[PHOTOGRAPH]
The
Gabelli
Global
Convertible
Securities
Fund
ANNUAL REPORT
DECEMBER 31, 1994
<PAGE>
Gabelli Global Series Funds, Inc.
One Corporate Center
Rye, New York 10580 - 1434
The Gabelli Global Convertible Securities Fund
Annual Report - 1994
To Our Shareholders:
We have completed nearly eleven months of operations in our first fiscal
year and we welcome our new shareholders. Since inception on February 3, 1994
through December 31, 1994, the Fund's net asset value grew by 0.9% compared to a
6.76% loss for the Lipper Convertible Securities Fund index for the same period.
The Gabelli Global Convertible Securities Fund was one of just two funds, among
the 31 open-ended convertible securities funds included in the Lipper index, to
have a positive rate of return in 1994.
Investment Results (a)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Quarter
------------------------------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<C> <S> <C> <C> <C> <C> <C>
1994: Net Asset Value ..................... $ 10.38 $ 10.37 $ 10.64 $ 9.93 $ 9.93
Total Return ........................ 3.8%(b) (0.1)% 2.6% (5.2)% 0.9%(b)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return reflects changes in share price, reinvestment of dividends and
is net of expenses. Of course, total return represents past performance and does
not guarantee future results. Investment returns and the principal value of an
investment will fluctuate. When shares are redeemed they may be worth more or
less than their original cost.
(b) From commencement of operations on February 3, 1994.
Dividend History
- --------------------------------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
----------------- -------------- ------------------
December 30, 1994 $0.16 $9.93
- --------------------------------------------------------------------------------
In the fourth quarter of 1994, The Gabelli Global Convertible Securities
Fund's share price decreased from $10.64 on September 30, 1994 to $10.09 on
December 31, 1994 (adding back the $0.16 per share annual dividend paid on
December 30, 1994). This represents a decline of 5.2% for the quarter and
compares to the Lipper Analytical Services, Inc. Convertible Securities Fund
Index's decline of 2.8%. The sharp fall in stocks and bonds in emerging markets
in the Pacific Rim and Latin America were largely responsible for the Fund's
retreat. In view of the 9.0% and 23.9% fourth quarter declines of Lipper's
Pacific Region Equity Funds and Latin America Equities Fund indices, our Fund's
performance clearly demonstrated the downside protection provided by convertible
securities over equities.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE GABELLI GLOBAL CONVERTIBLE SECURITIES FUND, THE
60% MORGAN STANLEY WORLD INDEX/40% J.P. MORGAN GLOB-
AL GOVERNMENT BOND INDEX AND THE LIPPER ANALYTICAL
SERVICES CONVERTIBLE SECURITIES FUND INDEX
The following table represents the Comparison Chart.
60% Morgan Stanley
Gabelli Global World Index/40% Lipper Analytical
Convertible J.P. Morgan Global Convertible Securities
Securities Fund Goverment Bond Index** Fund Index
Date
2/3/94 $10,000 $10,000 $10,000
12/31/94 $10,090* $9,791 $9,324
* Past performance is not predictive of future performance.
** The Morgan Stanley World Index is an unmanaged index of 1,609 foreign and
domestic equity securites. The J.P. Morgan Global Government Bond Index is
an unmanaged index of 186 foreign and domestic government bonds.
<PAGE>
Our Investment Objectives
The Fund's objective is to obtain a high rate of total return by investing
in global convertible securities. We expect to achieve an above average rate of
return by investing primarily in coupon paying convertible securities which meet
our selective investment criteria.
Our Approach
We weigh both country-specific and company-specific factors to make our
investment decisions. Country-specific factors include political stability,
economic growth, inflation and trends in interest rates. With regard to
companies, we seek firms which are undervalued in relation to their long-term
potential value. We then look for some dynamic in the country or company which
can unlock this value. In the case of global telecommunications, the dynamic is
the privatization of state owned monopolies. In developing countries, it is the
need to provide the infrastructure for growth. In Japan, it is the change from
an industrial to a consumer oriented economy. In commodities, it is the pick-up
in industrial demand.
[Graphic illustrating the interplay among the
four components of our valuation approach.]
Once a stock meets our criteria, we review the merits of its convertible
alternative. We are looking for a favorable risk/return trade-off compared to
the common stock. Typically, we hope to participate in two-thirds of the stock's
upside potential with only one-third of its downside movement. We seek a low
premium, an attractive yield advantage, strong call protection and liquidity. If
satisfied, we become patient long-term investors on behalf of our shareholders.
Over time, this has been a proven method of building wealth.
What Are Global Convertible Securities?
Global convertible securities are bonds, preferred shares and warrants of
domestic or foreign issuers which may be converted into a fixed number of shares
of the underlying company. Convertibles are hybrid securities which combine the
capital appreciation potential of equities with the higher yield of fixed income
instruments.
Market makers maintain an active market in over $360 billion of global
convertible securities. The chart below shows the geographic breakdown of the
market. The market has grown by about 12.5% during 1994. New issue activity in
the U.S. and Europe has declined as higher interest rates and lower stock prices
have made it less attractive for companies to issue new debt or equity. This
slack has been more than made up by Japan, where convertibles are traditionally
used as a substitute for issuing common stock and in emerging markets especially
non-Japan Asia.
What Are the Benefits of Global Convertible Securities?
Reduced volatility is foremost. Investing in foreign equity markets can be
rewarding but volatile. Our goal is to earn a high, risk-adjusted rate of
return. Due to its fixed income characteristics, a convertible security will
provide more stability than its underlying common stock. In the current market
environment, which has investors seeking alternatives to bond funds in favor of
global or international funds, the Gabelli Global Convertible Securities Fund
provides an attractive alternative by combining the capital appreciation
potential of global equity investing with the higher current income usually
associated with bonds.
<PAGE>
The following table represents the Convertible Market Chart.
