<PAGE>
LOGO
TCW CONVERTIBLE
SECURITIES FUND, INC.
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DIRECTORS AND OFFICERS
Ernest O. Ellison Coleman W. Morton
President and Director Director
Norman Barker, Jr. Charles A. Parker
Director Director
Richard W. Call Lawrence J. Sheehan
Director Director
Edmund W. Clarke Robert G. Sims
Director Director
Ronald E. Robison David K. Sandie
Senior Vice President and Principal Accounting Officer,
Chief Operating Officer Treasurer and Assistant Secretary
Robert M. Hanisee Philip K. Holl
Senior Vice President Secretary
Thomas E. Larkin, Jr. Marie M. Bender
Senior Vice President Assistant Secretary
Hilary G.D. Lord Michael E. Cahill
Senior Vice President General Counsel and
and Assistant Secretary Assistant Secretary
Kevin A. Hunter
Vice President
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SHAREHOLDER INFORMATION
INVESTMENT ADVISER
TCW Funds Management, Inc.
865 South Figueroa Street
Los Angeles, California 90017
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TRANSFER AGENT, DIVIDEND REINVESTMENT
AND DISBURSING AGENT AND REGISTRAR
The Bank of New York
Church Street Station
P.O. Box #11002
New York, New York 10277-0770
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CUSTODIAN
Custodial Trust Company
28 West State Street
Trenton, New Jersey 08608
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INDEPENDENT AUDITORS
Deloitte & Touche llp
1000 Wilshire Boulevard
Los Angeles, California 90017
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LEGAL COUNSEL
O'Melveny & Myers
400 S. Hope Street
Los Angeles, California 90071
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TCW CONVERTIBLE SECURITIES FUND, INC.
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SEMI-ANNUAL REPORT
JUNE 30, 1995
LOGO
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<PAGE>
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TCW CONVERTIBLE SECURITIES FUND, INC.
The President's Letter
[LOGO OF TCW]
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DEAR SHAREHOLDER:
The performance of both the bond and stock markets were very strong during
the first six months of 1995. The combination of falling interest rates and
strong corporate earnings fueled a blistering 20.2% total return by the Stan-
dard and Poor's 500 Stock Index with Income. This environment was also good
for convertible securities and made the first half of 1995 the best six month
period for convertible performance in four years.
PERFORMANCE OF THE FUND'S PORTFOLIO
As shown in the table below, the Fund's return exceeded the Lipper Average of
Convertible Mutual Funds, while lagging slightly behind that of the First Bos-
ton Convertible Index. While convertible performance was less than the return
of the Standard and Poor's 500 Stock Index with Income, it should be noted
that; 1) convertibles typically lag very strong market advances as their con-
version premiums contract and 2) convertibles generate a portion of their re-
turn from income which is earned over the full year.
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 1995
-------------
<S> <C>
TCW Convertible Securities Fund, Inc.............................. +13.6%*
Lipper Average of Convertible Mutual Funds........................ +11.4%
First Boston Convertible Index.................................... +15.5%
Standard and Poor's 500 Stock Index with Income................... +20.2%
</TABLE>
--------
*Net of Fees and Expenses
The convertible markets strong return in 1995 has not diminished the attrac-
tiveness of the overall market. While the level of undervaluation has been re-
duced somewhat during the last six months, we continue to find attractive op-
portunities in both the secondary and new issue markets. We have been particu-
larly active in the new issue market where terms have generally been the most
attractive. As shown in the table below, these terms remain quite favorable
when compared to those issues which were brought to market during 1994. While
current yields and conversion premiums are similar for the two periods, in-
vestors in new issues are receiving slightly more call protection. In addi-
tion, the average maturity on new issue convertible bonds continues to de-
cline, thus improving the defensiveness of these securities.
CONVERTIBLE NEW ISSUE TERMS
<TABLE>
<CAPTION>
Average Average
Average Average Call Bond
Yield Premium Protection Maturity
------- ------- ---------- --------
<S> <C> <C> <C> <C>
1995 (1st Half)............................. 6.5% 20.0% 4.3 Yrs 7.5
1994........................................ 6.4% 20.6% 3.7 Yrs 8.2
</TABLE>
During the quarter, your portfolio has benefitted from its weightings in sev-
eral groups which have done very well. In particular, our holdings in technol-
ogy, transportation, entertainment, leisure and media and pollution control
have shown substantial appreciation. Individual holdings such as National
Semiconductor, Motorola, Cypress Semiconductor, Silicon Graphics, EMC Corp.,
Delta Airlines, News Corp., and Thermo Electron, have all delivered perfor-
mance in excess of that of the market.
The significant appreciation we have seen in the portfolio during the last
six months has changed the risk/reward dynamics of some individual holdings.
Many convertibles, where the underlying stock has appreciated significantly,
have become equity surrogates and have the same upside/downside characteris-
tics as those of the underlying equity. We have generally been sellers of
these types of securities and have redeployed the assets into convertibles
which have more favorable risk/reward characteristics. While it is tempting to
hold equity surrogates in the midst of a bull market, we are cognizant of the
fact that no one rings a bell to let us know when the trend will reverse it-
self. Therefore, we believe our strategy is a prudent one and will serve the
portfolio well when the market reverses course.
