-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MhP6XvbWzHDPb1FsyNdEXSLQveaj+avPZqWCHa6PRyEVcQV2fTY1+ClPyLDRxb7R 2s1n1Y7VnS/TTM8e+70zZA== 0000930413-97-000165.txt : 19970320 0000930413-97-000165.hdr.sgml : 19970320 ACCESSION NUMBER: 0000930413-97-000165 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970319 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GABELLI SERIES FUNDS INC CENTRAL INDEX KEY: 0000845611 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05715 FILM NUMBER: 97559266 BUSINESS ADDRESS: STREET 1: ONE CORPORATE CENTER CITY: RYE STATE: NY ZIP: 10580 BUSINESS PHONE: 2123098408 MAIL ADDRESS: STREET 1: ONE CORPORATE CENTER CITY: RYE YORK STATE: NY ZIP: 10580 N-30D 1 ANNUAL REPORT Annual Report December 31, 1996 THE GABELLI CONVERTIBLE SECURITIES FUND, INC. PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1996 - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT COST VALUE ------ ---- ----- CONVERTIBLE SECURITIES -- 48.28% CONVERTIBLE CORPORATE BONDS--32.72% AUTOMOTIVE: PARTS AND ACCESSORIES -- 1.73% $ 400,000 Exide Corporation Sub. Deb. Cv. 2.90%, 12/15/05(e)... $ 246,315 $ 242,000 1,150,000 GenCorp Inc. Sub. Deb. Cv. 8.00%, 08/01/02...... 1,147,163 1,311,000 ---------- ---------- 1,393,478 1,553,000 ---------- ---------- AVIATION: PARTS AND SERVICES -- 1.68% 254,000 Kaman Corporation Sub. Deb. Cv. 6.00%, 03/15/12...... 161,057 215,900 1,350,000 UNC Incorporated Sub. Deb. Cv. 7.50%, 03/31/06...... 922,807 1,289,250 ---------- ---------- 1,083,864 1,505,150 ---------- ---------- BUILDING AND CONSTRUCTION -- 0.01% 10,000 Hofi International Finance Ltd. Sub. Deb. Cv. 4.50%, 08/11/08...... 12,233 13,000 ---------- ---------- BUSINESS SERVICES -- 0.86% 325,000 BBN Corp. Sub. Deb. Cv. 6.00%, 04/01/12...... 317,183 318,500 850,000 Builders Transport, Incorporated Sub. Deb. Cv. 6.50%, 05/01/11...... 354,123 456,875 ---------- ---------- 671,306 775,375 ---------- ---------- CABLE DISTRIBUTION -- 0.49% 250,000 Comcast Corporation Sub. Deb. Cv. 3.375%, 09/09/05..... 245,522 235,315 400,000 Comcast Corporation Sub. Deb. Cv. 1.125%, 04/15/07..... 234,603 202,500 ---------- ---------- 480,125 437,815 ---------- ---------- COMPUTER SOFTWARE AND SERVICES -- 0.14% 40,000 Sierra On-Line, Inc. Sub. Deb. Cv. 6.50%, 04/01/01(e)... 38,015 124,800 ---------- ---------- CONSUMER PRODUCTS -- 4.48% 600,000 Borden, Inc. Sub. Deb. Cv. Zero Cpn. 05/21/02(e) 434,044 444,000 2,800,000 Fieldcrest Cannon, Inc. Sub. Deb. Cv. 6.00%, 03/15/12...... 1,883,670 2,121,000 564,000 Masco Corporation Sub. Deb. Cv. 5.25%, 02/15/12...... 387,096 572,460 200,000 Roadmaster Industries, Inc. Sub. Deb. Cv. 8.00%, 08/15/03...... 200,169 148,500 800,000 Standard Commercial Corporation Sub. Deb. Cv. 7.25%, 03/31/07...... 634,345 730,000 ---------- ---------- 3,539,324 4,015,960 ---------- ---------- CONSUMER SERVICES -- 2.32% 2,000,000 HSN, Inc. Sub. Deb. Cv. 5.875%, 03/01/06(e).. 2,000,000 2,080,000 ---------- ---------- ELECTRONIC EQUIPMENT -- 1.62% 650,000 Pacific Scientific Company Sub. Deb. Cv. 7.75%, 06/15/03...... 605,303 663,000 381,000 Trans-Lux Corporation Sub. Deb. Cv. 9.00%, 12/01/05...... 337,078 388,620 400,000 Trans-Lux Corporation Sub. Deb. Cv. 7.50%, 12/01/06...... 400,000 399,000 ---------- ---------- 1,342,381 1,450,620 ---------- ---------- ENERGY -- 2.14% 1,100,000 Moran Energy Inc. Sub. Deb. Cv. 8.75%, 01/15/08...... 757,843 973,500 600,000 Pennzoil Company Sub. Deb. Cv. 6.50%, 01/15/03...... 600,000 948,000 ---------- ---------- 1,357,843 1,921,500 ---------- ---------- ENTERTAINMENT -- 0.87% 500,000(a)Havas Sub. Deb. Cv. 3.00%, 12/31/97...... 99,482 124,393 560,000 Savoy Pictures Entertainment, Inc. Sub. Deb. Cv. 7.00%, 07/01/03...... 493,387 459,200 450,000 Time Warner Inc. LYONS Sr. Sub. Notes Cv. Zero Cpn., 06/22/13.. 197,688 193,500 5,000 WMS Industries Inc. Sub. Deb. Cv. 5.75%, 11/30/02...... 4,841 4,680 ---------- ---------- 795,398 781,773 ---------- ---------- EQUIPMENT AND SUPPLIES -- 4.27% 1,050,000 Cooper Industries, Inc. Sub. Deb. Cv. 7.05%, 01/01/15...... 991,503 1,107,750 500,000 Fedders Corporation Sub. Deb. Cv. 8.50%, 06/15/12...... 340,580 490,000 The accompanying notes are an integral part of the financial statements. 6 THE GABELLI CONVERTIBLE SECURITIES FUND, INC. PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1996 (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT COST VALUE ------ ---- ----- CONVERTIBLE CORPORATE BONDS (CONTINUED) $ 450,000 General Signal Corporation Sub. Deb. Cv. 5.75%, 06/01/02...... $ 444,500 $ 478,125 625,000 Intermagnetics General Corporation Sub. Deb. Cv. 5.75%, 09/15/03(e)... 625,000 596,875 1,159,000 Kollmorgen Corporation Sub. Deb. Cv. 8.75%, 05/01/09...... 832,939 1,156,105 ---------- ---------- 3,234,522 3,828,855 ---------- ---------- FINANCIAL SERVICES -- 0.62% 550,000 Advest Group, Inc. Sub. Deb. Cv. 9.00%, 03/15/08...... 