<PAGE>
[LOGO OF TCW](R) TCW Convertible
Securities Fund, Inc.
==================================================
Directors and Officers
Ernest O. Ellison Coleman W. Morton
President and Director Director
John C. Argue Charles A. Parker
Director Director
Norman Barker, Jr. Lawrence J. Sheehan
Director Director
Richard W. Call Robert G. Sims
Director Director
Thomas D. Lyon Philip K. Holl
Senior Vice President Secretary
Kevin A. Hunter Marie M. Bender
Senior Vice President Assistant Secretary
Thomas E. Larkin, Jr. Michael E. Cahill
Senior Vice President General Counsel and
Assistant Secretary
Hilary G.D. Lord Peter C. DiBona
Senior Vice President Treasurer
and Assistant Secretary
Alvin R. Albe, Jr.
Senior Vice President
==================================================
Shareholder Information
Investment Adviser
TCW Funds Management, Inc.
865 South Figueroa Street
Los Angeles, California 90017
- --------------------------------------------------
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
- --------------------------------------------------
Custodian
Custodial Trust Company
101 Carnegie Center
Princeton, NJ 08540
- --------------------------------------------------
Independent Auditors
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017
- --------------------------------------------------
Legal Counsel
O'Melveny & Myers LLP
400 S. Hope Street
Los Angeles, California 90071
==================================================
TCW Convertible Securities Fund, Inc.
==================================================
Semi-Annual Report
June 30, 1999
[LOGO OF TCW](R)
<PAGE>
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[Logo] TCW Convertible Securities Fund, Inc.
The President's Letter
- -------------------------------------------------------------------------------
Dear Shareholder:
During the first half of 1999, equity prices rose significantly despite in-
vestor concerns about high valuations. Both large and small capitalization
stocks did well. Bonds had a more difficult time as interest rates rose sig-
nificantly during the first half of the year. Despite rising interest rates,
convertibles performed very well following the strong performance of their un-
derlying equities.
Performance of the Fund's shares
For the six months ended June 30, 1999, the Fund's return on Net Asset Value
("NAV") was 12.1%. The Fund's shareholders, however, realized a return of 6.9%
from an increase in the price of the Fund from $9.625 per share on December
31, 1998 to $9.875 per share on June 30, 1999 (with dividends reinvested). The
total distribution for the period was $0.42. The Fund's market price per share
represents a discount of 2.03% to the Fund's NAV.
The Convertible Market
During the first six months of 1999, convertible securities have performed
very well relative to the broad stock market. On average, convertibles have
appreciated more than the overall market primarily due to the robust perfor-
mance of the stocks underlying the convertible universe. These stocks, on av-
erage, delivered returns which were in the high "teens". In part, the excel-
lent performance of the equities underlying convertibles was due to the resur-
gence in small capitalization stocks.
The convertible new issue market was active during the first six months of
1999 although not nearly as robust as the comparable period in 1998. In total,
47 issues were brought to market with a net value of $15.9 billion. In gener-
al, many of the new issues have been of relatively low quality particularly
those on internet companies. While the Fund has purchased three or four
internet issues directly, the preferred strategy is to invest in the internet
indirectly by purchasing companies such as Cisco and Intel which will benefit
from the Internet's explosive growth. In addition to our concerns about quali-
ty, we believe that pricing has not fully reflected the increase in interest
over the last six months. As a result, the Fund has only participated in about
one-third of the new issuance.
Fund Performance and Strategy
The Fund's performance was ahead of the convertible benchmarks during the
first half of the year and compared quite favorably with the returns on equi-
ties. The Table below recaps the Fund's performance and compares it to the
relevant benchmarks.
TABLE 1
Performance
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999
----------------
<S> <C>
TCW Convertible Securities Fund, Inc........................... 12.1%(a)
First Boston Convertible Index................................. 11.7%
Lipper average of convertible mutual funds..................... 10.9%
Standard & Poors 500 Index (with income)....................... 12.4%
</TABLE>
- --------
(a) After management fees and expenses.
1
<PAGE>
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[Logo] TCW Convertible Securities Fund, Inc.
The President's Letter (continued)
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The Fund began 1999 most heavily weighted in the consumer staples, financial
services and capital goods sectors. The majority of the holdings in these sec-
tors are concentrated in the healthcare, media, retail, technology, telecommu-
nications and banking industries. The Fund continues to be underweighted in
consumer cyclicals and basic industries. Despite the increase in the prices of
many basic commodities during the last several months, we believe that most
areas are still plagued by overcapacity and low pricing leverage and thus, we
see only limited opportunities for investment.