Global Convertible Market by Region
Total Market - $360 Billion(a)
Japan 54.7%
United States 32.6%
Europe 8.7%
SE Asia 4.5%
Source: Morgan Stanley International Convertible Research. (a) As of 11/94
Commentary - 1994
The U.S. Federal Reserve Board continued to raise interest rates in the
fourth quarter. The November 15th increase of 0.75% was the last of six rate
hikes in 1994, which saw the federal funds rate rise 250 basis points from 3.0%
to 5.5%. Higher interest rates have finally started to bite. Excessive leverage
continues to be wrung out of the system. Losses in Orange County, California is
one example. Other markets around the world have also been effected. Economies
which tie their currencies to the U.S. dollar have been forced to follow U.S.
rates up too. The Hong Kong market, with its heavy capitalization in interest
rate-sensitive stocks, fell 31% in 1994. The devaluation of the peso, and
subsequent collapse of the Mexican stock and bond markets, is also a direct
result of higher U.S. rates drying up the liquidity needed to finance Mexico's
growing trade deficit.
In many ways, 1994 was the worst of all possible worlds for convertible
securities investors. With bond and stock prices trending lower in the face of
higher interest rates, the capital appreciation potential of convertibles was
limited. However, convertibles' yield component provided significant downside
protection. For example, the Malaysian stock market fell 20.7% in 1994 after
being up 107.3% in 1993. The stock price of Renog, one of the largest
conglomerates in Malaysia involved in construction, banking, hotels and energy,
fell 22.5% after its convertible was launched in October 1994. The convertible
bond fell by only 7.75% demonstrating the downside protection of the yield
component. Similarly, when the price of Cemex, the Mexican cement company fell
41.5% in dollar terms, the convertible bonds fell by only half as much.
In general, the fact that our fund was able to post a positive return in a
year in which Lipper Analytical Services Inc.'s Global Equities Fund index was
down 3.03% and World Income Fund index lost 5.52% displays the downside
protection of selective convertible securities investing.
<PAGE>
Looking Ahead to 1995
Having demonstrated their downside advantage in a difficult international
investment environment in 1994, we believe convertibles will display their
upside potential in what should be a more rewarding climate in 1995. The Fed may
be close to its goal of slowing the economy sufficiently to maintain modest
growth with low inflation. This would signal the peak in interest rates and set
the stage for improved stock prices here and abroad.
Currently, we see many attractive investment opportunities in the U.S.,
Europe and Asia. The table below is a sampling of some of the holdings in the
Fund. Ideally, we are looking for companies with modest leverage, strong cash
flow and a dominant position in their industry. When selecting the convertible
securities of these companies, we are looking for attractive yields to maturity
or a put of at least one to two percent over U.S. Treasury Bonds (i.e. 8.85% to
9.85%). Since we are long-term investors, we are less concerned with the
securities' current yield. This criteria gives us the downside support and
income that we expect from fixed income investments. However, we still want the
opportunity to benefit from the capital appreciation of the stock. Therefore, we
look for convertibles with low premiums under 30%.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Issuer Price($) Premium Current Yield to Country Currency
Yield Maturity
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Tate and Lyle 5.75% '01 84 18% 6.84% 8.95% United Kingdom Sterling
Amer Group 6.25% '03 85 12% 7.53% 9.22% Finland U.S. Dollars
Time Warner 8.75% '15 94 28% 9.31% 9.42% United States U.S. Dollars
Liberty Property 8% '01 95 0% 8.42% 9.04% United States U.S. Dollars
TRI 2.75% '04 95 27% 2.89% 9.74% Malaysia U.S. Dollars
SCICI 3.5% '04 88 19% 3.91% 9.31% Indonesia U.S. Dollars
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Not every convertible in the portfolio will have such attractive terms.
Some will have higher yields in exchange for higher premiums. Others will be
more sensitive to the price of the underlying common stock but will yield less.
However, the portfolio as a whole seeks to achieve these favorable
characteristics. These examples demonstrate the diversity of opportunity in the
global convertible market by industry and geography. Such diversification, when
combined with the convertible instrument, is an effective way to reduce risk.
THE PORTFOLIO
Global Allocation
The chart at right presents the Fund's holdings by geographic region at
December 31, 1994. The geographic allocation will change based on current global
market conditions. Countries and/or regions represented in the chart and below
may or may not be included in the Fund's future portfolio.
The following table represents the Holdings by Geographic Chart.
HOLDINGS BY GEOGRAPHIC REGION 12/31/94
United States 32.3%
Asia/Pacific Rim 23.2%
Europe 13.2%
Latin America 2.6%
Other 1.8%
Cash and Equivalents 26.9%
<PAGE>
Let's Talk Converts
The following are specifics on selected holdings of our Fund's
investments. Favorable EBITDA prospects do not necessarily translate into higher
stock prices, but they do express a positive trend which we believe will develop
over time.
Tate and Lyle plc (Sub. Deb. Cv. 5.75% - 3/21/01 - $132.63) is a world leader in
sugar production and refining, cereal sweeteners and starch production. The U.K.
based company has a market capitalization of $2.3 billion. In 1994, profits
before taxes increased by 23% to STG 274 million ($413 million). Cash flow from
operations increased 16% to STG 445 million ($672 million). The company's
balance sheet continues to improve. Net borrowings as a percentage of net assets
fell from 78% to 64%. Interest cover (profit before interest divided by net
interest expense) improved from 5.7 to 7.8 times.
Tate and Lyle's strong cash flow has allowed it to expand its business
globally. In 1994, new ventures were started in China, Botswana and Saudi Arabia
while investment was increased in Bulgaria, Mexico, Slovakia and Hungary. The
company is in an excellent position to profit from the growing demand for more
sophisticated foods and increased per capita sugar consumption in developing
markets.