438,763 558,250 ---------- ---------- FOOD AND BEVERAGE -- 2.26% 150,000 Boston Chicken, Inc. Sub. Deb. Cv. 4.50%, 02/01/04...... 136,294 189,939 1,050,000 Chock Full o' Nuts Corporation Sub. Deb. Cv. 8.00%, 09/15/06...... 1,037,826 992,250 1,005,000 Chock Full o' Nuts Corporation Sub. Deb. Cv. 7.00%, 04/01/12...... 758,387 844,200 ---------- ---------- 1,932,507 2,026,389 ---------- ---------- HOTELS/GAMING -- 0.81% 700,000 Hilton Hotels Corporation Sub. Deb. Cv. 5.00% 05/15/06....... 700,000 724,500 ---------- ---------- METALS AND MINING -- 0.40% 450,000 Coeur d'Alene Mines Corporation Sub. Deb. Cv. 6.00%, 06/10/02...... 413,035 357,525 ---------- ---------- PAPER AND FOREST PRODUCTS -- 0.26% 200,000 Riverwood International Corporation Sub. Deb. Cv. 6.75%, 09/15/03...... 199,664 230,890 ---------- ---------- PUBLISHING -- 2.52% 700,000 News American Holdings Incorporated Sub. Deb. Cv. Zero Cpn., 03/31/02.. 469,705 640,500 1,600,000 Thomas Nelson Inc. Sub. Deb. Cv. 5.75%, 11/30/99(e)... 1,632,168 1,616,000 ---------- ---------- 2,101,873 2,256,500 ---------- ---------- REAL ESTATE / DEVELOPMENT -- 0.09% 125,000 Rockefeller Center Properties Inc. Sub. Deb. Cv. Zero Cpn., 12/31/00.. 77,207 75,785 ---------- ---------- RETAIL -- 3.31% 146,000 Farah U.S.A., Inc. Sub. Deb. Cv. 8.50%, 02/01/04 ..... 132,173 102,200 380,000 Food Lion, Inc. Sub. Deb. Cv. 5.00%, 06/01/03(e)... 377,060 467,400 2,000,000 General Host Corporation Sub. Deb. Cv. 8.00%, 02/15/02...... 1,944,230 1,548,750 600,000 Ingles Markets, Incorporated Sub. Deb. Cv. 10.00% 10/15/08...... 601,605 765,000 110,000 Sports & Recreation, Inc. Sub. Deb. Cv. 4.25%, 11/01/00...... 107,320 81,950 ---------- ---------- 3,162,388 2,965,300 ---------- ---------- TELECOMMUNICATIONS -- 0.99% 8,000,000(b)Softe SA Sub. Deb. Cv. 4.25%, 07/01/98...... 480,253 886,695 ---------- ---------- TRANSPORTATION -- 0.61% 500,000 Greyhound Lines Inc. Sub. Deb. Cv. 8.50%, 03/31/07...... 321,670 446,250 150,000 WorldCorp, Inc. Sub. Deb. Cv. 7.00%, 05/15/04...... 119,027 102,750 ---------- ---------- 440,697 549,000 ---------- ---------- WIRELESS COMMUNICATIONS -- 0.24% 300,000 COMCAST Cellular Communications Inc. Ser. A Redeemable Notes, Zero Cpn., 03/05/00.. 211,543 217,125 ---------- ---------- TOTAL CONVERTIBLE CORPORATE BONDS ...... 26,106,419 29,335,807 ---------- ---------- CONVERTIBLE PREFERRED STOCKS -- 15.56% AUTOMOBILE MANUFACTURERS -- 0.58% 5,000 Ford Motor Company $4.20 Cv. Pfd. Ser. A 451,100 518,750 ---------- ---------- AVIATION: PARTS AND SERVICES -- 0.55% 9,000 Kaman Corporation 6.50% Cv. Pfd. Ser. 2...... 296,013 492,750 ----------- ---------- BROADCASTING -- 0.63% 10,000 Granite Broadcasting Corporation $1.938 Cv. Pfd. ..... 668,100 565,000 ----------- ---------- The accompanying notes are an integral part of the financial statements. 7 THE GABELLI CONVERTIBLE SECURITIES FUND, INC. PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1996 (CONTINUED) - -------------------------------------------------------------------------------- SHARES COST VALUE ------ ---- ----- CONVERTIBLE PREFERRED STOCKS (CONTINUED) CABLE DISTRIBUTION -- 0.15% 6,500 Cablevision Systems Corporation 8.50% Pfd. Ser. I.... $ 159,964 $ 133,250 ---------- ---------- CONSUMER PRODUCTS -- 0.43% 4,500 Fieldcrest Cannon, Inc. $3.00 Cv. Pfd. Ser. A .............. 188,810 176,625 28,000 Kerr Group, Inc. CI. B $1.70 Cv. Pfd. Ser. D .............. 495,938 213,500 ---------- ---------- 684,748 390,125 ---------- ---------- DIVERSIFIED INDUSTRIAL -- 1.76% 25,000 GATX Corporation $3.875 Cv. Pfd....... 1,104,163 1,459,375 1,000 GATX Corporation $2.50 Cv. Pfd........ 65,400 122,000 ---------- ---------- 1,169,563 1,581,375 ---------- ---------- ENERGY -- 2.34% 6,000 Atlantic Richfield Company $2.80 Cv. Pfd........ 1,600,963 1,980,000 2,500 McDermott International, Inc. Pfd. A............... 70,287 67,500 2,000 Santa Fe Energy Resources, Inc. 7.00% Ser............ 48,600 46,250 ---------- ---------- 1,719,850 2,093,750 ---------- ---------- EQUIPMENT AND SUPPLIES -- 3.55% 29,000 Navistar International Corporation $6.00 Cv. Pfd. Ser. G .............. 1,441,945 1,638,500 22,000 Sequa Corporation $5.00 Cv. Pfd........ 1,663,818 1,540,000 ---------- ---------- 3,105,763 3,178,500 ---------- ---------- PUBLISHING -- 0.63% 10,000 Golden Books Family Entertainment, Inc. 8.75% Cv. Pfd(e)..... 500,000 567,500 ---------- ---------- REAL ESTATE / DEVELOPMENT -- 0.64% 9,058 Catellus Development Corporation $3.75 Cv. Pfd. Ser. A .............. 476,074 575,185 ---------- ---------- TELECOMMUNICATIONS -- 1.36% 3,000 Sprint Corporation $1.50 Cv. Pfd. Ser. 1 .............. 301,100 369,000 2,200 Sprint Corporation $1.50 Cv. Pfd. Ser. 2 .............. 