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CONVERTIBLE
SECURITIES
FUND, INC.
FIRST QUARTER REPORT
MARCH 31, 2002
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Our cover icon represents the underpinnings of Gabelli.
The Teton mountains in Wyoming represent what we believe in
in America -- that creativity, ingenuity, hard work and a global
uniqueness provide enduring values. They also stand out in
an increasingly complex, interconnected and interdependent
economic world.
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MORNINGSTAR RATED[TM] GABELLI CONVERTIBLE
SECURITIES FUND 4 STARS OVERALL AND FOR THE THREE
AND FIVE-YEAR PERIOD ENDED 03/31/02 AMONG
53 AND 51 CLOSED-END DOMESTIC EQUITY FUNDS, RESPECTIVELY. THE FUND WAS
RATED 3 STARS FOR THE TEN-YEAR PERIOD ENDED 03/31/02 AMONG 35
CLOSED-END DOMESTIC EQUITY FUNDS.
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INVESTMENT OBJECTIVE:
The Gabelli Convertible Securities Fund, Inc. is a closed-end, diversified
management investment company whose primary objective is to seek a high level of
total return through a combination of current income and capital appreciation by
investing in convertible securities.
THIS REPORT IS PRINTED ON RECYCLED PAPER.
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NEW FROM THE GABELLI PRESS:
GLOBAL CONVERTIBLE INVESTING:
THE GABELLI WAY
BY HART WOODSON
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GRAPHIC OF THE GABELLI CONVERTIBLE SECURITIES FUND, INC. OMITTED
TO OUR SHAREHOLDERS,
Convertible stocks and bonds are hybrid securities. Because they can be
converted into common stock, performance will be impacted by the dominant trend
in the equity markets. However, due to their significantly higher yield,
performance is also influenced by the direction of the bond market. In the first
quarter of 2002, we saw a change in the market dynamics of recent years, with
modestly positive performance in the equity markets helping convertible
securities and a falling bond market restraining returns. Buoyed by investments
in the media, energy, and defense sectors, the Gabelli Convertible Securities
Fund (the "Fund") closed the quarter with a modest gain.
A PROMISE KEPT
When we asked the shareholders of the Fund to vote to convert from an
open-end investment company to a closed-end fund, we expressed our intent to
have the Fund's common shares track the Fund's net asset value. Based on the
Fund's consistent and above average annualized performance since inception, we
expected that such a Fund would trade at or above net asset value. In addition,
over the past few years the Board of Directors has taken several initiatives to
maintain the Fund's public market price at a level equal to or exceeding the
Fund's net asset value. These initiatives included a stock repurchase plan, a
managed 8% Distribution Policy, and the issuance of preferred stock.
We are pleased to report that management kept its promise to shareholders
and the Fund is trading at a premium to net asset value. In fact, the Fund began
trading at a premium in February 2001 and has continued to trade above net asset
value, ending the quarter at a 10.67% premium. We have been able to preserve
shareholder wealth during a tough market environment. We have been conservative
during the past year and it has paid off; now is the time to be aggressive.
PREMIUM / DISCOUNT DISCUSSION
As a refresher to our shareholders, the price of a closed-end mutual fund
is determined in the open market by willing buyers and sellers. Shares of the
Fund trade on the New York Stock Exchange and may trade at a premium to (higher
than) net asset value ("NAV") (the market value of the Fund's underlying
portfolio) or a discount to (lower than) net asset value. Of the 470 closed-end
funds in the U.S., approximately 31% currently trade at premiums to NAV versus
21% five years ago and 61% ten years ago.
Ideally, the Fund's market price will generally track the NAV. The Fund's
premium or discount to NAV fluctuates over time. Over our Fund's 7-year history
as a closed-end fund, the range fluctuated from a 14% premium in February 2002
to a 17% discount in April 2000. The average variance from NAV for the Fund
since converting to closed-end fund status is an 8% discount to NAV. Beginning
in early 2001, the market price of the Fund exceeded the NAV and this premium
has gradually increased since.
"Mr. Market" often provides opportunities to invest at a discount. As
discussed, the Fund has undertaken various initiatives to narrow the discount
when appropriate through distribution policies, share repurchase programs and
use of leverage.
The Fund's long-term investment goal is to seek a high level of total
return through a combination of current income and capital appreciation. We
believe that our securities selection process adds to the investment equation.
We have a successful history of investment providing shareholders average annual
returns of 8.6% since inception. However, it is important to remember that "Mr.
Market" is a pendulum that swings both ways. As the market moves away from
momentum investing and back to basics, we believe that an excessive premium for
the Fund is not likely to be sustainable.
PREMIUM/DISCOUNT SINCE CONVERSION TO A CLOSED-END FUND
0
0.0099
-0.0761
-0.0978
-0.0334
-0.0903
-0.1056
-0.0657
-0.0701
-0.0957
-0.0263
Year 1996 -0.065
-0.1064
-0.0802
-0.1071
-0.1507
-0.0953
-0.1465
-0.146
-0.1318
-0.1497
-0.1492
-0.1652
Year 1997 -0.1399
-0.131
-0.1577
-0.1622
-0.1593
-0.1322
-0.147
-0.1538
-0.1321
-0.1557
-0.1432
-0.1017
Year 1998 -0.0956
-0.0882
-0.0733
-0.0815
-0.095
-0.062
-0.0848
-0.1485
-0.0705
-0.0372
-0.0325
-0.0175
Year 1999 -0.0315
-0.0745
-0.0275
-0.1027
-0.0909
-0.0689
-0.0991
-0.1019
-0.0842
-0.0948
-0.1525
-0.0735
Y2k -0.1207
-0.148
-0.1497
-0.1734
-0.1454
-0.1263
-0.1128
-0.123
-0.1022
-0.1553
-0.1088
-0.0893
Year 2001 -0.03
0.0096
0.0039
0.0202
0.0207
0.0337
0.0316
0.059
0.1202
0.1169
0.1167
0.1156
Year 2002 0.1061
0.0959
0.1067
-----------------------
MARCH 31, 2002
-----------------------
Net Asset Value $ 9.84
Market Price $10.89
Premium 10.67%
-----------------------
2
COMPARATIVE PERFORMANCE
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2002 (A)
-------------------------------------------------
SINCE
QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR INCEPTION (D)
------- ------ ------ ------ ------- -------------
Gabelli Convertible Securities Fund
NAV Return (c) ............................. 1.22% 5.00% 4.83% 7.01% 8.04% 8.55%
Gabelli Convertible Securities Fund
Investment Return (d) ...................... 1.85% 15.38% 9.83% 13.47% N/A 5.13%(e)
S&P 500 Index ................................ 0.28% 0.24% (2.53)% 10.18% 13.25% 13.14%
Lipper Convertible Securities Fund Average ... 0.28% 0.00% 5.88% 8.05% 9.98% 10.22%
(a) Returns represent past performance and do not guarantee future
results. Investment returns and the principal value of an investment
will fluctuate. When shares are sold, they may be worth more or less
than their original cost. The Standard & Poor's ("S&P") 500 Index is
an unmanaged indicator of stock market performance, while the Lipper
Average reflects the average performance of open-end mutual funds
classified in this particular category. Performance for periods less
than one year are not annualized.