Amer Group, Ltd. (Sub. Deb. Cv. 6.25% - 6/15/03 - $84.00) a Finnish consumer
goods conglomerate with interests in sporting goods, car sales, tobacco and
publishing. The company manufactures sporting equipment under the brand names
"Wilson Sporting Goods" and "MacGregor Golf Company". During the first eight
months of 1994, profits before taxes and extraordinary items increased fourfold
to FM 166 million ($44 million) while operating income increased 47% to FM 277
million ($85 million). Out of total net sales of FM 4.8 billion ($1.2 billion),
46% were generated in North America, 32% in Finland, 14% in Europe and 8%
elsewhere.
The balance sheet continued to improve as gearing fell from 138% to 67%
due to increased profits and a rights offering. Interest cover improved from 1.4
to 2.4 times. With all divisions showing signs of improvement and new products
expected in the sporting division for 1995, we think the stock is inexpensive.
In fact, the value of the sporting division alone would seem to justify the
current stock price of FM 90.
Time Warner Inc. (LYONS Sr. Sub. Notes Cv. Zero Coupon - 6/22/13 - $35.50 and
Sub. Deb. Cv. 8.75% - 1/10/15 - $94.50) is one of the largest diversified media
and publishing companies in the world with a market capitalization of over $15
billion. Warner Brothers Studios, the company's filmed entertainment subsidiary,
was ranked number one at the box office for the third consecutive year. Time
Warner is restructuring its business into copyright and creativity (notably
publishing, music and filmed entertainment) on one side and distribution (mostly
cable) on the other.
Liberty Property Trust (Sub. Deb. Cv. 8.00% - 7/01/01 - $96.875) is a
self-administered and self-managed Maryland real estate investment trust. The
company provides acquisition, development, leasing and property management
services to its portfolio of 156 properties. Concentrated in six markets in the
Southeastern and Mid-Atlantic states and with operations in the U.K., Liberty
provides warehouse, distribution, manufacturing and office space to more than
500 tenants in 10 million square feet of space. The company was brought public
in June 1994 by its Chairman Willard G. Rouse III, founder of the Rouse Group.
<PAGE>
We believe the company is well positioned to take advantage of the improving
economic conditions, favorable demographics and increasing demand for office and
industrial space in its markets.
Technology Resources Industries Berhad (Sub. Deb. Cv. 2.75% - 11/28/04 - $96.50)
is a leading provider of telecommunications services in Malaysia. Through its
subsidiary Cellular Communications Network, the company is the largest cellular
operator in Malaysia. With 430,000 subscribers, the company has roughly a 75%
market share. TRI's strategy is to become a full-fledged telecommunications
company. Through 1995, it plans capital expenditures of $800 million to expand
its cellular network, microwave transmission network and to install fiber-optic
cables. TRI is one of Malaysia's ten largest companies, with a market
capitalization of over $2 billion.
SCICI Ltd. (Shipping Credit and Investment Company of India) (Sub. Deb. Cv.
3.50% - 4/01/04 - $87.75) incorporated in 1986 to promote ship financing. SCICI
recently has been diversifying its portfolio to include infrastructure related
lending as well. Since its inception, SCICI has never had a bad loan. Total
assets at March 31, 1994 were Rupia 22.276 million ($711 million). With a net
profit margin of 45.5%, we expect profitability to remain strong in 1995.
Minimum Initial Investment - $1,000
The minimum initial investment will be $1,000 until the Fund has grown to
over $100,000,000 in assets under management, at which time the minimum will
increase to $25,000 for new investors. There is no initial minimum investment
for accounts established through our Automatic Investment Plan. Shares of the
Fund are offered at no load through June 30, 1995. After such date, the Fund
will impose a 4.5% front end sales charge on all new accounts. Shareholders in
the Fund prior to that date will never be subject to a load, even on subsequent
investments.
Gabelli U.S. Treasury Money Market Fund
Shareholders of any of the Gabelli Funds may invest in The Gabelli U.S.
Treasury Money Market Fund with an initial investment of $3,000 or more. The
Fund provides checkwriting and exchange privileges. The Fund's expenses are
capped at .30% of average net assets, making it one of the most attractive U.S.
Treasury-only money market funds. With dividends that are exempt from state and
local income taxes in all states, the Fund is an excellent vehicle in which to
store idle cash. Call us at 1-800-GABELLI (1-800-422-3554) for a prospectus
which gives a more complete description of the Fund, including management fees
and expenses. Read it carefully before you invest or send money.
<PAGE>
In Conclusion
We thank all our shareholders for helping us successfully launch The
Gabelli Global Convertible Securities Fund. Our shareholder base and assets
continue to grow, with year end totals reaching 3,873 and $15.6 million,
respectively. We appreciate your support and look forward to justifying your
faith in our investment abilities.
The Fund's daily net asset value is available in the financial press and
each evening after 6:00 PM (Eastern Time) by calling 1-800-GABELLI
(1-800-422-3554). The Fund's NASDAQ symbol is GAGCX. Please call us during the
day for further information.
Sincerely,
/s/ Mario J. Gabelli /s/ Hart Woodson
Mario J. Gabelli, CFA A. Hartswell Woodson, III
President Vice President and
Portfolio Manager
February 1, 1995
- --------------------------------------------------------------------------------
Top Ten Holdings
December 31, 1994
-----------------
Time Warner Inc. Liberty Property Trust
Yangming Marine Transport Technology Resource Industries
James River Corporation Elf Enterprise Finances
Amax Gold Inc. Renog Berhad
Aegon NV SCI Finance LLC
- --------------------------------------------------------------------------------
<PAGE>
The Gabelli Global Convertible Securities Fund
Portfolio of Investments -- December 31, 1994
================================================================================
Principal Market
Amount Cost Value
--------- ---- ------
CONVERTIBLE SECURITIES--72.54%
CONVERTIBLE CORPORATE BONDS--53.96%
AUTOMOTIVE: PARTS AND ACCESSORIES--3.40%
$ 200,000 Consorcio G Grupo Dina Sub.
Deb. Cv. 8.00%, 08/08/04 .......... $ 147,121 $ 157,000
100,000 Johnson Electric Holding Sub.