187,510 270,600 8,000 Sprint Corporation 8.25% Cv. Pfd........ 255,000 287,000 4,000 TCI Communications Inc. 4.25% Cv. Pfd. Ser. A .............. 177,465 155,500 1,500 TCI Pacific Communications Inc. 5.00% Cv. Pfd... 134,838 137,065 ---------- ---------- 1,055,913 1,219,165 ---------- ---------- WIRELESS COMMUNICATIONS -- 2.94% 47,000 AirTouch Communications 6.00% Cv. Pfd. Cl. B. .............. 1,344,098 1,280,750 29,999 AirTouch Communications 4.25% Cv. Pfd. Cl. C. .............. 1,396,180 1,357,455 ---------- ---------- 2,740,278 2,638,205 ---------- ---------- TOTAL CONVERTIBLE PREFERRED STOCKS ..... 13,027,366 13,953,555 ---------- ---------- COMMON STOCKS -- 15.95% AVIATION: PARTS AND SERVICES -- 1.07% 25,700 Hudson General Corporation ......... 851,581 957,325 ---------- ---------- BROADCASTING -- 2.33% 10,000 The Providence Journal Company+............. 295,500 306,250 50,000 Renaissance Communications Corp.+............... 1,752,500 1,787,500 ---------- ---------- 2,048,000 2,093,750 ---------- ---------- ENERGY -- 0.44% 4,000 Exxon Corporation...... 237,758 392,000 ---------- ---------- FINANCIAL SERVICES -- 1.22% 63,000 Alexander & Alexander Services, Inc........ 1,082,025 1,094,625 ---------- ---------- FOOD-RETAIL -- 0.41% 29,729 Ingles Markets, Inc. Cl A(d) 333,560 371,613 ---------- ---------- HEALTH CARE -- 0.90% 15,000 Genentech, Inc.+....... 719,240 804,375 ---------- ---------- METALS & MINING -- 0.77% 24,499 Freeport-McMoran Copper & Gold, Inc.......... 693,325 689,077 ---------- ---------- REAL ESTATE/DEVELOPMENT -- 0.09% 15,581 Wharf Capital International Ltd. .. 57,177 77,765 ---------- ---------- The accompanying notes are an integral part of the financial statements. 8 THE GABELLI CONVERTIBLE SECURITIES FUND, INC. PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1996 (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT OR SHARES COST VALUE ------ ---- ----- COMMON STOCKS (CONTINUED) SPECIALITY-CHEMICALS -- 8.49% 125,000 Loctite Corp. $ 7,606,875 $ 7,609,375 ---------- ---------- TELECOMMUNICATIONS -- 0.23% 6,900 Pacific Telecom, Inc. (c) 206,845 207,000 ---------- ---------- TOTAL COMMON STOCKS ... 13,836,386 14,296,905 ---------- ---------- CORPORATE BONDS -- 0.48% WIRELESS COMMUNICATIONS -- 0.48% 600,000 COMCAST Cellular Communications Inc. Ser. B Redeemable Notes, Zero Cpn., 03/05/00.. 454,755 435,000 ---------- ---------- TOTAL CORPORATE BONDS.. 454,755 435,000 ---------- ---------- U.S. GOVERNMENT OBLIGATIONS -- 37.42% 33,700,000 U.S. Treasury Bills, 4.80% to 5.00%, Due 01/09/97 to 02/13/97 33,550,836 33,550,836 ---------- ---------- TOTAL U.S. GOVERNMENT OBLIGATIONS .......... 33,550,836 33,550,836 ---------- ---------- TOTAL INVESTMENTS -- 102.13% .............. 86,975,762* 91,572,103 ========== SECURITIES SOLD SHORT -- (0.41)% PROCEEDS -------- 29,729 Ingles Markets, Inc. Cl A 499,623 (371,613) LIABILITIES, IN EXCESS OF OTHER ASSETS-- (1.72)% (1,541,199) ---------- NET ASSETS-- 100.00% ... $89,659,291 (8,092,945 SHARES =========== OUTSTANDING) NET ASSET VALUE PER SHARE $11.08 ====== - ---------------- (a) - Principal amount denoted in French Francs. (b) - Principal amount denoted in Italian Lira. (c) - Fair valued as determined by Board of Directors. (d) - Segregated as collateral for securities sold short. (e) - Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 1996, Rule 144A securities amounted to $6,138,575 or 6.8% of net assets. * For Federal income tax purposes: Aggregate cost .................. $86,975,762 ========== Gross unrealized appreciation ... $ 6,049,505 Gross unrealized depreciation ... (1,453,164) ---------- Net unrealized appreciation ..... $ 4,596,341 ========== + Non-income producing security. The accompanying notes are an integral part of the financial statements. 9 THE GABELLI CONVERTIBLE SECURITIES FUND, INC. STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1996 - -------------------------------------------------------------------------------- ASSETS: Investments in securities, at value (Cost $86,975,762) .................. $91,572,103 Cash .................................. 466,644 Receivable for investments sold ....... 480,081 Deposits with brokers for securities sold short .......................... 499,623 Accrued interest receivable ........... 515,175 Dividends receivable .................. 142,160 ----------- Total Assets ........................ 93,675,786 ----------- LIABILITIES: Payable to Advisor .................... 77,053 Payable for investments purchased ..... 1,578,380 Securities sold short, at value (proceeds: $499,623) ................ 371,613 Dividends payable ..................... 1,917,853 Other accrued expenses ................ 71,596 ----------- Total Liabilities ................... 4,016,495 ----------- NET ASSETS for 8,092,945 shares outstanding ..................... 