TABLE 2
Fund Sector Allocation
<TABLE>
<CAPTION>
12/31/98 6/30/99
-------- -------
<S> <C> <C>
Basic Industries............................................... 2.8% 3.4%
Capital Goods.................................................. 28.8% 34.8%
Consumer Cyclicals............................................. 2.2% 2.1%
Consumer Staples............................................... 55.0% 49.7%
Credit Sensitive............................................... 11.5% 10.6%
</TABLE>
During the first half of 1999, the Fund benefited primarily from its
holdings in media, technology and financial services. In the media sector, the
Fund's holdings in Time Warner, Cox Communications and MediaOne appreciated
signficantly. In addition, the improving growth prospects for many technology
companies enabled the Fund's holdings in LSI Logic, Level One, STM
Microelectronics, Solectron, and Comverse Technology to post robust returns.
In the financial services sector, the large holdings in Citigroup, AIG and
Bank One delivered stellar returns.
The question confronting the financial markets is how long the disparity
between interest rates and stock prices can continue. Based upon numerous
valuation models, current equity prices when compared to historical price
levels appear to be overvalued by 20%-40%. However, we have seen that models
may sometimes predict the future inaccurately. Although inflation may move
somewhat higher, we believe that the current level of market interest rates
has discounted this possibility. In addition, we expect that in response to
the Federal Reserve raising the Fed Funds rate twenty-five basis points,
interest rates will decline from current levels as the bond market rallies.
Moreover, it now appears that second quarter corporate earnings should be
quite good and sustainable as world growth begins to improve. Stronger
earnings growth and lower interest rates later this year could allow stock
prices to move modestly higher from current levels. So, although we are
cautious about valuation levels, we are fully invested and will continue to
invest in the convertibles of companies that can grow earnings at above
average rates and that have excellent management teams.
Dividend Reinvestment Plan
Shareholders who wish to add to their investment may do so through the Divi-
dend Reinvestment Plan. Under the 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,
2
<PAGE>
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[Logo] TCW Convertible Securities Fund, Inc.
The President's Letter (continued)
- --------------------------------------------------------------------------------
is selling above the Net Asset Value, you will receive 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 investor relations department at (800) 386-3829. As
always, we would be pleased to accommodate your investment needs.
Sincerely,
Ernest O. Ellison
President and Director
August 13, 1999
3
<PAGE>
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[Logo] TCW Convertible Securities Fund, Inc.
Schedule of Investments (Unaudited)
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal Market
Amount Value
--------- ------
<S> <C> <C>
CONSUMER STAPLES (49.7% of Net Assets)
Drugs and Hospital Supply (5.2%)
$ 5,175,000 Centocor, Inc., 4.75%, due 02/15/05................. $ 5,744,250
$ 2,325,000 Sepracor, Inc., 6.25%, due 02/15/05................. 4,272,187
$12,310,000 Sepracor, Inc., 7%, due 12/15/05.................... 12,048,413*
----------
Total Drugs and Hospital Supply..................... 22,064,850
----------
Entertainment, Leisure and Media (16.2%)
34,400 Adelphia Communications, Inc., $11.00 Convertible
Preferred.......................................... 6,708,000
$17,455,000 Clear Channel Communications, Inc., 2.625%, due
04/01/03........................................... 22,167,850
33,800 Houston Industries, Inc., Exchangeable Time
Warner, Inc., $3.215 Convertible Preferred......... 4,030,650
$12,630,000 Merrill Lynch & Company, Inc., Exchangeable Time
Warner, Inc., 0.25%, due 05/10/06.................. 12,408,975
$10,840,000 News America Holdings, Inc. (Australia), 0%, due
03/11/13........................................... 7,892,875
123,700 Reader's Digest Association, Inc., $1.93
Convertible Preferred 4,576,900
126,300 Seagram Co., Ltd., $3.75 Convertible Preferred 6,307,105
$ 3,180,000 Speedway Motorsports, Inc., 5.75%,
due 09/30/03....................................... 4,531,500
----------
Total Entertainment, Leisure and Media.............. 68,623,855
----------
Foods, Hotels and Restaurants (1.0%)
100,800 Host Marriott Financial Trust, $3.375 Convertible
Preferred.......................................... 4,183,200
----------
Healthcare (14.1%)
$ 5,385,000 Alpharma, Inc., 3%, due 06/01/06.................... 6,711,055*
$ 7,110,000 Alternative Living Services, Inc., 5.25%, due
12/15/02........................................... 5,545,800
$ 3,210,000 Assisted Living Concepts, Inc., 5.625%, due
05/01/03........................................... 1,765,500*
$ 4,375,000 Assisted Living Concepts, Inc., 6%, due 11/01/02.... 2,406,250
$ 4,545,000 Athena Neurosciences, Inc., Exchangeable Elan Corp.