Deb. Cv. 4.50%, 11/05/00 .......... 92,517 85,750
255,000(a) Michelin France Sub. Deb.
Cv. 2.50% 01/01/01 ................ 50,795 44,782
10,000,000(c) Nippondenso Sub. Deb. Cv.
4.10%, 10/30/98 ................... 119,122 125,140
1,000,000(c) Showa Aircraft Industry Company
Sub. Deb. Cv. 2.30%, 09/30/02 ..... 11,301 10,302
100,000 Titan Wheel International Inc.
Sub. Deb. Cv. 4.75%, 12/01/00 ..... 108,946 106,000
----------- -----------
529,802 528,974
----------- -----------
BROADCASTING--1.59%
75,000 Carlton Communications plc
Sub. Deb. Cv. 7.50%, 8/14/07 ...... 153,205 155,817
425,000(a) Havas SA Sub. Deb. Cv.
3.00%, 12/31/97 ................... 90,800 91,420
----------- -----------
244,005 247,237
----------- -----------
BUILDING & CONSTRUCTION--6.75%
4,000,000(c) Asahi Glass Company, Limited
Sub. Deb. Cv. 1.90%,
12/25/08 .......................... 43,342 43,220
100,000 Bacnotan Consolidated Sub.
Deb. Cv. 5.50%, 06/21/04 .......... 98,114 91,250
100,000 Cemex SA Sub. Deb. Cv.
4.25%, 11/01/97 ................... 100,000 80,500
350,000 Hoogovens Groep BV Sub.
Deb. Cv. 4.50%, 4/11/01 ........... 219,972 223,039
150,000 Inco Ltd. Sub. Deb. Cv.
5.75%, 07/01/04 ................... 171,770 165,750
8,000,000(c) Nihon Cement Company
Sub. Deb. Cv. 2.60%,
03/29/02 .......................... 88,690 81,777
100,000 NTS Steel Groups Co. Ltd.
Sub. Deb. Cv. 4.00%,
12/16/08 .......................... 91,593 60,750
50,000 Sino-Thai Engineering &
Construction
Sub. Dev. Cv. 1.75%,
12/17/03 .......................... 50,720 49,000
100,000 Tung Ho Steel Ltd. Sub. Deb. Cv.
4.00%, 07/26/01 ................... 110,876 113,000
150,000 United Engineers (Malaysia)
Sub. Deb. Cv.
2.00%, 03/01/04 ................... 150,002 143,625
----------- -----------
1,125,079 1,051,911
----------- -----------
BUSINESS SERVICES--1.45%
100,000 Daily Mail & General Trust Sub.
Deb. Cv. 5.75%, 09/26/03 .......... 179,274 170,585
150,000 News American Holdings
Incorporated Sub. Deb. Cv.
Zero Cpn.,03/11/13 ................ 63,508 55,875
----------- -----------
242,782 226,460
----------- -----------
CABLE--0.65%
250,000 Comcast Corporation Sub.
Deb. Cv. 1.125%, 04/15/07 ......... 116,149 100,938
----------- -----------
CONSUMER PRODUCTS--2.03%
50,000 Kinpo Electronics Sub. Deb. Cv.
3.00% 07/21/01 .................... 50,000 43,875
4,000,000(c) Matsushita Electric Industrial
Co., Ltd. Sub. Deb. Cv.
2.70%, 05/31/02 ................... 46,925 43,019
4,000,000(c) Sony Corporation Sub. Deb. Cv.
1.40% 09/30/03 .................... 45,468 43,019
140,000 Tate & Lyle Public Limited
Company Sub. Deb. Cv.
5.75% 03/21/01 .................... 189,999 185,687
----------- -----------
332,392 315,600
----------- -----------
DIVERSIFIED INDUSTRIAL--5.25%
150,000 Amer Group Ltd. Sub. Deb. Cv.
6.25%, 06/15/03 ................... 157,911 126,000
100,000 Astra International Inc., PT Sub.
Deb. Cv. 6.75%, 05/30/06 .......... 86,249 84,000
427,500(a) Generale Des Eaux (Cie)
Sub. Deb. Cv.
6.00%, 01/01/98 ................... 88,206 89,235
255,000 Hanson America Inc. Sub.
Deb. Cv. 2.39%, 03/01/01 .......... 208,134 182,963
100,000 Liblife International BV Sub.
Deb. Cv. 6.50%, 09/30/04 .......... 98,841 105,500
250,000 Renong Berhad Sub. Deb.
Cv. 2.50%, 03/31/02 ............... 250,000 229,375
----------- -----------
889,341 817,073
----------- -----------
ENERGY--2.51%
100,000 Banpu Coal Sub. Deb. Cv.
3.50%, 08/25/04 ................... 108,307 116,625
150,000 Elf Enterprise Finances
Sub. Deb. Cv. 8.75%,
06/27/06 .......................... 232,928 232,206
50,000 Noble Affiliates, Inc. Sub.
Deb. Cv. 4.25%, 11/01/03 .......... 48,488 42,563
----------- -----------
389,723 391,394
----------- -----------
ENTERTAINMENT--3.15%
50,000 Time Warner Inc. LYONS
Sr. Sub. Notes Cv.
Zero Cpn., 06/22/13 ............... 20,331 17,750
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Convertible Securities Fund
Portfolio of Investments -- December 31, 1994 (Continued)
================================================================================
Principal Market
Amount Cost Value
--------- ---- ------
$ 500,000 Time Warner Inc. Sub. Deb. Cv.
8.75%, 01/10/15 ................... $ 493,010 $ 472,500
----------- -----------
513,341 490,250
----------- -----------
FINANCIAL SERVICES--4.83%
250,000 Aegon NV Sub. Deb. Cv.
4.75%, 11/01/04 ................... 250,000 261,563
200,000 Commerce Asset Hodings
Berhad Sub. Deb. Cv. 1.75%,
09/26/04 .......................... 200,000 184,000
150,000 Industrial Credit & Investment
Corp. Sub. Deb. Cv. 2.50%,
04/03/2000 ........................ 142,571 111,000
50,000 Lend Lease Finance International
Ltd. Sub. Deb. Cv. 4.75%,
06/01/03 .......................... 56,477 52,500
50,000 Mitsubishi Trust & Banking Corp.