89,659,291 =========== NET ASSETS CONSIST OF: Capital Stock, at par value ........... 8,093 Additional paid-in capital ............ 85,233,814 Distributions in excess of net investment income ................... (241,821) Distributions in excess of net realized gains ............................... (64,030) Net unrealized appreciation on investments and assets and liabilities denominated in foreign currencies ... 4,723,235 ----------- NET ASSETS ........................ $89,659,291 =========== NET ASSET VALUE ......................... $ 11.08 =========== (100,000,000 shares authorized of $0.001 par value) ($89,659,291 / 8,092,945 shares outstanding) STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 - -------------------------------------------------------------------------------- INCOME: Interest .............................. $4,267,896 Dividends (net of foreign taxes of $4,840) .......................... 1,006,328 ---------- Total Income ........................ 5,274,224 ---------- EXPENSES: Investment advisory fee ............... 912,913 Transfer and shareholder servicing agent .................... 125,587 Printing and mailing .................. 124,525 Directors' fees and expenses .......... 39,985 Legal and audit fees .................. 38,827 Custodian fees and expenses ........... 32,125 Miscellaneous ......................... 49,590 ---------- Total expenses ...................... 1,323,552 ---------- Net Investment Income ................. 3,950,672 ---------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments ...... 1,925,851 Net realized gain on futures .......... 57,335 Net change in unrealized appreciation . 536,303 ---------- Net gain on investments ............... 2,519,489 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................... $6,470,161 ========== STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED DECEMBER 31, 1996 DECEMBER 31, 1995 ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: Net investment income .......................................... $ 3,950,672 $ 4,292,816 Net realized gain on investments ............................... 1,925,851 4,571,863 Net realized gain (loss) on futures............................. 57,335 (50,494) Net change in unrealized appreciation .......................... 536,303 4,841,264 ----------- ----------- Net increase (decrease) in net assets resulting from operations. 6,470,161 13,655,449 ----------- ----------- Distributions from net investment income........................ (3,950,672) (4,292,816) Distributions from net realized gains........................... (1,982,772) (4,521,369) Distributions in excess of net investment income................ (14,871) (174,475) Distributions in excess of net realized gains................... -- (65,122) Distributions from paid-in capital.............................. -- (253,089) ----------- ----------- (5,948,315) (9,306,871) ----------- ----------- Share transactions-- net........................................ -- (27,301,497) ----------- ----------- Net increase (decrease) in net assets......................... 521,846 (22,952,919) NET ASSETS: Beginning of year............................................... 89,137,445 112,090,364 ----------- ----------- End of year..................................................... $89,659,291 $ 89,137,445 =========== ============
The accompanying notes are an integral part of the financial statements. 10 THE GABELLI CONVERTIBLE SECURITIES FUND, INC. NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION The Gabelli Convertible Securities Fund, Inc. (the "Fund") is a closed-end diversified management investment company whose objective is to seek a high level of total return through a combination of current income and capital appreciation by investing in convertible securities. The Corporation was incorporated in Maryland on December 19, 1988 as an open-end diversified management investment company and commenced operations on July 3, 1989. The Board of Directors, upon approval at a special meeting of shareholders held on February 17, 1995, voted to approve the conversion of the Fund to closed-end status, effective March 31, 1995. 