(b) From commencement of investment operations on July 3, 1989.
(c) Total returns and average annual returns reflect changes in net asset
value ("NAV"), reinvestment of distributions and taxes paid on
undistributed long-term capital gains, and are net of expenses. Life
of Fund return based on initial net asset value of $9.34.
(d) Total returns and average annual returns reflect changes in closing
market values on the New York Stock Exchange, reinvestment of
distributions and taxes paid on undistributed long-term capital gains.
Life of Fund return based on an initial offering price of $10.00.
(e) The Fund converted to closed-end status on March 31, 1995.
--------------------------------------------------------------------------------
OUR OBJECTIVE
Our mandate is to preserve and enhance our shareholders' wealth through a
conservative and disciplined approach to convertible securities investing. Our
goal is to generate profitable returns in strong markets and protect principal
in weak markets by taking advantage of the unique characteristics of convertible
securities.
Our Fund is managed with a goal of achieving a 600-800 basis point spread
above long-term Treasury yields. We hope to generate these returns over the
long-term. This is the type of performance that our Fund has been recognized for
and we anticipate will continue in the future. Of course, there are no
guarantees.
CONVERTIBLE SECURITIES ARE "HYBRIDS"
It is important to understand our stock selection discipline because price
movement in the underlying equity will generally have the greatest impact on
convertible securities pricing. The convertible securities market consists of
bonds, debentures, corporate notes, preferred stocks and warrants or other
similar securities which may be converted into or exchanged for a prescribed
amount of common stock or other equity security of the same or a different
issuer within a particular period of time at a specified price or formula.
Converts are "hybrid" securities that combine the capital appreciation potential
of equities with the higher yield of fixed income instruments. Our strategy
incorporates the purchase of convertible securities that are trading at a
premium above parity with the common stock but which generally provide a higher
yield and, over time, capital appreciation. We will also seek out "busted"
converts, where the underlying common stock has dropped significantly and the
values of both the conversion privilege and the convert are down. Such
securities will provide both high yields and long-term capital appreciation
potential.
3
CONVERTIBLE MARKET OVERVIEW
The convertible market, as measured by the Merrill Lynch All Convertible
Index, fell 0.94% during the first quarter. This compared to a gain of 0.28% in
the S&P 500 Index. The average convertible now has a conversion premium of 62%
(up from 56% at the end of last year), a current yield of 3.80% (versus 3.76%),
and a credit rating of BB+ (versus BBB-).
During the quarter, equity prices were generally firmer, credit spreads
tightened and Treasury prices fell (i.e. yields rose). This trend was also
reflected in the convertible market. Speculative grade convertibles outperformed
investment grade ones falling only 0.1% (versus -1.5%) as credit spreads
tightened in March by over 90 basis points in the single-B credit range.
The U.S. convertible market remains the largest in the world at $237
billion or about 49% of the total global market capitalization of $486 billion.
Domestic new issuance in the quarter totalled $29 billion putting the market on
pace to break last year's record issuance of $105 billion. The average issue
size continues to increase. The first quarter saw seven issues over $1 billion
including Ford ($5 billion), GM ($3.75 billion), Merrill Lynch ($2 billion), and
Lucent ($1.75 billion). This trend demonstrates the growing utility of
convertible securities as numerous companies use the product to finance their
growth, utilize attractive tax benefits, or repair their balance sheets. As
predicted, we also witnessed a swing away from zero coupon issues toward
convertible preferreds, which explains the slight deterioration in the overall
credit quality of the market.
The best performing sectors in the convertible market during the first
quarter were Materials (+8.70%), helped by precious metals, Consumer
Discretionary (+4.78%), spurred on by autos and auto parts, and Transportation
(+4.10%). Telecommunications was the worst performing sector (-17.53%), where
wireless companies lead the way down, followed by Media (-6.19%) and Utilities
(-4.37%). Finally, busted convertibles outperformed balanced and equity
sensitive convertibles and small capitalization issuers, following the good
performance of the Russell 2000, outperformed mid and large capitalization
issuers.
COMMENTARY
MISSION ACCOMPLISHED
After eleven short-term interest rate cuts totaling 4.75%, the Federal
Reserve Board ("Fed") (along with help from Congress, the U.S. Treasury and the
resilient American consumer) helped lead the economy back on the growth path.
Having accomplished this task, the Fed is back on inflation alert and may
reverse course and hike rates sometime in the quarters ahead. As is often the
case, fixed income investors responded to good economic news and the possibility
of an up-tick in inflation by demanding higher yields.