PERFORMANCE OF THE FUND'S SHARE PRICE
The performance of the Fund's shares has been good during the first six
months of 1995. Investors received a total return of 13.8%. This consisted of
two regular quar-
1
<PAGE>
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terly distributions of $.21 per share and a rise in the per share market price
which rose from $7.75 at the beginning of the year to $8.375 at June 30, 1995.
The market price of $8.375 represented at 4.04% premium to the Fund's NAV of
$8.05.
CASH DISTRIBUTIONS
The Fund's Board of Directors have continued the policy of paying out a quar-
terly dividend of $0.21 per share. These dividends are paid from income, if
sufficient, from capital gains if available, and then from principal.
ECONOMIC/MARKET OUTLOOK
The deceleration in the economy that began during the first quarter of 1995
continued in the second quarter. While we do not expect a recession, it is
likely that real GDP growth will remain sluggish until year-end. It is our
view that second quarter growth was close to zero and that there will be a
pick-up to the 2%-3% range during the second half of the year. This greater
than expected slowdown was brought about by a broad based decline in consumer
spending which precipitated cutbacks in auto production and a decline in hous-
ing activity. In addition, the economic weakness in Mexico and Japan slowed
exports.
The current economic environment has improved the outlook for inflation and
interest rates. In response to slowing economic activity, capacity utilization
has declined modestly. Wage rates and benefit increases remain in check and
show no signs of an acceleration. It now looks as though our original expecta-
tion of 3.5%-4.0% inflation in 1995 may be too pessimistic and that in fact
the rate may be closer to 3.0%. With inflationary expectations receding and a
sluggish economy, interest rates could continue to fall modestly. The Federal
Reserve has rarely ended its easing process after only 25 basis points of eas-
ing. Therefore, barring a significant rebound in the economy, another cut in
the Federal Funds rate could occur by late summer. This should continue to
create a good environment for both equities and bonds. Although we do not be-
lieve that the first half's performance will be repeated during the next six
months, it is possible that both stocks and bonds could appreciate modestly
from current levels. This should allow convertibles to continue to perform
well on a relative basis, particularly since they will accrue another six
months worth of income.
DIVIDEND REINVESTMENT PLAN
Shareholders who wish to add to their investment may do so through the Divi-
dend Reinvestment Plan. Under this plan, your dividend is used to purchase
shares on the open market whenever shares and the related sales commission are
selling below the per share Net Asset Value. If the market price, including
commission on the share, is selling above the Net Asset Value, you will re-
ceive shares at a price equal to the higher of the Net Asset Value per share
on the payment date or 95% of the closing market price.
To enroll in the plan, if your shares are registered in your name, write to
the Bank of New York, Church Street Station, P.O. Box #11002, New York, New
York, 10277-0770, or call their toll free number (800) 524-4458. If your
shares are held by a brokerage firm, please call your broker. If, however, you
need assistance please call our shareholder relations department at (800) 386-
3829. As always, we would be pleased to accommodate your investment needs.
Sincerely,
/s/ ERNEST O. ELLISON
Ernest O. Ellison
President and Director
August 3, 1995
2
<PAGE>
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TCW CONVERTIBLE SECURITIES FUND, INC.
[LOGO OF TCW] Schedule of Investments (Unaudited)
June 30, 1995
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<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
CONSUMER STAPLES (29.6% OF NET ASSETS)
ENTERTAINMENT, LEISURE AND MEDIA (9.5%)
$ 9,380,000 Coleman Worldwide Corp., Exchangeable Coleman
Company, 0%, due 05/27/13......................... $ 2,685,025
$ 6,010,000 Comcast Corp., 3.375%,
due 09/09/05...................................... 5,732,038
$17,230,000 News America Holdings, Exchangeable News Corp.
(Australia), 0%, due 03/11/13..................... 8,270,400
$ 2,100,000 Thomas Nelson, Inc., 5.75%,
due 11/30/99...................................... 2,443,875*
$ 4,815,000 Time Warner, Inc., 8.75%,
due 01/10/15...................................... 5,037,694
-----------
Total Entertainment, Leisure and Media............. 24,169,032
-----------
FOODS AND BEVERAGES (1.0%)
$ 2,270,000 Grand Metropolitan PLC
(Great Britain), 6.5%,
due 01/31/00...................................... 2,431,738*
-----------
HEALTHCARE (8.2%)
$ 6,050,000 Elan International, Exchangeable Elan Corp. PLC
(Ireland), 0%, due 10/16/12....................... 2,835,938
77,800 FHP International Corp., $1.25 Convertible
Cumulative Preferred Series A..................... 1,847,750
$ 3,020,000 Healthsouth Corp., 5%,
due 04/01/01...................................... 3,371,075
$ 4,620,000 Integrated Health Services, Inc., 5.75%, due
01/01/01.......................................... 4,989,600
