laws.

April 1, 1998
<PAGE>   3
                           AMENDMENT TO THE BYLAWS OF
                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                            AS PROPOSED MAY 19, 1999

      The By-Laws of Gabelli Global Multimedia Trust Inc. (the "Trust") be, and
they hereby are, amended to add the following Section to Article I of the
Trust's By-Laws.

      "Section 12 -- Notice of Stockholder Business. At any annual or special
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an
annual or special meeting, the business must be (i) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (iii) otherwise properly brought before
the meeting by a stockholder.

      For business to be properly brought before an annual or special meeting by
a stockholder, the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, any such notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not later than 60 days prior to the date of the meeting; provided,
however, that if less than 70 days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, any such notice by a
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which notice of the date of the
annual or special meeting was given or such public disclosure was made.

      Any such notice by a stockholder shall set forth as to each matter the
stockholder proposes to bring before the annual or special meeting (i) a brief
description of the business desired to be brought before the annual or special
meeting and the reasons for conducting such business at the annual or special
meeting, (ii) the name and address, as they appear on the Corporation's books,
of the stockholder proposing such business, (iii) the class and number of shares
of the capital stock of the Corporation which are beneficially owned by the
stockholder, and (iv) any material interest of the stockholder in such business.

      Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at any annual or special meeting except in accordance with
the procedures set forth in this Section 12. The chairman of the annual or
special meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting in accordance
with the provisions of this Section 12, and, if he should determine, he shall so
declare to the meeting that any such business not properly brought before the
meeting shall not be considered or transacted."

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.D.2
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>FORM OF SUBSCRIPTION CERTIFICATE
<TEXT>

<PAGE>   1
                                                                   EXHIBIT D(2)


         VOID IF NOT RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 P.M.
                      NEW YORK TIME ON THE EXPIRATION DATE

CONTROL NO. ___________   MAXIMUM PRIMARY SUBSCRIPTION SHARES AVAILABLE ________

                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                      SUBSCRIPTION RIGHTS FOR COMMON STOCK

Dear Shareholder:

      IN ORDER TO EXERCISE YOUR RIGHTS, YOU MUST COMPLETE BOTH SIDES OF THE TEAR
OFF CARD.

      As the registered owner of the Subscription Certificate below, you are
entitled to subscribe for the number of shares of Common Stock, $.001 par value
per share, of The Gabelli Global Multimedia Trust Inc. (the "Fund"), shown above
pursuant to the Primary Subscription Right and upon the terms and conditions and
at the Subscription Price for each share of Common Stock specified in the
Prospectus relating thereto. The Rights represented hereby include the
Over-Subscription Privilege for Rights holders, as described in the Prospectus.
Under the Privilege, any number of additional shares may be purchased by a
Rights holder if such shares are available and the holder's Primary Subscription
Rights have been fully exercised to the extent possible.

      Registered owners who are participants in The Gabelli Global Multimedia
Trust Inc. Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan will
receive their primary and oversubscription shares via an uncertificated share
credit to their existing accounts. To request a stock certificate, participants
in the plan must check Box D on the reverse side of the Subscription Certificate
below. Registered owners who are not participants in the plan will be
automatically issued stock certificates. Stock certificates for primary share
subscriptions will be delivered as soon as practicable after receipt of the
required completed Subscription Certificate and after full payment has been
received and cleared. Stock certificates for oversubscriptions and confirmation
statements reflecting uncertificated share credits for dividend reinvestment
accounts will be delivered as soon as practicable after the Expiration Date and
after all allocations have been effected.

                     THE SUBSCRIPTION RIGHT IS TRANSFERABLE


      PAYMENT MUST BE IN UNITED STATES DOLLARS. ONLY MONEY ORDERS OR CHECKS
DRAWN ON A BANK LOCATED IN THE CONTINENTAL UNITED STATES (OR FOR CANADIAN
RESIDENTS ONLY, ON A BANK LOCATED IN CANADA) AND MADE PAYABLE TO THE GABELLI
GLOBAL MULTIMEDIA TRUST INC. WILL BE ACCEPTED. PLEASE REFERENCE YOUR RIGHTS CARD
CONTROL NUMBER ON YOUR CHECK, MONEY ORDER OR NOTICE OF GUARANTEED DELIVERY.


- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

         VOID IF NOT RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 P.M.
                      NEW YORK TIME ON THE EXPIRATION DATE

CONTROL NO. _______   RIGHTS REPRESENTED BY THIS SUBSCRIPTION CERTIFICATE ______
CUSIP NO. 36239Q 109                                       ACCOUNT NO. _________

                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                      SUBSCRIPTION RIGHTS FOR COMMON STOCK
           (COMPLETE APPROPRIATE SECTION ON REVERSE SIDE OF THIS FORM)

      The registered owner of this Subscription Certificate named below, or
assigns, is entitled to the number of Rights to subscribe for the Common Stock,
$.001 par value, of The Gabelli Global Multimedia Trust Inc. (the "Fund") shown
above, in the ratio of one share of Common Stock for each three Rights, pursuant
to the Primary Subscription Right and upon the terms and conditions and at the
price for each share of Common Stock specified in the Prospectus relating
thereto. The Rights represented hereby include the Over-Subscription Privilege
for Record Date Stockholders only, as described in the Prospectus. Under this
Privilege, any number of additional shares may be purchased by a Record Date
Stockholder if such shares are available and the owner's Primary Subscription
Rights have been fully exercised to the extent possible and the pro rata
allocation requirements have been satisfied. Stock certificates for the shares
subscribed for pursuant to the Primary Subscription Right will be delivered as
soon as practicable after receipt of the required completed Subscription
Certificate and after full payment has been received and cleared. Stock
certificates for the shares subscribed for pursuant to the Over-Subscription
Privilege will be delivered as soon as practicable after the Expiration Date and
after all allocations have been effected. Registered owners who are participants
in The Gabelli Global Multimedia Trust Inc. Automatic Dividend Reinvestment and
Voluntary Cash Purchase Plan will receive their primary and oversubscription
shares via an uncertificated share credit to their existing accounts. To request
a stock certificate, participants in the plan should check Box D on the reverse
side of this form. Any refund in connection with an over-subscription will be
delivered as soon as practicable after the Expiration Date and after all
allocations have been effected. The Subscription Certificate may be transferred
in the same manner and with the same effect as in the case of a negotiable
instrument payable to specific persons, by duly completing and signing the
assignment on the reverse side hereof. To subscribe pursuant to the Primary
Subscription Right or the Over-Subscription Privilege, three Rights and the
Subscription Price are required for each share of Common Stock. Payment of the
$____ per share must accompany the Subscription Certificate. See reverse side of
forms.

                                       THE GABELLI GLOBAL MULTIMEDIA TRUST INC.

                                       By:
                                          -----------------------------


                                       EQUISERVE TRUST COMPANY

                                       By:
                                          -----------------------------

<PAGE>   2
To subscribe for your primary shares please complete line "A" on the card below.

Example:

100 shares = 100 rights (100 rights will be AUTOMATICALLY rounded up to 102
rights, the nearest number of rights divisible by three)

102 rights divided by 3 = 34 primary shares

The maximum number of primary subscription shares would be 34.

                               A.   34     x   $____ = $______
                                   (No. of shares)

If you are not subscribing for your full Primary Subscription, check box "E"
below and we will attempt to sell any remaining unexercised Rights.

To subscribe for any over-subscription shares please complete line "B" below.

PLEASE NOTE: Only Record Date Stockholders who have exercised their Primary
Subscription in full may apply for shares pursuant to the Over-Subscription
Privilege.

PAYMENT OF SHARES: Full payment for both the primary and over-subscription
shares or a notice of guaranteed delivery must accompany this subscription.
Please reference your rights card control number on your check, money order or
notice of guaranteed delivery.

If the aggregate Subscription Price paid by a Record Date Stockholder is
insufficient to purchase the number of shares of Common Stock that the holder
indicates are being subscribed for, or if a Record Date Stockholder does not
specify the number of shares of Common Stock to be purchased, then the Record
Date Stockholder will be deemed to have exercised first, the Primary
Subscription Right (if not already fully exercised) and second, the
Over-Subscription Privilege to purchase shares of Common Stock to the full
extent of the payment rendered. If the aggregate Subscription Price paid by a
Record Date Stockholder exceeds the amount necessary to purchase the number of
shares of Common Stock for which the Record Date Stockholder has indicted an
intention to subscribe, then the Record Date Stockholder will be deemed to have
exercised first, the Primary Subscription Right (if not already fully exercised)
and second, the Over-Subscription Privilege to the full extent of the excess
payment tendered.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

               Expiration Date ________, 2000 (unless extended)

To:   EQUISERVE                       PLEASE FILL IN ALL APPLICABLE INFORMATION
      Attention: Corporate Actions

                                   By Mail:
                                 P.O. Box 9573
                             Boston, MA 02205-9573


                             By Overnight Courier:
                              40 Campanelli Drive
                              Braintree, MA 02184


                                 By Facsimile:
                                (781) 575-4826

With the original Subscription Certificate to be sent by mail, hand or
overnight courier. Confirm facsimile by telephone to (781) 575-4816


                                   By Hand:

               Securities Transfer and Reporting Services, Inc.
                                 c/o EquiServe
                           100 Williams St. Galleria
                              New York, NY 10038


A.   Primary Subscription          ________ x      $____      = $______
     (3 Rights = 1 share)          (No. of Shares)  (Purchase Price)
B.   Over-Subscription Privilege   ________ x      $____      = $______(1)
                                     (Shares)       (Purchase Price)
C.   Amount of Check Enclosed                                 = $______
     (or amount in notice of guaranteed delivery)

D.   IF YOU CURRENTLY PARTICIPATE IN THE FUND'S AUTOMATIC DIVIDEND REINVESTMENT
     AND CASH PURCHASE PLAN AND WISH TO RECEIVE A CERTIFICATE, CHECK HERE [ ]

E.   Sell any Remaining Rights[ ]

F.   Sell all of my Rights[ ]

           (1)  The Over-Subscription Privilege can be exercised only by a
                Record Date Stockholder, as described in the Prospectus, and
                only if the Rights initially issued to him are exercised to the
                fullest extent possible.

- -------------------------------------------------------------------------------
SECTION 1. TO SUBSCRIBE: I hereby irrevocably subscribe for the face amount of
Common Stock indicated as the total of A and B hereon upon the terms and
conditions specified in the Prospectus relating thereto, receipt of which is
acknowledged. I hereby agree that if I fail to pay for the shares of Common
Stock for which I have  subscribed,  the Fund may  exercise any of the remedies
set forth in the Prospectus.


        TO SELL:  If I have checked either the box on line E or on line F, I
authorize  the sale of Rights by the Subscription Agent according to the
procedures described in the Prospectus.

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
Signature(s) of Subscriber(s)

- -------------------------------------------------------------------------------
Address for delivery of Shares if other than shown on front

If permanent change of address, check here [ ]

Please give your telephone number: (   )
                                         ----------------------------
Please give your e-mail address:
                                 ------------------------------------

- --------------------------------------------------------------------------------
SECTION 2. TO TRANSFER RIGHTS (except pursuant to E or F above):
   For value received, ________ of the Rights represented by the Subscription
   Certificate are assigned to:


- --------------------------------------------------------------------------------
                         (Print Full Name of Assignee)

- --------------------------------------------------------------------------------
                             (Print Full Address)

- --------------------------------------------------------------------------------
                          Signature(s) of Assignee(s)

IMPORTANT:   The Signature(s) must correspond in every particular, without
             alteration, with the name(s) as printed on your Subscription
             Certificate.
Your signature must be guaranteed by:
   a) a commercial bank or trust company or
   b) a member firm of a domestic stock exchange or
   c) a savings bank or credit union.
Signature
         -----------------------------------------------------------------------
Guaranteed                       (Name of Bank or Firm)
By:
   -----------------------------------------------------------------------------
                       (Signature of Officer and Title)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.D.3
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>FORM OF NOTICE OF GUARANTEED DELIVERY
<TEXT>

<PAGE>   1
                                                                   EXHIBIT D(3)



                          NOTICE OF GUARANTEED DELIVERY
                          FOR SHARES OF COMMON STOCK OF

                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                    SUBSCRIBED FOR UNDER PRIMARY SUBSCRIPTION
                       AND THE OVER-SUBSCRIPTION PRIVILEGE


As set forth in the Prospectus, this form or one substantially equivalent hereto
may be used as a means of effecting subscription and payment for all shares of
the Fund's Common Stock (the "Shares") subscribed for under the Primary
Subscription and the Over-Subscription Privilege. Such form may be delivered by
hand or sent by facsimile transmission, overnight courier or first class mail to
the Subscription Agent.

                           THE SUBSCRIPTION AGENT IS:

                                    EQUISERVE
                          Attention: Corporate Actions

               BY MAIL:
            P.O. Box 9573                               BY FACSIMILE:
        Boston, MA 02205-9573                          (781) 575-4826


                            CONFIRM BY TELEPHONE TO:
                                 (781) 575-4816

 BY OVERNIGHT COURIER:                          BY HAND:
  40 Campanelli Drive          Securities Transfer and Reporting Services, Inc.
  Braintree, MA 02184                        c/o EquiServe
                                       100 Williams St. Galleria
                                          New York, NY 10038


DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA A
TELECOPY FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A
VALID DELIVERY.

The New York Stock Exchange member firm or bank or trust company which completes
this form must communicate this guarantee and the number of Shares subscribed
for in connection with this guarantee (separately disclosed as to the Primary
Subscription and the Over-Subscription Privilege) to the Subscription Agent and
must deliver this Notice of Guaranteed Delivery of Payment, guaranteeing
delivery of (a) payment in full for all subscribed Shares and (b) a properly
completed and signed copy of the Subscription Certificate (which certificate and
full payment must then be delivered no later than the close of business of the
third business day after the Expiration Date, unless extended) to the
Subscription Agent prior to 5:00 p.m., New York time, on the Expiration Date,
unless extended. Failure to do so will result in a forfeiture of the Rights.

                                    GUARANTEE

The undersigned, a member firm of the New York Stock Exchange or a bank or trust
company having an office or correspondent in the United States, guarantees
delivery to the Subscription Agent by no later than 5:00 p.m., New York time, on
____________, 2000 (unless extended as described in the Prospectus) of (a) a
properly completed and executed Subscription Certificate and (b) payment of the
full Subscription Price for Shares subscribed for on Primary Subscription and
for any additional Shares subscribed for pursuant to the Over-Subscription
Privilege, as subscription for such Shares is indicated herein or in the
Subscription Certificate.

                                                       (continued on other side)

<PAGE>   2
                                                BROKER ASSIGNED CONTROL # ______

                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.

<TABLE>
<S>                        <C>                           <C>                             <C>
1.    Primary              Number of Rights              Number of Primary Shares        Payment to be made in
      Subscription         to be exercised               requested for which you         connection with
                                                         are guaranteeing delivery       Primary Shares
                                                         of Rights and Payment

                           __________Rights              _________Shares                 $___________
                                                         (Rights / by 3)


2.    Over-Subscription                                  Number of Over-Subscription     Payment to be made in
                                                         Shares requested for which      connection with Over-
                                                         you are guaranteeing payment    Subscription Shares

                                                         _________Shares                 $___________


3.    Totals               Total Number of
                           Rights to be Delivered

                           __________Rights                                              $___________
                                                                                         Total Payment
</TABLE>

Method of delivery (circle one)

A.      Through DTC

B.      Direct to EquiServe, as Subscription Agent. Please reference below the
        registration of the Rights to be delivered.

                              --------------------

                              --------------------

                              --------------------



PLEASE SIGN A UNIQUE CONTROL NUMBER FOR EACH GUARANTEE SUBMITTED. This number
needs to be referenced on any direct delivery of Rights or any delivery through
DTC. In addition, please note that if you are guaranteeing for Over-Subscription
Privilege Shares and are a DTC participant, you must also execute and forward to
EquiServe a DTC Participant Over-Subscription Exercise form.

- ---------------------------                   --------------------------------
Name of Firm                                  Authorized Signature

- ---------------------------                   --------------------------------
DTC Participant Number                        Title

- ---------------------------                   --------------------------------
Address                                       Name (Please Type or Print)

- ---------------------------                   --------------------------------
                  Zip Code                    Phone Number

- ---------------------------                   --------------------------------
Contact Name                                  Date

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.D.4
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>FORM OF OVERSUBSCRIPTION EXERCISE FORM
<TEXT>

<PAGE>   1
                                                                   EXHIBIT D(4)


                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                                 RIGHTS OFFERING

                 DTC PARTICIPANT OVER-SUBSCRIPTION EXERCISE FORM

THIS FORM IS TO BE USED ONLY BY DEPOSITORY TRUST COMPANY PARTICIPANTS TO
EXERCISE THE OVER-SUBSCRIPTION PRIVILEGE IN RESPECT OF RIGHTS WITH RESPECT TO
WHICH THE PRIMARY SUBSCRIPTION WAS EXERCISED AND DELIVERED THROUGH THE
FACILITIES OF THE DEPOSITORY TRUST COMPANY. ALL OTHER EXERCISES OF
OVER-SUBSCRIPTION PRIVILEGES MUST BE EFFECTED BY THE DELIVERY OF THE
SUBSCRIPTION CERTIFICATES.

                          ----------------------------


THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE COMPANY'S
PROSPECTUS DATED ________, 2000 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN
BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM THE
COMPANY AND THE SUBSCRIPTION AGENT.

                          ----------------------------


VOID UNLESS RECEIVED BY THE SUBSCRIPTION AGENT BY 5:00 PM, NEW YORK CITY TIME,
ON ______, 2000, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE").

                          ----------------------------


1. The undersigned hereby certifies to the Company and the Subscription Agent
that it is a participant in The Depository Trust Company ("DTC") and that it has
either (i) fully exercised its Rights under the Primary Subscription and
delivered such exercised Rights to the Subscription Agent by means of transfer
to the DTC account of the Subscription Agent or (ii) delivered to the
Subscription Agent a Notice of Guaranteed Delivery in respect of the exercise of
the Rights under the Primary Subscription and will deliver the Rights called for
in such Notice of Guaranteed Delivery to the Subscription Agent by means of
transfer to such DTC account of the Subscription Agent.