THE ECONOMY: FAST OUT OF THE BLOCKS, BUT STUMBLING AT THE FINISH LINE
Impressive first and perhaps second quarter Gross Domestic Product ("GDP")
growth appears to be "in the bag" -- largely the result of the lift in
manufacturing schedules from the absence of "the inventory drag" in output.
However, looking farther ahead, there are marked differences of opinion on how
strong the nascent economic recovery will be. The optimists expect business
investment, especially information technology capital spending, to rebound in
the second half, providing "legs" to the consumer-led recovery. The pessimists
contend that with the
4
consumer having spent freely throughout the modest and short-lived recession,
end demand will not be impressive enough to inspire corporations to invest more
in their businesses. Consequently, they anticipate an anemic recovery at best,
and if consumer spending flags, perhaps even a double-dip recession.
The realists -- we generously put ourselves in this category -- fall in
between. It is certainly true that strong economic recoveries are generally
propelled by pent-up consumer demand (housing, autos, and so on). But, we don't
expect the consumer to roll over and play dead. The Fed will probably hike rates
later in the year -- "taking back" the post 9/11 cuts -- but interest rates
should remain relatively low. Mortgage re-financing will abate as rates rise,
but lower mortgage payments will continue to have a positive effect on household
cash flow. In addition, the 2001 tax cuts that took place in 2002 continue to
bolster workers' "take home" pay. Political dynamics, volatility in oil prices
and in the U.S. dollar will act as a drag on consumer psychology. Our concerns
center on the U.S. dollar, the Fed's stop-go/stop-go policy and the "what if?"
if the housing sector gets crimped.
We don't anticipate a surge in business investment this year and doubt
that technology capital spending will increase significantly. However, because
corporations reduced inventories so aggressively following the terrorist
attacks, capital outlays on cost saving equipment should increase as production
is ramped up to meet current retail activity. Should inventories be restocked,
this would put added zest to the manufacturing schedule. For example, General
Motors' "Keep America Rolling" campaign removed a million units from auto
industry inventories. The company has to increase production, which is below
demand, or inventories will be depleted even further. Our conclusion is that
business investment will trend higher, particularly as the year unfolds,
providing enough additional support to sustain an economic recovery muted by
higher oil prices. Finally, we observe that exports to Europe and Japan will
help in 2003, as will continued pick-up in defense-related spending.
EARNINGS RECOVER, BUT . . .
Cost cutting and improved productivity has created a lot of earnings
leverage, which we believe will result in stronger than generally expected
earnings growth in 2002. However, stocks still aren't cheap even based on
significantly better 2002 earnings. Rising interest rates later in the year may
well put pressure on equity valuations. In the quarters ahead, we can envision
the stock market rallying on good earnings news, but then falling back as
investors focus on interest rates and valuations. By year-end, we suspect the
leading market indices will be relatively flat.
IN LIMBO?
We expect the bond market to lose a bit of ground as the Fed tightens, and
for stocks to make halting progress at best over the balance of the year.
Consequently, security selection will be the key to generating returns in the
convertibles market. We believe our media holdings will continue to perform
well, due both to rising cash flow and earnings, and accelerating merger and
acquisition activity prompted by further deregulation. Our defense industry
investments should also prosper as the U.S. and its allies continue to wage the
war against terrorism. We believe our energy holdings will benefit from rising
oil and natural gas prices as demand improves with the economy.
Our telecommunications holdings, a drag on performance this quarter,
should stabilize. We believe pricing, profit margins, and earnings will remain
under pressure, but that investors will recognize that the shakeout in the
telecommunications industry is setting the stage for better days ahead.
5
INVESTMENT SCORECARD
This quarter's best performing holdings came from a variety of industry
groups including: broadcasting (Granite Broadcasting), publishing (Times
Mirror), tourism (Six Flags, Inc.), packaging (Sealed Air Corp.), and energy (CH
Energy Group and Moran Energy).
Telecommunications securities such as Williams Communication and Nextel
Communications were near the bottom of our performance chart along with
engineering/construction giant Foster Wheeler, and old portfolio stalwart
Cablevision Systems.
LET'S TALK CONVERTS
The following are specifics on selected holdings of our Fund. Favorable
earnings prospects do not necessarily translate into higher prices, but they do
express a positive trend that we believe will develop over time.
BROADWING INC. (6.75% CV. PFD., SER. B) located in Cincinnati, OH, received its
new name in 1999 when local phone provider Cincinnati Bell made a $3.2 billion
acquisition of IXC Communications and gained access to a nation-wide all optical
fiber network. Broadwing's Cincinnati-based operations include one million local
phone lines and about 465,000 wireless customers through its 80% ownership of a
wireless JV with AT&T Wireless Services (AWE - $8.95 - NYSE). Broadwing also
offers long distance voice and broadband data services to other carriers and
enterprise accounts on a nation-wide basis. Broadwing's incumbent local exchange
carrier's ("ILEC") operations are surrounded by SBC Communications (SBC - $37.44
- NYSE)/Ameritech's local footprint.
CITIZENS COMMUNICATIONS CO. (5.00% CV. PFD.) has recently become the country's
second largest independent local exchange carrier with about 2.5 million access
lines after completion of a $3.4 billion acquisition of almost 1.1 million lines
from Frontier. This and several other recent acquisitions, accompanied by
divestitures of its utilities operations, have repositioned the company as a
pure telecommunications carrier. Citizens also owns 81% of a competitive
carrier, Electric Lightwave Inc. (ELIX - $0.50 - Nasdaq), with fiber optic
networks covering the Western part of the U.S.
GENERAL MOTORS CORP. (5.25% CV. PFD., SER. B; 4.50% CV. PFD., SER. A) is the
largest producer of motor vehicles in the world, with unit sales of over 8
million cars, trucks, and commercial vehicles in 2001 alone. The company has
operating subsidiaries in North America, Europe, Latin America, and Asia, and
equity interests in manufacturers in Europe (Fiat Auto Holdings) and Japan
(Isuzu, Suzuki, Subaru). General Motors Acceptance Corporation provides retail
and wholesale financing to consumers and dealers worldwide, as well as vehicle
leasing, mortgage, and insurance products. The company's Hughes Electronics (GMH
- $16.45 - NYSE) subsidiary provides direct-to-home satellite television
services to over 10 million consumers in the U.S. under the DirecTV brand name.