$ 1,200,000 Multicare Companies, Inc., 7%, due 03/15/03........ 1,170,000*
$ 1,200,000 Multicare Companies, Inc., Euro, 7%, due 03/15/03.. 1,170,000
$ 2,080,000 Quantum Health Resources, Inc., 4.75%, due
10/01/00.......................................... 1,760,200
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
$ 2,710,000 Theratx, Inc., 8%, due 02/01/02.................... $ 2,469,488*
$ 1,180,000 United Technologies--Pharmaceutical Exchangeable
Note, 0%, due 09/08/97............................ 1,234,575
-----------
Total Healthcare................................... 20,848,626
-----------
HOTELS AND RESTAURANTS (2.7%)
$12,020,000 Boston Chicken, Inc., 0%,
due 06/01/15...................................... 2,764,600
$ 3,565,000 Hospitality Franchise Systems, Inc., 4.5%, due
10/01/99.......................................... 4,019,538
-----------
Total Hotels and Restaurants....................... 6,784,138
-----------
HOUSEHOLD PRODUCTS (1.2%)
$ 3,395,000 McKesson Corp., Exchangeable Armor All Products
Corp., 4.5%, due 03/01/04......................... 3,106,425
-----------
RETAIL (2.1%)
$ 870,000 Michael Stores, Inc., 4.75%,
due 01/15/03...................................... 804,750
$ 4,325,000 Office Depot, Inc., 0%,
due 11/01/08...................................... 2,832,875
$ 1,845,000 Pep Boys--Manny Moe & Jack, 4%, due 09/01/99....... 1,736,606
-----------
Total Retail..................................... 5,374,231
-----------
SERVICES--BUSINESS (4.9%)
$ 5,630,000 Omnicom Group, Inc., 4.5%,
due 09/01/00...................................... 6,446,350*
99,700 SCI Finance LLC, Exchangeable Service Corporation
International, $3.125 Convertible Preferred....... 6,056,775
-----------
Total Services--Business......................... 12,503,125
-----------
TOTAL CONSUMER STAPLES (Cost: $70,747,227)..... 75,217,315
-----------
</TABLE>
* Restricted security. (See Note 7)
See accompanying Notes to Financial Statements.
3
<PAGE>
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<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
CONSUMER CYCLICALS (0.8%)
AUTOMOTIVE (0.8%)
35,000 Federal Mogul Corp., $3.875 Convertible Preferred... $ 1,968,750*
-----------
TOTAL CONSUMER CYCLICALS (Cost: $1,950,568)....... 1,968,750
-----------
CAPITAL GOODS (41.8%)
BUILDING MATERIALS (2.1%)
$3,660,000 Cemex, S.A. (Mexico), 4.25%, due 11/01/97........... 2,781,600*
48,700 Owens-Corning Fiberglas Corp., $3.25 Convertible
Preferred.......................................... 2,495,875*
-----------
Total Building Materials.......................... 5,277,475
-----------
ELECTRICAL EQUIPMENT (0.9%)
152,900 Westinghouse Electric Corp., $1.30 Convertible
Preferred.......................................... 2,312,613*
-----------
ELECTRONICS--SEMICONDUCTORS AND INSTRUMENTS (7.2%)
$1,180,000 3COM Corp., 10.25%,
due 11/01/01....................................... 1,513,350*
$3,210,000 Altera Corp., 5.75%,
due 06/15/02....................................... 3,378,525*
$2,215,000 Fisher Scientific International, Inc., 4.75%, due
03/01/03........................................... 2,372,819
$ 915,000 General Instrument Corp., 5%, due 06/15/00.......... 1,509,750
$2,095,000 Integrated Device Technology, Inc., 5.5%, due
06/01/02........................................... 2,207,606
$2,500,000 International Cabletel, Inc., 7.25%, due 04/15/05... 2,675,000*
47,300 National Semiconductor Corp., $3.25 Convertible
Preferred Series B............................... 4,664,963
-----------
Total Electronics--Semiconductors and Instruments... 18,322,013
-----------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C> <C> <C>
ENGINEERING AND CONSTRUCTION (1.0%)
$2,595,000 Renong Berhad PLC (Malaysia), 2%, due
07/15/05................................... $ 2,595,000*
-----------
INFORMATION PROCESSING (13.8%)
$4,750,000 Automatic Data Processing, Inc.,
0%, due 02/20/12........................... 2,125,625
$2,420,000 EMC Corp., 4.25%, due 01/01/01.............. 3,248,850
$6,095,000 First Financial Management Corp., 5%, due
12/15/99................................... 8,136,825
123,400 General Motors Corp., $3.25 Series C
Convertible Class E Common Stock........... 7,774,195
$ 915,000 MacNeal-Schwendler Corp., 7.875%, due
08/18/04................................... 969,900
$3,525,000 Merrill Lynch & Company, Inc., Exchangeable
Microsoft, 0%,
due 06/30/99............................... 4,423,875*
$1,190,000 Sterling Software, Inc., 5.75%,
due 02/01/03............................... 1,680,875
$2,730,000 Storage Technology Corp., 8%,
due 05/31/15............................... 2,675,400
$3,625,000 Unisys Corp., 8.25%,
due 08/01/00............................... 4,023,750
-----------
Total Information Processing.............. 35,059,295
-----------
MACHINERY AND INDUSTRIAL EQUIPMENT (1.3%)
$3,185,000 Cooper Industries, Inc., 7.05%,
due 01/01/15............................... 3,324,344
-----------
OFFICE EQUIPMENT & SUPPLIES (2.1%)
$5,090,000 Danka Business Systems PLC (Great Britain),
6.75%,
due 04/01/02............................... 5,357,225*
-----------
</TABLE>
* Restricted security. (See Note 7)
See accompanying Notes to Financial Statements.