2. The undersigned hereby exercises the Over-Subscription Privilege to purchase,
to the extent available, ______ shares of Common Stock and certifies to the
Company and the Subscription Agent that such Over-Subscription Privilege is
being exercised for the account or accounts of persons (which may include the
undersigned) on whose behalf all Primary Subscription Rights have been
exercised.


3. The undersigned understands that payment of the Subscription Price of $_____
per share for each share of Common Stock subscribed for pursuant to the
Over-Subscription Privilege must be received by the Subscription Agent at or
before 5:00 p.m., New York City time, on the Expiration Date and represents that
such payment, in the aggregate amount of $_________, either (check appropriate
box):


        [ ]     has been or is being delivered to the Subscription Agent
                pursuant to the Notice of Guaranteed Delivered referred to above


                                    or


        [ ]     is being delivered to the Subscription Agent herewith


                                    or


        [ ]     has been delivered separately to the Subscription Agent;


                            (continued on other side)

<PAGE>   2
        and, in the case of funds not delivered pursuant to a Notice of
        Guaranteed Delivery, is or was delivered in the manner set forth below
        (check appropriate box and complete information relating thereto):

        [ ]      uncertified check

        [ ]      certified check




- ------------------------------------------
 Primary Subscription Confirmation Number


- ------------------------------------------
          DTC Participant Number


- ------------------------------------------
          Name of DTC Participant


For allocation purposes, the total number of record date shares owned by the
persons on whose behalf this Over-Subscription Privilege is being exercised were
_________________________

Registration into which shares, interest and/or refund checks should be issued:

Name:
     --------------------------------

     --------------------------------

Address:
        -----------------------------

        -----------------------------

        -----------------------------

Certified TIN:
              -----------------------

By:
   ----------------------------------
Name:
Title:



Contact Name:
             ------------------------

Phone Number:
             ------------------------

Dated:          , 2000
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.D.5
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>FORM OF OVER-SUBSCRIPTION CERTIFICATION
<TEXT>

<PAGE>   1
                                                                   EXHIBIT D(5)



                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                                 RIGHTS OFFERING

                 NOMINEE HOLDER OVER-SUBSCRIPTION CERTIFICATION
                   PLEASE COMPLETE ALL APPLICABLE INFORMATION

<TABLE>
<CAPTION>
By Express Mail or Overnight Courier:              By Mail:                              By Hand:

<S>                                       <C>                         <C>
              EquiServe                           EquiServe            Securities Transfer and Reporting Services, Inc.
       Att: Corporate Actions               Att: Corporate Actions                     c/o EquiServe
        40 Campanelli Drive                     P.O. Box 9573                    100 Williams St. Galleria
   Braintree, Massachusetts 02184           Boston, MA 02205-9573                   New York, NY 10038
</TABLE>

        THIS FORM IS TO BE USED ONLY BY NOMINEE HOLDERS TO EXERCISE THE
OVER-SUBSCRIPTION PRIVILEGE IN RESPECT OF RIGHTS WITH RESPECT TO WHICH THE
PRIMARY SUBSCRIPTION PRIVILEGE WAS EXERCISED IN FULL AND DELIVERED THROUGH THE
FACILITIES OF A COMMON DEPOSITORY. ALL OTHER EXERCISES OF OVER-SUBSCRIPTION
PRIVILEGES MUST BE EFFECTED BY THE DELIVERY OF THE SUBSCRIPTION CERTIFICATES.

        THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE
FUND'S PROSPECTUS DATED _________, 2000 (THE "PROSPECTUS") AND ARE INCORPORATED
HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM
THE SUBSCRIPTION AGENT.

        VOID UNLESS RECEIVED BY THE SUBSCRIPTION AGENT WITH PAYMENT IN FULL OR
WITH A PROPERLY COMPLETED NOTICE OF GUARANTEED DELIVERY BEFORE 5:00 P.M., NEW
YORK CITY TIME, ON ____________, 2000, UNLESS EXTENDED BY THE FUND (THE
"EXPIRATION DATE").

        1. The undersigned hereby certifies to the Subscription Agent that it is
a participant in __________ [Name of Depository] (the "Depository") and that it
has either (i) exercised the Primary Subscription in respect of the Rights and
delivered such exercised Rights to the Subscription Agent by means of transfer
to the Depository Account of the Subscription Agent or (ii) delivered to the
Subscription Agent a Notice of Guaranteed Delivery in respect of the exercise of
the Primary Subscription Privilege and will deliver the Rights called for in
such Notice of Guaranteed Delivery to the Subscription Agent by means of
transfer to such Depository Account of Subscription Agent.

        2. The undersigned hereby exercises the Over-Subscription Privilege to
purchase, to the extent available, ________ shares of Common Stock and certifies
to the Subscription Agent that such Over-Subscription Privilege is being
exercised for the account or accounts of persons (which may include the
undersigned) on whose behalf all Primary Subscription Rights have been
exercised.*

        3. The undersigned understands that payment of the Subscription Price of
$____ per share for each share of Common Stock subscribed for pursuant to the
Over-Subscription Privilege must be received by the Subscription Agent before
5:00 p.m., New York City time, on the Expiration Date, unless a Notice of
Guaranteed Delivery is used, in which case, payment in full must be received by
the Subscription Agent no later than the close of business on the third business
day after the Expiration Date and represents that such payment, in the aggregate
amount of $____________, either

<PAGE>   2
                             (check appropriate box)

        [ ]     has been or is being delivered to the Subscription Agent
                pursuant to the Notice of Guaranteed Delivery referred to above

                                       or

        [ ]     is being delivered to the Subscription Agent herewith

                                       or

        [ ]     has been delivered separately to the Subscription Agent; and, in
                the case of funds not delivered pursuant to a Notice of
                Guaranteed Delivery, is or was delivered in the manner set forth
                below (check appropriate box and complete information relating
                thereto):

                [ ]      uncertified check

                [ ]      certified check

                [ ]      bank draft


- --------------------------------------------------------------------------------
Primary Subscription Confirmation Number

                                        ----------------------------------------
                                        Name of Nominee Holder

- ------------------------------          ----------------------------------------
Depository Participant Number           Address

Contact Name:
             -----------------          ----------------------------------------
                                        City           State            Zip Code

Phone Number:
             -----------------
                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------

Dated:       , 2000

* PLEASE ATTACH A BENEFICIAL OWNER LISTING CONTAINING THE RECORD DATE POSITION
OF RIGHTS OWNED, THE NUMBER OF PRIMARY SHARES SUBSCRIBED AND THE NUMBER OF
OVER-SUBSCRIPTION SHARES, IF APPLICABLE, REQUESTED BY EACH SUCH OWNER.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.D.7
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>FORM OF BENEFICIAL OWNER CERTIFICATION
<TEXT>

<PAGE>   1
                                                                   EXHIBIT D(7)


                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                         BENEFICIAL OWNER CERTIFICATION

The undersigned, a bank, broker or other nominee holder of Rights to purchase
shares of Common Stock of The Gabelli Global Multimedia Trust Inc. pursuant to
the rights offering (the "Offer") described and provided for in the Fund's
Prospectus dated _______, 2000 (the "Prospectus") hereby certifies to The
Gabelli Global Multimedia Trust Inc. and to EquiServe, as Subscription Agent for
the Offer, that for each numbered line filled in below the undersigned has
purchased, on behalf of the beneficial owner thereof (which may be the
undersigned), the number of shares of Common Stock specified on such line
pursuant to the Primary Subscription (as defined in the Prospectus) and such
beneficial owner wishes to subscribe for the purchase of additional shares of
Common Stock pursuant to the Over-Subscription Privilege (as defined in the
Prospectus), in the amount set forth in the third column of such line:

================================================================================
          I                         II                          III
- --------------------------------------------------------------------------------
                             NUMBER OF SHARES             NUMBER OF SHARES
                           PURCHASED PURSUANT TO        REQUESTED PURSUANT TO
   RECORD DATE SHARES      PRIMARY SUBSCRIPTION      OVER-SUBSCRIPTION PRIVILEGE
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Total =                    Total =                   Total =
================================================================================

- --------------------------------
Name of Nominee Holder

By:
   -----------------------------
     Name:
     Title:

Date: ________________, 2000

Provide the following information if applicable.      Contact:
                                                              ------------------

                                                      Phone Number:
- ------------------------------------------------                   -------------
Depository Trust Company ("DTC") Participant
   Number

- ------------------------------------------------
DTC Basic Subscription Confirmation Number

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.D.8
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>FORM OF SUBSCRIPTION RIGHTS
<TEXT>

<PAGE>   1

                                                                    EXHIBIT D(8)



                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
                    SUBSCRIPTION RIGHTS BROKER SPLIT REQUESTS

                                    EQUISERVE
                             ATT: CORPORATE ACTIONS
                                  P.O. BOX 9573
                              BOSTON, MA 02205-9573

                   TELEPHONE (800) 336-6983 OR (781) 575-2000
                            FACSIMILE (781) 575-4826
                             CONFIRM (781) 575-4816







If you require that your Rights certificate be issued in various denominations,
please indicate your request for breakdown below and return this form to us,
either by facsimile at the above number or by mail at the above address.



                 *Total Share Position__________________________
                   (this will be verified on the record date)

                    No. of Cards to be Issued x No. of Rights




         Total Cards __________________ Total Rights __________________



Please advise us where to forward the Rights certificates, by completing the
following information:

                              Contact Name:
                                           ----------------------------

                              Address:
                                      ---------------------------------

                                      ---------------------------------

                                      ---------------------------------

                                      ---------------------------------

                              Telephone Number:
                                               ------------------------




*Please note: this number should not include any shares which are held by you
through DTC.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.D.9
<SEQUENCE>10
<FILENAME>0010.txt
<DESCRIPTION>FORM OF CERTIFICATE
<TEXT>

<PAGE>   1
                                                                   EXHIBIT D(9)


                 CERTIFICATION AND REQUEST FOR ADDITIONAL RIGHTS
                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.

To the Subscription Agent:

        The undersigned hereby certifies that it is a broker-dealer registered
with the Securities and Exchange Commission, commercial bank or trust company,
securities depository or participant therein, or nominee therefor, holding of
record              shares of Common Stock, par value $0.001 per share (the
"Common Stock"), of The Gabelli Global Multimedia Trust Inc. (the "Fund") on
behalf of           beneficial owners as of the close of business on ______,
2000, the Record Date for the offering by the Fund of 3,599,438 shares of Common
Stock pursuant to transferable subscription rights (the "Rights") distributed to
record holders of shares of Common Stock, all as described in a Prospectus dated
________, 2000 (the "Prospectus"), a copy of which the undersigned has received.
One Right was distributed for each full share of Common Stock held of record as
of the close of business on the Record Date; the number of rights issued to each
record holder was rounded up to the nearest number evenly divisible by three;
and each beneficial owner of Common Stock on the Record Date is entitled to have
the number of Rights issued in respect of the shares of Common Stock
beneficially owned by it rounded up to the nearest number evenly divisible by
three.

        The undersigned further certifies that (A)       beneficial owners on
whose behalf it held, as of the close of business on the Record Date,     shares
of Common Stock registered in the name of the undersigned are each entitled to
ONE additional Right in accordance with the foregoing, and (B)       beneficial
owners on whose behalf it held, as of the close of business on the Record
Date,       shares of Common Stock registered in the name of the undersigned are
each entitled to TWO additional Rights in accordance with the foregoing.
Accordingly, the undersigned requests that, upon surrender of its Subscriptions
Certificate evidencing       Rights, a subscription Certificate evidencing
      Rights (including        additional Rights for rounding as detailed
above*) be issued.  The undersigned further certifies that each such beneficial
owner is a bona fide beneficial owner of shares of Common Stock, that such
beneficial ownership is reflected on the undersigned's records and that all
shares of Common Stock which, to the undersigned's knowledge, are beneficially
owned by any such beneficial owner through the undersigned have been aggregated
in calculating the foregoing. The undersigned agrees to provide the Fund or its
designee with such additional information as the Fund deems necessary to verify
the foregoing.

Date:    , 2000
                                             -----------------------------------
                                             Name of Record Holder



                                             By:

                                             -----------------------------------
                                               Name:
                                               Title:
                                               Address:

                                               Telephone:
                                               Facsimile:
                                               DTC Participant Number


- --------
*     The number of additional Rights should be equal to (A) + 2x(B).
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.E
<SEQUENCE>11
<FILENAME>0011.txt
<DESCRIPTION>AUTOMATIC PLAN
<TEXT>

<PAGE>   1

                                                                       EXHIBIT E


Terms and Conditions of Automatic Dividend Reinvestment and Voluntary Cash
Purchase Plan

1. Each shareholder (a "Shareholder") holding shares of common stock ("Shares")
of The Gabelli Global Multimedia Trust (the "Fund") will automatically be a
participant in the Automatic Dividend Reinvestment and Voluntary Cash Purchase
Plan (the "Plan"), unless the Shareholder specifically elects to receive all
dividends and capital gains in cash paid by check mailed directly to the
Shareholder (or sent to the Shareholder's bank account) by State Street Bank and
Trust Company as agent under the Plan (the "Agent"). The Agent will open an
account for each Shareholder under the Plan in the same name in which such
Shareholder's shares of Common Stock are registered.

2. Whenever the Fund declares a capital gains distribution or an income dividend
payable in Shares or cash, participating Shareholders will take the distribution
or dividend entirely in Shares and the Agent will automatically receive the
Shares, including fractions, for the Shareholder's account. The process is as
follows:

Whenever the market price per Share is equal to or exceeds the net asset value
at the time Shares are valued for the purpose of determining the number of
Shares equivalent to the cash dividend or capital gains distribution (the
"Valuation Date"), participants will be issued Shares at the greater of (i) net
asset value or (ii) 95% of the then current market price of the Shares. 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 Shares on the Valuation Date exceeds the market price of the
Shares at that time, participants will receive shares from the Fund valued at
market price.

If the Fund should declare a dividend or capital gains distribution payable only
in cash, the Agent will, as purchasing agent for the participants, buy Shares in
the open market, on the New York Stock Exchange (the "exchange") or elsewhere,
for the participants' accounts after the payment date, except that the Agent
will endeavor to terminate purchases in the open market and cause the Fund to
issue the remaining Shares if, following the commencement of the purchases, the
market value of the Shares exceeds that day's closing net asset value. These
remaining shares will be issued by the Fund at a price equal to the greater of
(i) net asset value or (ii) 95% of the then current market price.

In a case where the Agent has terminated open market purchases and caused the
issuance of remaining Shares by the Fund, the number of shares received by the
participant in respect of the cash dividend or distribution will be based on the
weighted average of prices paid for Shares purchased in the open market and the
price at which the Fund issues remaining Shares. To the extent that the Agent is
unable to terminate purchases in the open market before the Agent has completed
its purchases, or remaining Shares cannot be issued by the Fund because the Fund
declared a dividend or distribution payable only in cash, and the market price
exceeds the net asset value of the Shares, the average Share purchase price paid
by the Agent may exceed the net asset value of the Shares, resulting in the
acquisition of fewer Shares than if the dividend or capital gains distribution
had been paid in Shares issued by the Fund.

The Agent will apply all cash received as a dividend or capital gains
distribution to purchase shares of common stock on the open market as soon as
practicable after the payment date of the dividend or capital gains
distribution, but in no event later than 45 days after that date, except when
necessary to comply with applicable provisions of the federal securities laws.

3. For all purposes of the Plan: (a) the market price of Fund Shares on a
particular date shall be the last sale price on the Exchange on that date or, if
no sale occurred on the Exchange on that date, then the mean between the closing
bid and asked quotations for the Shares on the Exchange on such date and (b) net
asset value per share on a particular date shall be as determined by or on
behalf of the Fund.

4. The open-market purchases provided for above may be made on any securities
exchange on which the Shares of the Fund are traded, in the over-the-counter
market or in negotiated transactions, and may be on such terms as

<PAGE>   2

to price, delivery and otherwise as the Agent shall determine. Funds held by the
Agent uninvested will not bear interest, and it is understood that, in any
event, the Agent shall have no liability in connection with any inability to
purchase Shares within 45 days after the initial date of such purchase as herein
provided, or with the timing of any purchases effected. The Agent shall have no
responsibility as to the value of the Shares of the Fund acquired for the
Shareholder's account.

5. The Agent will hold Shares acquired pursuant to the Plan in non-certificated
form in the Agent's name or that of its nominee. The Agent will forward to the
Shareholder any proxy solicitation material and will vote any Shares so held for
the Shareholder only in accordance with the proxy returned by her or him to the
Fund. Upon the Shareholder's written request, the Agent will deliver to her or
him, without charge, a certificate or certificates for the full Shares.

6. The Agent will confirm to the Shareholder each acquisition made for her or
his account as soon as practicable but not later than 60 days after the date
thereof. Although the Shareholder may from time to time have an individual
fractional interest (computed to four decimal places) in a Share of the Fund, no
certificates for a fractional Share will be issued. However, dividends and
distributions on fractional Shares will be credited to the Shareholder's
account. In the event of a termination of a Shareholder's account under the
Plan, the Agent will adjust for any such undivided fractional interest in cash
at the opening market value of the Shares at the time of termination.

7. Any stock dividends or split Shares distributed by the Fund on Shares held by
The Agent for the Shareholder will be credited to the Shareholder's account. In
the event that the Fund makes available to the Shareholder rights to purchase
additional Shares or other securities, the Shares held for a Shareholder under
the Plan will be added to other shares held by the Shareholder in calculating
the number of rights to be issued to such Shareholder.

8. The Agent's service fee for handling capital gains distributions or income
dividends will be paid by the Fund. The Shareholder will be charged a pro rata
share of brokerage commissions on all open market purchases.

9. A Shareholder wishing to terminate her or his account under the Plan may do
so by written or telephone notification to the Agent of such intent. If such
notice is received by the Agent less than 10 days prior to any dividend or
distribution record date, then such termination shall be immediately effective
with respect to all shares then held in the Shareholder's account except that
any shares to be received pursuant to the reinvestment of dividends or
distributions shall be terminated on the first trading day after such shares
have been credited to the Shareholder's account. Upon any termination the Agent
will cause a certificate or certificates for the full Shares held for the
Shareholder under the Plan and cash adjustment for any fraction to be delivered
to her or him. If, the Shareholder elects by notice to the Agent in writing in
advance of such termination to have the Agent sell part or all of her or his
shares and remit the proceeds to her or him, the Agent is authorized to deduct
$2.50 per transaction plus brokerage commissions for this transaction from the
proceeds.