2. SIGNIFICANT ACCOUNTING POLICIES The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund. SECURITY VALUATION. Readily marketable securities traded on a national securities exchange or admitted to trading on the NASDAQ National Market List are valued at the last reported sales price on the business day as of which such value is determined. Securities for which no sale was reported on that date and over-the-counter securities not included in the NASDAQ National Market List are valued at the mean between the last bid and asked prices. United States government obligations and other debt instruments having 60 days or fewer remaining until maturity are stated at amortized cost (which approximates market value). Debt instruments having a remaining maturity of more than 60 days will be valued at the highest bid price obtained from a dealer maintaining an active market in that security or on the basis of prices obtained from a pricing service approved by the Board of Directors. All other investment assets, including restricted and not readily marketable securities, are valued under procedures established by and under the direction of the Fund's Board of Directors, designed to reflect in good faith the fair value of such securities. FOREIGN CURRENCY. The books and records of the Fund are maintained in United States ( U.S.) dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at the exchange rates prevailing at the end of the period, and purchases and sales of investment securities, income and expenses are translated on the respective dates of such transactions. Unrealized gains or losses which result from changes in the value of foreign currencies and net other assets have been included in unrealized appreciation / depreciation on investments. Realized gains and losses on investments include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions and the difference between the amounts of interest, dividends, and expenses originally recorded on the books of the Fund and the amounts actually received or paid. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuation arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments. FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase. Such investments will only be made if they are, in the opinion of Fund management, economically appropriate to the reduction of risks involved in the management of the Fund. Upon entering into a futures contract, the Fund is required to deposit with the broker an amount of cash or cash equivalents equal to a certain percentage of the contract amount. This is known as the "initial margin." Subsequent payments ("variation margin") are made or received by the Fund each day, depending on the daily fluctuation of the value of the contract. The daily changes in the contract are recorded as unrealized gains or losses. The Fund recognizes a realized gain or loss when the contract is closed. The net unrealized appreciation / (depreciation) is shown in the financial statements. There are several risks in connection with the use of futures contracts as a hedging device. The change in value of futures contracts primarily corresponds with the value of their underlying instruments, which may not correlate with the change in value of the hedged investments. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market. 11 THE GABELLI CONVERTIBLE SECURITIES FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) SHORT SALES. The Fund may make short sales both to obtain capital gains from anticipated declines in securities and as a form of hedging to offset potential declines in positions in the same or similar securities. A short sale is a transaction in which the Fund sells securities it may or may not own in anticipation of a decline in the market price of the securities. To complete a short sale on securities that it may or may not own, the Fund must arrange through a broker to borrow the securities to be delivered to the buyer. The proceeds received by the Fund from the short sale are retained by the broker until the Fund replaces the borrowed securities. In borrowing the securities to be delivered to the buyer, the Fund becomes obligated to replace the securities borrowed at their market price at the time of replacement, whatever that price may be. The Fund must pay any dividends or interest payable on securities while those securities are in a short position. Possible losses from short sales differ from losses that could be incurred from a purchase of a security, because losses from short sales may be unlimited and therefore exceed the liability reflected in the financial statements, whereas losses from purchases can equal only the total amount invested. SECURITY TRANSACTIONS AND INVESTMENT INCOME. Security transactions are accounted for on the dates the securities are purchased or sold (the trade dates) with realized gain and loss on investments determined by using specific identification as the cost method. Interest income (including amortization of premium and accretion of discount) is recorded as earned. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic developments in a specific industry or region. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments of income and gains on various investment securities held by the Fund, temporary differences and differing characterization of distributions made by the Fund. Tax basis return of capital distributions have been recorded as an adjustment to paid-in capital. FEDERAL INCOME TAXES. The Fund intends to continue to qualify as a "regulated investment company" under Subchapter M of the Internal Revenue Code of 1986 and distribute all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required. 3. CAPITAL STOCK TRANSACTIONS The Articles of Incorporation, dated December 19, 1988, permit the Fund to issue 100,000,000 shares (par value $0.001). Transactions in shares of common stock were as follows:
YEAR ENDED YEAR ENDED DECEMBER 31, 1996 DECEMBER 31, 1995 ------------------------ ------------------------- SHARES AMOUNT SHARES AMOUNT --------- ---------- --------- ---------- Shares sold................................... -- $-- 229,155 $2,489,821 Shares redeemed............................... -- -- (2,712,960) (29,791,318) --------- ---------- --------- ---------- Net decrease................................ 0 0 (2,483,805) (27,301,497) ========= ========== ========= ==========
4. PURCHASES AND SALES OF SECURITIES Purchases and sales of securities for the year ended December 31, 1996, other than U.S. government obligations and short-term securities, aggregated $65,384,730 and $85,189,622, respectively. 5. INVESTMENT ADVISORY CONTRACT The Fund employs Gabelli Funds, Inc. (the "Advisor") to provide a continuous investment program for the Fund's portfolio, provide all facilities and personnel, including officers, required for its administrative management, and to pay the compensation of such officers and Directors of the Fund who are its affiliates. As compensation for the services rendered and related expenses borne by the Advisor, the Fund pays the Advisor a fee, computed and accrued daily and payable monthly, equal to 1.00% per annum of the Fund's average daily net assets. 6. TRANSACTIONS WITH AFFILIATES The Fund paid brokerage commissions during the year ended December 31, 1996 of $7,212 to Gabelli & Company, Inc. and its affiliates. 12 THE GABELLI CONVERTIBLE SECURITIES FUND, INC. FINANCIAL HIGHLIGHTS Selected data for a share of capital stock outstanding throughout each year ended December 31:
1996 1995 1994 1993 1992 ----- ----- ----- ----- ----- OPERATING PERFORMANCE: Net asset value, beginning of period .................... $ 11.01 $ 10.60 $ 11.52 $ 11.45 $ 10.91 ------- ------- ------- ------- ------- Net investment income ................................... 0.49 0.53 0.69 0.76 0.65 Net realized and unrealized gain (loss) on securities ... 0.31 1.03 (0.71) 0.74 0.76 ------- ------- ------- ------- ------- Total from investment operations ........................ 0.80 1.56 (0.02) 1.50 1.41 ------- ------- ------- ------- ------- LESS DISTRIBUTIONS: Dividends from net investment income .................... (0.49) (0.53) (0.69) (0.76) (0.65) Distributions from net realized gain on investments ..... (0.24) (0.56) (0.21) (0.67) (0.22) Distributions in excess of net investment income ........ -- (0.02) -- -- -- Distributions in excess of net realized gains ........... -- (0.01) -- -- -- Distributions from paid-in capital ...................... -- (0.03) -- -- -- ------- ------- ------- ------- ------- Net asset value, end of period .......................... $ 11.08 $ 11.01 $ 10.60 $ 11.52 $ 11.45 ======= ======= ======= ======= ======= Market value, end of period ............................. $ 9.25 $ 10.75 -- -- -- ======= ======= ======= ======= ======= Total Net Asset Value Return+(a) ........................ 8.4% 15.0% (0.2)% 13.1% 13.0% Total Investment Return+(b) ............................. (7.3)% 12.3% -- -- -- RATIOS TO AVERAGE NET ASSETS / SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ................ $89,659 $89,137 $112,090 $108,674 $92,541 Ratio of operating expenses to average net assets (c) ... 1.45% 1.56% 1.31% 1.38% 1.40% Ratio of net investment income to average net assets .... 4.33% 4.60% 4.77% 4.58% 5.53% Portfolio Turnover Rate ................................. 114% 140% 67% 45% 32% Average Commission Rate(d) .............................. $0.0423 -- -- -- -- - -------------------------------------------------------------------------------- + Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of distributions. (a)Based on net asset value per share, adjusted for reinvestment of all distributions. (b)Based on net asset value per share through March 31, 1995, the date of conversion of the Fund to closed-end status, and market value thereafter, adjusted for reinvestment of all distributions. (c)Includes, for 1995, a current period expense associated with the conversion of the Fund to closed-end status. Without the conversion expense, this ratio would have been 1.28% in 1995. (d)For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate paid per share for purchases and sales of investment securities.