4
<PAGE>
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--------------------------------------------------------------------------------
TCW CONVERTIBLE SECURITIES FUND, INC.
Schedule of Investments (unaudited) (continued)
[LOGO OF TCW] June 30, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
POLLUTION CONTROL (7.5%)
62,400 Browning-Ferris Industries, Inc., $2.583
Convertible Preferred............................. $ 2,277,600
$ 2,770,000 Thermo Electron Corp., 5%,
due 04/15/01...................................... 3,767,200*
$ 4,075,000 Thermo Electron Corp., Euro, 5%, due 04/15/01...... 5,542,000
$ 4,490,000 United States Filter Corp., 5%,
due 10/15/00...................................... 4,725,725
$ 3,021,000 WMX Technologies, Inc., 2%,
due 01/24/05...................................... 2,541,416
-----------
Total Pollution Control.......................... 18,853,941
-----------
TELECOMMUNICATION EQUIPMENT (5.9%)
$ 955,000 Aspect Telecommunications Corp., 5%, due 10/15/03.. 1,181,813*
$ 1,455,000 Audiovox Corp., 6.25%,
due 03/15/01...................................... 873,000*
90,900 Corning Delaware, $3.00 Convertible Preferred...... 4,647,262
$10,300,000 Motorola, Inc., 0%,
due 09/27/13...................................... 8,343,000
-----------
Total Telecommunication Equipment.............. 15,045,075
-----------
TOTAL CAPITAL GOODS
(Cost: $95,504,658)............................. 106,146,981
-----------
BASIC INDUSTRIES (13.4%)
METALS--NON-FERROUS (0.4%)
50,000 Freeport-McMoRan Copper & Gold, Inc., $1.25
Convertible Preferred............................. 1,081,250
-----------
OIL AND GAS--DOMESTIC (4.9%)
$ 1,800,000 Apache Corp., Euro, 6%,
due 01/15/02...................................... 2,007,000
59,400 Occidental Petroleum Corp., $3.875 Convertible
Preferred......................................... 3,452,625*
32,100 Parker & Parsley Petroleum Company, $3.125
Convertible Preferred............................. 1,436,475*
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
$4,505,000 Pennzoil Company, Exchangeable Chevron Corp., 4.75%,
due 10/01/03 ....................................... $ 4,144,600
$1,225,000 Pennzoil Company, Exchangeable Chevron Corp., 6.5%,
due 01/15/03........................................ 1,451,625
-----------
Total Oil and Gas-- Domestic...................... 12,492,325
-----------
OIL AND GAS--INTERNATIONAL (2.3%)
97,100 Occidental Petroleum Corp., Exchangeable Canadian
Occidental Petroleum, $3.00 Convertible Preferred... 5,753,175
-----------
PAPER AND PACKAGING (0.8%)
$1,535,000 Riverwood International Corp., 6.75%, due 09/15/03... 2,102,950
-----------
TRANSPORTATION (5.0%)
$3,915,000 AMR Corp., 6.125%,
due 11/01/24........................................ 4,071,600
$1,610,000 Alaska Air Group, Inc., 6.5%,
due 06/15/05........................................ 1,686,475
$7,215,000 Delta Air Lines, Inc., 3.23%,
due 06/15/03........................................ 6,944,438
-----------
Total Transportation............................... 12,702,513
-----------
TOTAL BASIC INDUSTRIES (Cost: $30,877,677)....... 34,132,213
-----------
CREDIT SENSITIVE (14.6%)
BUILDING, REAL ESTATE AND MISCELLANEOUS (2.7%)
$1,140,000 Camden Property Trust, 7.33%,
due 04/01/01........................................ 1,094,400
$1,215,000 Liberty Property Trust, 8%,
due 07/01/01........................................ 1,186,144
$1,165,000 Malan Realty Investors, 9.5%,
due 07/15/04........................................ 1,051,413
$2,020,000 Santa Fe Pacific Pipeline Partners L.P., 10.42%, due
08/15/10............................................ 2,595,700
</TABLE>
* Restricted security. (See Note 7)
See accompanying Notes to Financial Statements.