10. Shareholders have the option of sending additional funds, two times per
month, in any amount from $250 to $10,000, for the purchase on the open market
of shares of the common stock of the Fund for Shareholder's accounts. Voluntary
payments will be invested on or shortly after the 1st or the 15th of each month,
and in no event more than 45 days after such dates except where temporary
curtailment or suspension of purchases is necessary to comply with applicable
provisions of federal securities law. Funds not received at least five business
days before the investment date will be held for investment on the next
investment date. Shareholders may withdraw their entire voluntary cash payment
by written notice not less that 48 hours before such payment is to be invested.

11. Investments of voluntary cash payments and other open-market purchases
provided for above may be made on any securities exchange where the Fund's
common stock is traded, in the over-the-counter market or in negotiated
transactions and may be on such terms as to price, delivery and otherwise as the
Agent shall determine. Funds held by the Agent uninvested will not bear
interest, and it is understood that, in any event, the

<PAGE>   3

Agent shall have no liability in connection with any inability to purchase
shares within 45 days after the initial date of such purchase as herein
provided, or with the timing of any Purchases effected. The Agent shall have no
responsibility as to the value of the common stock of the Fund acquired for the
Shareholders' account. For the Purposes of cash investments the Agent may
commingle Shareholder funds with those of other Shareholders of the Fund for
whom the Agent also acts as Agent, and the average price (including brokerage
commissions) of all shares purchased by the Agent shall be the price per share
allocable to the Shareholder in connection therewith. The cost per transaction
is $0.75.

12. The Agent may hold Shareholder's shares acquired pursuant to Shareholder
authorization, together with the shares of other Shareholders of the Fund
acquired pursuant to similar authorization, in non-certificated form in the name
of the Agent or that of the Agent's nominee. The Agent will forward to each
Shareholder any proxy solicitation material and will vote any shares held for
the Shareholder only in accordance with the proxy returned by the Shareholder to
the Fund. Upon written request the Agent will deliver to the Shareholder,
without charge, a certificate or certificates for the full shares.

13. These terms and conditions may be amended or supplemented by the Agent or
the Fund at any time or times but, except when necessary or appropriate to
comply with applicable law or the rules or policies of the Securities and
Exchange Commission or any other regulatory authority, only by mailing to the
Shareholder appropriate written notice at least 90 days prior to the effective
date thereof. The amendment or supplement shall be deemed to be accepted by the
Shareholder unless, prior to the effective date thereof, the Agent receives
written notice of the termination of the Shareholder account under the Plan. Any
such amendment may include an appointment by the Fund of a successor agent in
its place and stead under these terms and conditions, with full power and
authority to perform all or any of the acts to be performed by the Agent. Upon
any such appointment of an Agent for the purpose of receiving dividends and
distributions, the Fund will be authorized to pay to such successor Agent, for
Shareholders' accounts, all dividends and distributions payable on Shares held
in the Shareholders' name or under the Plan for retention or application by such
successor Agent as provided in these terms and conditions.

14. In the case of Shareholders, such as banks, brokers or nominees, which hold
Shares for others who are the beneficial owners, the Agent will administer the
Plan on the basis of the number of Shares certified from time to time by the
Shareholders as representing the total amount registered in the Shareholder's
name and held for the account of beneficial owners who are to participate in the
Plan.

15. The Agent shall at all times act in good faith and agree to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this agreement and to comply with applicable law, but assumes no
responsibility and shall not be liable for loss or damage due to errors unless
the errors are caused by its negligence, bad faith or willful misconduct or that
of its employees.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.G
<SEQUENCE>12
<FILENAME>0012.txt
<DESCRIPTION>INVESTMENT ADVISORY AGREEMENT
<TEXT>

<PAGE>   1

                                                                       EXHIBIT G


                             AMENDMENT NO. 1 TO THE
                          INVESTMENT ADVISORY AGREEMENT

       This Amendment No. 1 dated as of May 19, 1999 is entered into by Gabelli
Funds, LLC (formerly known as Gabelli Funds, Inc. (the "Adviser") and The
Gabelli Global Multimedia Trust Inc. (the "Fund").

       WHEREAS, the Adviser and the Fund entered into an Investment Advisory
Agreement dated as of October 3, 1994 (the "Investment Advisory Agreement"); and

       WHEREAS, the Adviser and the Fund wish to amend the Investment Advisory
Agreement to reflect the change in the Adviser's name;

       NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
hereby agree as follows:

1.     The name "Gabelli Funds, Inc." in the Investment Advisory Agreement is
hereby deleted in all places where it appears and replaced with the name
"Gabelli Funds, LLC".

2.     The Investment Advisory Agreement shall remain in full force and effect
in all other respects.

       IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
as of the date and year first written above.

THE GABELLI GLOBAL MULTIMEDIA TRUST              GABELLI FUNDS, LLC
INC.


BY: /s/ BRUCE N. ALPERT                          BY: /s/ JAMES E. MCKEE
   ------------------------                         --------------------------



<PAGE>   2







                          INVESTMENT ADVISORY AGREEMENT


October 3, 1994


Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580-1434

Dear Sir:

       The Gabelli Global Multimedia Trust Inc. (the "Trust"), a corporation
organized under the laws of the State of Maryland, confirms its investment
advisory agreement with Gabelli Funds, Inc., (the "Advisor") as follows:

       1.     Investment Description; Appointment

       The Trust desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Articles of Incorporation, as amended from time to time (the "Articles of
Incorporation"), and in its Registration Statement on Form N-2 under the
Investment Company Act of 1940, as amended (the "1940 Act") as from time to time
in effect (the "Registration Statement") and in such manner and to such extent
as may from time to time be approved by the Trust's Board of Directors. Copies
of the Articles of Incorporation and the Registration Statement have been
submitted to the Advisor. The Trust desires to employ and hereby appoints the
Advisor to act as its investment advisor and to oversee the administration of
all aspects of the Trust's business and affairs and provide, or arrange for
others whom it believes to be competent to provide, certain services as
specified in subparagraph (b) below. The Advisor accepts the appointment and
agrees to furnish the services set forth below for the compensation set forth
below. Nothing contained herein shall be construed to restrict the Trust's
right to hire its own employees or to contract for administrative services to be
performed by third parties, including but not limited to, the calculation of the
net asset value of the Trust's shares.

       2.     Services

       (a) Investment Advice. Subject to the supervision and direction of the
Trust`s Board of Directors, the Advisor will (i) act in strict conformity
with the Articles of Incorporation, the 1940 Act and the Investment Advisers Act
of 1940, as the same may from time to time be amended, (ii) manage the Trust's
assets in






<PAGE>   3







accordance with the Trust's investment objective and policies as stated in the
Registration Statement, (iii) make investment decisions for the Trust and (iv)
place purchase and sale orders on behalf of the Trust. In rendering those
services, the Advisor will provide investment research and supervision of the
Trust's investments and conduct a continual program of investment, evaluation
and, if appropriate, sale and reinvestment of the Trust's assets. In addition,
the Advisor will furnish the Trust with whatever statistical information the
Trust may reasonably request with respect to the securities that the Trust may
hold or contemplate purchasing.

       (b) Administration. The specific services to be provided or arranged
for by the Advisor for the Trust are (i) maintaining the Trust's books and
records, such as journals, ledger accounts and other records in accordance with
applicable laws and regulations to the extent not maintained by the Trust's
custodian, transfer agent or dividend disbursing agent; (ii) initiating all
money transfers to the Trust's custodian and from the Trust's custodian for
the payment of the Trust's expenses, investments, and dividends; (iii)
reconciling account information and balances among the Trust's custodian,
transfer agent, dividend disbursing agent and the Advisor; (iv) providing the
Trust, upon request, with such office space and facilities, utilities and office
equipment as are adequate for the Trust's needs; (v) preparing, but not paying
for, all reports by the Trust to its shareholders and all reports and filings
required to maintain registration and qualification of the Trust`s shares
under federal and state law including the updating of the Trust's Registration
Statement, when necessary; (vi) supervising the calculation of net asset value
of the Trust's shares; and (vii) preparing notices and agendas for meetings of
the Trust's shareholders and the Trust's Board of Directors as well as
minutes of such meetings in all matters required by applicable law to be acted
upon by the Board of Directors.


       3.     Brokerage

       In executing transactions for the Trust and selecting brokers or dealers,
the Advisor will use its best efforts to seek the best overall terms available.
In assessing the best overall terms available for any transaction on behalf of
the Trust, the Advisor will consider all factors it deems relevant including,
but not limited to, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of any commission for the specific transaction and
on a continuing basis. In selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, the Advisor may
consider the brokerage and research services provided to the Trust


                                        2



<PAGE>   4











and/or other accounts over which the Advisor or an affiliate of the Advisor
exercises investment discretion.

       4.     Information Provided to the Trust

       The Advisor will keep the Trust informed of developments materially
affecting the Trust, and will, on its own initiative, furnish the Trust from
time to time with whatever information the Advisor believes is appropriate for
this purpose.

       5.     Standard of Care

       The Advisor shall exercise its best judgment in rendering the services
described in paragraphs 2 and 3 above. The Advisor shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters of which this Agreement relates, provided that
nothing in this paragraph shall be deemed to protect or purport to protect the
Advisor against any liability to the Trust or to its shareholders to which the
Advisor would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or by reason of
the Advisor's reckless disregard of its obligations and duties under this
Agreement.

       6.     Compensation

       In consideration of the services rendered pursuant to this Agreement, the
Trust will pay the Advisor on the first business day of each month a fee for the
previous month at the annual rate of 1.00% of the Trust's average weekly net
assets. Upon any termination of this Agreement before the end of a month, the
fee for such part of that month shall be prorated according to the proportion
that such period bears to the full monthly period and shall be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to the Advisor, the value of the Trust's net assets shall be computed at
the times and in the manner specified in the Registration Statement.

       7.     Expenses

       The Advisor will bear all expenses in connection with the performance of
its services under this Agreement. The Trust will bear certain other expenses to
be incurred in its operation, including: expenses for legal and independent
accountants' services, costs of printing proxies, stock certificates and
shareholder reports, charges of the custodian, any sub-custodian and transfer
and dividend paying agent, expenses in connection with the Dividend
Reinvestment and Cash Purchase Plan, Securities and

                                        3




<PAGE>   5




Exchange Commission fees, fees and expenses of unaffiliated directors,
accounting and pricing costs, membership fees in trade associations, fidelity
bond coverage for the Trust's officers and employees, directors' and officers'
errors and omissions insurance coverage, interest, brokerage costs, taxes, stock
exchange listing fees and expenses, all expenses of computing the Trust's net
asset value per share, including any equipment or services obtained solely for
the purpose of pricing shares or valuing the Trust's investment portfolios,
expenses of qualifying the Trust's shares for sale in various states, litigation
and other extraordinary or non-recurring expenses, and other expenses properly
payable by the Trust.

       8.     Services to Other Companies or Accounts

       The Trust understands that the Advisor now acts and will continue to act
as investment advisor to other investment companies and may act in the future as
investment advisor to other investment companies or portfolios, and the Trust
has no objection to the Advisor so acting, provided that whenever the Trust and
one or more other portfolios of or investment companies advised by the Advisor
have available funds for investment, investments suitable and appropriate for
each will be allocated in a manner believed to be equitable to each entity. The
Trust recognizes that in some cases this procedure may adversely affect the size
of the position obtainable for the Trust. In addition, the Trust understands
that the persons employed by the Advisor to assist in the performance of the
Advisor's duties under this Agreement will not devote their full time to such
service and nothing contained herein shall be deemed to limit or restrict the
right of the Advisor or any affiliate of the Advisor to engage in and devote
time and attention to other businesses or to render services of whatever kind or
nature.

       9.     Use of the Word "Gabelli"

       It is understood and agreed that the word "Gabelli" is the Advisor's
property for copyright and other purposes. The Trust further agrees that the
word "Gabelli" in its name is derived from the name of Mario J. Gabelli and such
name may freely be used by the Advisor for other investment companies, entities
or products. The Trust further agrees that, in the event that the Advisor
shall cease to act as an investment advisor to the Trust, the Trust shall
promptly take all necessary and appropriate action to change its name to one
that does not include the word "Gabelli"; provided, however, that the Trust may
continue to use such name if the Advisor consents in writing to such use.

                                        4


<PAGE>   6
         10. Term of Agreement

         This Agreement shall become effective on the date hereof and shall
continue in effect for two years and thereafter shall continue for successive
annual periods, provided such continuance is specifically approved at least
annually by (i) the Trust's Board of Directors or (ii) a vote of a "majority"
(as defined in the 1940 Act) of the Trust's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board of Directors who are not "interested persons" (as defined in the 1940
act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on 60 days' written notice, by the Trust's Board of Directors,
by vote of holders of a majority of the Trust's shares, or by the Advisor. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act and the rules thereunder).

         If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the enclosed
copy.

Very truly yours,

THE GABELLI GLOBAL MULTIMEDIA TRUST INC.

By: /s/ [SIG]
    ----------------------------
Name:
Title:

Agreed to and Accepted:

GABELLI FUNDS, INC.

By: /s/ [SIG]
    ----------------------------
Name:
Title:

                                       5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.J.1
<SEQUENCE>13
<FILENAME>0013.txt
<DESCRIPTION>CUSTODIAL CONTRACT
<TEXT>

<PAGE>   1


                                                                    EXHIBIT J(1)

                        AMENDMENT TO CUSTODIAN CONTRACT

         Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and The Gabelli Global Multimedia Trust Inc. (the "Fund").

         WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated October 3, 1994 (The "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and

         WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended;

         NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions;

         1. Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash property
of the Fund which are maintained in such account shall identify by book-entry
those securities and other non-cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-cash property so held by
the foreign sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.

         2. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.

         IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed as a sealed instrument in its name and behalf by its duly authorized
representative this    day of   , 1995.

                                             THE GABELLI GLOBAL MULTIMEDIA TRUST
                                             INC.

                                             By: /s/ [SIG]
                                                 ----------------------------
                                             Title:  Treasurer & V.P.
                                                     ------------------------

                                             STATE STREET BANK AND TRUST COMPANY

                                             By:  /s/ [SIG]
                                                  ---------------------------
                                             Title:  Executive Vice President
                                                     ------------------------

<PAGE>   2

                               CUSTODIAN CONTRACT

                                     BETWEEN

                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.

                                       AND

                       STATE STREET BANK AND TRUST COMPANY

<PAGE>   3

                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

1.     Employment of Custodian and Property to be
       Held by it ...................................................     1

2.     Duties of the Custodian with Respect to Property of
       the Fund Held by the Custodian in the United States ..........     2

       2.1     Holding Securities ...................................     2
       2.2     Delivery of Securities ...............................     3
       2.3     Registration of Securities ...........................     7
       2.4     Bank Accounts ........................................     8
       2.5     Availability of Federal Funds ........................     9
       2.6     Collection of Income .................................     9
       2.7     Payment of Fund Monies ...............................    10
       2.8     Liability for Payment in Advance of
               Receipt of Securities Purchased ......................    12
       2.9     Appointment of Agents ................................    13
       2.10    Deposit of Securities in Securities System ...........    13
       2.10A   Fund Assets Held in the Custodians'
               Direct Paper System ..................................    16
       2.11    Segregated Account ...................................    18
       2.12    Ownership Certificates for Tax Purposes ..............    19
       2.13    Proxies ..............................................    19
       2.14    Communications Relating to Fund Portfolio Securities..    19
       2.15    Reports to Fund by Independent Public Accountants.....    20

3.     Duties of the Custodian with Respect to Property of
       the Fund Held Outside of the United States ...................    21

       3.1     Appointment of Foreign Sub-Custodians ................    21
       3.2     Assets to be Held ....................................    21
       3.3     Foreign Securities Depositories ......................    22
       3.4     Agreements with Foreign Banking Institutions .........    22
       3.5     Access of Independent Accountants of the Fund ........    23
       3.6     Reports by Custodian .................................    23
       3.7     Transactions in Foreign Custody Account ..............    24
       3.8     Liability of Foreign Sub-Custodians ..................    25
       3.9     Liability of Custodian ...............................    25
       3.10    Reimbursement of Advances ............................    26
       3.11    Monitoring Responsibilities ..........................    27
       3.12    Branches of U.S. Banks ...............................    27

4.     Proper Instructions ..........................................    28

5.     Actions Permitted Without Express Authority ..................    29

6.     Evidence of Authority ........................................    29


<PAGE>   4

7.        Duties of Custodian with Respect to the Books of
          Accounts and Calculations of Net Asset Value and
          Net Income ................................................       30

8.        Records ...................................................       30

9.        Opinion of Fund's Independent Accountant ..................       31

10.       Compensation of Custodian .................................       31

11.       Responsibility of Custodian ...............................       31

12.       Effective Period, Termination and Amendment ...............       33

13.       Successor Custodian .......................................       35

14.       Interpretive and Additional Provisions ....................       36

15.       Massachusetts Law to Apply ................................       37

16.       Prior Contracts ...........................................       37

17.       Shareholder Communications Election .......................       37

<PAGE>   5

                               CUSTODIAN CONTRACT

         This Contract between The Gabelli Global Multimedia Trust Inc., a
corporation organized and existing under the laws of Maryland, having its
principal place of business at One Corporate Center, Rye, New York 10580-1434,
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian".

         WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:

1.        Employment of Custodian and Property to be Held by It

         The Fund hereby employs the Custodian as the custodian of its assets,
including securities it desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund agrees to deliver to the Custodian all securities and
cash owned by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for such new or
treasury shares of capital stock, $.001 par value, ("Shares") of the Fund as
may be issued or sold from time to time. The Custodian shall not be responsible
for any
<PAGE>   6

property of the Fund held or received by the Fund and not delivered to the
Custodian.