Sub. Deb. Cv. 3.25%,
09/30/03 .......................... 44,244 38,500
50,000 SCICI Ltd. Sub. Deb. Cv.
3.50%, 04/01/04 ................... 61,415 43,875
60,000 Toyo Trust & Banking Ltd.
Sub. Deb. Cv. 1.75%,
03/31/02 .......................... 49,267 42,000
2,000,000(c) Yasuda Fire & Marine Insurance
Co., Ltd. Sub. Deb. Cv. 0.60%,
03/30/01 .......................... 20,345 18,695
----------- -----------
824,319 752,133
----------- -----------
FOOD AND BEVERAGES--0.35%
270,000(a) BSN SA Unsub. Deb. Cv.
6.60%, 01/01/2000 ................. 57,412 54,974
----------- -----------
HOTELS/CASINOS--0.31%
50,000 Hospitality Franchise Systems
Sub. Deb. Cv. 4.50%,
10/01/99 .......................... 50,000 48,625
----------- -----------
METALS & MINING--2.91%
50,000 Agnico-Eagle Mines, Limited
Sr. Notes 3.50%, 01/27/04 ......... 40,437 35,500
100,000 Bema Gold Corporation Sub.
Deb. Cv. 7.50%, 09/15/99 .......... 100,000 96,000
100,000 Coeur d'Alene Mines
Corporation Sub. Deb. Cv.
6.375%, 1/31/04 ................... 100,980 83,000
50,000 Gold Mines of Kalgoorlie Limited
Sub. Deb. Cv.
7.50%, 02/28/2000 ................. 56,338 50,125
50,000 Homestake Mining Company
Sub. Deb. Cv. 5.50%,
06/23/2000 ........................ 56,326 48,625
100,000 Lonrho Finance Pubic Sub.
Deb. Cv. 6.00%, 02/27/2004 ........ 139,988 140,067
----------- -----------
494,069 453,317
----------- -----------
PAPER FOREST PRODUCTS--3.85%
50,000 Aokam Perdana Berhad Sub.
Dev. Cv. 3.50%, 06/13/04 .......... 50,353 48,875
500,000 Kymmene Corporation Sub.
Deb. Cv. 8.25%, 11/18/43 .......... 113,117 112,365
100,000 PT Pabrik Kertas Tjiwi Sub.
Deb. Cv. 7.25%, 04/12/01 .......... 100,959 92,000
1,000,000(d) Repola Corporation Sub.
Deb. Cv. 6.50%, 03/25/04 .......... 202,514 187,803
150,000 Riverwood International Sub.
Deb. Cv. 6.75%, 09/15/03 .......... 160,143 158,250
----------- -----------
627,086 599,293
----------- -----------
REAL ESTATE / DEVELOPMENT--5.40%
250,000 Continental Homes Holding
Corp. Sub. Deb. Cv.
6.875%, 03/15/02 .................. 263,695 196,250
200,000 Henderson Capital International
Sub. Deb. Cv., 4.00%,
10/27/96 .......................... 194,367 191,500
50,000 Land Securities plc Sub.
Deb. Cv. 7.00%, 09/30/08 .......... 85,938 78,250
250,000 Liberty Property Trust Sub.
Deb. Cv. 8.00%, 07/01/01 .......... 250,000 242,188
100,000 Rouse Company Sub. Deb.
Cv. 5.75%, 07/23/02 ............... 81,038 80,250
50,000 Wharf Capital International
Ltd. Sub. Deb. Cv. 5.00%,
07/15/2000 ........................ 58,510 53,000
----------- -----------
933,548 841,438
----------- -----------
RETAIL--1.38%
100,000 ASDA Finance Ltd. Sub. Deb.
Cv. 10.75%, 10/21/05 .............. 165,441 165,987
5,000,000(c) Heiwado Company Ltd. Sub.
Deb. Cv. 2.00%, 08/20/96 .......... 54,454 49,050
----------- -----------
219,895 215,037
----------- -----------
SPECIALITY CHEMICALS--0.97%
50,000 IMC Fertilizer Group, Inc. Sub.
Deb. Cv. 6.25%, 12/01/01 .......... 47,814 45,750
4,000,000(c) Shin-Etsu Chemical Company
Ltd. Sub. Deb. Cv. 1.30%,
03/31/99 .......................... 41,274 43,823
5,000,000(c) Sumitomo Chemical Company,
Ltd. Sub. Deb. Cv. 4.70%,
12/29/2000 ........................ 59,687 61,563
----------- -----------
148,775 151,136
----------- -----------
TELECOMMUNICATIONS--4.54%
5,000,000(c) Anritsu Corporation Sub. Deb. Cv.
5.40%, 03/31/97 ................... 55,008 55,281
40,000 S. Megga International Holdings
Ltd. Sub. Deb. Cv. 2.50%,
01/04/02 .......................... 37,027 30,000
100,000,000(b) Softe SA Unsub. Deb. Cv.
4.25%, 07/30/98 ................... 68,089 64,292
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Convertible Securities Fund
Portfolio of Investments -- December 31, 1994 (Continued)
================================================================================
Principal Market
Amount Cost Value
--------- ---- ------
$ 250,000 Technology Resource Industries
Sub. Deb. Cv. 2.75%,
11/28/04 .......................... $ 250,000 $ 241,250
250,000 Telekom Malaysia Berhad Sub.
Deb. Cv. 4.00%, 10/03/04 .......... 250,000 221,250
100,000 Tele 2000 S.A. Sub. Deb.