5
<PAGE>
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<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
39,700 Security Capital, $1.75 Convertible Preferred........ $ 883,325
----------
Total Building, Real Estate and Miscellaneous........ 6,810,982
----------
INSURANCE (6.2%)
$ 965,000 Aegon N.V. (Netherlands), 4.75%, due 11/01/04........ 1,206,250*
$1,155,000 Aegon N.V. (Netherlands), Euro, 4.75%, due 11/01/04.. 1,443,750
50,400 American General Corp., $3.00 Convertible Preferred.. 2,614,500
$2,410,000 Chubb Capital Corp., Euro, 6%,
due 05/15/98........................................ 2,500,375
$3,370,000 Fremont General Corp., 0%,
due 10/12/13........................................ 1,293,238
49,700 St. Paul Companies, Inc., $3.00 Convertible
Preferred........................................... 2,596,825
$2,200,000 SwissRe Finance (Bermuda), Ltd., 2%, due 07/06/00.... 1,991,000*
$3,780,000 USF&G Corp., 0%,
due 03/03/09........................................ 2,102,625
----------
Total Insurance...................................... 15,748,563
----------
SERVICES--FINANCIAL (2.6%)
22,800 AllState Corp., Exchangeable PMI Group Inc., $2.30
Convertible Preferred............................... 929,100
$ 880,000 Capstone Capital Corp., 10.5%, due 04/01/02.......... 966,900
37,500 First USA, Inc., $1.992
Convertible Preferred............................... 1,518,750
$2,895,000 Laidlaw, Inc., Exchangeable ADT, Ltd. (Canada), 6%,
due 01/15/99........................................ 3,184,500*
----------
Total Services--Financial............................ 6,599,250
----------
TELECOMMUNICATIONS (3.1%)
$1,765,000 Cellular Communications, Inc., 0%, due 07/27/99...... 1,392,144*
$2,825,000 LDDS Communications, Inc., 5%, due 08/15/03.......... 2,697,875
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
58,600 MFS Communication Company, Inc., $2.68 Convertible
Preferred......................................... $ 2,021,700
$5,755,000 U.S. Cellular Corp., 0%,
due 06/15/15...................................... 1,798,437
------------
Total Telecommunications........................... 7,910,156
------------
TOTAL CREDIT SENSITIVE
(Cost: $34,891,984)............................... 37,068,951
------------
REPURCHASE AGREEMENTS (5.3%) (COST: $13,297,441)
$1,292,716 Stock Loan Repurchase, Bear Stearns & Co., Inc.,
dated 06/30/95, 3.125%, due 07/03/95,
(collateralized by $1,345,000 U.S. Treasury Bill,
valued at $1,322,310)............................. 1,292,716
$6,318,830 Stock Loan Repurchase, Bear Stearns & Co., Inc.,
dated 06/30/95, 6.375%, due 07/03/95,
(collateralized by $6,560,000 U.S. Treasury Bill,
valued at $6,449,333)............................. 6,318,830
$5,685,895 Cash Repurchase Agreement, Bear Stearns & Co.,
Inc., dated 06/30/95, 6.125%, due 07/03/95,
(collateralized by $5,900,000 U.S. Treasury Bill,
valued at $5,800,467)............................. 5,685,895
------------
TOTAL REPURCHASE AGREEMENTS
(Cost: $13,297,441)............................... 13,297,441
------------
TOTAL INVESTMENTS (105.5%) (COST: $247,269,555).... 267,831,651
------------
EXCESS OF LIABILITIES OVER OTHER ASSETS
(-5.5%)........................................... (13,908,269)
------------
NET ASSETS (100%).................................. $253,923,382
============
</TABLE>
* Restricted security. (See Note 7)
See accompanying Notes to Financial Statements.
6
<PAGE>
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TCW CONVERTIBLE SECURITIES FUND, INC.
Statement of Assets and Liabilities (Unaudited)
[LOGO OF TCW] June 30, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at Value (Cost $247,269,555) (Note 1).............. $267,831,651
Receivables for Securities Sold................................ 6,256,435
Interest Receivable............................................ 2,170,354
Dividends Receivable........................................... 164,211
------------
Total Assets................................................. 276,422,651
------------
LIABILITIES:
Payables for Securities Purchased.............................. 7,851,267
Payable upon Return of Securities Loaned (Note 5).............. 7,611,546
Distributions Payable.......................................... 6,622,441
Accrued Investment Advisory and Service Fees (Note 3).......... 270,735
Accounts Payable............................................... 143,280
------------
Total Liabilities............................................ 22,499,269
------------
NET ASSETS....................................................... $253,923,382
============
Net Assets were comprised of:
Common Stock, par value $.01 per share, 50,000,000 shares au-
thorized, 31,535,437 shares issued and outstanding............ $ 315,354
Paid-in Capital................................................ 285,113,111
Distribution of Paid-in Capital................................ (34,179,879)
Net Unrealized Appreciation of Investments..................... 20,562,096
Distributions in Excess of Realized Gains...................... (12,329,842)
Net Realized Losses on Security Transactions................... (5,557,458)
------------
NET ASSETS....................................................... $253,923,382
============
NET ASSET VALUE PER SHARE........................................ $ 8.05
============
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
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TCW CONVERTIBLE SECURITIES FUND, INC.
Statement of Operations (Unaudited)
[LOGO OF TCW] For the Six Months Ended June 30, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (including security lending fees of $20,129)............ $ 5,219,768
Dividends........................................................ 1,438,758
-----------
Total Investment Income........................................ 6,658,526
-----------
EXPENSES:
Investment Advisory Fees (Note 3)................................ 733,813
Custodian Fees................................................... 56,221
Directors' Fees and Expenses (Note 6)............................ 46,409
Transfer Agent Fees.............................................. 25,524
Proxy Costs...................................................... 22,315
Audit and Tax Service Fees....................................... 19,005
Listing Fees..................................................... 16,694
Business Tax Fees................................................ 15,834
Printing and Distribution Costs.................................. 14,480
Accounting and Other Service Fees (Note 3)....................... 12,500
Legal Fees (Note 6).............................................. 9,955
Insurance Costs.................................................. 6,697
Other Fees....................................................... 406
-----------
Total Expenses................................................. 979,853
-----------
Net Investment Income.......................................... 5,678,673
-----------
NET REALIZED (LOSS) AND INCREASE IN UNREALIZED APPRECIATION
OF INVESTMENTS:
Net Realized (Loss) on Investments............................... (5,557,458)
Increase in Unrealized Appreciation of Investments............... 31,299,841
-----------
Net Realized (Loss) and Increase in Unrealized
Appreciation of Investments................................... 25,742,383
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $31,421,056
===========
</TABLE>
See accompanying Notes to Financial Statements.