PLC (Ireland), 4.75%, due 11/15/04................. 4,794,975*
$ 4,915,000 Concentra Managed Care, Inc., 4.5%, due 03/15/03.... 4,632,387*
$ 2,550,000 Concentra Managed Care, Inc., 6%, due 12/15/01...... 2,403,375
$21,795,000 Elan Corp., PLC (Ireland), 0%, due 12/14/18......... 11,197,181*
74,800 Laboratory Corp. of America Holdings, $4.25
Convertible Preferred.............................. 4,385 150
$ 6,380,000 Omnicare, Inc., 5%, due 12/01/07.................... 4,705,250*
$ 3,140,000 Omnicare, Inc., 5%, due 12/01/07.................... 2,315,750
$ 5,550,000 Quintiles Transnational Corp., 4.25%, due 05/31/00.. 6,153,563
$ 715,000 Sunrise Assisted Living, Inc., 5.5%, due 06/15/02... 790,075*
$ 1,865,000 Sunrise Assisted Living, Inc., 5.5%, due 06/15/02... 2,060,825
----------
Total Healthcare.................................... 59,867,136
----------
Retail (5.7%)
$ 2,345,000 Action Performance Companies, Inc., 4.75%, due
04/01/05........................................... 2,177,919
$ 5,880,000 Ann Taylor Stores Corp., 0.55%, due 06/18/19........ 3,741,150*
$ 8,690,000 Costco Companies, Inc., 0%, due 08/19/17............ 8,212,050*
137,100 Dollar General Corp., $3.3524 Convertible Preferred. 5,878,163
$ 3,030,000 Rite Aid Corp., 5.25%, due 09/15/02................. 3,018,638*
$ 1,425,000 Rite Aid Corp., 5.25%, due 09/15/02................. 1,419,656
----------
Total Retail........................................ 24,447,576
----------
</TABLE>
* Restricted security. (See Note 8)
See accompanying Notes to Financial Statements.
4
<PAGE>
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[Logo] TCW Convertible Securities Fund, Inc.
Schedule of Investments (Unaudited) (continued)
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal Market
Amount Value
--------- ------
<S> <C> <C>
Services--Business (7.5%)
48,500 Cendant Corp., $3.43 Convertible Preferred......... $ 1,412,563
337,500 Cendant Corp., $3.75 Convertible Preferred......... 11,622,656
$4,710,000 Interim Services, Inc., 4.5%, due 06/01/05......... 4,038,825
$8,685,000 Interpublic Group, Inc., 1.87%, due 06/01/06....... 7,957,631*
$8,670,000 Metamor Worldwide, 2.94%, due 08/15/04............. 7,001,025
------------
Total Services--Business........................... 32,032,700
------------
TOTAL CONSUMER STAPLES (Cost: $201,495,775)........ 211,219,317
------------
CONSUMER CYCLICALS (2.1%)
Automotive (2.1%)
$3,500,000 Magna International, Inc. (Canada), 4.875%, due
02/15/05.......................................... 3,447,500*
$ 445,000 Magna International, Inc. (Canada), 4.875%, due
02/15/05.......................................... 448,175
$3,965,000 Tower Automotive, Inc., 5%, due 08/01/04........... 4,430,888*
$ 530,000 Tower Automotive, Inc., 5%, due 08/01/04........... 592,275
------------
TOTAL CONSUMER CYCLICALS (Cost: $8,508,255)........ 8,918,838
------------
CAPITAL GOODS (34.8%)
Aerospace and Conglomerates (1.3%)
111,550 Loral Space and Communication, Ltd. (Bermuda),
$3.00 Convertible Preferred....................... 5,654,191
------------
Electronics (14.3%)
$4,265,000 Exchangeable Certificates Corp., 0.25%, due 07/17/06 4,318,313*
$6,285,000 Level One Communications, Inc., 4%, due 09/01/04 12,365,737
$7,985,000 Micron Technology, Inc., 7%,
due 07/01/04 8,234,531
124,086 Morgan Stanley Dean Witter & Co., Exchangeable
Applied Materials, Inc., $3.00 Convertible
Preferred......................................... 6,638,600
481,118 Morgan Stanley Dean Witter & Co., Exchangeable
WorldCom, Inc., $0.513 Convertible Preferred...... 4,269,922
$ 6,410,000 Sanmina Corp., 4.25%, due 05/01/04................. 7,131,125*
$ 4,005,000 SGS-Thompson Microelectronics, N.V. (Netherlands),
0%, due 06/10/08.................................. 4,846,050
$23,010,000 Solectron Corp., 0%, due 01/27/19.................. 13,029,413*
-----------
Total Electronics.................................. 60,833,691
-----------
Information Processing (8.9%)
$ 4,415,000 Arbor Software Corp., 4.5%, due 03/15/05........... 3,118,094
$17,550,000 Citrix System, Inc., 0%, due 03/22/19.............. 7,985,250*
$ 4,055,000 LSI Logic Corp., 4.25%, due 03/15/04............... 6,604,580*
25,300 Morgan Stanley Dean Witter & Co., Exchangeable