Cv. 9.75%, 04/14/97 ............... 97,218 95,500
----------- -----------
757,342 707,573
----------- -----------
TRANSPORTATION--2.64%
10,000,000(c)Nippon Yusen Kabushiki Kaisha
Sub. Deb. Cv. 2.00%,
09/29/2000 ........................ 121,860 125,640
250,000 Yang Ming Marine Transport
Sub. Deb. Cv. 2.00%,
10/06/2001 ........................ 250,000 285,000
----------- -----------
371,860 410,640
----------- -----------
TOTAL CONVERTIBLE
CORPORATE BONDS ..................... 8,866,920 8,404,003
----------- -----------
CONVERTIBLE PREFERRED STOCKS--18.58%
CONSUMER PRODUCTS & SERVICES--1.67%
5,000 SCI Finance LLC ..................... 250,000 260,000
----------- -----------
BUILDING & CONSTRUCTION--1.29%
4,700 WHX Corporation ..................... 219,960 200,925
----------- -----------
ENERGY--3.10%
5,000 Parker & Parsley Petroleum
Company 6.25% Cv. Pfd ............. 250,000 226,875
2,000 Unocal Corporation .................. 110,750 97,500
5,000 Western Gas Resources, Inc.
$2.625 Cv. Pfd .................... 250,000 158,750
----------- -----------
610,750 483,125
----------- -----------
METALS & MINING--4.92%
5,500 Amax Gold Inc. $3.75 Cv. Pfd.
Ser. B ............................ 275,000 266,750
6,500 Echo Bay Finance Corporation
$1.75 Cv. Pfd. Ser. A ............. 217,140 213,688
700 Cyprus Mineral Company $4.00
Cv. Pfd. Ser. A ................... 49,469 40,863
3,000 Magma Copper Company 6.00%
Cv. Pfd. Ser. E ................... 197,555 192,000
1,000 Newmont Mining Corporation
$2.75 Cv. Pfd. Ser. A ............. 59,750 53,375
----------- -----------
798,914 766,676
----------- -----------
PAPER & FOREST PROOUCTS--2.89%
5,000 Bowater Inc. 7.00% Cv. Pfd.
Ser. B ............................ 122,800 123,125
7,100 James River Corporation $3.50
Cv. Pfd. Ser. L ................... 294,851 278,675
Shares
---------
1,000 Sonoco Products Company
$2.25 Cv. Pfd. Ser. A ............. 48,625 48,000
----------- -----------
466,276 449,800
----------- -----------
REAL ESTATE / DEVELOPMENT--1.96%
1,500 Amboy Properties Inc.
5.50% Cv. Pfd ..................... 144,375 108,000
9,000 Property Trust of America
$1.75 Cv. Pfd. Ser. A ............. 189,439 198,000
----------- -----------
333,814 306,000
----------- -----------
SPECIALTY CHEMICALS--0.84%
5,000 Atlantic Richfield Company
9.01% Cv. Pfd ..................... 123,750 130,625
----------- -----------
TELECOMMUNICATIONS--1.31%
15,000 Ericsson (L.M.) Telephone
Company 4.25% Cv. Pfd ............. 26,250 28,125
5,000 LCI International, Inc. ............. 148,750 175,625
----------- -----------
175,000 203,750
----------- -----------
TRANSPORTATION--0.60%
1,750 Burlington Northern Inc. 6.25%
Cv. Pfd. Ser. A ................... 116,105 93,188
----------- -----------
TOTAL CONVERTIBLE
PREFERRED STOCKS .................... 3,094,569 2,894,089
----------- -----------
PREFERRED STOCKS--0.63%
METALS & MINING--0.63%
5,000 Freeport-McMoRan Copper ............. 95,925 98,125
----------- -----------
TOTAL PREFERRED STOCKS .............. 95,925 98,125
----------- -----------
COMMON STOCKS--1.82%
ENERGY--0.39%
4,000 Yukong Ltd--GDS+ .................... 100,000 61,000
----------- -----------
METALS & MINING--0.65%
60,000 M.I.M. Holdings Ltd. ................ 128,993 99,975
----------- -----------
TECHNOLOGY--0.55%
5,000 Yageo Corporation+ .................. 114,500 86,250
----------- -----------
TELEPHONE NETWORKS--0.23%
1,000 PT Indonesia Satellite ADR+ ......... 37,060 35,750
----------- -----------
TOTAL COMMON STOCKS ................. 380,553 282,975
----------- -----------
WARRANTS--0.60%
APPAREL--0.14%
2,550 Christian Dior--ABSA+ 14,468 21,501
----------- -----------
DIVERSIFIED INDUSTRIAL--0.43%
50 Kyocera Corporation (1/98)
Ser. 2+ ........................... 70,000 66,875
----------- -----------
TELECOMMUNICATIONS--0.03%
5,000 BCE Inc. (4/95)+ .................... 26,172 4,458
----------- -----------
TOTAL WARRANTS ...................... 110,640 92,834
----------- -----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Convertible Securities Fund
Portfolio of Investments -- December 31, 1994 (Continued)
================================================================================
Principal Market
Amount Cost Value
--------- ---- ------
U.S. GOVERNMENT OBLIGATIONS--19.72%
$3,090,000 U.S. Treasury Bills, 4.50% to
4.82%, ..............................
Due 02/09/94
to 02/23/95 ....................... $ 3,070,748 $ 3,070,748
----------- -----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS ......................... 3,070,748 3,070,748
----------- -----------
TOTAL
INVESTMENTS--95.31% ................. $15,619,355* 14,842,774
=========== -----------
Cash and Other Assets,
in excess of Liabilities
--4.69% ............................. 730,731
-----------
NET ASSETS--100.00%
(1,568,738 shares
outstanding) ...................... $15,573,505
===========
Net Asset Value and
Redemption Price
Per Share ......................... $9.93
=====
Contracts
---------
PUT OPTIONS
20 U.S. T- Bond Future
February 1995 $99.00 .............. 16,714 15,937
50 S & P 500 January
1995 $450.00 ...................... 37,650 10,313
20 S & P 500 January
1995 $460.00 ...................... 11,685 9,625
------- -------
TOTAL PUT OPTIONS ................... $66,049 $35,875
======= =======
Proceeds
Received Value
-------- -----
PUT OPTIONS WRITTEN
20 U.S. T-Bond Future
February 1995 $98.00 .............. 9,536 8,750
50 S & P 500 Janaury 1995
$435.00 ............................ 18,599 3,281
------- -------
TOTAL PUT OPTIONS
WRITTEN ........................... $28,135 $12,031
======= =======
- ----------
(a) - Principal amount denoted in French Francs.