         Upon receipt of  "Proper Instructions" (within the meaning of Article
4), the Custodian shall from time to time employ one or more sub-custodians
located in the United States, but only in accordance with an applicable vote
by the Board of Directors of the Fund, and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian.  The Custodian may employ as sub-custodians
for the Fund's securities and other assets the foreign banking institutions and
foreign securities depositories designated in Schedule "A" hereto but only in
accordance with the provisions of Article 3.

2.       Duties of the Custodian with Respect to Property of the Fund Held By
         the Custodian in the United States

2.1      Holding Securities.  The Custodian shall hold and physically segregate
         for the account of the Fund all non-cash property, to be held by it
         in the United States, including all domestic securities owned by the
         Fund, other than securities which are maintained pursuant to
         Section 2.10 in a clearing agency which acts as a securities
         depository  or in a book-entry system authorized by the U.S.
         Department of the Treasury, collectively referred to herein as
         "Securities System" and (b) commercial paper of an issuer for which
         State Street Bank and Trust Company acts as issuing and paying agent
         ("Direct Paper") which is





                                       2
<PAGE>   7
         deposited and/or maintained in the Direct Paper System of the
         Custodian pursuant to Section 2.10A.

2.2      Delivery of Securities.  The Custodian shall release and deliver
         domestic securities owned by the Fund held by the Custodian or in a
         Securities System account of the Custodian or in the Custodian's
         Direct Paper book entry system account ("Direct Paper Account") only
         upon receipt of Proper Instructions, which may be continuing
         instructions when deemed appropriate by the parties, and only in the
         following cases:

                 1)       Upon sale of such securities for the account of the
                          Fund and receipt of payment therefor;

                 2)       Upon the receipt of payment in connection with any
                          repurchase agreement related to such securities
                          entered into by the Fund;

                 3)       In the case of a sale effected through a Securities
                          System, in accordance with the provisions of Section
                          2.10 hereof;

                 4)       To the depository agent in connection with tender or
                          other similar offers for portfolio securities of the
                          Fund;

                 5)       To the issuer thereof or its agent when such
                          securities are called, redeemed, retired, or
                          otherwise become payable; provided that, in any such
                          case, the cash or other consideration is to be
                          delivered to the Custodian;

                 6)       To the issuer thereof, or its agent, for





                                       3
<PAGE>   8
                          transfer into the name of the Fund or into the name
                          of any nominee or nominees of the Custodian or into
                          the name or nominee name of any agent appointed
                          pursuant to Section 2.9 or into the name or nominee
                          name of any sub-custodian appointed pursuant to
                          Article 1; or for exchange for a different number of
                          bonds, certificates or other evidence representing
                          the same aggregate face amount or number of units;
                          provided that, in any such case, the new securities
                          are to be delivered to the Custodian;

                 7)       Upon the sale of such securities for the account of
                          the Fund, to the broker or its clearing agent,
                          against a receipt, for examination in accordance with
                          "street delivery" custom;  provided that in any such
                          case, the Custodian shall have no responsibility or
                          liability for any loss arising from the delivery of
                          such securities prior to receiving payment for such
                          securities except as may arise from the Custodian's
                          own negligence or willful misconduct;

                 8)       For exchange or conversion pursuant to any plan of
                          merger, combination, recapitalization,
                          reorganization or readjustment of the securities of
                          the issuer





                                       4
<PAGE>   9
                          of such securities, or pursuant to provisions for
                          conversion contained in such securities, or pursuant
                          to any deposit agreement; provided that, in any such
                          case, the new securities and cash, if any, are to be
                          delivered to the Custodian;

                 9)       In the case of warrants, rights or similar
                          securities, the surrender thereof in the exercise of
                          such warrants, rights or similar securities or the
                          surrender of interim receipts or temporary securities
                          for definitive securities; provided that, in any such
                          case, the new securities and cash, if any, are to be
                          delivered to the Custodian;

                 10)      For delivery in connection with any loans of
                          securities made by the Fund, but only against receipt
                          of adequate collateral as agreed upon from time to
                          time by the Custodian and the Fund, which may be in
                          the form of cash or obligations issued by the United
                          States government, its agencies or instrumentalities,
                          except that in connection with any loans for which
                          collateral is to be credited to the Custodian's
                          account in the book-entry system authorized by the
                          U.S. Department of the Treasury, the Custodian will
                          not be held liable or responsible for





                                       5
<PAGE>   10
                          the delivery of securities owned by the Fund prior to
                          the receipt of such collateral;

                 11)      For delivery as security in connection with any
                          borrowing by the Fund requiring a pledge of assets by
                          the Fund, but only against receipt of amounts
                          borrowed;

                 12)      For delivery in accordance  with the provisions of
                          any agreement among the Fund, the Custodian and a
                          broker-dealer registered under the Securities
                          Exchange Act of 1934 (the "Exchange Act") and a
                          member of The National Association of Securities
                          Dealers, Inc. ("NASD"), relating to compliance with
                          the rules of The Options Clearing Corporation and of
                          any registered national securities exchange, or of
                          any similar organization or organizations, regarding
                          escrow or other arrangements in connection with
                          transactions by the Fund;

                 13)      For delivery in accordance with the provisions of any
                          agreement among the Fund, the Custodian, and a Futures
                          Commission Merchant registered under the Commodity
                          Exchange Act, relating to compliance with the rules
                          of the Commodity Futures Trading Commission and/or
                          any Contract Market, or any similar organization or
                          organizations, regarding account deposits in
                          connection with





                                       6
<PAGE>   11
               transactions by the Fund;
          14)  For any other proper corporate purpose, but only upon receipt of,
               in addition to Proper Instructions, a certified copy of a
               resolution of the Board of Directors or of the Executive
               Committee signed by an officer of the Fund and certified by the
               Secretary or an Assistant Secretary, specifying the securities to
               be delivered, setting forth the purpose for which such delivery
               is to be made, declaring such purpose to be a proper corporate
               purpose, and naming the person or persons to whom delivery of
               such securities shall be made.

2.3     Registration of Securities. Domestic securities held by the Custodian
        (other than bearer securities) shall be registered in the name of the
        Fund or in the name of any nominee of the Fund or of any nominee of the
        Custodian which nominee shall be assigned exclusively to the Fund,
        unless the Fund had authorized in writing the appointment of a nominee
        to be used in common with other registered investment companies having
        the same investment adviser as the Fund, or in the name or nominee name
        of any agent appointed pursuant to Section 2.9 or in the name or nominee
        name of any sub-custodian appointed pursuant to Article 1. All
        securities accepted by the Custodian on behalf of the Fund under the
        terms of this Contract shall be in "street name" or other good delivery
        form. If,

                                       7

<PAGE>   12


        however, the Fund directs the Custodian to maintain securities in
        "street name", the Custodian shall utilize its best efforts only to
        timely collect income due the Fund on such securities and to notify the
        Fund on a best efforts basis only of relevant corporate actions
        including, without limitation, pendancy of calls, maturities, tender or
        exchange offers.

2.4     Bank Accounts. The Custodian shall open and maintain a separate bank
        account or accounts in the United States in the name of the Fund,
        subject only to draft or order by the Custodian acting pursuant to the
        terms of this Contract, and shall hold in such account or accounts,
        subject to the provisions hereof, all cash received by it from or for
        the account of the Fund, other than cash maintained by the Fund in a
        bank account established and used in accordance with Rule 17f-3 under
        the Investment Company Act of 1940. Funds held by the Custodian for the
        Fund may be deposited by it to its credit as Custodian in the Banking
        Department of the Custodian or in such other banks or trust companies as
        it may in its discretion deem necessary or desirable; provided, however,
        that every such bank or trust company shall be qualified to act as a
        custodian under the Investment Company Act of 1940 and that each such
        bank or trust company and the funds to be deposited with each such bank
        or trust company shall be approved by vote of a majority of the Board of
        Directors of the Fund. Such funds shall be deposited by the Custodian


                                        8


<PAGE>   13


        in its capacity as Custodian and shall be withdrawable by the Custodian
        only in that capacity.

2.5     Availability of Federal Funds. Upon mutual agreement between the Fund
        and the Custodian, the Custodian shall, upon the receipt of Proper
        Instructions, make federal funds available to the Fund as of specified
        times agreed upon from time to time by the Fund and the Custodian in the
        amount of checks received in payment for Shares of the Fund which are
        deposited into the Fund's account.

2.6     Collection of Income. Subject to the provisions of Section 2.3, the
        Custodian shall collect on a timely basis all income and other payments
        with respect to United States registered securities held hereunder to
        which the Fund shall be entitled either by law or pursuant to custom in
        the securities business, and shall collect on a timely basis all income
        and other payments with respect to United States bearer securities if,
        on the date of payment by the issuer, such securities are held by the
        Custodian or its agent thereof and shall credit such income, as
        collected, to the Fund's custodian account. Without limiting the
        generality of the foregoing, the Custodian shall detach and present for
        payment all coupons and other income items requiring presentation as and
        when they become due and shall collect interest when due on securities
        held hereunder.

        Income due the Fund on United States securities loaned
        pursuant to the provisions of Section 2.2 (10) shall be the


                                        9


<PAGE>   14


        responsibility of the Fund. The Custodian will have no duty or
        responsibility in connection therewith, other than to provide the Fund
        with such information or data as may be necessary to assist the Fund in
        arranging for the timely delivery to the Custodian of the income to
        which the Fund is properly entitled.

2.7     Payment of Fund Monies. Upon receipt of Proper Instructions, which may
        be continuing instructions when deemed appropriate by the parties, the
        Custodian shall pay out monies of the Fund in the following cases only;

               1)      Upon the purchase of domestic securities, options,
                       futures contracts or options on futures contracts
                       for the account of the Fund but only (a) against the
                       delivery of such securities or evidence of title to such
                       options, futures contracts or options on futures
                       contracts to the Custodian (or any bank, banking firm or
                       trust company doing business in the United States or
                       abroad which is qualified under the Investment Company
                       Act of 1940, as amended, to act as a custodian and has
                       been designated by the Custodian as its agent for this
                       purpose) registered in the name of the Fund or in the
                       name of a nominee of the Custodian referred to in
                       Section 2.3 hereof or in proper form for transfer; (b) in
                       the case of a purchase effected through a

                                       10


<PAGE>   15


                       Securities System, in accordance with the conditions set
                       forth in Section 2.10 hereof; (c) in the case of a
                       purchase involving the Direct Paper System, in accordance
                       with the conditions set forth in Section 2.10A; (d) in
                       the case of repurchase agreements entered into between
                       the Fund and the Custodian, or another bank, or a
                       broker-dealer which is a member of NASD, (i) against
                       delivery of the securities either in certificate form or
                       through an entry crediting the Custodian's account at the
                       Federal Reserve Bank with such securities or (ii) against
                       delivery of the receipt evidencing purchase by the Fund
                       of securities owned by the Custodian along with written
                       evidence of the agreement by the Custodian to repurchase
                       such securities from the Fund or (e) for transfer
                       to a time deposit account of the Fund in any bank,
                       whether domestic or foreign; such transfer may be
                       effected prior to receipt of a confirmation from a broker
                       and/or the applicable bank pursuant to Proper
                       Instructions from the Fund as defined in Article 4;

               2)      In connection with conversion, exchange or surrender of
                       securities owned by the Fund as set forth in Section 2.2
                       hereof;

               3)      For the payment of any expense or liability

                                       11


<PAGE>   16
                     incurred by the Fund, including but not limited to the
                     following payments for the account of the Fund: interest,
                     taxes, management, accounting, transfer agent and legal
                     fees, and operating expenses of the Fund whether or not
                     such expenses are to be in whole or part capitalized or
                     treated as deferred expenses;

              4)     For the payment of any dividends declared pursuant to the
                     governing documents of the Fund;

              5)     For payment of the amount of dividends received in respect
                     of securities sold short;

              6)     For any other proper purpose, but only upon receipt of, in
                     addition to Proper Instructions, a certified copy of a
                     resolution of the Board of Directors or of the Executive
                     Committee of the Fund signed by an officer of the Fund and
                     certified by its Secretary or an Assistant Secretary,
                     specifying the amount of such payment, setting forth the
                     purpose for which such payment is to be made, declaring
                     such purpose to be a proper purpose, and naming the person
                     or persons to whom such payment is to be made.

2.8    Liability for Payment in Advance of Receipt of Securities Purchased.
       Except as specifically stated otherwise in this Contract, in any and
       every case where payment for purchase

                                       12

<PAGE>   17


       of domestic securities for the account of the Fund is made by the
       Custodian in advance of receipt of the securities purchased in the
       absence of specific written instructions from the Fund to so pay in
       advance, the Custodian shall be absolutely liable to the Fund for such
       securities to the same extent as if the securities had been received by
       the Custodian.

2.9    Appointment of Agents. The Custodian may at any time or times in its
       discretion appoint (and may at any time remove) any other bank or trust
       company which is itself qualified under the Investment Company Act of
       1940, as amended, to act as a custodian, as its agent to carry out such
       of the provisions of this Article 2 as the Custodian may from time to
       time direct; provided, however, that the appointment of any agent shall
       not relieve the Custodian of its responsibilities or liabilities
       hereunder.

2.10   Deposit of Securities in Securities Systems. The Custodian may deposit
       and/or maintain domestic securities owned by the Fund in a clearing
       agency registered with the Securities and Exchange Commission under
       Section 17A of the Securities Exchange Act of 1934, which acts as a
       securities depository, or in the book-entry system authorized by the U.S.
       Department of the Treasury and certain federal agencies, collectively
       referred to herein as "Securities System" in accordance with applicable
       Federal Reserve Board and Securities and Exchange Commission rules and
       regulations, if any, and subject to


                                       13


<PAGE>   18


the following provisions:

              1)     The Custodian may keep domestic securities of the Fund in a
                     Securities System provided that such securities are
                     represented in an account ("Account") of the Custodian in
                     the Securities System which shall not include any assets of
                     the Custodian other than assets held as a fiduciary,
                     custodian or otherwise for customers;

              2)     The records of the Custodian with respect to domestic
                     securities of the Fund which are maintained in a Securities
                     System shall identify by book-entry those securities
                     belonging to the Fund;

              3)     The Custodian shall pay for domestic securities purchased
                     for the account of the Fund upon (i) receipt of advice from
                     the Securities System that such securities have been
                     transferred to the Account, and (ii) the making of an entry
                     on the records of the Custodian to reflect such payment and
                     transfer for the account of the Fund. The Custodian shall
                     transfer domestic securities sold for the account of the
                     Fund upon (i) receipt of advice from the Securities System
                     that payment for such securities has been transferred to
                     the Account, and (ii) the making


                                       14



<PAGE>   19





                     of an entry on the records of the Custodian to reflect such
                     transfer and payment for the account of the Fund. Copies of
                     all advices from the Securities System of transfers of
                     domestic securities for the account of the Fund shall
                     identify the Fund, be maintained for the Fund by the
                     Custodian and be provided to the Fund at its request. Upon
                     request, the Custodian shall furnish the Fund confirmation
                     of each transfer to or from the account of the Fund in the
                     form of a written advice or notice and shall furnish to the
                     Fund copies of daily transaction sheets reflecting each
                     day's transactions in the Securities System for the account
                     of the Fund.

              4)     The Custodian shall provide the Fund with any report
                     obtained by the Custodian on the Securities System's
                     accounting system, internal accounting control and
                     procedures for safeguarding domestic securities deposited
                     in the Securities System;

              5)     The Custodian shall have received the initial or annual
                     certificate, as the case may be, required by Article 12
                     hereof;

              6)     Anything to the contrary in this Contract notwithstanding,
                     the Custodian shall be liable to the Fund for any loss or
                     damage to the Fund

                                       15


<PAGE>   20


                     resulting from use of the Securities System by reason of
                     any negligence, misfeasance or misconduct of the Custodian
                     or any of its agents or of any of its or their employees or
                     from failure of the Custodian or any such agent to enforce
                     effectively such rights as it may have against the
                     Securities System; at the election of the Fund, it shall be
                     entitled to be subrogated to the rights of the Custodian
                     with respect to any claim against the Securities System or
                     any other person which the Custodian may have as a
                     consequence of any such loss or damage if and to the extent
                     that the Fund has not been made whole for any such loss or
                     damage.

2.10A  Fund Assets Held in the Custodian's Direct Paper System

       The Custodian may deposit and/or maintain securities owned by the Fund in
       the Direct Paper System of the Custodian subject to the following
       provisions:

              1)     No transaction relating to securities in the Direct Paper
                     System will be effected in the absence of Proper
                     Instructions;

              2)     The Custodian may keep securities of the Fund in the Direct
                     Paper System only if such securities are represented in an
                     account ("Account") of the Custodian in the Direct Paper
                     System which shall not include any assets



                                       16





<PAGE>   21
              of the Custodian other than assets held as a fiduciary, custodian
              or otherwise for customers;

       3)     The records of the Custodian with respect to securities of the
              Fund which are maintained in the Direct Paper System shall
              identify by book-entry those securities belonging to the Fund;

       4)     The Custodian shall pay for securities purchased for the account
              of the Fund upon the making of an entry on the records of the
              Custodian to reflect such payment and transfer of securities to
              the account of the Fund. The Custodian shall transfer securities
              sold for the account of the Fund upon the making of an entry on
              the records of the Custodian to reflect such transfer and receipt
              of payment for the account of the Fund;

       5)     The Custodian shall furnish the Fund confirmation of each transfer
              to or from the account of the Fund, in the form of a written
              advice or notice, of Direct Paper on the next business day
              following such transfer and shall furnish to the Fund copies of
              daily transaction sheets reflecting each day's transaction in the
              Securities System for the account of the Fund;

       6)     The Custodian shall provide the Fund with any report on its system
              of internal accounting

                                       17

<PAGE>   22

              control as the Fund may reasonably request from time to time.