HILTON HOTELS CORP. (HLT) (SUB. DEB. CV., 5.00%, 05/15/06) is recognized as one
of the world's preeminent hospitality companies. Hilton develops, owns, manages
and franchises hotels, resorts and vacation ownership properties. Based on the
number of hotel rooms, Hilton is the nation's third largest lodging company.
Hilton's hotel system includes approximately 2,000 properties totaling over
327,000 rooms worldwide. The Company's hotel brands include Hilton, Hilton
Garden Inn, Doubletree, Embassy Suites Hotels, Hampton Inn, Hampton Inn &
Suites, Homewood Suites by Hilton, Conrad, and Harrison Conference Centers.
Flagship properties include the Waldorf Astoria, the Hilton Chicago, the Hilton
Hawaiian Village Beach Resort & Spa, and the Palmer House Hilton. HLT formalized
a marketing alliance with the British company Hilton Group Plc (HG.L - $3.55 -
London
6
Stock Exchange), owner of Hilton International, in January 1997 to reunite the
Hilton name worldwide for the first time in over 30 years. Hilton's casino
gaming properties were spun-off into a new company, Park Place Entertainment
(PPE - $10.55 - NYSE), on December 31, 1998.
KAMAN CORP. (SUB. DEB. CV., 6.00%, 03/15/12), founded in 1945, is a pioneer in
the helicopter industry. Aircraft manufacturing remains the core of the
business. Kaman serves both commercial and governmental markets with helicopters
and aircraft components. The company also produces specialized, high-value niche
market products and services that tend to be technological leaders in their
markets. Kaman is a major, national distributor of original equipment, repair
and replacement products and value-added services to nearly every sector of
North American industry. The company also manufactures and distributes musical
instruments (Ovation guitars) and accessories to independent retailers.
NEXTEL COMMUNICATIONS INC. (CV., 5.25%, 01/15/10, ET AL.) is one of two
remaining independent national wireless carriers in US, servicing over 9.1
million mostly high-value business subscribers and controlling wireless licenses
covering over 235 million people. Nextel is differentiating itself by offering
its unique direct-connect feature that allows instant two-way voice
communication. Nextel International, a wholly-owned international subsidiary of
Nextel, serves over 1 million wireless customers in Latin America and has
licenses covering over 230 million people in Brazil, Argentina, Mexico, Peru and
Chile. Nextel also has investment portfolio currently valued at over $400
million.
SEALED AIR CORP. ($2.00 CV. PFD., SER. A) is a global manufacturer and
distributor of a wide range of protective and specialty packaging materials and
systems for industrial, food and consumer products. Sealed Air is a strong free
cash flow generator, which will be used to pay down debt, make niche
acquisitions, and buy back stock.
SEQUA CORP. ($5.00 CV. PFD.) is a diversified company with businesses in
aerospace, pre-paint metal, specialty chemical, printing and cannery equipment.
Chromalloy Gas Turbine, Sequa's aerospace business, is the largest independent
supplier of aftermarket parts for the overhaul and repair of jet and industrial
gas turbine engines. We believe this business is attractive to original
equipment engine manufacturers like General Electric and Pratt & Whitney who are
looking to grow their replacement parts business. With roughly $800 million in
revenues, we estimate Chromalloy's private market value to be near the entire
public value of Sequa.
STANDARD MOTOR PRODUCTS INC. (SMP) (SUB. DEB. CV., 6.75%, 07/15/09),
headquartered in Long Island City, New York, supplies functional replacement
parts for the engine management, electrical and climate control systems of cars,
trucks and buses. The company services all makes and models, both new and old
cars, imported and domestic. SMP has two primary divisions--engine management
and temperature control--and believes it is the number one supplier to the North
American aftermarket in each of these lines.
STOCK REPURCHASE PLAN
The Gabelli Convertible Securities Fund is authorized to repurchase up to
500,000 shares of the Fund's outstanding common shares. Pursuant to this stock
repurchase plan, the Fund may from time to time purchase shares of its capital
stock in the open market when the shares are trading at a discount of 10% or
more from the net asset value of the shares. In total, through March 31, 2002,
305,200 shares have been repurchased in the open market under this stock
repurchase plan.
7
COMMON STOCK 8% DISTRIBUTION POLICY
The Convertible Securities Fund continues to maintain its 8% Distribution
Policy whereby the Fund pays out to common stock shareholders 8% of its average
net assets each year. Pursuant to this policy, the Convertible Securities Fund
distributed $0.20 per share on March 25, 2002. The next distribution is
scheduled for June 2002.
8.00% CUMULATIVE PREFERRED STOCK - DIVIDENDS
The Convertible Securities Fund's 8.00% Cumulative Preferred Stock paid a
cash distribution on March 26, 2002 of $0.50 per share. For the twelve-months
ended March 31, 2002, Preferred Stock shareholders received distributions
totaling $2.00, the annual dividend rate per share of Preferred Stock. The next
distribution is scheduled for June 2002.
WWW.GABELLI.COM
Please visit us on the Internet. Our homepage at http://www.gabelli.com
contains information about Gabelli Asset Management Inc., the Gabelli Mutual
Funds, IRAs, 401(k)s, quarterly reports, closing prices and other current news.
You can send us e-mail at closedend@gabelli.com.
In our efforts to bring our shareholders more timely portfolio
information, Gabelli Fund's portfolio managers regularly participate in chat
sessions at www.gabelli.com as reflected below.
WHO WHEN
--- ----
Special Chats: Mario J. Gabelli First Monday of each month
Howard Ward First Tuesday of each month
In addition, every Wednesday will feature a different portfolio manager.