8
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TCW CONVERTIBLE SECURITIES FUND, INC.
Statements of Changes in Net Assets
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<TABLE>
<CAPTION>
Six Month
Period Ended
June 30,
1995 Year Ended
(Unaudited) December 31, 1994
------------ -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net Investment Income........................ $ 5,678,673 $ 11,997,248
Net Realized Gain (Loss) on Investments...... (5,557,458) 9,388,610
Increase (Decrease) in Unrealized
Appreciation of Investments................. 31,299,841 (36,466,986)
------------ ------------
Increase (Decrease) in Net Assets Resulting
from Operations........................... 31,421,056 (15,081,128)
------------ ------------
Distributions to Shareholders:
Net Investment Income........................ (5,678,673) (11,997,248)
Net Realized Gain on Investments............. -- (9,524,298)
Distribution in Excess of Realized Gains..... (7,552,025) (4,777,817)
------------ ------------
Total Distributions to Shareholders........ (13,230,698) (26,299,363)
------------ ------------
Capital Share Transactions:
Shares Issued in Reinvestment of Dividends
(135,604 for the six months ended June 30,
1995 and 324,920 for the year ended December
31, 1994)................................... 1,046,802 2,836,474
------------ ------------
Total Increase (Decrease) in Net Assets.... 19,237,160 (38,544,017)
NET ASSETS:
Beginning of Period............................ 234,686,222 273,230,239
------------ ------------
End of Period.................................. $253,923,382 $234,686,222
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
9
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TCW CONVERTIBLE SECURITIES FUND, INC.
Notes to Financial Statements (Unaudited)
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NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
TCW Convertible Securities Fund, Inc. (the "Fund") was incorporated in Mary-
land on January 13, 1987 as a diversified, closed-end management investment
company and is registered under the Investment Company Act of 1940, as amended.
The Fund commenced operations on March 5, 1987. The following is a summary of
the significant accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
SECURITY VALUATION: Securities traded on national exchanges are valued at the
last reported sales price or the mean of the current bid and asked prices if
there are no sales in the trading period immediately preceding the time of de-
termination. Other securities which are traded on the over-the-counter market
are valued at the mean of the current bid and asked prices. Short-term debt se-
curities with maturities of 60 days or less at the time of purchase are valued
at amortized cost. Securities for which quotations are not readily available
and unregistered securities are valued at fair value as determined in good
faith by, or under the direction of, the Board of Directors.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Security transactions are
recorded on the trade date. Dividend income is recorded on the ex-dividend
date, while interest income is recorded on the accrual basis. Original issue
discount is amortized as interest income using a constant yield to maturity.
Discounts on securities purchased are recognized as interest income at the time
the security is sold using a constant yield to maturity. Premiums on securities
purchased are not amortized. Realized and unrealized gains and losses on
investments are recorded on the basis of identified cost.
DISTRIBUTIONS: The Fund's Board of Directors has adopted a policy under which
it has declared quarterly dividends of $0.21 per share. Payments to
shareholders under the distribution policy are reflected in the financial
statements in the following order; first from net investment income and,
depending upon the results achieved each year, secondly from net realized
capital gains, thirdly as a distribution in excess of net investment income or
capital gains which may become taxable to shareholders in the subsequent year
and, lastly, as a return of capital which is not taxable to shareholders.
Income 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 for market discount
and losses deferred due to wash sales. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications to paid
in capital and may affect net investment income per share.
REPURCHASE AGREEMENT: The Fund may invest in repurchase agreements secured by
U.S. Government Securities. A repurchase agreement arises when the Fund pur-
chases a security and simultaneously agrees to resell it to the seller at an
agreed upon future date. The Fund requires the seller to maintain the value of
the securities, marked to market daily, at not less than the repurchase price.
If the seller defaults on its repurchase obligation, the Fund could suffer de-
lays, collection expenses and losses to the extent that the proceeds from the
sale of the collateral are less than the repurchase price.
NOTE 2--FEDERAL INCOME TAXES:
It is the policy of the Fund to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and distribute all of
its net taxable income, including any net realized gain on investments, to its
shareholders. Therefore, no federal income tax provision is required.
10
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TCW CONVERTIBLE SECURITIES FUND, INC.
Notes to Financial Statements (unaudited) (continued)
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During the six months ended June 30, 1995, the Fund realized on a tax basis a
net realized loss of $6,519,725 on security transactions.
As of June 30, 1995, net unrealized appreciation (depreciation) for federal
income tax purposes is comprised of the following components:
<TABLE>
<S> <C>
Appreciated securities............................................ $ 24,366,378
Depreciated securities............................................ (4,766,549)
------------
Net unrealized appreciation....................................... $ 19,599,829
============
Cost of securities for federal income tax purposes................ $248,231,822
============
</TABLE>
NOTE 3--INVESTMENT ADVISORY AND SERVICE FEES:
TCW Funds Management, Inc. is the Investment Adviser of the Fund and also fur-
nishes the Fund with accounting and other services and office space. As compen-
sation for the services rendered, facilities provided, and expenses borne, the
Adviser is paid a monthly fee by the Fund computed at the annual rate of .75%
of the first $100 million of the Fund's average net assets and .50% of the
Fund's average net assets in excess of $100 million. In addition, the Fund re-
imburses the Adviser for the costs of providing accounting services to the Fund
(up to a maximum of $25,000 per year).