2.11   Segregated Account. The Custodian shall upon receipt of Proper
       Instructions establish and maintain a segregated account or accounts for
       and on behalf of the Fund, into which account or accounts may be
       transferred cash and/or securities, including securities maintained in
       an account by the Custodian pursuant to Section 2.10 hereof, (i) in
       accordance with the provisions of any agreement among the Fund, the
       Custodian and a broker-dealer registered under the Exchange Act and a
       member of the NASD (or any futures commission merchant registered under
       the Commodity Exchange Act), relating to compliance with the rules of The
       Options Clearing Corporation and of any registered national securities
       exchange (or the Commodity Futures Trading Commission or any registered
       contract market), or of any similar organization or organizations,
       regarding escrow or other arrangements in connection with transactions by
       the Fund, (ii) for purposes of segregating cash or government securities
       in connection with options purchased, sold or written by the Fund or
       commodity futures contracts or options thereon purchased or sold by the
       Fund, (iii) for the purposes of compliance by the Fund with the
       procedures required by Investment Company Act Release No. 10666, or any
       subsequent release or releases of the Securities and Exchange Commission
       relating to the maintenance of segregated accounts by registered


                                       18

<PAGE>   23

       investment companies and (iv) for other proper corporate purposes, but
       only, in the case of clause (iv), upon receipt of, in addition to Proper
       Instructions, a certified copy of a resolution of the Board of Directors
       or of the Executive Committee signed by an officer of the Fund and
       certified by the Secretary or an Assistant Secretary, setting forth the
       purpose or purposes of such segregated account and declaring such
       purposes to be proper corporate purposes.

2.12   Ownership Certificates for Tax Purposes. The Custodian shall execute
       ownership and other certificates and affidavits for all federal and
       state tax purposes in connection with receipt of income or other payments
       with respect to domestic securities of the Fund held by it and in
       connection with transfers of such securities.

2.13   Proxies. The Custodian shall, with respect to the domestic securities
       held hereunder, cause to be promptly executed by the registered holder of
       such securities, if the securities are registered otherwise than in the
       name of the Fund or a nominee of the Fund, all proxies, without
       indication of the manner in which such proxies are to be voted, and shall
       promptly deliver to the Fund such proxies, all proxy soliciting materials
       and all notices relating to such securities.

2.14   Communications Relating to Fund Portfolio Securities

       Subject to the provisions of Section 2.3, the Custodian shall transmit
       promptly to the Fund all written information


                                       19

<PAGE>   24

       (including, without limitation, pendency of calls and maturities of
       domestic securities and expirations of rights in connection therewith and
       notices of exercise of call and put options written by the Fund and the
       maturity of futures contracts purchased or sold by the Fund) received by
       the Custodian from issuers of the domestic securities being held for the
       Fund. With respect to tender or exchange offers, the Custodian shall
       transmit promptly to the Fund all written information received by the
       Custodian from issuers of the domestic securities whose tender or
       exchange is sought and from the party (or his agents) making the tender
       or exchange offer. If the Fund desires to take action with respect to
       any tender offer, exchange offer or any other similar transaction, the
       Fund shall notify the Custodian at least three business days prior to the
       date on which the Custodian is to take such action.

2.15   Reports to Fund by Independent Public Accountants

       The Custodian shall provide the Fund, at such times as the Fund may
       reasonably require, with reports by independent public accountants on
       the accounting system, internal accounting control and procedures for
       safeguarding securities, futures contracts and options on futures
       contracts, including domestic securities deposited and/or maintained in
       a Securities System, relating to the services provided by the Custodian
       under this Contract; such reports shall be of sufficient scope and in
       sufficient detail, as may reasonably be required by the Fund, to provide


                                       20

<PAGE>   25

       reasonable assurance that any material inadequacies would be disclosed by
       such examination, and, if there are no such inadequacies, the reports
       shall so state.

3.     Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States

3.1    Appointment of Foreign Sub-Custodians

       The Fund hereby authorizes and instructs the Custodian to employ as
       sub-custodians for the Fund's securities and other assets maintained
       outside the United States the foreign banking institutions and foreign
       securities depositories designated on Schedule A hereto ("foreign
       sub-custodians"). Upon receipt of "Proper Instructions", as defined in
       Section 4 of this Contract, together with a certified resolution of the
       Fund's Board of Directors, the Custodian and the Fund may agree to
       amend Schedule A hereto from time to time to designate additional
       foreign banking institutions and foreign securities depositories to act
       as sub-custodian. Upon receipt of Proper Instructions, the Fund may
       instruct the Custodian to cease the employment of any one or more such
       sub-custodians for maintaining custody of the Fund's assets.

3.2    Assets to be Held. The Custodian shall limit the securities and other
       assets maintained in the custody of the foreign sub-custodians to: (a)
       "foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
       the Investment Company Act of 1940, and (b) cash and cash equivalents in
       such amounts as the Custodian or the Fund


                                       21

<PAGE>   26
      may determine to be reasonably necessary to effect the Fund's foreign
      securities transactions. The Custodian shall identify on its books as
      belonging to the Fund, the foreign securities of the Fund held by each
      foreign sub-custodian.

3.3   Foreign Securities Depositories. Except as may otherwise be agreed upon in
      writing by the Custodian and the Fund, assets of the Fund shall be
      maintained in foreign securities depositories only through arrangements
      implemented by the foreign banking institutions serving as sub-custodians
      pursuant to the terms hereof. Where possible, such arrangements shall
      include entry into agreements containing the provisions set forth in
      Section 3.4 hereof.

3.4   Agreements with Foreign Banking Institutions. Each agreement with a
      foreign banking institution shall be substantially in the form set forth
      in Exhibit 1 hereto and shall provide that: (a) the Fund's assets will not
      be subject to any right, charge, security interest, lien or claim of any
      kind in favor of the foreign banking institution or its creditors or
      agent, except a claim of payment for their safe custody or administration;
      (b) beneficial ownership of the Fund's assets will be freely transferable
      without the payment of money or value other than for custody or
      administration; (c) adequate records will be maintained identifying the
      assets as belonging to the Fund; (d) officers of or auditors employed by,
      or other

                                  22


<PAGE>   27



      representatives of the Custodian, including to the extent permitted under
      applicable law the independent public accountants for the Fund, will be
      given access to the books and records of the foreign banking institution
      relating to its actions under its agreement with the Custodian; and (e)
      assets of the Fund held by the foreign sub-custodian will be subject only
      to the instructions of the Custodian or its agents.

3.5   Access of Independent Accountants of the Fund. Upon request of the Fund,
      the Custodian will use its best efforts to arrange for the independent
      accountants of the Fund to be afforded access to the books and records of
      any foreign banking institution employed as a foreign sub-custodian
      insofar as such books and records relate to the performance of such
      foreign banking institution under its agreement with the Custodian.

3.6   Reports by Custodian. The Custodian will supply to the Fund from time to
      time, as mutually agreed upon, statements in respect of the securities and
      other assets of the Fund held by foreign sub-custodians, including but not
      limited to an identification of entities having possession of the Fund's
      securities and other assets and advices or notifications of any transfers
      of securities to or from each custodial account maintained by a foreign
      banking institution for the Custodian on behalf of the Fund indicating, as
      to securities acquired for the Fund, the identity of the entity having
      physical possession of such


                                       23
<PAGE>   28

      securities.

3.7   Transactions in Foreign Custody Account

      (a) Except as otherwise provided in paragraph (b) of this Section 3.7, the
      provision of Sections 2.2 and 2.7 of this Contract shall apply, mutatis
      mutandis to the foreign securities of the Fund held outside the United
      States by foreign sub-custodians.

      (b) Notwithstanding any provision of this Contract to the contrary,
      settlement and payment for securities received for the account of the Fund
      and delivery of securities maintained for the account of the Fund may be
      effected in accordance with the customary established securities trading
      or securities processing practices and procedures in the jurisdiction or
      market in which the transaction occurs, including, without limitation,
      delivering securities to the purchaser thereof or to a dealer therefor (or
      an agent for such purchaser or dealer) against a receipt with the
      expectation of receiving later payment for such securities from such
      purchaser or dealer.

      (c) Securities maintained in the custody of a foreign sub-custodian may
      be maintained in the name of such entity's nominee to the same extent as
      set forth in Section 2.3 of this Contract, and the Fund agrees to hold any
      such nominee harmless from any liability as a holder of record of such
      securities.

                                       24

<PAGE>   29




3.8   Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
      Custodian employs a foreign banking institution as a foreign sub-custodian
      shall require the institution to exercise reasonable care in the
      performance of its duties and to indemnify, and hold harmless, the
      Custodian and each Fund from and against any loss, damage, cost, expense,
      liability or claim arising out of or in connection with the institution's
      performance of such obligations. At the election of the Fund, it shall be
      entitled to be subrogated to the rights of the Custodian with respect to
      any claims against a foreign banking institution as a consequence of any
      such loss, damage, cost, expense, liability or claim if and to the extent
      that the Fund has not been made whole for any such loss, damage, cost,
      expense, liability or claim.

3.9   Liability of Custodian. The Custodian shall be liable for the acts or
      omissions of a foreign banking institution to the same extent as set forth
      with respect to sub-custodians generally in this Contract and, regardless
      of whether assets are maintained in the custody of a foreign banking
      institution, a foreign securities depository or a branch of a U.S. bank as
      contemplated by paragraph 3.12 hereof, the Custodian shall not be liable
      for any loss, damage, cost, expense, liability or claim resulting from
      nationalization, expropriation, currency restrictions, or acts of war or
      terrorism or any loss where the sub-custodian has otherwise exercised
      reasonable care. Notwithstanding the foregoing

                                       25

<PAGE>   30

      provisions of this paragraph 3.9, in delegating custody duties to State
      Street London Ltd., the Custodian shall not be relieved of any
      responsibility to the Fund for any loss due to such delegation, except
      such loss as may result from (a) political risk (including, but not
      limited to, exchange control restrictions, confiscation, expropriation,
      nationalization, insurrection, civil strife or armed hostilities) or (b)
      other losses (excluding a bankruptcy or insolvency of State Street London
      Ltd. not caused by political risk) due to Acts of God, nuclear incident or
      other losses under circumstances where the Custodian and State Street
      London Ltd. have exercised reasonable care.

3.10  Reimbursement for Advances. If the Fund requires the Custodian to advance
      cash or securities for any purpose including the purchase or sale of
      foreign exchange or of contracts for foreign exchange, or in the event
      that the Custodian or its nominee shall incur or be assessed any taxes,
      charges, expenses, assessments, claims or liabilities in connection with
      the performance of this Contract, except such as may arise from its or
      its nominee's own negligent action, negligent failure to act or willful
      misconduct, any property at any time held for the account of the Fund
      shall be security therefor and should the Fund fail to repay the
      Custodian promptly, the Custodian shall be entitled to utilize available
      cash and to dispose of the Fund assets to the extent necessary to obtain
      reimbursement.

                                      26
<PAGE>   31

3.11  Monitoring Responsibilities. The custodian shall furnish annually to the
      Fund, during the month of June, information concerning the foreign
      sub-custodians employed by the Custodian. Such information shall be
      similar in kind and scope to that furnished to the Fund in connection with
      the initial approval of this Contract. In addition, the Custodian will
      promptly inform the Fund in the event that the Custodian learns of a
      material adverse change in the financial condition of a foreign
      sub-custodian or any material loss of the assets of the Fund or in the
      case of any foreign sub-custodian not the subject of an exemptive order
      from the Securities and Exchange Commission is notified by such foreign
      sub-custodian that there appears to be a substantial likelihood that its
      shareholders' equity will decline below $200 million (U.S. dollars or the
      equivalent thereof) or that its shareholders' equity has declined below
      $200 million (in each case computed in accordance with generally accepted
      U.S. accounting principles).


3.12  Branches of U.S. Banks

      (a) Except as otherwise set forth in this Contract, the provisions hereof
      shall not apply where the custody of the Fund assets are maintained in a
      foreign branch of a banking institution which is a "bank" as defined by
      Section 2(a)(5) of the Investment Company Act of 1940 meeting the
      qualification set forth in Section 26(a) of said Act. The appointment of
      any such branch as a sub-custodian shall be

                                       27

<PAGE>   32
               governed by paragraph 1 of this Contract.

               (b) Cash held for the Fund in the United Kingdom shall be
               maintained in an interest bearing account established for the
               Fund with the Custodian's London branch, which account shall be
               subject to the direction of the Custodian, State Street London
               Ltd. or both.


     4.        Proper Instructions

               Proper Instructions as used herein means a writing signed or
               initialled by one or more person or persons as the Board of
               Directors shall have from time to time authorized. Each such
               writing shall set forth the specific transaction or type of
               transaction involved, including a specific statement of the
               purpose for which such action is requested. Oral instructions
               will be considered Proper Instructions if the Custodian
               reasonably believes them to have been given by a person
               authorized to give such instructions with respect to the
               transaction involved. The Fund shall cause all oral instructions
               to be confirmed in writing. Upon receipt of a certificate of the
               Secretary or an Assistant Secretary as to the authorization by
               the Board of Directors of the Fund accompanied by a detailed
               description of procedures approved by the Board of Directors,
               Proper Instructions may include communications effected directly
               between electro-mechanical or electronic devices provided that
               the Board of Directors and the Custodian are satisfied that such
               procedures afford adequate safeguards for the Fund's assets. For
               purposes of this Section, Proper Instructions shall include
               instructions received by the Custodian pursuant to any three-
               party agreement which requires a segregated asset account


                                       28


<PAGE>   33
         in accordance with Section 2.11.

         5.        Actions Permitted without Express Authority

                   The Custodian may in its discretion, without express
         authority from the Fund:

                   1)     make payments to itself or others for minor expenses
         of handling securities or other similar items relating to its duties
         under this Contract, provided that all such payments shall be accounted
         for to the Fund;

                   2)     surrender securities in temporary form for securities
         in definitive form;

                   3)     endorse for collection, in the name of the Fund,
         checks, drafts and other negotiable instruments; and

                   4)     in general, attend to all non-discretionary details in
         connection with the sale, exchange, substitution, purchase, transfer
         and other dealings with the securities and property of the Fund except
         as otherwise directed by the Board of Directors of the Fund.

         6.        Evidence of Authority

                   The Custodian shall be protected in acting upon any
         instructions, notice, request, consent, certificate or other instrument
         or paper believed by it to be genuine and to have been properly
         executed by or on behalf of the Fund. The Custodian may receive and
         accept a certified copy of a vote of the Board of Directors of the Fund
         as conclusive evidence (a) of the authority of any person to act in
         accordance with such vote or (b) of any determination or of any action
         by the Board of Directors pursuant to the Articles of Incorporation as
         described in such vote, and

                                       29
<PAGE>   34


such vote may be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.

7.    Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income

      The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of
the outstanding shares of the Fund or, if directed in writing to do so by the
Fund, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate weekly the
net income of the Fund as described in the Fund's currently effective prospectus
and shall advise the Fund and the Transfer Agent weekly of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the weekly income of the Fund shall be made at the time or times
described from time to time in the Fund's currently effective prospectus.

8.    Records

      The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-l and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times

                                       30

<PAGE>   35

during the regular business hours of the Custodian be open for inspection by
duly authorized officers, employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission. The Custodian shall, at the
Fund's request, supply the Fund with a tabulation of securities owned by the
Fund and held by the Custodian and shall, when requested to do so by the Fund
and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.

9     Opinion of Fund's Independent Accountant

      The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-2, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.

10.   Compensation of Custodian

      The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund and the Custodian.

11.   Responsibility of Custodian

      So long as and to the extent that it is in the exercise of reasonable
care, the custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it

                                       31
<PAGE>   36


to be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.

       The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States and, regardless of whether assets are maintained in
the custody of a foreign banking institution, a foreign securities depository or
a branch of a U.S. bank as contemplated by paragraph 3.9 hereof, the Custodian
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from, or caused by, the direction of or authorization by the Fund to
maintain custody or any securities or cash of the Fund in a foreign country
including, but not limited to, losses resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism.

       If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the


                                       32

<PAGE>   37

Custodian or its nominee assigned to the Fund being liable for the payment of
money or incurring liability of some other form, the Fund, as a prerequisite to
requiring the Custodian to take such action, shall provide indemnity to the
Custodian in an amount and form satisfactory to it.

       If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement.

12.    Effective Period, Termination and Amendment

       This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under

                                       33
<PAGE>   38

Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System and the receipt of an
annual certificate of the Secretary or an Assistant Secretary that the Board of
Directors has reviewed the use by the Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company Act or 1940, as
amended and that the Custodian shall not act under Section 2.10A hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors has approved the initial use of the Direct
Paper System and the receipt of an annual certificate of the Secretary or an
Assistant Secretary that the Board of Directors has reviewed the use by the Fund
of the Direct Paper System; provided further, however, that the Fund shall not
amend or terminate this Contract in contravention of any applicable federal or
state regulations, or any provision of the Articles of Incorporation, and
further provided, that the Fund may at any time by action of its Board of
Directors (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver for
the Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.

       Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such


                                       34

<PAGE>   39

termination and shall likewise reimburse the Custodian for its costs, expenses
and disbursements.

13.    Successor Custodian

       If a successor custodian shall be appointed by the Board of Directors of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.

       If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.

       In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all

                                       35

<PAGE>   40

other property held by it under this Contract and to transfer to an account of
such successor custodian all of the Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the successor of the
Custodian under this Contract.

       In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.

14.    Interpretive and Additional Provisions

       In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Articles of Incorporation of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an



                                       36
<PAGE>   41
amendment of this Contract.


15.           Massachusetts Law to Apply

              This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.

16.           Prior Contracts

              This Contract supersedes and terminates, as of the date hereof,
all prior contracts between the Fund and the Custodian relating to the custody
of the Fund's assets.

17.           Shareholder Communications Election

              Securities and Exchange Commission Rule 14b-2 requires banks which
hold securities for the account of customers to respond to requests by issuers
of securities for the name, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the


                                       37
<PAGE>   42


Fund'S protection, the Rule prohibits the requesting company from using the
Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.

              YES [  ]       The Custodian is authorized to release the
                             Fund's name, address, and share positions.

              NO  [  ]       The Custodian is not authorized to release the
                             Fund's name, address, and share positions.

           IN WITNESS WHEREOF, each of parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the third day of October, 1994.

ATTEST                                THE GABELLI GLOBAL MULTIMEDIA TRUST INC.