(b) - Principal amount denoted in Italian Lira.
(c) - Principal amount denoted in Japanese Yen.
(d) - Principal amount denoted in Finnish Kroner.
+ Non-income producing security
* For Federal income tax purposes:
Aggregate cost ...................................... $ 15,605,161
============
Gross unrealized appreciation ....................... $ 182,730
Gross unrealized depreciation ....................... (979,624)
------------
Net unrealized
depreciation .................................... $ (796,894)
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Convertible Securities Fund
Statement of Assets and Liabilities
December 31, 1994
================================================================================
Assets:
Investments in securities, at value
(Cost $15,619,355) ................................. $ 14,842,774
Options purchased at value (Cost $66,049) ............... 35,875
Cash .................................................... 102,696
Receivable for investment sold .......................... 155,056
Receivable for Fund shares sold ......................... 403,429
Dividends receivable .................................... 114,536
Accrued interest receivable ............................. 149,895
Deferred organizational expenses ........................ 54,800
Other assets ............................................ 272
------------
Total assets ....................................... 15,859,333
------------
Liabilities:
Payable for investments purchased ....................... 152,822
Payable to Advisor ...................................... 32,391
Put options written, at value
(Premiums received: $28,135) ....................... 12,031
Payable for distribution fees ........................... 2,911
Payable for Fund shares redeemed ........................ 35,582
Dividends payable ....................................... 20,245
Other accrued expenses .................................. 29,846
------------
Total Liabilities . ................................ 285,828
------------
Net assets (applicable to 1,568,738
shares outstanding) ................................ $ 15,573,505
============
Net asset value and redemption
price per share .................................. $ 9.93
============
Net Assets Consist of:
Capital Stock, at par value ............................. $ 1,569
Additional paid-in-capital .............................. 16,400,877
Accumulated net realized loss on
investments ........................................ (30,100)
Distributions in excess of net investment
income ............................................. (1,947)
Net unrealized depreciation on investments
and foreign currency transactions .................. (796,894)
------------
Net assets ......................................... $ 15,573,505
============
Statement of Operations -- For the Period
February 3, 1994 (Commencement of Operations)
through December 31, 1994 Assets:
================================================================================
Investment Income:
Interest .................................................... $ 265,126
Dividends (Net of foreign tax of $1,139) .................... 191,957
---------
Total Income ........................................... 457,083
---------
Expenses:
Investment advisory fee ..................................... 86,233
Transfer and shareholder servicing agent .................... 38,412
Distribution expenses ....................................... 21,569
Legal and audit fees ........................................ 17,000
Registration fees ........................................... 14,522
Printing and mailing ........................................ 11,415
Custodian fees and expenses ................................. 10,688
Amortization of organization expenses ....................... 10,200
Directors' fees and expenses ................................ 4,167
Miscellaneous ............................................... 1,020
---------
Total expenses ......................................... 215,226
---------
Investment income - net ..................................... 241,857
---------
Net Realized and Unrealized Loss on
Investments:
Net realized loss on investments ............................ (30,100)
Net change in unrealized depreciation ....................... (796,894)
---------
Net loss on investments ..................................... (826,994)
---------
Net decrease in net assets resulting from
operations .................................................. $(585,137)
=========
Statement of Changes in Net Assets -- February 3, 1994 (Commencement of
Operations) through December 31, 1994
================================================================================
Increase in Net Assets:
Investment income - net ..................................... $ 241,857
Net realized loss on investments ............................ (30,100)
Change in unrealized depreciation - net ..................... (796,894)
------------
Net decrease in net assets resulting from operations ..... (585,137)
------------
Distributions from net investment income .................... (241,857)
Distributions in excess of net investment income ............ (1,947)
------------
(243,804)
------------
Share transactions - net .................................... 16,402,446
------------
Net increase in net assets ................................ 15,573,505
Net Assets:
Beginning of period ......................................... --
------------
End of period ............................................... $ 15,573,505
============
The accompaying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements
================================================================================
1. Significant Accounting Policies. The Gabelli Global Convertible Securities
Fund (the "Fund") is a series of Gabelli Global Series Funds, Inc. (the
"Corporation"), incorporated in Maryland on July 16, 1993. The Fund is a
no-load, open-end, non-diversified management investment company and one of five
separately managed portfolios of the Corporation. The Fund commenced investment
operations on February 3, 1994. The following is a summary of significant
accounting policies followed by the Fund.
Security Valuation. Portfolio securities listed or traded on the New York or
American Stock Exchanges, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") or traded on foreign exchanges are
valued at the last sale price on that exchange (if there were no sales that day,
the security is valued at the average of the bid and asked prices). All other
portfolio securities for which over-the-counter market quotations are readily
available are valued at the latest average of the bid and asked prices. When
market quotations are not readily available, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Corporation's Directors. Short-term debt
securities with remaining maturities of 60 days or less are valued at amortized
cost, unless the Directors determine such does not reflect the securities' fair
value, in which case these securities will be valued at their fair value as
determined by the Directors. Options are valued at the last sale price on the
exchange on which they are listed, unless no sales of such options have taken
place that day, in which case they will be valued at the mean between their
closing bid and asked prices.
Foreign Currency Transactions. The books and records of the Fund are maintained
in U.S. dollars as follows:
(i) market value of investment securities and other assets and liabilities are
recorded at the exchange rate on the valuation date.