The accompanying notes are an integral part of the financial statements. REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE GABELLI CONVERTIBLE SECURITIES FUND, INC. In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of The Gabelli Convertible Securities Fund, Inc. (the "Fund") at December 31, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1996 by correspondence with the custodian and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP 1177 Avenue of the Americas New York, New York February 27, 1997 13 THE GABELLI CONVERTIBLE SECURITIES FUND, INC. FEDERAL INCOME TAX INFORMATION (UNAUDITED) CALENDAR YEAR 1996 CASH DIVIDENDS AND DISTRIBUTIONS
TOTAL AMOUNT ORDINARY LONG-TERM DIVIDEND PAYABLE RECORD PAID INVESTMENT CAPITAL REINVESTMENT DATE DATE PER SHARE INCOME GAINS PRICE ------------ ------------ ------------ ------------ ------------ ------------ 03/25/96 03/11/96 $0.1200 $0.1200 $0.0000 $10.4050 06/24/96 06/17/96 0.1200 0.1200 0.0000 10.1689 09/23/96 09/16/96 0.1200 0.1200 0.0000 9.7321 12/27/96 12/19/96 0.3750 0.2716 0.1034 9.5050 -------- ------- ------- $0.7350 $0.6316 $0.1034
A Form 1099-DIV has been mailed to all shareholders of record for the distributions mentioned above, setting forth specific amounts to be included in the 1996 tax returns. Ordinary income distributions include net investment income and realized net short-term capital gains. RETURN OF CAPITAL The amount received as a non-taxable (return of capital) distribution should be applied to reduce the tax cost of shares. This amount will be reflected on Form 1099-DIV. If the amount of the non-taxable portion exceeds your tax basis, the excess will be taxable as a capital gain. CORPORATE DIVIDENDS RECEIVED DEDUCTION AND U.S. TREASURY SECURITIES INCOME The Fund paid to shareholders net investment income dividends of $0.0931 per share on March 25, 1996, $0.0931 per share on June 24, 1996, $0.0931 per share on September 23, 1996 and $0.2107 per share on December 27, 1996. The percentage of such dividends that qualifies for the dividends received deduction available to corporations is 19.83% for all such dividends paid in 1996. The percentage of the ordinary income dividends paid by the Fund during 1996 derived from U.S. Treasury Securities was 27.59%. HISTORICAL DISTRIBUTION SUMMARY
SHORT- LONG- TERM TERM ADJUSTMENT ANNUAL INVESTMENT CAPITAL CAPITAL RETURN OF TOTAL TO SUMMARY INCOME(A) GAIN(A) GAINS CAPITAL (B) DISTRIBUTIONS COST BASIS ------------ ------------ ------------ ------------ ------------ ------------ ------------ 1996 ......... $0.4900 $0.1416 $0.1034 -- $0.7350 -- 1995 ......... 0.5574 0.2041 0.3595 $0.0290 1.1500 $0.0290- 1994 ......... 0.5730 0.1150 0.2120 -- 0.9000 -- 1993 ......... 0.5610 0.2000 0.6640 -- 1.4250 -- 1992 ......... 0.6540 0.0900 0.1320 -- 0.8760 -- 1991 ......... 0.7060 0.1120 0.0470 -- 0.8650 -- 1990 ......... 0.6900 -- -- -- 0.6900 -- 1989 ......... 0.1150 -- -- -- 0.1150 -- - ------------
(a)Taxable as ordinary income for Federal tax purposes. (b)Non-taxable. - - Decrease in cost basis. 14 AUTOMATIC DIVIDEND REINVESTMENT AND VOLUNTARY CASH PURCHASE PLAN ENROLLMENT IN THE PLAN It is the policy of The Gabelli Convertible Securities Fund, Inc. ("Convertible Securities Fund") to automatically reinvest dividends. As a "registered" shareholder you automatically become a participant in the Convertible Securities Fund's Automatic Dividend Reinvestment Plan (the "Plan"). The Plan authorizes the Convertible Securities Fund to issue shares to participants upon an income dividend or a capital gains distribution regardless of whether the shares are trading at a discount or a premium to net asset value. All distributions to shareholders whose shares are registered in their own names will be automatically reinvested pursuant to the Plan in additional shares of the Convertible Securities Fund. Plan participants may send their stock certificates to State Street Bank and Trust Company to be held in their dividend reinvestment account. Registered shareholders wishing to receive their distribution in cash must submit this request in writing to: The Gabelli Convertible Securities Fund, Inc. c/o State Street Bank and Trust Company P.O. Box 8200 Boston, MA 02266-8200 Shareholders requesting this cash election must include the shareholder's name and address as they appear on the share certificate. Shareholders with additional questions regarding the Plan may contact State Street Bank and Trust Company at 1 (800) 336-6983. SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at State Street Bank and Trust Company must do so in writing or by telephone. Please submit your request to the above mentioned address or telephone number. Include in your request your name, address and account number. The cost to liquidate shares is $2.50 per transaction as well as the brokerage commission incurred. Brokerage charges are expected to be less than the usual brokerage charge for such transactions. If your shares are held in the name of a broker, bank or nominee, you should contact such institution. If such institution is not participating in the Plan, your account will be credited with a cash dividend. In order to participate in the Plan through such institution, it may be necessary for you to have your shares taken out of "street name" and re-registered in your own name. Once registered in your own name your dividends will be automatically reinvested. Certain brokers participate in the Plan. Shareholders holding shares in "street name" at participating institutions will have dividends automatically reinvested. Shareholders wishing a cash dividend at such institution must contact their broker to make this change. The number of shares of Common Stock distributed to participants in the Plan in lieu of cash dividends is determined in the following manner. Under the Plan, whenever the market price of the Convertible Securities Fund's Common Stock is equal to or exceeds net asset value at the time shares are valued for purposes of determining the number of shares equivalent to the cash dividends or capital gains distribution, participants are issued shares