Cisco Systems, Inc., $4.00 Convertible Preferred.. 2,928,475
$10,205,000 Network Associates, Inc., 0%, due 02/13/18......... 2,984,963*
$ 6,560,000 Network Associates, Inc., 0%, due 02/13/18......... 1,943,400
$ 3,465,000 QuadraMed Corp., 5.25%,
due 05/01/05...................................... 1,975,050
$ 4,660,000 Safeguard Scientifics, Inc., 6%,
due 02/01/06...................................... 4,776,500*
$ 4,410,000 Tribune Co., Exchangeable America Online, Inc., 2%,
due 05/15/29...................................... 5,490,450
-----------
Total Information Processing....................... 37,806,762
-----------
</TABLE>
*Restricted security. (See Note 8)
See accompanying Notes to Financial Statements.
5
<PAGE>
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[Logo] TCW Convertible Securities Fund, Inc.
Schedule of Investments (Unaudited) (continued)
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal Market
Amount Value
--------- ------
<S> <C>
Machinery (Diversified) (1.3%)
122,100 United Rentals, Inc., $3.25 Convertible
Preferred.......................................... $ 5,555,550*
------------
Pollution Control (2.5%)
$ 8,035,000 USA Waste Systems, Inc., 4%,
due 02/01/02....................................... 10,505,763
------------
Telecommunication Equipment (6.5%)
$ 4,445,000 Comverse Technology, Inc., 4.5%, due 07/01/05....... 8,512,175*
$ 1,460,000 ITC Deltacom, Inc., 4.25%,
due 05/15/06....................................... 1,788,500*
60,000 MediaOne Group, Inc., Exchangeable AirTouch
Communications, Inc., $3.633 Convertible
Preferred.......................................... 5,430,000
347,705 Merrill Lynch & Company, Inc., Exchangeable
Lucent Technologies, Inc., $0.575 Convertible
Preferred.......................................... 3,998,608
$ 7,500,000 Telefonos De Mexico, S.A. (Mexico), 4.25%, due
06/15/04........................................... 7,743,750
------------
Total Telecommunication Equipment................... 27,473,033
------------
TOTAL CAPITAL GOODS (Cost: $124,735,629)............ 147,828,990
------------
BASIC INDUSTRIES (3.4%)
Energy and Oil Services (2.4%)
165,900 Apache Corp., $2.015 Convertible Preferred.......... 6,138,300
$ 4,220,000 Pennzoil Energy Co., Exchangeable Chevron Co.,
4.9%, due 08/15/08................................. 4,330,775
------------
Total Energy and Oil Services....................... 10,469,075
------------
Paper and Packaging(1.0%)
65,800 Sealed Air Corp., $2.00 Convertible Preferred....... 4,112,500
------------
TOTAL BASIC INDUSTRIES (Cost: $13,129,886).......... 14,581,575
------------
CREDIT SENSITIVE (10.6%)
Insurance (1.2%)
$ 3,635,000 American International Group, Inc., 2.25%, due
07/30/04........................................... 4,961,775
-----------
Services-Financial, Banking, and Miscellaneous
(9.4%)
$ 8,190,000 Berkshire Hathaway, Inc., 1%, due 12/02/01.......... 17,475,413
159,480 CNB Bancshares, Inc., $1.50 Convertible Preferred... 4,814,303
142,800 National Australia Bank (Australia), $1.96875
Convertible Preferred.............................. 4,337,550
$ 1,385,000 Net.Bank, Inc., 4.75%, due 06/01/04................. 1,703,550
31,100 SouthWest Securities Group, Inc., $2.8345
Convertible Preferred.............................. 1,858,225
$ 5,380,000 UBS AG Stamford, Exchangeable Nikkei 225 Index, 0%,
due 12/11/03....................................... 5,702,800
121,100 Westpac Holdings Corp., Ltd., $3.135 Convertible
Preferred.......................................... 3,920,613
-----------
Total Services-Financial, Banking, and
Miscellaneous...................................... 39,812,454
-----------
TOTAL CREDIT SENSITIVE (Cost: $ 33,899,742)......... 44,774,229
-----------
REPURCHASE AGREEMENTS (3.3%)
$ 6,967,980 Stock Loan Repurchase, Bear Stearns & Co., Inc.,
dated 06/30/99, 6%, due 07/01/99 (collateralized by
$7,140,000 U.S. Treasury Note, valued at
$7,108,584)........................................ 6,967,980
$ 25,366 Stock Loan Repurchase, Bear Stearns & Co., Inc.,
dated 06/30/99, 2.9375%, due 07/01/99
(collateralized by $30,000 U.S. Treasury Note,
valued at $29,868)................................. 25,366
</TABLE>
* Restricted Security. (See Note 8)
See accompanying Notes to Financial Statements.