         [SIG]                        By:         [SIG]
- -------------------------------          -------------------------------------
       SECRETARY

ATTEST                                STATE STREET BANK AND TRUST COMPANY

         [SIG]                        By:         [SIG]
- -------------------------------          -------------------------------------
                                            Executive Vice President



                                       38
<PAGE>   43



                                   Schedule A

              The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of The Gabelli Global
Multimedia Trust Inc. for use as sub-custodians for the Fund's securities and
other assets:




                                 (See attached)










certified:

- -------------------------
Fund's Authorized Officer

Date:
     --------------------


<PAGE>   44
                                                                     EXHIBIT I

                             SUBCUSTODIAN AGREEMENT

     AGREEMENT made this    day of          , 19  , between State Street Bank
and Trust Company, a Massachusetts Trust Company (hereinafter referred to as the
"Custodian"), having its principal place of business at 225 Franklin Street,
Boston, MA, and
(hereinafter referred to as the "Subcustodian"), a              organized
under the laws of                and having an office at                    .

     WHEREAS, Custodian has been appointed to act as Trustee, Custodian or
Subcustodian of securities and monies on behalf of certain of its customers
including, without limitation, collective investment undertakings, investment
companies subject to the U.S. Investment Company Act of 1940, as amended, and
employee benefit plans subject to the U.S. Employee Retirement Income Security
Act of 1974, as amended;

     WHEREAS, Custodian wishes to establish Account (the "Account") with the
Subcustodian to hold and maintain certain property for which Custodian is
responsible as custodian; and

     WHEREAS, Subcustodian agrees to establish the Account and to hold and
maintain all Property in the Account in accordance with the terms and conditions
herein set forth.

     NOW THEREFORE, in consideration of the mutual convenants and agreements
hereinafter contained, the Custodian and the Subcustodian agree as follows:

I.   The Account

     A.   Establishment of the Account.  Custodian hereby requests that
Subcustodian establish for each client of the Custodian an Account which shall
be composed of:

          1.   A Custody Account for any and all Securities (as hereinafter
defined) from time to time received by Subcustodian therefor, and

          2.   A Deposit Account for any and all Cash (as hereinafter defined)
from time to time received by Subcustodian therefor.

     B.   Use of the Account.  The Account shall be used exclusively to hold,
acquire, transfer or otherwise care for, on behalf of Custodian as custodian
and the customers of Custodian and not for Custodian's own interest, Securities
and such Cash or cash equivalents as are transferred to Subcustodian or as are
received in payment of any transfer of, or as payment on, or interest on, or
dividend from, any such Securities (herein collectively called "Cash").

     C.   Transfer of Property in the Account.  Beneficial ownership of the
Securities and Cash in the Account shall be freely transferable without
payment of money or value other than for safe custody and administration.

     D.   Ownership and Segregation of Property in the Account.  The ownership
of the property in the Account, whether Securities, Cash or both, and whether
any such property is held by Subcustodian in an Eligible Depository, shall be
clearly recorded on Subcustodian's books as belonging to Custodian on behalf
of Custodian's customers, and not for Custodian's own interest and, to the
extent that Securities are physically held in the Account, such Securities shall
also be physically segregated from the general assets of Subcustodian, the
assets of Custodian in its individual capacity and the assets of Subcustodian's
other

                                       1
<PAGE>   45

customers. In addition, Subcustodian shall maintain such other records as may
be necessary to identify the property hereunder as belonging to each Account.

     E.   Registration of Securities in the Account.  Securities which are
eligible for deposit in a depository as provided for in Paragraph III may be
maintained with the depository in an account for Subcustodian's customers.
Securities which are not held in a depository and that are ordinarily held in
registered form will be registered in the name of Subcustodian or in the name of
Subcustodian's nominee, unless alternate Instructions are furnished by
Custodian.

II.  Services to Be Provided By the Subcustodian

     The services Subcustodian will provide to Custodian and the manner in
which such services will be performed will be as set forth below in this
Agreement.

     A.   Services Performed Pursuant to Instructions.  All transactions
involving the Securities and Cash in the Account shall be executed solely in
accordance with Custodian's Instructions as that term is defined in Paragraph IV
hereof, except those described in paragraph B below.

     B.   Services to Be Performed Without Instructions.  Subcustodian will,
unless it receives Instructions from Custodian to the contrary:

          1.   Collect Cash.  Promptly collect and receive all dividends,
income, principal, proceeds from transfer and other payments with respect to
property held in the Account, and present for payment all Securities held in the
Account which are called, redeemed or retired or otherwise become payable and
all coupons and other income items which call for payment upon presentation, and
credit Cash receipts therefrom to the Deposit Account.

          2.   Exchange Securities. Promptly exchange Securities where the
exchange is purely ministerial including, without limitation, the exchange of
temporary Securities for those in definitive form and the exchange of warrants,
or other documents of entitlement to Securities, for the Securities themselves.

          3.   Sale of Rights and Fractional Interests.  Whenever notification
of a rights entitlement or a fractional interest resulting from a rights issue,
stock dividend or stock split is received for the Account and such rights
entitlement or fractional interest bears an expiration date, Subcustodian will
promptly endeavor to obtain Custodian's Instructions, but should these not be
received in time for Subcustodian to take timely action, Subcustodian is
authorized to sell such rights entitlement or fractional interest and to credit
the Account.

          4.   Execute Certificates.  Execute in Custodian's name for the
Account, whenever Subcustodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of income from the
Securities held in the account.

          5.   Pay Taxes and Receive Refunds.  To pay or cause to be paid from
the Account and all taxes and levies in the nature of taxes imposed on the
property in the Account by any governmental authority, and to take all steps
necessary to obtain all tax exemptions, privileges or other benefits, including
reclaiming and recovering any foreign withholding tax, relating to the Account
and to execute any declaration, affidavits, or certificates of ownership which
may be necessary in connection therewith

          6.   Prevent Losses.  Take such steps as may be reasonably necessary
to secure or otherwise prevent the loss of, entitlements attached to or
otherwise relating to property held in the Account.

                                       2
<PAGE>   46
       C.     Additional Services.

       1.     Transmission of Notices of Corporate Action. By such means as
will permit Custodian to take timely action with respect thereto, Subcustodian
will promptly notify Custodian upon receiving notices or reports, or otherwise
becoming aware, of corporate action affecting Securities held in the Account
(including, but not limited to, calls for redemption, mergers, consolidations,
reorganizations, recapitalizations, tender offers, rights offerings, exchanges,
subscriptions and other offerings) and dividend, interest and other income
payments relating to such Securities.

       2.     Communications Regarding the Exercise of Entitlements. Upon
request by Custodian, Subcustodian will promptly deliver, or cause any Eligible
Depository authorized and acting hereunder to deliver, to Custodian all notices,
proxies, proxy soliciting materials and other communications that call for
voting or the exercise of rights or other specific action (including material
relative to legal proceedings intended to be transmitted to security holders)
relating to Securities held in the Account to the extent received by
Subcustodian or said Eligible Depository, such proxies or any voting
instruments to be executed by the registered holder of Securities, but without
indicating the manner in which such Securities are to be voted.

       3.     Monitor Financial Service. In furtherance of its obligations under
this Agreement, Subcustodian will monitor a leading financial service with
respect to announcements and other information respecting property held in the
Account, including announcements and other information with respect to
corporate actions and dividend, interest and other income payments.

III.  Use of Securities Depository

Subcustodian may, with the prior written approval of Custodian, maintain all or
any part of the Securities in the account with a securities depository or
clearing agency which is incorporated or organized under the laws of a country
other than the United States of America and is supervised or regulated by a
government agency or regulatory authority in the foreign jurisdiction having
authority over such depositories or agencies, and which operates (a) the
central system for handling of designated securities or equivalent book entries
in               , or (b) a transnational system for the central handling of
securities or equivalent book entries (herein called "Eligible Depository"),
provided however, that, while so maintained, such Securities shall be subject
only to the directions of Subcustodian, and that Subcustodian duties,
obligations and responsibilities with regard to such Securities shall be the
same as if such Securities were held by Subcustodian on its premises.

IV.    Claims Against Property in the Account

The property in the account shall not be subject to any right, charge, security
interest, lien or claim of any kind (collectively "Charges") in favor of
Subscustodian or of any Eligible Depository or any creditor of Subcustodian or
of any Eligible Depository except a claim for payment for such property's safe
custody or administration in accordance with the terms of this Agreement.
Subcustodian will immediately notify Custodian of any attempt by any party to
assert any Charge against the property held in the Account and shall take all
lawful actions to protect such property from such Charges until Custodian has
had a reasonable time to respond to such notices.

V.     Subcustodian's Warranty

Subcustodian represents and warrants that:

       (A)    It is a branch of a "qualified U.S. bank" or an "eligible foreign
custodian" as those terms are defined in Rule 17f-5 of the Investment Company
Act
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.K.2
<SEQUENCE>14
<FILENAME>0014.txt
<DESCRIPTION>AGREEMENT
<TEXT>

<PAGE>   1




                                                                    EXHIBIT K(2)


                      STATE STREET BANK AND TRUST COMPANY

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                      TRANSFER AGENT AND REGISTRAR SERVICES
                         CLOSED-END FUND FEE AGREEMENT
                                      FOR
                    THE GABELLI GLOBAL MULTIMEDIA TRUST INC.




ONGOING TRANSFER AGENT FEES

$6.50 per shareholder account per annum. Includes the issuance and registration
of the first 1,500 credit certificates in a calendar year, but excludes the
issuance of the initial shares being distibuted by the Gabelli Equity Trust.
Excess credits beyond 1,500 to be billed at $1.25 each within a calendar
year.

For each dividend reinvestment per participant            $.75
For each optional cash infusion                           $.75

ACCOUNT MAINTENANCE SERVICES

- -      Establishing new accounts

- -      Preparation and mailing of W-9 solicitation to new accounts without
       T.I.N.'s

- -      Address changes

- -      Processing T.I.N. changes

- -      Processing routine and non-routine transfers of ownership

- -      Issuance of credit certificates (see limits)

- -      Posting debit and credit transactions

- -      Providing a daily transfer journal of ownership changes

- -      Responding to written shareholder communications

- -      Responding to shareholder telephone inquiries; toll-free number

- -      Placing and releasing stop transfers

- -      Replacing lost certificates

- -      Registration of credit certificates (see limits)

<PAGE>   2


Fee. Agreement
Page 2

DIVIDEND DISBURSEMENT SERVICES

- -      Generate and mail twelve dividend checks per annum with one enclosure

- -      Replace lost dividend checks

- -      Processing of backup withholding and remittance

- -      Processing of non-resident alien withholding and remittance

- -      Preparation and filing of Federal Tax Forms 1099 and 1042

- -      Preparation and filing of State Tax Information as directed

DIVIDEND REINVESTMENT SERVICES PROVIDED

- -      Processing optional cash investments and acknowledging same

- -      The reinvestment of dividend proceeds for participants

- -      Participant withdrawal or sell requests

- -      Preparation, mailing and filing of Federal Tax Form 1099B for sales

- -      Preparation and mailing of reinvestment statements



ANNUAL MEETING SERVICES


- -      Coordination of mailing of proxies, proxy statement, annual report and
       business reply envelope (all out-of-pocket expenses, including printing
       of proxy cards, postage, and envelope costs will be billed as incurred)

- -      Providing one set of labels of banks, brokers and nominees for broker
       search

- -      Providing an Annual Meeting Record Date List

- -      Tabulation of returned proxies

- -      Daily reporting of tabulation results

- -      Interface support during solicitation effort

- -      Providing one Inspector of Election at Annual Meeting (out-of-pocket
       travel expenses billed as cost as incurred)

- -      Providing an Annual Meeting Final Voted list

<PAGE>   3




Fee Agreement
Page 3

ADDRESSING AND MAILING SERVICES

 -  Preparation for the mailing of three (3) quarterly reports


INFORMATIONAL SERVICES PROVIDED

- -      One complete statistical report annually

       -      Shareholders by state

       -      Shareholders by classification code

       -      Shareholders by share grouping

- -      Geographical Analysis monthly

TERMS OF FEE AGREEMENT

- -      Minimum $1,000 per month

MISCELLANEOUS

- -      All out-of-pocket expenses such as postage, stationery, etc. will be
       billed as incurred.

ADDITIONAL SERVICES

- -      Services over and above this Fee Schedule will be invoiced in accordance
       with our current Schedule of Services or priced by appraisal.



<PAGE>   4






                        STATE STREET BANK AND TRUST COMPANY

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       STOCK TRANSFER AGENT FEE AGREEMENT

                                       FOR

                       THE GABELLI GLOBAL MULTIMEDIA TRUST INC.

FEE AGREEMENT EFFECTIVE DATE:                 10/7/94



REQUIRED SIGNATURES:

 /s/ CHARLES V. ROSSI                                  October 7, 1994
- ------------------------------------                   ---------------
State Street Bank and Trust Company                    Date
Nane:  Charles V. Rossi
Title; Vice President

 [SIG]                                                 10/10/94
- ------------------------------------                   ---------------
The Gabelli Global Multimedia Trust Inc.               Date
Name:
Title:
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.L.1
<SEQUENCE>15
<FILENAME>0015.txt
<DESCRIPTION>OPINION AND CONSENT OF WILLKIE FARR & GALLAGHER
<TEXT>

<PAGE>   1




                                                                    EXHIBIT L(1)




June 2, 2000

The Gabelli Global Multimedia Trust Inc.
One Corporate Center
Rye, New York 10580-1435

Ladies and Gentlemen:

We have acted as counsel to The Gabelli Global Multimedia Trust Inc. (the
"Fund"), a corporation organized under the laws of the State of Maryland, in
connection with the issuance of up to 3,598,938 shares (the "Shares") of its
common stock, par value $.001 per share (the "Common Stock"), pursuant to the
exercise of rights (the "Rights") to purchase Common Stock to be distributed to
the shareholders of the Fund (the "Offer") in accordance with the Fund's
Registration Statement on Form N-2 (File Nos. 333-33514 and 811-8476) under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended (the "Registration Statement").

We have examined copies of the Articles of Incorporation and By-Laws of the
Fund, as amended, the Registration Statement, resolutions adopted by the Fund's
Board of Directors and other records and documents that we have deemed necessary
for the purpose of this opinion. We have also examined such other documents,
papers, statutes and authorities as we have deemed necessary to form a basis for
the opinion hereinafter expressed. We have assumed that the Fund has no
"Principal Shareholder" as defined in Article VIII of the Fund's Articles of
Incorporation and have relied upon a certificate of the Assistant Secretary of
the Fund to the effect that the Fund has no knowledge of any such Principal
Shareholder.

In our examination, we have assumed the genuineness of all signatures and the
conformity to original documents of all copies submitted to us. As to various
questions of fact material to our opinion, we have relied upon statements and
certificates of officers and representatives of the Fund and others. As to
matters governed by the laws of Maryland, we have relied upon the opinion of
Messrs. Venable, Baetjer and Howard, LLP that is attached to this opinion.

Based upon the foregoing, we are of the opinion that, when the purchase price
for the Shares has been determined by the duly appointed Pricing Committee of
the Board of Directors as authorized by the Board of Directors, the Shares to be
issued upon exercise of the Rights will have been duly authorized and that when
the Shares have been sold, issued and paid for as contemplated by the
Registration Statement, the Shares will have been validly and legally issued and
will be fully paid and non-assessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Prospectus included as part of the Registration



<PAGE>   2

June 2, 2000

Page 2




Statement. We do not thereby admit that we are "experts" as that term is used in
the Securities Act of 1933, as amended, and the regulations thereunder.

Very truly yours,



/s/ Willkie Farr & Gallagher

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.L.2
<SEQUENCE>16
<FILENAME>0016.txt
<DESCRIPTION>OPINION & CONSENT OF VENABLE BAETJER & HOWARD LLP
<TEXT>

<PAGE>   1
                                                                    EXHIBIT L(2)

                                  June 2, 2000


Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York  10019-6099

            Re:   The Gabelli Global Multimedia Trust Inc.

Ladies and Gentlemen:

            We have acted as special Maryland counsel for The Gabelli Global
Multimedia Trust Inc., a Maryland corporation (the "Fund"), in connection with
the issuance of up to 3,598,938 shares (the "Shares") of its common stock, $.001
par value per share (the "Common Stock") pursuant to the exercise of rights (the
"Rights") to purchase Common Stock to be distributed to the Fund's stockholders
in accordance with the Fund's Registration Statement on Form N-2 (File No.
333-33514) (the "Registration Statement").


            As Maryland counsel for the Fund, we are familiar with its Charter
and Bylaws. We have examined the Registration Statement for the Shares,
substantially in the form in which it is to become effective, and the form of
subscription certificate for exercise of the Rights. We have examined and relied
upon a certificate of the Maryland State Department of Assessments and Taxation
to the effect that the Fund is duly incorporated and existing under the laws of
the State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland. We have further examined and relied upon a
certificate of the Secretary of the Fund with respect to the Fund's Charter and
Bylaws and certain action taken by its Board of Directors, among other matters
addressed in the certificate. We have examined and relied upon such corporate
records of the Fund and other documents and certificates as to factual matters
as we have deemed necessary to render the opinion expressed herein.



            We have assumed that the Fund has no "Principal Shareholder" as
defined in Article VIII of the Fund's Charter and have relied upon a certificate
of the Secretary of the Fund to the effect that the Fund has no knowledge of any
such Principal Shareholder. We have also assumed, without independent
verification, the authenticity of all documents submitted to us as originals,
the conformity with originals of all documents submitted to us as copies, and
the genuineness of all signatures.

<PAGE>   2
Willkie Farr & Gallagher
June 2, 2000
Page 2


            Based on such examination, we are of the opinion and so advise you
that when the purchase price for the Shares has been determined by the duly
appointed Pricing Committee of the Board of Directors as authorized by the Board
of Directors, the Shares of Common Stock to be issued upon exercise of the
Rights will have been duly authorized and that when the Shares have thereafter
been sold, issued and paid for as contemplated by the Registration Statement,
the Shares will have been validly and legally issued and will be fully paid and
nonassessable.

            This letter expresses our opinion with respect to the Maryland
General Corporation Law governing matters such as the authorization and issuance
of stock. It does not extend to the securities laws or "Blue Sky" laws of
Maryland, to federal securities laws, or to other federal or state laws.