NOTE 4--PURCHASES AND SALES OF SECURITIES:
For the six months ended June 30, 1995, purchases and sales or maturities of
investment securities (excluding short-term investments) aggregated
$122,334,439 and $127,328,676, respectively.
NOTE 5--SECURITY LENDING:
During the six months ended June 30, 1995, the Fund lent securities to a bro-
ker. The broker provided collateral, which must be maintained at not less than
100% of the value of the loaned securities, to secure the obligation. At June
30, 1995, the cash received from the borrowing broker was invested in overnight
repurchase agreements issued by the borrowing broker which, in turn, were col-
lateralized by U.S. Treasury securities valued at $7,771,643, or 102%, of the
value of the loaned securities.
NOTE 6--DIRECTORS' AND LEGAL FEES:
Directors who are not affiliated with the Investment Adviser received, as a
group, aggregate fees and expenses of $46,409 from the Fund for the six months
ended June 30, 1995. Legal fees totaled $9,955 of which $2,633 were paid to
O'Melveny & Myers, of which an individual who is of counsel serves as director
of the Fund. Certain officers and/or directors of the Fund are also officers
and/or directors of the Investment Adviser.
NOTE 7--RESTRICTED SECURITIES:
The following restricted securities held by the Fund at June 30, 1995 were
valued both at the date of acquisition and June 30, 1995, in accordance with
the Security Valuation policy of the Fund described in Note 1. The restricted
securities were purchased in private placement transactions without registra-
tion under the Securities Act of 1933. Such securities generally may be sold
only in a privately negotiated transaction with a limited number of purchasers,
in a public offering registered under the Securities Act of 1933 (the "1933
Act") or in accordance with Rule 144A under the 1933 Act. The Fund may classify
a Rule 144A security as liquid if it can be reasonably expected that the Fund
would be able to dispose of the security within seven days in the ordinary
course of business at approximately its carrying value. Rule 144A securities
for which such a determination is not made and other restricted securities are
deemed illiquid and are subject to an aggregate limitation of no more than 15%
of the Fund's investment portfolio. The Fund will bear any costs incurred in
connection with the disposition of restricted securities. The total value of
restricted securities at June 30, 1995 is $62,948,271, which represents 24.8%
of net assets. The total value of illiquid securities at June 30, 1995 is
$3,224,813, which represents 1.3% of net assets.
11
<PAGE>
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--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal Date of
Amount Investment Acquisition Cost
--------- ---------- ----------- ----------
<C> <S> <C> <C>
$1,180,000 3COM Corp., 10.25%,
due 11/01/01 11/29/94 $1,202,088
$ 965,000 Aegon N.V. (Netherlands), 4.75%, due
11/01/04 10/12/94 999,450
$3,210,000 Altera Corp., 5.75%, due 06/15/02 06/16/95 3,210,000
$ 955,000 Aspect Telecommunications Corp., 5%,
due 10/15/03 09/14/93 972,550*
$1,455,000 Audiovox Corp., 6.25%,
due 03/15/01 03/08/94 1,381,050*
$1,765,000 Cellular Communications, Inc., 0%, due
07/27/99 07/19/93 1,362,987
$3,660,000 Cemex, S.A. (Mexico), 4.25%,
due 11/01/97 09/28/94 3,737,259
$5,090,000 Danka Business Systems PLC (Great
Britain), 6.75%,
due 04/01/02 03/06/95 5,157,250
35,000 Federal Mogul Corp., $3.875 Convertible
Preferred 06/12/95 1,950,568
$2,270,000 Grand Metropolitan PLC (Great Britain),
6.5%, due 01/31/00 01/16/95 2,275,250
$2,500,000 International Cabletel, Inc., 7.25%,
due 04/15/05 04/12/95 2,500,000
$2,895,000 Laidlaw, Inc., Exchangeable ADT, Ltd.
(Canada), 6%,
due 01/15/99 12/23/93 2,937,913
<CAPTION>
Number of
Shares or
Principal Date of
Amount Investment Acquisition Cost
--------- ---------- ----------- ----------
<C> <S> <C> <C>
$3,525,000 Merrill Lynch & Company, Inc.,
Exchangeable Microsoft, 0%,
due 06/30/99 11/14/94 $3,511,647
$1,200,000 Multicare Companies, Inc., 7%,
due 03/15/03 03/09/95 1,200,750*
59,400 Occidental Petroleum Corp., $3.875
Convertible Preferred 08/03/94 3,210,796
$5,630,000 Omnicom Group, Inc., 4.5%, due 09/01/00 08/18/93 5,762,988
48,700 Owens-Corning Fiberglas Corp., $3.25
Convertible Preferred 05/03/95 2,435,000
32,100 Parker & Parsley Petroleum Company,
$3.125 Convertible Preferred 03/22/94 1,584,813
$2,595,000 Renong Berhad PLC (Malaysia), 2%,
due 07/15/05 06/22/95 2,595,000
$2,200,000 SwissRe Finance (Bermuda), Ltd., 2%, due
07/06/00 06/26/95 1,933,580
$2,710,000 Theratx, Inc., 8%,
due 02/01/02 02/09/95 2,710,000
$2,770,000 Thermo Electron Corp., 5%, due 04/15/01 04/07/94 2,798,800
$2,100,000 Thomas Nelson, Inc., 5.75%, due 11/30/99 11/11/92 2,249,100
152,900 Westinghouse Electric Corp., $1.30
Convertible Preferred 03/13/95 2,302,450
</TABLE>
--------
*Illiquid security.