6
<PAGE>
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[Logo] TCW Convertible Securities Fund, Inc.
Schedule of Investments (Unaudited) (continued)
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal Market
Amount Value
--------- ------
<C> <S> <C>
REPURCHASE AGREEMENTS (3.3%) (continued)
$ 6,981,543 Cash Repurchase Agreement, Bear Stearns & Co.,
Inc., dated 06/30/99, 4.8%, due 07/01/99
(collateralized by $7,155,000 U.S. Treasury Note,
valued at $7,123,518)............................ $ 6,981,543
------------
TOTAL REPURCHASE AGREEMENTS (Cost: $13,974,889)... 13,974,889
------------
TOTAL INVESTMENTS (103.9%) (Cost: $395,744,176)... 441,297,838
EXCESS OF LIABILITIES OVER OTHER ASSETS
(-3.9%).......................................... (16,664,550)
------------
NET ASSETS (100%)................................. $424,633,288
============
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
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[Logo] TCW Convertible Securities Fund, Inc.
Statement of Assets and Liabilities (Unaudited)
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments at Value (Cost $395,744,176) (Note 1)............... $441,297,838
Receivable for Securities Sold.................................. 1,688,145
Interest and Dividends Receivable............................... 2,102,831
------------
Total Assets.................................................. 445,088,814
------------
Liabilities:
Distributions Payable........................................... 8,850,550
Payable upon Return of Securities Loaned (Note 5)............... 6,993,346
Payable for Securities Purchased................................ 4,265,000
Accrued Investment Advisory and Service Fees (Note 3)........... 215,798
Accounts Payable................................................ 130,832
------------
Total Liabilities............................................. 20,455,526
------------
Net Assets........................................................ $424,633,288
============
Net Assets were comprised of:
Common Stock, par value $0.01 per share, (50,000,000 shares au-
thorized, 42,145,475 shares issued and outstanding)............ $ 421,455
Paid-in Capital................................................. 341,765,459
Net Unrealized Appreciation of Investments...................... 45,553,662
Undistributed Net Realized Gains on Investments................. 36,892,712
------------
Net Assets........................................................ $424,633,288
============
Net Asset Value per Share......................................... $ 10.08
============
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
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[Logo] TCW Convertible Securities Fund, Inc.
Statement of Operations (Unaudited)
For the Six Months Ended June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income:
Interest (Note 1) (including security lending fees of $19,209)... $ 5,928,769
Dividends (Note 1)............................................... 3,059,995
-----------
Total Investment Income........................................ 8,988,764
-----------
Expenses:
Investment Advisory Fees (Note 3)................................ 1,160,080
Custodian Fees................................................... 72,713
Directors' Fees and Expenses (Note 6)............................ 37,192
Transfer Agent Fees.............................................. 27,374
Printing and Distribution Costs.................................. 24,795
Proxy Costs...................................................... 20,827
Listing Fees..................................................... 17,186
Audit and Tax Service Fees....................................... 14,878
Accounting and Other Service Fees (Note 3)....................... 12,397
Insurance Costs.................................................. 9,064
Business Tax Fees................................................ 5,921
Legal Fees (Note 6).............................................. 2,480
Miscellaneous.................................................... 1,984
-----------
Total Expenses................................................. 1,406,891
-----------
Net Investment Income.......................................... 7,581,873
-----------
Net Realized Gains and Change in Unrealized Appreciation
of Investments:
Net Realized Gains on Investments................................ 46,999,828
Change in Unrealized Appreciation of Investments................. (7,365,490)
-----------
Net Realized Gains and Change in Unrealized
Appreciation of Investments................................... 39,634,338
-----------
Increase in Net Assets Resulting from Operations................... $47,216,211
===========
</TABLE>
See accompanying Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
[Logo] TCW Convertible Securities Fund, Inc.