            You may rely upon our foregoing opinion in rendering your opinion to
the Fund that is to be filed as an exhibit to the Registration Statement. We
consent to the filing of this opinion as an exhibit to the Registration
Statement and the reference to us under the caption "Legal Matters" in the
Prospectus. We do not thereby admit that we are "experts" as that term is used
in the Securities Act of l933 and the regulations thereunder.

                                    Very truly yours,




                              /s/ Venable, Baetjer and Howard, LLP

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.N
<SEQUENCE>17
<FILENAME>0017.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>

<PAGE>   1


                      CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in this Registration
Statement on Form N-2 of our report dated February 11, 2000, relating to the
financial statements and financial highlights which appears in the December 31,
1999 Annual Report to Shareholders of The Gabelli Global Multimedia Trust
Inc., which is also incorporated by reference into the Registration Statement.
We also consent to the references to us under the headings "Financial
Highlights", "Experts", "Counsel and Independent Accountants" and "Financial
Statements" in such Registration Statement.


/s/ PricewaterhouseCoopers LLP

New York, New York
June 2, 2000
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.R
<SEQUENCE>18
<FILENAME>0018.txt
<DESCRIPTION>CODE OF ETHICS
<TEXT>

<PAGE>   1

                                                                       EXHIBIT R


                                    SECTION S

                                 CODE OF ETHICS

Gabelli Funds, LLC
GAMCO Investors, Inc.
Gabelli & Company, Inc.
Gabelli Advisers, Inc.
Gabelli Fixed Income LLC

Each Registered Investment Company
     or series thereof (each of which
     is considered to be a Company
     for this purpose) for which any
     of the Companies listed above
     presently or hereafter provides
     investment advisory or principal
     underwriting services, other than a
     money market fund or a fund
     that does not invest in Securities.

                                  INTRODUCTION

       This Code of Ethics establishes rules of conduct for persons who are
associated with the companies named above or with the registered investment
companies for which such companies provide investment advisory or principal
underwriter services. The Code governs their personal investment and other
investment-related activities.

       The basic rule is very simple: put the client's interests first. The rest
of the rules elaborate this principle. Some of the rules are imposed
specifically by law. For example, the laws that govern investment advisers
specifically prohibit fraudulent activity, making statements that are not true
or that are misleading or omit something that is significant in the context and
engaging in manipulative practices. These are general words, of course, and over
the years the courts, the regulators and investment advisers have interpreted
these words and established codes of conduct for their employees and others who
have access to their investment decisions and trading activities. Indeed, the
rules obligate investment advisers to adopt written rules that are reasonably
designed to prevent the illegal activities described above and must follow
procedures that will enable them to prevent such activities.

       This Code is intended to assist the companies in fulfilling their
obligations under the law. The first part lays out who the Code applies to, the
second part deals with personal investment activities, the third part deals with
other sensitive business practices, and subsequent parts deal with reporting and
administrative procedures.

FEBRUARY 15, 2000
                                        S-1


<PAGE>   2




       The Code is very important to the companies and their employees.
Violations can not only cause the companies embarrassment, loss of business,
legal restrictions, fines and other punishments but for employees can lead to
demotion, suspension, firing, ejection from the securities business and very
large fines.

I.     APPLICABILITY

       A.     The Code applies to each of the following:

              1.     The Companies named or described at the top of page one of
                     the Code and all entities that are under common management
                     with these Companies or otherwise agree to be subject to
                     the Code ("Affiliates"). A listing of the Affiliates, which
                     is periodically updated, is attached as Exhibit A.

              2.     Any officer, director or employee of any Company, Affiliate
                     or Fund Client (as defined below) whose job regularly
                     involves him in the investment process. This includes the
                     formulation and making of investment recommendations and
                     decisions, the purchase and sale of securities for clients
                     and the utilization of information about investment
                     recommendations, decisions and trades. Due to the manner in
                     which the Companies and the Affiliates conduct their
                     business, every employee should assume that he is subject
                     to the Code unless the Compliance Officer specifies
                     otherwise.

              3.     With respect to all of the Companies, Affiliates and Fund
                     Clients except Gabelli & Company, Inc., any natural person
                     who controls any of the Companies, Affiliates or Fund
                     Clients and who obtains information regarding the
                     Companies' or the Affiliates' investment recommendations or
                     decisions. However, a person whose control arises only as a
                     result of his official position with such entity is
                     excluded. Disinterested directors of Fund Clients, for
                     example, are excluded from coverage under this item.

              4.     With respect to all of the Companies and Fund Clients
                     except Gabelli & Company, Inc., any director, officer,
                     general partner or person performing a similar function
                     even if he has no knowledge of and is not involved in the
                     investment process. Disinterested directors of Fund Clients
                     and independent directors of Affiliates are included in
                     coverage under this item.

              5.     As an exception, the Code does not apply to any director,
                     officer or employee of any Fund Client (such as certain of
                     The Gabelli Westwood Funds) with respect to which the
                     Companies' services do not involve the formulation or
                     making of investment recommendations or decisions or the
                     execution of portfolio transactions if that person is also
                     a director, officer or employee of any entity that does
                     perform such services (such as



                                      S-2
<PAGE>   3




                     Westwood Management Corp.). These individuals are covered
                     by codes of ethics adopted by such entities.

       B.     Definitions

              1.     ACCESS PERSONS. The Companies and the persons described in
                     items (A)2 and (A)3 above other than those excluded by item
                     (A)5 above.

              2.     ACCESS PERSON ACCOUNT. Includes all advisory, brokerage,
                     trust or other accounts or forms of direct beneficial
                     ownership in which one or more Access Persons and/or one or
                     more members of an Access Person's immediate family have a
                     substantial proportionate economic interest. Immediate
                     family includes an Access Person's spouse and minor
                     children living with the Access Person. A substantial
                     proportionate economic interest will generally be 10% of
                     the equity in the account in the case of any single Access
                     Person and 25% of the equity in the account in the case of
                     all Access Persons in the aggregate, whichever is first
                     applicable. Investment partnerships and similar indirect
                     means of ownership other than registered open-end
                     investment companies are also treated as accounts.

                     As an exception, accounts in which one or more Access
                     Persons and/or their immediate family have a substantial
                     proportionate interest which are maintained with persons
                     who have no affiliation with the Companies and with respect
                     to which no Access Person has, in the judgment of the
                     Compliance Officer after reviewing the terms and
                     circumstances, any direct or indirect influence or control
                     over the investment or portfolio execution process are not
                     Access Person Accounts.

                     As a further exception, subject to the provisions of
                     Article II(I)7, bona fide market making accounts of Gabelli
                     & Company, Inc. are not Access Person Accounts.

                     As a further exception, subject to the provisions of
                     Article II(I)7, bona fide error accounts of the Companies
                     and the Affiliates are not Access Person Accounts.

              3.     ASSOCIATE PORTFOLIO MANAGERS. Access Persons who are
                     engaged in securities research and analysis for designated
                     Clients or are responsible for investment recommendations
                     for designated Clients but who are not principally
                     responsible for investment decisions with respect to any
                     Client accounts.

              4.     CLIENTS. Investment advisory accounts maintained with any
                     of the Companies or Affiliates by any person, other than
                     Access Person Accounts. However, Fund Clients covered by
                     item (A)(5) above are considered Client accounts only with
                     respect to employees specifically identified by the

                                      S-3



<PAGE>   4








                     Compliance Officer as having regular information regarding
                     investment recommendations or decisions or portfolio
                     transactions for such Fund Clients.

              5.     COMPANIES. The companies named or described at the top of
                     page one of the Code.

              6.     COMPLIANCE OFFICER. The persons designated as the
                     compliance officers of the Companies.

              7.     COVERED PERSONS. The Companies, the Access Persons and the
                     persons described in item (A)4 above.

              8.     FUND CLIENTS. Clients that are registered investment
                     companies or series thereof.

              9.     PORTFOLIO MANAGERS. Access Persons who are principally
                     responsible for investment decisions with respect to any
                     Client accounts.

              10.    SECURITY. Any financial instrument treated as a security
                     for investment purposes and any related instrument such as
                     a futures, forward or swap contract entered into with
                     respect to one or more securities, a basket of or an index
                     of securities or components of securities. However, the
                     term security does not include securities issued by the
                     Government of the United States, bankers' acceptances, bank
                     certificates of deposit, commercial paper and high quality
                     short-term debt instruments, including repurchase
                     agreements, or shares of registered open-end investment
                     companies.

II.    RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES

       A.     Basic Restriction on Investing Activities

              If a purchase or sale order is pending or under active
              consideration for any Client account by any Company or Affiliate,
              neither the same Security nor any related Security (such as an
              option, warrant or convertible security) may be bought or sold for
              any Access Person Account.

                                       S-4



<PAGE>   5




       B.     Initial Public Offerings

              No Security or related Security may be acquired in an initial
              public offering for any Access Person Account.

       C.     Blackout Period

              No Security or related Security may be bought or sold for the
              account of any Portfolio Manager or Associate Portfolio Manager
              during the period commencing seven (7) days prior to and ending
              seven (7) calendar days after the purchase or sale (or entry of an
              order for the purchase or sale) of that Security or any related
              Security for the account of any Client with respect to which such
              person has been designated a Portfolio Manager or Associate
              Portfolio Manager, unless the Client account receives at least as
              good a price as the account of the Portfolio Manager or Associate
              Portfolio Manager and the Compliance Officer determines under the
              circumstances that the Client account has not been adversely
              affected (including with respect to the amount of such Security
              able to be bought by the Client account) by the transaction for
              the account of the Portfolio Manager or Associate Portfolio
              Manager.

       D.     Short-term Trading

              No Security or related Security may, within a 60 day period, be
              bought and sold or sold and bought at a profit for any Access
              Person Account if the Security or related Security was held at any
              time during that period in any Client account.

       E.     Exempt Transactions

              Participation on an ongoing basis in an issuer's dividend
              reinvestment or stock purchase plan, participation in any
              transaction over which no Access Person had any direct or indirect
              influence or control and involuntary transactions (such as
              mergers, inheritances, gifts, etc.) are exempt from the
              restrictions set forth in paragraphs (A) and (C) above without
              case by case preclearance under paragraph (G) below.

       F.     Permitted Exceptions

              Purchases and sales of the following Securities for Access Person
              Accounts are exempt from the restrictions set forth in paragraphs
              A, C and D above if such purchases and sales comply with the
              pre-clearance requirements of paragraph (G) below:

              1.     Non-convertible fixed income Securities rated at least "A";


                                       S-5






<PAGE>   6

              2.     Equity Securities of a class having a market capitalization
                     in excess of $l billion;

              3.     Equity Securities of a class having a market capitalization
                     in excess of $500 million if the transaction in question
                     and the aggregate amount of such Securities and any related
                     Securities purchased and sold for the Access Person
                     Account in question during the preceding 60 days does not
                     exceed 100 shares;

              4.     Municipal Securities; and

              5.     Securities transactions effected for federal, state or
                     local income tax purposes that are identified to the
                     Compliance Officer at the time as being effected for such
                     purposes.

              In addition, the exercise of rights that were received pro rata
              with other security holders is exempt if the pre-clearance
              procedures are satisfied.

       G.     Pre-Clearance of Personal Securities Transactions

              No Security may be bought or sold for an Access Person Account
              unless (i) the Access Person obtains prior approval from the
              Compliance Officer or, in the absence of the Compliance Officer,
              from the general counsel of Gabelli Asset Management Inc.; (ii)
              the approved transaction is completed on the same day approval is
              received; and (iii) the Compliance Officer or the general counsel
              does not rescind such approval prior to execution of the
              transaction (See paragraph I below for details of the
              Pre-Clearance Process.)

       H.     Private Placements

              The Compliance Officer will not approve purchases or sale of
              Securities that are not publicly traded, unless the Access Person
              provides full details of the proposed transaction (including
              written certification that the investment opportunity did not
              arise by virtue of such person's activities on behalf of any
              Client) and the Compliance Officer concludes, after consultation
              with one or more of the relevant Portfolio Managers, that the
              Companies would have no foreseeable interest in investing in such
              Security or any related Security for the account of any Client.

       I.     Pre-Clearance Process

              1.     No Securities may be purchased or sold for any Access
                     Person Account unless the particular transaction has been
                     approved in writing by the Compliance Officer or, in his
                     absence, the general counsel of Gabelli Asset Management
                     Inc. The Compliance Officer shall review not less
                     frequently than weekly reports from the trading desk (or,
                     if applicable, confirmations

                                       S-6




<PAGE>   7





                     from brokers) to assure that all transactions effected for
                     Access Person Accounts are effected in compliance with this
                     Code.

              2.     No Securities may be purchased or sold for any Access
                     Person Account other than through the trading desk of
                     Gabelli & Company, Inc., unless express permission is
                     granted by the Compliance Officer. Such permission may be
                     granted only on the condition that the third party broker
                     supply the Compliance Officer, on a timely basis, duplicate
                     copies of confirmations of all personal Securities
                     transactions for such Access Person in the accounts
                     maintained with such third party broker and copies of
                     periodic statements for all such accounts.

              3.     A Trading Approval Form, attached as Exhibit B, must be
                     completed and submitted to the Compliance Officer for
                     approval prior to entry of an order.

              4.     After reviewing the proposed trade, the level of potential
                     investment interest on behalf of Clients in the Security in
                     question and the Companies' restricted lists, the
                     Compliance Officer shall approve (or disapprove) a trading
                     order on behalf of an Access Person as expeditiously as
                     possible. The Compliance Officer will generally approve
                     transactions described in paragraph (F) above unless the
                     Security in question or a related security is on the
                     Restricted List or the Compliance Officer believes for any
                     other reason that the Access Person Account should not
                     trade in such Security at such time.

              5.     Once an Access Person's Trading Approval Form is approved,
                     the form must be forwarded to the trading desk (or, if a
                     third party broker is permitted, to the Compliance Officer)
                     for execution on the same day. If the Access Person's
                     trading order request is not approved, or is not executed
                     on the same day it is approved, the clearance lapses
                     although such trading order request maybe resubmitted at a
                     later date.

              6.     In the absence of the Compliance Officer, an Access Person
                     may submit his or her Trading Approval Form to the general
                     counsel of Gabelli Asset Management Inc. Trading approval
                     for the Compliance Officer must be obtained from the
                     general counsel, and trading approval for the general
                     counsel must be obtained from the Compliance Officer. In no
                     case will the Trading Desk accept an order for an Access
                     Person Account unless it is accompanied by a signed Trading
                     Approval Form.

              7.     The Compliance Officer shall review all Trading Approval
                     Forms, all initial, quarterly and annual disclosure
                     certifications and the trading activities on behalf of all
                     Client accounts with a view to ensuring that all Covered
                     Persons are complying with the spirit as well as the
                     detailed requirements


                                      S-7

<PAGE>   8




                     of this Code. The Compliance Officer will review all
                     transactions in the market making accounts of Gabelli &
                     Company, Inc. and the error accounts of the Companies and
                     the Affiliates in order to ensure that such transactions
                     are bona fide market making or error transactions or are
                     conducted in accordance with the requirements of this
                     Article II.

III.   OTHER INVESTMENT-RELATED RESTRICTIONS

       A.     Gifts

              No Access Person shall accept any gift or other item of more than
              $100 in value from any person or entity that does business with or
              on behalf of any Client.

       B.     Service As a Director

              No Access Person shall commence service on the Board of Directors
              of a publicly traded company or any company in which any Client
              account has an interest without prior authorization from the
              Compliance Committee based upon a determination that the Board
              service would not be inconsistent with the interests of the
              Clients. The Compliance Committee shall include the senior
              Compliance Officer of Gabelli Asset Management Inc., the general
              counsel of Gabelli Asset Management Inc. and at least two of the
              senior executives from among the Companies.

IV.    REPORTS AND ADDITIONAL COMPLIANCE PROCEDURES

       A.     Every Covered Person, except independent directors of
              Affiliates of the Companies, must submit a report (a form
              of which is appended as Exhibit C) containing the
              information set forth in paragraph (B) below with respect
              to transactions in any Security in which such Covered
              Person has or by reason of such transaction acquires, any
              direct or indirect beneficial ownership (as defined in
              Exhibit D) in the Security, and with respect to any account
              established by the Covered Person in which any Securities
              were held for the direct or indirect benefit of the Covered
              Person; provided, however, that:

              1.     a Covered Person who is required to make reports
                     only because he is a director of one of the Fund
                     Clients and who is a "disinterested" director
                     thereof need not make a report with respect to any
                     transactions other than those where he knew or
                     should have known in the course of his duties as a
                     director that any Fund Client of which he is a
                     director has made or makes a purchase or sale of the
                     same or a related Security within 15 days before or
                     after the purchase or sale of such Security or
                     related Security by such director.




                                      S-8

<PAGE>   9

              2.     a Covered Person need not make a report with respect
                     to any transaction effected for, and Securities held
                     in, any account over which such person does not have
                     any direct or indirect influence or control; and

              3.     a Covered Person will be deemed to have complied
                     with the requirements of this Article IV insofar as
                     the Compliance Officer receives in a timely fashion
                     duplicate monthly or quarterly brokerage statements
                     or transaction confirmations on which all
                     transactions required to be reported hereunder are
                     described.

       B.     A Covered Person must submit the report required by this
              Article to the Compliance Officer no later than 10 days
              after the end of the calendar quarter in which the
              transaction or account to which the report relates was
              effected or established, and the report must contain the
              date that the report is submitted.

              1.     This report must contain the following information
                     with respect to transactions:

                     a.     The date of the transaction, the title and
                            number of shares and the principal amount of
                            each Security involved;

                     b.     The nature of the transaction (i.e.,
                            purchase, sale or any other type of
                            acquisition or disposition);

                     c.     The price at which the transaction was
                            effected; and

                     d.     The name of the broker, dealer or bank with
                            or through whom the transaction was effected.

              2.     This report must contain the following information
                     with respect to accounts established:

                     a.     The name of the broker, dealer or bank with
                            whom the account was established; and

                     b.     The date the account was established.