The upcoming Wednesday chat schedule is as follows:
MAY JUNE JULY
--- ---- ----
1st Wednesday Ivan Arteaga Henry Van der Eb Ivan Arteaga
2nd Wednesday Charles Minter & Martin Weiner Caesar Bryan Caesar Bryan
3rd Wednesday Walter Walsh & Laura Linehan Ivan Arteaga Lynda Calkin
4th Wednesday Hart Woodson Barbara Marcin Henry Van der Eb
5th Wednesday Barbara Marcin Barbara Marcin
All chat sessions start at 4:15 ET. Please arrive early, as participation
is limited.
You may sign up for our HIGHLIGHTS e-mail newsletter at www.gabelli.com
and receive early notice of chat sessions, closing mutual fund prices, news
events and media sightings.
8
IN CONCLUSION
Last year, with stocks declining and bonds rising, convertible securities'
fixed income characteristics worked in our favor. This quarter, a rally in the
equity markets helped converts make some progress. In recent years' volatile
markets, the duel nature of converts has helped stabilize portfolio returns. We
believe convertible securities investing will continue to be a productive, risk
averse method of generating solid long-term returns.
Sincerely,
/S/ Mario J. Gabelli
MARIO J. GABELLI
President and Chief Investment Officer
May 10, 2002
--------------------------------------------------------------------------------
SELECTED CONVERTIBLE HOLDINGS
MARCH 31, 2002
Broadwing Inc. (6.75% Cv. Pfd., Ser. B) Nextel Communications Inc. (Cv., 5.25%, 01/15/10)
Citizens Communications Co. (5.00% Cv. Pfd.) Sealed Air Corp. ($2.00 Cv. Pfd.)
General Motors Corp. (Cv. Pfd.) Sequa Corp. ($5.00 Cv. Pfd.)
Hilton Hotels Corp. (Sub. Deb. Cv., 5.00%, 05/15/06) Standard Motor Products Inc. (Sub. Deb. Cv., 6.75%, 07/15/09)
Kaman Corp. (Sub. Deb. Cv., 6.00%, 03/15/12) Orion Power Holdings Inc. (Cv., 4.50%, 06/01/08)
--------------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period stated in this report. The manager's views
are subject to change at any time based on market and other conditions.
9
THE GABELLI CONVERTIBLE SECURITIES FUND, INC.
PORTFOLIO OF INVESTMENTS
MARCH 31, 2002 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
CONVERTIBLE CORPORATE BONDS -- 37.0%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 6.1%
$ 800,000 Exide Corp., Sub. Deb. Cv.,
2.900%, 12/15/05 (b) .......................... $ 24,000
9,000,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 .............................. 6,693,750
------------
6,717,750
------------
AVIATION: PARTS AND SERVICES -- 3.9%
4,396,000 Kaman Corp., Sub. Deb. Cv.,
6.000%, 03/15/12 .............................. 4,297,090
------------
BUILDING AND CONSTRUCTION -- 0.0%
Foster Wheeler Ltd., Sub. Deb. Cv.,
40,000 6.500%, 06/01/07 (b) .......................... 14,600
60,000 6.500%, 06/01/07 .............................. 22,725
------------
37,325
------------
BUSINESS SERVICES -- 5.2%
900,000 BBN Corp., Sub. Deb. Cv.,
6.000%, 04/01/12 (a) .......................... 870,750
10,000 First Data Corp., Sub. Deb. Cv.,
2.000%, 03/01/08 .............................. 12,062
3,000,000 Franklin Resources Inc., Cv.,
Zero Coupon, 05/11/31 ......................... 1,743,750
100,000 Navistar Financial Corp.,
Sub. Deb. Cv.,
4.750%, 04/01/09 (b) .......................... 104,375
2,000,000 Stilwell Financial Inc., Cv.,
Zero Coupon, 04/30/31 ......................... 1,515,000
1,800,000 Trans-Lux Corp., Sub. Deb. Cv.,
7.500%, 12/01/06 .............................. 1,454,625
------------
5,700,562
------------
CABLE -- 0.8%
1,100,000 Charter Communications Inc., Cv.,
4.750%, 06/01/06 .............................. 860,750
------------
COMPUTER SOFTWARE AND SERVICES -- 0.3%
300,000 Exodus Communications Inc.,
Sub. Deb. Cv.,
5.250%, 02/15/08+ (d) ......................... 1,687
350,000 QuadraMed Corp., Sub. Deb. Cv.,
5.250%, 05/01/05 .............................. 289,188
------------
290,875
------------
CONSUMER PRODUCTS -- 0.6%
1,500,000 Pillowtex Corp., Sub. Deb. Cv.,
6.000%, 03/15/12+ (d) ......................... 0
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
$ 700,000 Standard Commercial Corp.,
Sub. Deb. Cv.,
7.250%, 03/31/07 .............................. $ 656,250
------------
656,250
------------
CONSUMER SERVICES -- 0.5%
1,100,000 Ogden Corp., Sub. Deb. Cv.,
6.000%, 06/01/02 .............................. 523,930
------------
DIVERSIFIED INDUSTRIAL -- 0.5%
500,000 GATX Corp., Cv.,
7.500%, 02/01/07 (b) .......................... 581,250
------------
ELECTRONICS -- 0.6%
ASM Lithography Holding, Cv.,
40,000 2.500%, 04/09/05 (c) .......................... 24,050
10,000 2.500%, 04/09/05 (b) (c) ...................... 6,013
700,000 Oak Industries Inc., Sub. Deb. Cv.,
4.875%, 03/01/08 .............................. 595,000
100,000 Solectron Corp., Cv.,
Zero Coupon, 05/08/20 ......................... 57,000
------------
682,063
------------
ENERGY AND UTILITIES -- 4.8%
325,000 Devon Energy Corp., Sub. Deb. Cv.,
4.950%, 08/15/08 .............................. 328,250
200,000 Friede Goldman Halter Inc.,
Sub. Deb. Cv.,
4.500%, 09/15/04+ (d) ......................... 29,000
1,700,000 Mirant Corp., Sub. Deb. Cv.,
2.500%, 06/15/21 .............................. 1,377,000
511,000 Moran Energy Inc., Sub. Deb. Cv.,
8.750%, 01/15/08 .............................. 513,555
3,000,000 Orion Power Holdings Inc., Cv.,
4.500%, 06/01/08 .............................. 2,992,500
------------
5,240,305
------------
ENTERTAINMENT -- 0.7%
800,000 USA Networks Inc., Sub. Deb. Cv.,