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
---------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income..................... $ 7,581,873 $ 13,786,605
Net Realized Gains on Investments......... 46,999,828 27,232,673
Change in Unrealized Appreciation
(Depreciation) of Investments............ (7,365,490) 7,006,205
------------ ------------
Increase in Net Assets Resulting from
Operations............................. 47,216,211 48,025,483
------------ ------------
Distributions to Shareholders:
From Net Investment Income................ (7,581,873) (13,786,605)
From Net Realized Gains on Investments.... (10,108,035) (28,049,163)
------------ ------------
Total Distributions to Shareholders..... (17,689,908) (41,835,768)
------------ ------------
Capital Share Transactions:
Shares Issued through Exercise of Common
Stock Subscription Rights (3,172,657 for
the year ended December 31, 1998) (Note
7)....................................... -- 29,988,611
Shares Issued in Reinvestment of Dividends
(155,580 for the six months ended June
30, 1999 and 255,959 for the year ended
December 31, 1998, respectively)......... 1,518,847 2,348,541
------------ ------------
Total Increase in Net Assets............ 31,045,150 38,526,867
Net Assets:
Beginning of Period......................... 393,588,138 355,061,271
------------ ------------
End of Period............................... $424,633,288 $393,588,138
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE>
- -------------------------------------------------------------------------------
[Logo] TCW Convertible Securities Fund, Inc.
Notes to Financial Statements (Unaudited)
- -------------------------------------------------------------------------------
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 amend-
ed. The Fund commenced operations on March 5, 1987. The Fund's investment ob-
jective is to seek a total investment return, comprised of current income and
capital appreciation through investment principally in convertible securities.
The preparation of the accompanying financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates.
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
securities with maturities of 60 days or less at the time of purchase are val-
ued at amortized cost. Securities for which quotations are not readily avail-
able 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 accreted 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 share-
holders under the distribution policy are reflected in the financial state-
ments 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 in-
come tax regulations which may differ from generally accepted accounting prin-
ciples. These differences may be primarily due to differing treatments for
losses deferred due to wash sales and spillover distributions. 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.
11
<PAGE>
- -------------------------------------------------------------------------------
[Logo] TCW Convertible Securities Fund, Inc.
Notes to Financial Statements (Unaudited) (continued)
- -------------------------------------------------------------------------------
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 gains on investments, to
its shareholders. Therefore, no federal income tax provision is required.
During the six months ended June 30, 1999, the Fund realized on a tax basis
net realized gains of $46,999,828 on security transactions.
As of June 30, 1999, net unrealized appreciation (depreciation) for federal
income tax purposes is comprised of the following components;
<TABLE>
<S> <C>
Appreciated securities............................................ $ 60,710,078
Depreciated securities............................................ (15,156,416)
------------
Net unrealized appreciation....................................... $ 45,553,662
============
Cost of securities for federal income tax purposes................ $395,744,176
============
</TABLE>
Note 3--Investment Advisory and Service Fees:
TCW Funds Management, Inc. is the Investment Adviser of the Fund and also
furnishes the Fund with accounting and other services and office space. As
compensation 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 0.75% of the first $100 million of the Fund's average net assets and
0.50% of the Fund's average net assets in excess of $100 million. In addition,
the Fund reimburses the Adviser for the costs of providing accounting services
to the Fund (up to a maximum of $25,000 per year).
On July 21, 1999, shareholders of the Fund approved an amendment to the
Fund's Investment Advisory and Management Agreement which terminates the Ad-
viser's providing of accounting services to the Fund. Effective September 1,
1999, the Fund's accounting services will be provided by Investors Bank and
Trust Company.
Note 4--Purchases and Sales of Securities:
For the six months ended June 30, 1999, purchases and sales or maturities of
investment securities (excluding short-term investments) aggregated
$225,798,037 and $234,021,482, respectively. There were no purchases or sales
of U.S. Government securities for the six months ended June 30, 1999.
Note 5--Security Lending:
During the six months ended June 30, 1999, 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, 1999, the cash received from the borrowing broker was invested in over-
night repurchase agreements issued by the borrowing broker which, in turn,
were collateralized by U.S. Treasury securities valued at $7,138,452, 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 $31,192 from the Fund for the six months
ended June 30, 1999. Legal fees totaled $2,480 of which $2,480 were paid to
O'Melveny & Myers, of which an individual who is of counsel, serves as a di-
rector of the Fund. Certain officers and/or directors of the Fund are also of-
ficers and/or directors of the Investment Adviser.