of Common Stock valued at the greater of (i) the net asset value as most recently determined or (ii) 95% of the then current market price of the Convertible Securities Fund's Common Stock. The valuation date is the dividend or distribution payment date or, if that date is not a New York Stock Exchange trading day, the next trading day. If the net asset value of the Common Stock at the time of valuation exceeds the market price of the Common Stock, participants will receive shares from the Convertible Securities Fund valued at market price. If the Convertible Securities Fund should declare a dividend or capital gains distribution payable only in cash, State Street will buy Common Stock in the open market, or on the New York Stock Exchange or elsewhere, for the participants' accounts, except that State Street will endeavor to terminate purchases in the open market and cause the Convertible Securities Fund to issue shares at net asset value if, following the commencement of such purchases, the market value of the Common Stock exceeds the then current net asset value. 15 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 Convertible Securities 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 members of the Plan at least 90 days before the record date for such dividend or distribution. The Plan also may be amended or terminated by State Street on at least 90 days' written notice to participants in the Plan. VOLUNTARY CASH PURCHASE PLAN The Voluntary Cash Purchase Plan is yet another vehicle for our shareholders to increase their investment in the Convertible Securities 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 and Trust Company for investments in the Convertible Securities Fund shares at the then current market price. Shareholders may send an amount from $250 to $10,000. State Street Bank and Trust Company will use these funds to purchase shares in the open market on or about 15th of each month beginning in April 1996. State Street Bank and Trust Company will charge each shareholder who participates $0.75, plus a pro rata share of the brokerage commissions. Brokerage charges for such purchases are expected to be less than the usual brokerage charges for such transactions. It is suggested that any voluntary cash payments be sent to State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-8200 such that State Street receives such payments approximately 10 days before the 15th of the month. Funds not received at least five days before the investment date shall be held for investment in the following month. A payment may be withdrawn without charge if notice is received by State Street Bank and Trust Company at least 48 hours before such payment is to be invested. For more information regarding the Dividend Reinvestment Plan and Voluntary Cash Purchase Plan, brochures are available by calling (914) 921-5070 or by writing directly to the Convertible Securities Fund. - -------------------------------------------------------------------------------- For the one year period through March 31, 1998, Gabelli Funds, Inc. has arranged for registered shareholders to have the opportunity to purchase shares of the Convertible Securities Fund through our Voluntary Cash Purchase Plan at no commission. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Annual Meeting of the Convertible Securities Fund Stockholders will be held at 12:00 P.M. on Monday, May 12, 1997, at the Cole Auditorium, Greenwich Public Library in Greenwich, Connecticut. - -------------------------------------------------------------------------------- 16 DIRECTORS AND OFFICERS THE GABELLI CONVERTIBLE SECURITIES FUND, INC. ONE CORPORATE CENTER, RYE, NY 10580-1434 DIRECTORS Mario J. Gabelli, CFA PRESIDENT AND CHIEF INVESTMENT OFFICER E. Val Cerutti CHIEF EXECUTIVE OFFICER CERUTTI CONSULTANTS, INC. Felix J. Christiana FORMER SENIOR VICE PRESIDENT DOLLAR DRY DOCK SAVINGS BANK Anthony J. Colavita, P.C. ATTORNEY-AT-LAW ANTHONY J. COLAVITA, P.C. Dugald A. Fletcher PRESIDENT, FLETCHER & COMPANY, INC. Karl Otto Pohl FORMER PRESIDENT, DEUTSCHE BUNDESBANK Anthony R. Pustorino CERTIFIED PUBLIC ACCOUNTANT PROFESSOR, PACE UNIVERSITY Anthony C. van Ekris MANAGING DIRECTOR BALMAC INTERNATIONAL, INC. Salvatore J. Zizza CHAIRMAN & CHIEF EXECUTIVE OFFICER, THE LEHIGH GROUP, INC. OFFICERS AND PORTFOLIO MANAGERS Mario J. Gabelli, CFA PRESIDENT & CHIEF INVESTMENT OFFICER A. Hartswell Woodson, III ASSOCIATE PORTFOLIO MANAGER Bruce N. Alpert VICE PRESIDENT & TREASURER Douglas Neviera ASSISTANT VICE PRESIDENT James E. McKee SECRETARY INVESTMENT ADVISOR Gabelli Funds, Inc. One Corporate Center Rye, New York 10580-1434 CUSTODIAN, TRANSFER AGENT AND REGISTRAR State Street Bank and Trust Company LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom STOCK EXCHANGE LISTING NYSE--Symbol: GCV Shares Outstanding 8,092,945 The Net Asset Value appears in the Publicly Traded Funds column, under the heading "Convertible Securities Funds," in Saturday's The New York Times and in Monday's The Wall Street Journal. It is also listed in Barron's Mutual Funds/Closed End Funds section under the heading "Convertible Securities Funds". The Net Asset Value may be obtained each day by calling (914) 921-5071. - -------------------------------------------------------------------------------- For general information about the Gabelli Funds, call 1-800-GABELLI (1-800-422-3554), fax us at 914-921-5118, visit our Internet homepage at: http://www.gabelli.com, or e-mail us at: closedend@gabelli.com - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that the Convertible Securities Fund may from time to time purchase shares of its capital stock in the open market when the Convertible Securities Fund shares are trading at a discount of 10% or more from the net asset value of the shares - -------------------------------------------------------------------------------- THE GABELLI CONVERTIBLE SECURITIES FUND, INC. ONE CORPORATE CENTER, RYE, NY 10580-1434 PHONE: 1-800-GABELLI (1-800-422-3554) Fax: 1-914-921-5118 Internet: http://www.gabelli.com e-mail: closedend@gabelli.com -----END PRIVACY-ENHANCED MESSAGE-----