7.000%, 07/01/03 .............................. 823,000
------------
EQUIPMENT AND SUPPLIES -- 1.5%
1,600,000 Robbins & Myers Inc., Sub. Deb. Cv.,
6.500%, 09/01/03 .............................. 1,706,000
------------
HEALTH CARE -- 0.1%
50,000 Apogent Technologies Inc., Cv.,
2.250%, 10/15/21 (b) .......................... 51,937
10,000 Inhale Therapeutic Systems,
Sub. Deb. Cv.,
6.750%, 10/13/06 (b) .......................... 7,882
10,000 Invitrogen Corp., Sub. Deb. Cv.,
5.500%, 03/01/07 .............................. 8,763
10
THE GABELLI CONVERTIBLE SECURITIES FUND, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2002 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
CONVERTIBLE CORPORATE BONDS (CONTINUED)
HEALTH CARE (CONTINUED)
$ 150,000 Sabratek Corp., Sub. Deb. Cv.,
6.000%, 04/15/05+ (d) ......................... $ 0
------------
68,582
------------
HOTELS AND GAMING -- 4.8%
5,500,000 Hilton Hotels Corp., Sub. Deb. Cv.,
5.000%, 05/15/06 .............................. 5,238,750
------------
PAPER AND FOREST PRODUCTS -- 1.4%
200,000 Riverwood International Corp.,
Sub. Deb. Cv.,
6.750%, 09/15/03 .............................. 230,890
1,400,000 Thermo Fibertek Inc., Sub. Deb. Cv.,
4.500%, 07/15/04 (b) .......................... 1,330,000
------------
1,560,890
------------
PUBLISHING -- 0.1%
200,000 Times Mirror Ltd., Sub. Deb. Cv.,
Zero Coupon, 04/15/17 ......................... 133,250
------------
RETAIL -- 1.4%
60,000 Costco Companies Inc., Sub. Deb. Cv.,
Zero Coupon, 08/19/17 ......................... 55,500
300,000 Rite Aid Corp., Sub. Deb Cv.,
5.250%, 09/15/02 .............................. 294,000
10,000 School Specialty Inc., Sub. Deb. Cv.,
6.000%, 08/01/08 .............................. 10,962
1,200,000 Thermo Instrument Systems Inc.,
Sub. Deb. Cv.,
4.500%, 10/15/03 (b) .......................... 1,174,500
------------
1,534,962
------------
SPECIALTY CHEMICALS -- 0.9%
IVAX Corp. Sub. Deb. Cv.,
750,000 5.500%, 05/15/07 .............................. 675,000
400,000 4.500%, 05/15/08 .............................. 323,000
------------
998,000
------------
TELECOMMUNICATIONS -- 1.2%
80,000 Amnex Inc., Sub. Deb. Cv.,
8.500%, 09/25/02+ (b)(d) ...................... 0
Bell Atlantic Corp., Cv.,
600,000 4.250%, 09/15/05 (b) .......................... 603,900
90,000 4.250%, 09/15/05 .............................. 90,113
1,300,000 NTL Inc., Sub. Deb. Cv.,
5.750%, 12/15/09 .............................. 221,000
500,000 Rogers Communications Inc.,
Sub. Deb. Cv.,
2.000%, 11/26/05 .............................. 395,625
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
$ 200,000 XO Communications Inc., Sub. Deb. Cv.,
5.750%, 01/15/09+ (b)(d) ...................... $ 2,500
------------
1,313,138
------------
WIRELESS COMMUNICATIONS -- 1.6%
Nextel Communications Inc., Cv.,
700,000 6.000%, 06/01/11 (b) .......................... 393,750
1,700,000 5.250%, 01/15/10 .............................. 858,500
100,000 4.750%, 07/01/07 .............................. 57,875
1,100,000 United States Cellular Corp.,
Sub. Deb. Cv.,
Zero Coupon, 06/15/15 ......................... 503,250
------------
1,813,375
------------
TOTAL CONVERTIBLE
CORPORATE BONDS ............................... 40,778,097
------------
SHARES
------
CONVERTIBLE PREFERRED STOCKS -- 18.7%
AEROSPACE -- 1.3%
10,800 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B ....................... 1,432,080
------------
AUTOMOTIVE -- 0.9%
5,000 Ford Motor Co. Capital Trust II,
6.500% Cv. Pfd. ............................... 281,200
General Motors Corp.,
14,000 5.250% Cv. Pfd., Ser. B ....................... 382,620
12,000 4.500% Cv. Pfd., Ser. A ....................... 318,960
------------
982,780
------------
AVIATION: PARTS AND SERVICES -- 1.8%
Coltec Capital Trust,
17,000 5.250% Cv. Pfd. (b) ........................... 626,581
37,000 5.250% Cv. Pfd. ............................... 1,415,250
------------
2,041,831
------------
BUSINESS SERVICES -- 0.5%
20,000 Key3Media Group,
5.500% Cv. Pfd. ............................... 500,000
------------
CABLE -- 0.5%
15,000 CVC Equity Securities Trust I,
6.500% Cv. Pfd. ............................... 517,650
------------
DIVERSIFIED INDUSTRIAL -- 0.4%
2,000 GATX Corp.,
$2.50 Cv. Pfd. ................................ 360,000
WHX Corp.,
28,000 6.500% Cv. Pfd., Ser. A ....................... 86,800
10,000 $3.75 Cv. Pfd., Ser. B ........................ 29,000
------------
475,800
------------
11
THE GABELLI CONVERTIBLE SECURITIES FUND, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2002 (UNAUDITED)
MARKET
SHARES VALUE
----------- -----------
CONVERTIBLE PREFERRED STOCKS (CONTINUED)
ENERGY AND UTILITIES -- 0.4%
500 Cinergy Corp.,
9.500% Cv. Pfd. ............................... $ 28,800
2,500 FPL Group Inc.,
8.500% Cv. Pfd. ............................... 140,250
200 KCS Energy Inc.,
5.000% Cv. Pfd., Ser. A (a) ................... 208,000
10,000 Semco Capital Trust II,
11.000% Cv. Pfd. .............................. 86,300
------------
463,350
------------
ENTERTAINMENT -- 1.0%
2,000 Metromedia International Group Inc.,
7.250% Cv. Pfd. ............................... 10,020
30,000 Rainbow Equity Securities Trust II,
6.250% Cv. Pfd. ............................... 726,000
12,000 Six Flags Inc.,
7.250% Cv. Pfd. ............................... 324,000
------------
1,060,020
------------
EQUIPMENT AND SUPPLIES -- 2.4%
31,000 Sequa Corp.,