Note 7--Common Stock Subscription Rights:
Non-transferable rights to subscribe to shares of the Fund's common stock
were issued to shareholders of record on June 29, 1998. The rights entitled
the shareholders to acquire one share of newly issued common stock for each
five rights held. At the termination of the subscription period on July 28,
1998, 3,172,657 shares of common stock were subscribed at a price of $9.49 per
share as of July 29, 1998. Proceeds from the subscriptions, net of issuance
costs, totaled $29,988,611.
12
<PAGE>
- --------------------------------------------------------------------------------
[Logo] TCW Convertible Securities Fund, Inc.
Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
Note 8--Restricted Securities:
The following restricted securities held by the Fund at June 30, 1999 were
valued both at the date of acquisition and June 30, 1999, in accordance with
the Security Valuation policy of the Fund described in Note 1. The restricted
securities were purchased in private placement transactions without
registration 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, 1999 is $140,139,062, which
represents 33% of net assets.
<TABLE>
<CAPTION>
Principal Date of
Amount Acquisition Cost
--------- ----------- ----------
<C> <S> <C> <C>
$5,385,000 Alpharma, Inc., 3%,
due 06/01/06............................... 05/27/99 $5,385,000
$5,880,000 Ann Taylor Stores Corp., 0.55%,
due 06/18/19............................... 06/14/99 3,252,205
$3,210,000 Assisted Living Concepts, Inc.,
5.625%,
due 05/01/03............................... 04/07/98 3,120,632
$4,545,000 Athena Neurosciences, Inc., Exchangeable
Elan Corp. PLC (Ireland),
4.75%, due 11/15/04........................ 11/05/97 4,545,000
$17,550,000 Citrix System, Inc., 0%, due
03/22/19.................................. 03/16/99 6,314,334
$ 4,445,000 Comverse Technology, Inc., 4.5%,
due 07/01/05.............................. 06/25/98 4,350,170
$ 4,915,000 Concentra Managed Care, Inc., 4.5%,
due 03/15/03.............................. 03/11/98 4,860,421
$ 8,690,000 Costco Companies, Inc., 0%,
due 08/19/17.............................. 08/14/97 4,631,698
$21,795,000 Elan Corp. PLC (Ireland),
0%, due 12/14/18.......................... 12/08/98 12,835,699
$ 4,265,000 Exchangeable Certificates Corp.,
0.25%, due
07/17/06.................................. 06/24/99 4,265,000
$ 8,685,000 Interpublic Group, Inc., 1.87%,
due 06/01/06.............................. 05/26/99 7,358,242
$ 1,460,000 ITC Deltacom, Inc., 4.25%, due
05/15/06.................................. 05/06/99 1,466,150
$ 4,055,000 LSI Logic Corp., 4.25%,
due 03/15/04.............................. 03/16/99 4,055,000
$ 3,500,000 Magna International, Inc. (Canada),
4.875%, due 02/15/05...................... 02/10/98 3,500,000
$10,205,000 Network Associates, Inc., 0%,
due 02/13/18.............................. 02/10/98 4,257,469
$ 6,380,000 Omnicare, Inc., 5%,
due 12/01/07.............................. 12/04/97 6,380,000
$ 3,030,000 Rite Aid Corp., 5.25%,
due 09/15/02.............................. 09/04/97 3,030,000
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
[Logo] TCW Convertible Securities Fund, Inc.
Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal Date of
Amount Acquisition Cost
--------- ----------- -----------
<C> <S> <C> <C>
$ 4,660,000 Safeguard Scientifics, Inc., 6%, due
02/01/06................................ 01/17/97 $ 4,660,000
$ 6,410,000 Sanmina Corp., 4.25%, due 05/01/04....... 04/30/99 6,426,800
$12,310,000 Sepracor, Inc., 7%, due 12/15/05......... 12/17/98 12,863,683
$23,010,000 Solectron Corp., 0%, due 01/27/19........ 01/21/99 10,599,226
$ 715,000 Sunrise Assisted Living, Inc., 5.5%, due
06/15/02................................ 06/03/97 728,181
$ 3,965,000 Tower Automotive, Inc., 5%, due
08/01/04................................ 07/24/97 3,965,000
122,100 United Rentals, Inc., $3.25 Convertible
Preferred............................... 01/27/99 5,830,275
</TABLE>
Note 9--Subsequent Event--Report of Annual Meeting of Shareholders:
The Annual Meeting of Shareholders of the Fund was held on July 21, 1999. 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, John C. Argue, Norman Barker, Jr.,
Richard W. Call, 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 37,706,667 affirmative votes; votes opposed 666,308 and votes
withheld 202,008); (ii) Amendment of the Investment Advisory and Management
Agreement to utilize the accounting services of Investors Bank and Trust
Company for the Fund's books and records, (votes for: 36,503,286; votes against
1,216,561 and abstentions 855,136); (iii) the ratification of the selection of
Deloitte & Touche LLP as independent auditors of the Fund for the fiscal year
ending December 31, 1999 (votes for: 37,865,433; votes against 260,937 and
abstentions 448,613). 42,145,475 shares were outstanding on the record date for
this meeting and 38,574,983 shares entitled to vote were present in person or
by proxy at the meeting.