12
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TCW CONVERTIBLE SECURITIES FUND, INC.
Financial Highlights
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<TABLE>
<CAPTION>
Six Months March 5, 1987
Ended (Commencement)
June 30, Year Ended December 31, to
1995 ---------------------------------------------------------------------- December 31,
(Unaudited) 1994 1993 1992 1991 1990 1989 1988 1987
----------- -------- -------- -------- -------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per
Share, Beginning of
Period................. $ 7.47 $ 8.79 $ 8.36 $ 8.09 $ 6.85 $ 8.36 $ 7.99 $ 7.76 $ 9.30 (4)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income from Operations:
Net Investment Income.. 0.18 0.38 0.40 0.41 0.43 0.46 0.50 0.55 0.46
Impact to Capital for
Shares Issued......... -- -- (0.01) (0.01) -- -- -- -- (0.03)
Net Realized and
Unrealized Gains
(Losses) on
Securities............ 0.82 (0.86) 1.25 0.71 1.65 (1.13) 0.71 0.44 (1.53)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations........... 1.00 (0.48) 1.64 1.11 2.08 (0.67) 1.21 0.99 (1.10)
Less Distributions:
Dividends from Net
Investment Income..... (0.18) (0.38) (0.40) (0.41) (0.43) (0.46) (0.50) (0.55) (0.44)
Distributions from
Capital Gains......... -- (0.30) (0.81) (0.07) -- -- (0.06) -- --
Distribution in Excess
of Capital Gains...... (0.24) (0.16) -- -- -- -- -- -- --
Return of Capital ..... -- -- -- (0.36) (0.41) (0.38) (0.28) (0.21) --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Distributions.. (0.42) (0.84) (1.21) (0.84) (0.84) (0.84) (0.84) (0.76) (0.44)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value Per
Share,
End of Period.......... $ 8.05 $ 7.47 $ 8.79 $ 8.36 $ 8.09 $ 6.85 $ 8.36 $ 7.99 $ 7.76
======== ======== ======== ======== ======== ======== ======== ======== ========
Total Investment
Return (5)............. 13.76%(1) (7.43)% 13.77% 15.90% 41.38% (3.78)% 20.23% 24.79% (32.61)%(2)
Net Asset Value Total
Return (6)............. 13.64%(1) (5.70)% 16.12% 13.35% 31.20% (8.25)% 15.97% 13.24% (13.49)%(2)
Ratios/Supplemental
Data:
Net Assets, End of
Period
(in thousands)......... 253,923 234,686 $273,230 $215,208 $172,331 $144,593 $175,732 $167,797 $162,989
Ratio of Expenses to
Average
Net Assets............. 0.81%(3) 0.79% 0.80% 0.88% 0.94% 0.94% 0.95% 0.94% 0.83 %(3)
Ratio of Net Investment
Income
to Average Net Assets.. 4.69%(3) 4.66% 4.48% 5.04% 5.68% 5.93% 5.90% 6.66% 6.12 %(3)
Portfolio Turnover Rate. 51.25%(1) 110.04% 173.79% 139.39% 114.13% 99.53% 84.17% 70.62% 76.91 %(2)
</TABLE>
(1) For the six months ended June 30, 1995 and not indicative of a full year's
operations.
(2) For the period March 5, 1987 (commencement) to December 31, 1987 and not
indicative of a full year's operating results.
(3) Annualized.
(4) Net of underwriting discount of $.70.
(5) Based on market value per share, adjusted for reinvestment of distributions.
(6) Based on net asset value per share, adjusted for reinvestment of distribu-
tions.
See accompanying Notes to Financial Statements.
13
<PAGE>
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REPORT OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of the Fund was held on May 24, 1995. At
the meeting, the following matters were submitted to a shareholder vote and
approved by a vote of a majority of the Fund's outstanding voting securities:
(i) the election of Ernest O. Ellison, Norman Barker, Jr., Richard W. Call,
Edmund W. Clarke, Coleman W. Morton, Charles A. Parker, Lawrence J. Sheehan
and Robert G. Sims as Directors to serve until the next annual meeting of the
Fund's shareholders and until their successors are elected and qualify (each
Director received 24,679,614 affirmative votes; votes withheld: 787,325; and
exceptions: 179,614); (ii) Renewal of the Investment Advisory and Management
Agreement for another annual period (votes for: 23,122,934; votes against:
444,995; abstentions: 985,203); and (iii) the ratification of the selection of
Deloitte & Touche LLP as independent auditors of the Fund for the fiscal year
ending December 31, 1995 (votes for: 24,750,356; votes against: 193,297;
abstentions: 699,268). 31,467,889 shares were outstanding on the record date
for this meeting and 25,642,921 shares entitled to vote were present in person
or by proxy at the meeting.
14
<PAGE>
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