$5.00 Cv. Pfd. ................................ 2,611,750
------------
PAPER AND FOREST PRODUCTS -- 2.4%
58,000 Sealed Air Corp.,
$2.00 Cv. Pfd., Ser. A ........................ 2,659,300
------------
TELECOMMUNICATIONS -- 6.2%
28,300 Broadwing Inc.,
6.750% Cv. Pfd., Ser. B ....................... 922,580
76,000 Citizens Communications Co.,
5.000% Cv. Pfd. ............................... 3,573,520
750 Lucent Technologies Capital Trust I,
7.750% Cv. Pfd. (b) ........................... 711,187
1,200 Lucent Technologies Inc.,
8.000% Cv. Pfd. ............................... 1,098,000
13,000 Philippine Long Distance Telephone Co.,
$3.50 Cv. Pfd., Ser. III ...................... 323,700
1,500 TCI Pacific Communications Inc.,
5.000% Cv. Pfd. ............................... 225,000
------------
6,853,987
------------
WIRELESS COMMUNICATIONS -- 0.9%
21,000 Allen Telecom Inc.,
7.750% Cv. Pfd., Ser. D ....................... 997,920
3,000 Loral Space & Communications Ltd.,
6.000% Cv. Pfd., Ser. D ....................... 36,180
------------
1,034,100
------------
TOTAL CONVERTIBLE
PREFERRED STOCKS .............................. 20,632,648
------------
MARKET
SHARES VALUE
----------- ------------
COMMON STOCKS -- 3.7%
AVIATION: PARTS AND SERVICES -- 0.2%
15,000 Kaman Corp., Cl. A .............................. $ 254,250
------------
BROADCASTING -- 0.1%
38,500 Granite Broadcasting Corp.+ ..................... 80,850
------------
CABLE -- 0.1%
20,000 UnitedGlobalCom Inc., Cl. A+ .................... 108,200
------------
ENERGY AND UTILITIES -- 2.1%
8,900 AGL Resources Inc. .............................. 209,150
10,000 BP plc, ADR ..................................... 531,000
10,000 CH Energy Group Inc. ............................ 474,500
10,000 Conectiv ........................................ 248,900
10,000 NiSource Inc.+ .................................. 23,200
30,000 Northeast Utilities ............................. 596,100
10,000 Progress Energy Inc.+ ........................... 2,750
2,200 SJW Corp. ....................................... 178,640
------------
2,264,240
------------
EQUIPMENT AND SUPPLIES -- 0.1%
50,000 Fedders Corp. ................................... 150,000
------------
FINANCIAL SERVICES -- 0.5%
28,000 Argonaut Group Inc. ............................. 591,920
------------
FOOD AND BEVERAGE -- 0.1%
3,609 Chiquita Brands International Inc.+ ............. 59,553
------------
PUBLISHING -- 0.5%
19,555 News Corp. Ltd., ADR ............................ 559,071
------------
TELECOMMUNICATIONS -- 0.0%
1,000 Philippine Long Distance Telephone
Co., ADR ...................................... 10,400
------------
WIRELESS COMMUNICATIONS -- 0.0%
49 Winstar Communications Inc.+ .................... 0
------------
TOTAL COMMON STOCKS ............................. 4,078,484
------------
PREFERRED STOCKS -- 1.2%
BROADCASTING -- 1.0%
2,128 Granite Broadcasting Corp. ...................... 1,053,112
------------
PUBLISHING -- 0.2%
9,777 News Corp. Ltd., Pfd., ADR ...................... 229,575
------------
TOTAL PREFERRED STOCKS .......................... 1,282,687
------------
12
THE GABELLI CONVERTIBLE SECURITIES FUND, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2002 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
CORPORATE BONDS -- 0.4%
BROADCASTING -- 0.0%
$ 15,000 Granite Broadcasting Corp., Sub. Deb.,
8.875%, 05/15/08 .............................. $ 12,900
------------
TELECOMMUNICATIONS -- 0.1%
400,000 Williams Communications Group Inc.,
10.875%, 10/01/09+ ............................ 62,000
------------
WIRELESS COMMUNICATIONS -- 0.3%
500,000 Nextel Communications Inc.,
9.500%, 02/01/11 .............................. 323,750
------------
TOTAL CORPORATE BONDS ........................... 398,650
------------
U.S. GOVERNMENT OBLIGATIONS -- 37.6%
41,488,000 U.S. Treasury Bills,
1.660% to 1.760%++,
04/04/02 to 06/27/02 .......................... 41,419,232
------------
TOTAL INVESTMENTS -- 98.6%
(Cost $111,593,321) .......................................... 108,589,798
OTHER ASSETS, LIABILITIES
AND LIQUIDATION
VALUE OF CUMULATIVE
PREFERRED STOCK -- (25.8)% ................................... (28,432,100)
------------
NET ASSETS -- COMMON STOCK -- 72.8%
(8,142,324 common shares outstanding) ........................ 80,157,698
------------
NET ASSETS -- PREFERRED STOCK -- 27.2%
(1,200,000 preferred shares outstanding) ..................... 30,000,000
------------
TOTAL NET ASSETS -- 100.0% ..................................... $110,157,698
============
NET ASSET VALUE PER COMMON SHARE
($80,157,698 / 8,142,324 shares outstanding) ................. $ 9.84
=======
MARKET
COMMON STOCKS SHARES PROCEEDS VALUE
--------------------------------------------------------------------------------
SECURITIES SOLD SHORT
KCS Energy Inc. .................... 44,068 $ 420,074 $137,492
========
For Federal tax purposes:
Aggregate Cost .................................. $111,593,321
============
Gross unrealized appreciation ................... $2,741,822
Gross unrealized depreciation ................... (5,745,345)
------------
Net unrealized depreciation ..................... $ (3,003,523)
============
-------------
(a) Security fair valued under procedures established by the Board of
Directors.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At March
31, 2002, the market value of Rule 144A securities amounted to $5,632,476
or 5.11% of total net assets.