14
<PAGE>
- --------------------------------------------------------------------------------
[Logo] TCW Convertible Securities Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year Ended December 31,
1999 ------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value Per
Share, Beginning of
Period................. $ 9.37 $ 9.21 $ 8.51 $ 8.36 $ 7.47 $ 8.79
-------- -------- -------- -------- -------- --------
Income from Operations:
Net Investment Income... 0.18 0.35 0.35 0.36 0.37 0.38
Impact to Capital for
Shares Issued.......... -- (0.01) (0.01) -- -- --
Net Realized and
Unrealized Gains
(Losses) on
Securities............. 0.95 0.85 1.23 0.77 1.36 (0.86)
-------- -------- -------- -------- -------- --------
Total from Investment
Operations.......... 1.13 1.19 1.57 1.13 1.73 (0.48)
Less Distributions:
Distributions from
Net Investment
Income................. (0.18) (0.27) (0.35) (0.36) (0.37) (0.38)
Distributions from
Net Realized Gains..... (0.24) (0.76) (0.52) (0.62) (0.33) (0.30)
Distributions in Excess
of Net Realized
Gains.................. -- -- -- -- (0.14) (0.16)
-------- -------- -------- -------- -------- --------
Total Distributions.. (0.42) (1.03) (0.87) (0.98) (0.84) (0.84)
-------- -------- -------- -------- -------- --------
Net Asset Value Per
Share, End of Period... $ 10.08 $ 9.37 $ 9.21 $ 8.51 $ 8.36 $ 7.47
======== ======== ======== ======== ======== ========
Total Investment
Return (/1/)........... 6.92%(/3/) 11.41% 12.98% 11.75% 33.60% (7.43)%
Net Asset Value Total
Return (/2/)........... 12.11%(/3/) 13.34% 19.10% 13.94% 24.00% (5.70)%
Ratios/Supplemental
Data:
Net Assets, End of
Period
(in thousands)......... $424,633 $393,588 $355,061 $271,267 $264,608 $234,686
Ratio of Expenses to
Average Net Assets..... 0.70%(/4/) 0.73% 0.74% 0.77% 0.81% 0.79%
Ratio of Net Investment
Income to Average Net
Assets................. 3.78%(/4/) 3.73% 3.95% 4.12% 4.60% 4.66%
Portfolio Turnover
Rate................... 56.70%(/3/) 124.51% 132.99% 125.72% 108.98% 110.04%
</TABLE>
(1) Based on market value per share, adjusted for reinvestment of distribu-
tions.
(2) Based on net asset value per share, adjusted for reinvestment of distribu-
tions.
(3) For the six months ended June 30, 1999 and not indicative of a full year's
operating results.
(4) Annualized.
See accompanying Notes to Financial Statements.
15
<PAGE>
[LOGO OF TCW(R)]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 395,744,176
<INVESTMENTS-AT-VALUE> 441,297,838
<RECEIVABLES> 3,790,976
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 445,088,814
<PAYABLE-FOR-SECURITIES> 4,265,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16,190,526
<TOTAL-LIABILITIES> 20,455,526
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 342,186,914
<SHARES-COMMON-STOCK> 42,145,475
<SHARES-COMMON-PRIOR> 41,989,895
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 36,892,712
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 45,553,662
<NET-ASSETS> 424,633,288
<DIVIDEND-INCOME> 3,059,995
<INTEREST-INCOME> 5,928,769
<OTHER-INCOME> 0
<EXPENSES-NET> 1,406,891
<NET-INVESTMENT-INCOME> 7,581,873
<REALIZED-GAINS-CURRENT> 46,999,828
<APPREC-INCREASE-CURRENT> (7,365,490)
<NET-CHANGE-FROM-OPS> 47,216,211
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,581,873
<DISTRIBUTIONS-OF-GAINS> 10,108,035
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 155,580
<NET-CHANGE-IN-ASSETS> 31,045,150
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 919
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,160,080
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,406,891
<AVERAGE-NET-ASSETS> 404,849,738
<PER-SHARE-NAV-BEGIN> 9.37
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> .95
<PER-SHARE-DIVIDEND> .18
<PER-SHARE-DISTRIBUTIONS> .24
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.08
<EXPENSE-RATIO> 0.70
</TABLE>