       C.     Any report submitted to comply with the requirements of
              this Article IV may contain a statement that the report
              shall not be construed as an admission by the person making
              such report that he has any direct or indirect beneficial
              ownership in the Security to which the report relates. A
              person need not make any report under this Article IV with
              respect to transactions effected for, and Securities held
              in, any account over which the person has no direct or
              indirect influence or control

       D.     No later than 10 days after beginning employment with any
              of the Companies or Affiliates or otherwise becoming a
              Covered Person, each Covered Person (except




                                      S-9

<PAGE>   10


              for a "disinterested" director of the Fund Client who is
              required to submit reports solely by reason of being such a
              director) must submit a report containing the following
              information:

              1.     The title, number of shares and principal amount of
                     each Security in which the Covered Person had any
                     direct or indirect beneficial ownership when the
                     person became a Covered Person;

              2.     The name of any broker, dealer or bank with whom
                     the Covered Person maintained an account in which
                     any Securities were held for the direct or indirect
                     benefit of the Covered Person as of the date the
                     person became a Covered Person; and

              3.     The date that the report is submitted.

              The form of such report is attached as Exhibit E.


       E.     Annually each Covered Person must certify that he has
              read and understood the Code and recognizes that he is
              subject to such Code. In addition, annually each Covered
              Person must certify that he has disclosed or reported all
              personal Securities transactions required to be disclosed
              or reported under the Code and that he is not subject to
              any regulatory disability described in the annual
              certification form. Furthermore, each Covered Person
              (except for a "disinterested" director of the Fund Client
              who is required to submit reports solely by reason of being
              such a director) annually must submit a report containing
              the following information (which information must be
              current as of a date no more than 30 days before the report
              is submitted):

              1.     The title, number of shares and principal amount of
                     each Security in which the Covered Person had any
                     direct or indirect beneficial ownership;

              2.     The name of any broker, dealer or bank with whom the
                     Covered Person maintains an account in which any
                     Securities are held for the direct or indirect
                     benefit of the Covered Person; and

              3.     The date that the report is submitted.

              The form of such certification and report is attached as
              Exhibit F.

       F.     At least annually (or quarterly in the case of Items 4 and
              5 below), each of the Companies that has a Fund Client or
              that provides principal underwriting services for a Fund
              Client shall, together with each Fund Client, furnish a
              written report to the Board of Directors of the Fund
              Client that:

              1.     Describes any issues arising under the Code since
                     the last report.

                                      S-10
<PAGE>   11
                2.      Certifies that the Companies have developed procedures
                        concerning Covered Persons' personal trading activities
                        and reporting requirements relevant to such Fund Clients
                        that are reasonably necessary to prevent violations of
                        the Code;

                3.      Recommends changes, if any, to the Fund Clients' or the
                        Companies' Codes of Ethics or procedures;

                4.      Provides a summary of any material or substantive
                        violations of this Code by Covered Persons with respect
                        to such Fund Clients which occurred during the past
                        quarter and the nature of any remedial action taken; and

                5.      Describes any material or significant exceptions to any
                        provisions of this Code of Ethics as determined under
                        Article VI below.

        G.      The Compliance Officer shall notify each employee of any of the
                Companies or Affiliates as to whether such person is considered
                to be an Access Person or Covered Person and shall notify each
                other person that is considered to be an Access Person or
                Covered Person.

V.      SANCTIONS

        Upon discovering that a Covered Person has not complied with the
        requirements of this Code, the Board of Directors of the relevant
        Company or of the relevant Fund Client, whichever is most appropriate
        under the circumstances, may impose on that person whatever sanctions
        the Board deems appropriate, including, among other things, disgorgement
        of profit, censure, suspension or termination of employment. Material
        violations of requirements of this Code by employees of Covered Persons
        and any sanctions imposed in connection therewith shall be reported not
        less frequently than quarterly to the Board of Directors of any relevant
        Company or Fund Client, as applicable.

VI.     EXCEPTIONS

        The Compliance Committee of the Companies reserves the right to decide,
        on a case-by-case basis, exceptions to any provisions under this Code.
        Any exceptions made hereunder will be maintained in writing by the
        Compliance Committee and presented to the Board of Directors of any
        relevant Fund Client at its next scheduled meeting.

VII.    PRESERVATION OF DOCUMENTS

        This Code, a copy of each report by a Covered Person, any written report
        made hereunder by the Companies or the Compliance Officer, lists of all
        persons required to make reports, a list of any exceptions, and the
        reasons therefor, with respect to Article II.B, and any records under
        Article II.G with respect to purchases pursuant to Article II.H above
        shall


                                      S-11
<PAGE>   12






        be preserved with the records of the relevant Company and any relevant
        Fund Client for the period required by Rule l7j-l.

VIII.   OTHER LAWS, RULES AND STATEMENTS OF POLICY

        Nothing contained in this Code shall be interpreted as relieving any
        Covered Person from acting in accordance with the provision of any
        applicable law, rule or regulation or any other statement of policy or
        procedure governing the conduct of such person adopted by the Companies,
        the Affiliates or the Fund Clients.

IX.     FURTHER INFORMATION

        If any person has any question with regard to the applicability of the
        provisions of this Code generally or with regard to any Securities
        transaction or transactions, he should consult the Compliance Officer.




                                      S-12
<PAGE>   13



                                                                       EXHIBIT A

                       LIST OF AFFILIATES OF THE COMPANIES



 ALCE Partners, L.P.
 Darien Associates LLC
 Gabelli Asset Management Inc.
 Gabelli Associates Fund
 Gabelli Associates Limited
 Gabelli Fixed Income Distributors
 Gabelli Fixed Income, Inc.
 Gabelli Global Partners, L.P.
 Gabelli Global Partners, Ltd.
 Gabelli International Gold Fund Limited
 Gabelli International Limited
 Gabelli International II Limited
 Gabelli International Securities Limited
 Gabelli Multimedia Partners, L.P.
 Gabelli Performance Partnership L.P.
 Gabelli Securities, Inc.
 Gemini Capital Management Ltd.
 GLI, Inc.
 Gabelli Group Capital Partners, Inc. and its subsidiaries
 Gabelli Global Partners, L.P.
 Gabelli Global Partners, Ltd.
 Gabelli European Partners, Ltd.
 Gabelli Fund, LDC
 MJG Associates, Inc.
 New Century Capital Partners, L.P.



                                      S-13
<PAGE>   14




                                                                       EXHIBIT B

                       PRE-CLEARANCE TRADING APPROVAL FORM

I, ___________________________________ (name), am an Access Person or authorized
officer thereof and seek pre-clearance to engage in the transaction described
below for the benefit of myself or another Access Person:

Acquisition or Disposition (circle one)

Name of Account:
                ----------------------------------------------------------------
Account Number:
               -----------------------------------------------------------------

Date of Request:
                ----------------------------------------------------------------

Security:
         -----------------------------------------------------------------------

Amount or # of Shares:
                     -----------------------------------------------------------

Broker:
       -------------------------------------------------------------------------


If the transaction involves a Security that is not publicly traded, a
description of proposed transaction, source of investment opportunity and any
potential conflicts of interest:




I hereby certify that, to the best of my knowledge, the transaction described
herein is not prohibited by the Code of Ethics and that the opportunity to
engage in the transaction did not arise by virtue of my activities on behalf of
any Client.

Signature:                                   Print Name:
          ----------------------------------            ------------------------

Approved or Disapproved (Circle One)

Date of Approval:
                 ---------------------------

Signature:                                   Print Name:
          ----------------------------------            ------------------------

If approval is granted, please forward this form to the trading desk (or if a
third party broker is permitted, to the Compliance Officer) for immediate
execution.



                                      S-14
<PAGE>   15





                                                                       EXHIBIT C


                               TRANSACTION REPORT


Report submitted by:
                    ------------------------------------------------------------
                                       Print Name


This transaction report (the "Report") is submitted pursuant to Section IV(B)
of the Code of Ethics of the Companies and supplies information with respect to
transactions in any Security in which you may be deemed to have, or by reason of
such transaction acquire, any direct or indirect beneficial ownership interest,
and with respect to accounts established by you in which any Securities were
held for your direct or indirect benefit, for the period specified below. If you
were not employed by or affiliated with us during this entire period, amend the
dates specified below to cover your period of employment or affiliation.

Unless the context otherwise requires, all terms used in the Report shall have
the same meaning as set forth in the Code of Ethics.

If you have no reportable transactions or new accounts, sign and return this
page only. If you have reportable transactions or new accounts, complete, sign
and return Page 2 and any attachments.




I HAD NO REPORTABLE SECURITIES TRANSACTIONS OR ACCOUNTS ESTABLISHED DURING THE
PERIOD __________ THROUGH ____________. I CERTIFY THAT I AM FULLY FAMILIAR WITH
THE CODE OF ETHICS AND THAT, TO THE BEST OF MY KNOWLEDGE, THE INFORMATION
FURNISHED IN THIS REPORT IS TRUE AND CORRECT.


Signature
         -----------------------------------------------------------------------

Position
        ------------------------------------------------------------------------

Date
    ----------------------------------------------------------------------------




                                      S-15
<PAGE>   16
                                                                          Page 2

                               TRANSACTION REPORT

         Report submitted by:
                              ------------------------------------------------
                                             Print Name

The following tables supply the information required by Section IV(B) of the
Code of Ethics for the period specified below. Transactions reported on
brokerage statements or duplicate confirmations actually received by the
Compliance Officer do not have to be listed although it is your responsibility
to make sure that such statements or confirmations are complete and have been
received in a timely fashion.

<TABLE>
<CAPTION>
                                                         TRANSACTIONS
- -------------------------------------------------------------------------------------------------------------------------------

                               Whether Purchase,
                              Sale, Short Sale or                                      Name of Broker/Dealer
Securities                       Other Type of                                          with or through Whom         Nature of
(Name and         Date of        Disposition or        Quantity of    Price per Share     the Transaction          Ownership of
Symbol)        Transaction        Acquisition          Securities      or Other Unit        was Effected             Securities
- --------       -----------        -----------          ---------      -------------         ------------            ----------
<S>            <C>               <C>                   <C>            <C>                <C>                       <C>



</TABLE>




<TABLE>
<CAPTION>
                                                    NEW ACCOUNTS ESTABLISHED
- -------------------------------------------------------------------------------------------------------------------------------
    Name of Broker, Dealer or Bank              Account Number                     Date Account Established
    ------------------------------              --------------                     ------------------------
<S>                                             <C>                                <C>

</TABLE>

* To the extent specified above, I hereby disclaim beneficial ownership of any
securities listed in this Report or brokerage statements or transaction
confirmations provided by me.

I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST
OF MY KNOWLEDGE, THE INFORMATION IN THIS REPORT IS TRUE AND CORRECT FOR THE
PERIOD OF ____________ THROUGH _________

Signature _____________________________________ Date ________________


Position _____________________________________


                                      S-16

<PAGE>   17


                                                                       EXHIBIT D

                              BENEFICIAL OWNERSHIP

For purposes of the attached Code of Ethics, "beneficial ownership" shall be
interpreted in the same manner as it would be in determining whether a person is
subject to the provisions of Section 16 of the Securities Exchange Act of 1934
and the rules and regulations thereunder, except the determination of direct or
indirect beneficial ownership shall apply to all securities that a Covered
Person has or acquires. The term "beneficial ownership" of securities would
include not only ownership of securities held be a Covered Person for his own
benefit, whether in bearer form or registered in his name or otherwise, but also
ownership of securities held for his benefit by others (regardless of whether or
how they are registered) such as custodians, brokers, executors, administrators,
or trustees (including trusts in which he has only a remainder interest), and
securities held for his account by pledges, securities owned by a partnership in
which he is a member if he may exercise a controlling influence over the
purchase, sale of voting of such securities, and securities owned by any
corporation or similar entry in which he owns securities if the shareholder is a
control-ling shareholder of the entity and has or shares investment control over
the entity's portfolio.

Ordinarily, this term would not include securities held by executors or
administrators in estates in which a Covered Person is a legatee or beneficiary
unless there is a specified legacy to such person of such securities or such
person is the sole legatee or beneficiary and there are other assets in the
estate sufficient to pay debts ranking ahead of such legacy, or the securities
are held in the estate more than a year after the decedent's death.

Securities held in the name of another should be considered as beneficially
owned by a Covered Person where such person enjoys "financial benefits
substantially equivalent to ownership." The Securities and Exchange Commission
has said that, although the final determination of beneficial ownership is a
question to be determined in the light of the facts of the particular case,
generally a person is regarded as the beneficial owner of securities held in the
name of his or her spouse and their minor children. Absent special circumstances
such relationship ordinarily results in such person obtaining financial benefits
substantially equivalent to ownership, e.g., application of the income derived
from such securities to maintain a common home, or to meet expenses that such
person otherwise would meet from other sources, or the ability to exercises a
controlling influence over the purchase, sale or voting of such securities.

A Covered Person also may be regarded as the beneficial owner of securities held
in the name of another person, if by reason of any contract, understanding,
relationship, agreement, or other agreement, he obtains therefrom financial
benefits substantially equivalent to those of ownership.

A Covered Person also is regarded as the beneficial owner of securities held in
the name of a spouse, minor children or other person, even though he does not
obtain therefrom the aforementioned benefits of ownership, if he can vest or
revest title in himself at once or at some future time.


                                      S-17
<PAGE>   18





                                                                     EXHIBIT E

                             INITIAL HOLDINGS REPORT

Report submitted by:
                     --------------------------------------------------------
                                             Print Name

This initial holdings report (the "Report") is submitted pursuant to Section IV
(D) of the Code of Ethics of the Companies and supplies information with respect
to any Security in which you may be deemed to have any direct or indirect
beneficial ownership interest and any accounts established by you in which any
Securities were held for your direct or indirect benefit, as of the date you
became subject to the Code of Ethics.

Unless the context otherwise requires, all terms used in the Report shall have
the same meaning as set forth in the Code of Ethics.

If you have no reportable Securities or accounts, sign and return this page
only. If you have reportable Securities or accounts, complete, sign and return
Page 2 and any attachments.

I HAVE NO REPORTABLE SECURITIES OR ACCOUNTS AS OF __________________. I CERTIFY
THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST OF MY
KNOWLEDGE, THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT.

Signature
          ------------------------------------------------------------

Position
         -------------------------------------------------------------

Date
      ----------------------------------------------------------------



                                      S-18

<PAGE>   19

                                                                          Page 2

                             INITIAL HOLDINGS REPORT

Report submitted by:
                    ---------------------------------------------------------
                                              Print Name

The following tables supply the information required by Section IV(D) of the
Code of Ethics as of the date you became subject to the Code.

<TABLE>
<CAPTION>
                                                       SECURITIES HOLDINGS
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                   Name of Broker/Dealer Where            Nature of Ownership of
 Securities (Name and Symbol)         Quantity of Securities          Securities Are Held                       Securities
 ----------------------------         ----------------------          -------------------                       ----------
<S>                                   <C>                          <C>                                   <C>

</TABLE>

<TABLE>
<CAPTION>
                                                             ACCOUNTS
- ----------------------------------------------------------------------------------------------------------------------------------
   Name of Broker, Dealer or Bank                                                        Account Number
   ------------------------------                                                        --------------
<S>                                                                                     <C>

</TABLE>





I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST
OF MY KNOWLEDGE, THE INFORMATION IN THIS REPORT IS TRUE AND CORRECT AS
OF
   ---------------------------.


Signature                                              Date
          ------------------------------                    -----------------

Position
         -------------------------------



                                      S-19


<PAGE>   20



                                                                       EXHIBIT F

                     ANNUAL CERTIFICATION OF CODE OF ETHICS

A.     I (a Covered Person) hereby certify that I have read and understood the
       Code of Ethics dated February 15, 2000, and recognize that I am subject
       to its provisions. In addition, I hereby certify that I have disclosed
       or reported all personal Securities transactions required to be disclosed
       or reported under the Code of Ethics;

B      Within the last ten years there have been no complaints or disciplinary
       actions filed against me by any regulated securities or commodities
       exchange, any self-regulatory securities or commodities organization, any
       attorney general, or any governmental office or agency regulating
       insurance, securities, commodities or financial transactions in the
       United States, in any state of the United States, or in any other
       country;

C.     I have not within the last ten years been convicted of or acknowledged
       commission of any felony or misdemeanor arising out of my conduct as an
       employee, salesperson, officer, director, insurance agent, broker,
       dealer, underwriter, investment manager or investment advisor; and

D.     I have not been denied permission or otherwise enjoined by order,
       judgment or decree of any court of competent jurisdiction, regulated
       securities or commodities exchange, self-regulatory securities or
       commodities organization or other federal or state regulatory authority
       from acting as an investment advisor, securities or commodities broker or
       dealer, commodity pool operator or trading advisor or as an affiliated
       person or employee of any investment company, bank, insurance company or
       commodity broker, dealer, pool operator or trading advisor, or from
       engaging in or continuing any conduct or practice in connection with any
       such activity or the purchase or sale of any security.

E.     Unless I am exempt from filing an Annual Holdings Report (as a
       "disinterested" director of a Fund Client or an independent director of
       an Affiliate), I have attached a completed Annual Holdings Report which
       is accurate as of a date no more than 30 days ago.

Print Name:
            --------------------------------------

Signature:
            --------------------------------------

Date:
            --------------------------------------

                                 S-20

<PAGE>   21


                                                                          Page 2

                             ANNUAL HOLDINGS REPORT

Report submitted by
                    -----------------------------------------------------------
                                            Print Name

The following tables supply the information required by Section IV(E) of the
Code of Ethics as of a date no more than 30 days before this report is
submitted. If you have no reportable Securities holdings or accounts, write
"None" in the space provided.


<TABLE>
<CAPTION>
                                                       SECURITIES HOLDINGS
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                   Name of Broker/Dealer Where            Nature of Ownership of
 Securities (Name and Symbol)         Quantity of Securities          Securities Are Held                       Securities
 ----------------------------         ----------------------          -------------------                       ----------
<S>                                   <C>                          <C>                                   <C>

</TABLE>

<TABLE>
<CAPTION>
                                                                  ACCOUNTS
- ----------------------------------------------------------------------------------------------------------------------------------
   Name of Broker, Dealer or Bank                                                        Account Number
   -----------------------------                                                        --------------
<S>                                                                                     <C>

</TABLE>



Signature                                              Date
          ------------------------------                    -----------------

Position
         -------------------------------





                                      S-21
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