(c) Principal amount denoted in Euros.
(d) Bond in default.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depositary Receipt.
13
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 EquiServe Trust Company ("EquiServe") 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 EquiServe
P.O. Box 43011
Providence, RI 02940-3011
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 EquiServe at 1 (800)
336-6983.
SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at EquiServe 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, EquiServe will buy Common Stock in the open market, or on the New
York Stock Exchange or elsewhere, for the participants' accounts, except that
EquiServe 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.
14
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 EquiServe 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.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to EquiServe for investments in the Convertible
Securities Fund's shares at the then current market price. Shareholders may send
an amount from $250 to $10,000. EquiServe will use these funds to purchase
shares in the open market on or about the 1st and 15th of each month. EquiServe
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 EquiServe, P.O. Box 43011,
Providence, RI 02940-3011 such that EquiServe 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 in the
following month. A payment may be withdrawn without charge if notice is received
by EquiServe 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.
15
--------------------------------------------------------------------------------
THE GABELLI CONVERTIBLE SECURITIES FUND, INC.
AND YOUR PERSONAL PRIVACY
WHO ARE WE?
The Gabelli Convertible Securities Fund, Inc. (the "Fund") is a closed-end
investment company registered with the Securities and Exchange Commission
under the Investment Company Act of 1940. We are managed by Gabelli Funds
LLC, which is affiliated with Gabelli Asset Management Inc. Gabelli Asset
Management is a publicly-held company that has subsidiaries that provide
investment advisory or brokerage services for a variety of clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
GABELLI CUSTOMER?
When you purchase shares of the Trust on the New York Stock Exchange, you
have the option of registering directly with our transfer agent in order,
for example, to participate in our dividend reinvestment plan.
o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include your
name, address, telephone number, social security number, bank account
number, and other information.
o INFORMATION ABOUT YOUR TRANSACTIONS WITH US. This would include
information about the shares that you buy or sell, it may also include
information about whether you sell or exercise rights that we have issued
from time to time. If we hire someone else to provide services--like a
transfer agent--we will also have information about the transactions that
you conduct through them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers
or former customers to anyone, other than our affiliates, our service
providers who need to know such information and as otherwise permitted by
law. If you want to find out what the law permits, you can read the privacy
rules adopted by the Securities and Exchange Commission. They are in volume
17 of the Code of Federal Regulations, Part 248. The Commission often posts
information about its regulations on its web site, WWW.SEC.GOV.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the
people who need to know that information in order to perform their jobs or
provide services to you and to ensure that we are complying with the laws
governing the securities business. We maintain physical, electronic, and
procedural safeguards to keep your personal information confidential.
--------------------------------------------------------------------------------
16
DIRECTORS AND OFFICERS
THE GABELLI CONVERTIBLE SECURITIES FUND, INC.
ONE CORPORATE CENTER, RYE, NY 10580-1422
DIRECTORS
Mario J. Gabelli, CFA
CHAIRMAN & CHIEF INVESTMENT OFFICER,
GABELLI ASSET MANAGEMENT INC.
E. Val Cerutti
CHIEF EXECUTIVE OFFICER,
CERUTTI CONSULTANTS, INC.
Anthony J. Colavita
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 EMERITUS, PACE UNIVERSITY
Werner J. Roeder, MD
MEDICAL DIRECTOR,
LAWRENCE HOSPITAL
Anthonie C. van Ekris
MANAGING DIRECTOR,
BALMAC INTERNATIONAL, INC.
Salvatore J. Zizza
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.
OFFICERS AND PORTFOLIO MANAGERS
Mario J. Gabelli, CFA
PRESIDENT & CHIEF INVESTMENT OFFICER
Bruce N. Alpert
VICE PRESIDENT & TREASURER
Peter W. Latartara
VICE PRESIDENT
A. Hartswell Woodson, III
ASSOCIATE PORTFOLIO MANAGER
James E. McKee
SECRETARY
INVESTMENT ADVISOR
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN, TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company
COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
STOCK EXCHANGE LISTING
Common 8.00% Preferred
-------- ---------------
NYSE-Symbol: GCV GCV Pr
Shares Outstanding: 8,142,324 1,200,000
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "Convertible Securities Funds," in Sunday'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 Gabelli Funds' 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 common 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 Convertible Securities Fund may also,
from time to time, purchase shares of its Cumulative Preferred Stock in the open
market when the shares are trading at a discount to the Liquidation Value of
$25.00.
--------------------------------------------------------------------------------
THE GABELLI CONVERTIBLE SECURITIES FUND, INC.
ONE CORPORATE CENTER
RYE, NY 10580-1422
(914) 921-5070
HTTP://WWW.GABELLI.COM
FIRST QUARTER REPORT
MARCH 31, 2002
GBFCS 03/02