(ii) purchases and sales of investment securities, income and expenses are
recorded at the exchange rate prevailing on the respective date of such
transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Forward Foreign Currency Contracts. The Fund may hold currencies to meet
settlement requirements for foreign securities and may engage in currency
exchange transactions to hedge against changes in exchange rates. Forward
foreign currency contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded by the Fund as an
unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
currency contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts.
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Continued)
================================================================================
At December 31, 1994, the Fund had sold short the following forward currency
contracts:
<TABLE>
<CAPTION>
Settlement Unrealized
Amount/Currency Dates Value Gain/(Loss)
--------------- ---------- ------- ----------
<S> <C> <C> <C>
47,417,500 Japenese Yen 11/30/95 and 12/1/95 $ 499,522 $ 478
319,963 British Pound 11/30/95 and 12/1/95 499,784 216
1,333,625 French Franc 11/30/95 251,409 (1,409)
1,211,750 Finnish Mark 11/30/95 257,646 (7,646)
---------- --------
$1,508,361 $(8,361)
========== =======
</TABLE>
Security Transactions and Investment Income. Security transactions are accounted
for on the dates the securities are purchased or sold (the trade dates), with
realized gain and loss on investments determined by using specific
identification as the cost method. Interest income (including amortization of
premium and discount) is recorded as earned. Dividend income and dividend and
capital gain distributions to shareholders are recorded on the ex-dividend date.
Federal Income Taxes. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of Internal Revenue Code of 1986 and distribute all
of its taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging to 30%. Such withholding
taxes may be reduced or eliminated under the terms of applicable U.S. income tax
treaties, and the Fund intends to undertake any procedural steps required to
claim the benefits of such treaties. If more than 50% in value of the Fund's
total assets at the close of any taxable year consists of stocks or securities
of non-U.S. corporations, the Fund is permitted and may elect to treat any
non-U.S. taxes paid by it as paid by its shareholders.
2. Capital Stock Transactions. The Articles of Incorporation, dated July 16,
1993, permit the Fund to issue 200,000,000 shares (par value $ 0.001).
Transactions in shares of common stock were as follows:
February 3, 1994
(commencement of operations)
through December 31, 1994
---------------------------
Shares Amount
------- ------
Shares sold .................................... 1,854,279 $ 19,389,838
Shares issued upon reinvestment of dividends ... 22,513 223,559
Shares redeemed ................................ (308,054) (3,210,951)
--------- ------------
Ending balance ................................. 1,568,738 $ 16,402,446
========= ============
3. Purchases and Sales of Securities. Purchases and sales of securities for the
period ended December 31, 1994, other than U.S. government obligations and
short-term securities, aggregated $32,728,893 and $20,101,249 respectively.
Futures Contracts. The Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Such investments will only be made
if they are, in the opinion of management, economically appropriate to the
reduction of risks involved in the management of the Fund. Upon entering into a
futures contract, the Fund is required to deposit with the broker an amount of
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Continued)
================================================================================
cash or cash equivalents equal to a certain percentage of the contract amount.
This is known as the "initial margin." Subsequent payments ("variation margin")
are made or received by the Fund each day, depending on the daily fluctuation of
the value of the contract. The daily changes in the contract are recorded as
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed. The net unrealized appreciation/depreciation is shown in the
financial statements.
At December 31, 1994 the Fund had the following positions open:
<TABLE>
<CAPTION>
Number Market Appreciation/
of Contracts Value (Depreciation)
- ------------ ------ -------------
<S> <C> <C> <C> <C>
Held Long
25 March 102 Strike Gilt Future Puts .................................. $ 39,112 $ 8,917
10 March '95 3 month Treasury Bills Future ............................ 2,336,000 (875)
---------- --------
$2,375,112 $ 8,042
========== ========
Sold Short
(25) March 101 Strike Gilt Future Puts .................................. $ 28,723 $ (6,882)
(10) March '95 90 Day Eurodollars Future ................................ 2,319,250 1,625
---------- --------
$2,347,973 $ (5,257)
========== ========
</TABLE>
Options. The Fund may purchase or write call or put options on securities or
indices. During 1994, the Fund utilized put options to hedge the value of the
Fund's portfolio. As a writer of put options, the Fund receives a premium at the
outset and then bears the market risk of unfavorable changes in the price of the
financial instrument underlying the option. The Fund would incur a loss if the
price of the underlying financial instrument decreases between the date the
option is written and the date on which the option is terminated. The Fund would
realize a gain, to the extent of the premiums, if the price of the financial
instrument increases between those dates.
Transactions in written put options for the period ended December 31, 1994:
Number
of Contracts Premium
------------ --------
Options written ............................. 420 $ 104,435
Options closed .............................. (290) (47,823)
Options expired ............................. (50) (23,008)
Options exercised ........................... (10) (5,469)
----- ---------
Options outstanding at December 31, 1994..... 70 $ 28,135
===== =========
As a purchaser of put options, The Fund pays a premium for the right to sell to
the seller of the put option the underlying security at a specified price. The
seller of the put has the obligation to purchase the underlying security upon
exercise at the exercise price.
Transactions in purchased put options for the period ended December 31, 1994:
Number
of Contracts Premium
------------ --------
Options purchased ........................... 410 $ 199,284
Options closed .............................. (270) (77,585)
Options expired ............................. (30) (34,873)
Options exercised ........................... (20) (20,777)
----- ---------
Options outstanding at December 31, 1994 .... 90 $ 66,049
===== =========
<PAGE>
Repurchase Agreements. The Fund may enter into repurchase agreements with
government securities dealers recognized by the Federal Reserve Board, with
member banks of the Federal Reserve System or with other brokers or dealers that
meet the credit guidelines established by the Directors. The Fund will always
receive and maintain securities as collateral whose market value, including
accrued interest, will be at least equal to 100% of the dollar amount invested
by the Fund in each agreement, and the Fund will make payment for such
securities only upon physical delivery or upon evidence of book entry transfer,
of the collateral to the account of the custodian. To the extent that any
repurchase transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to maintain the adequacy of the collateral. If
the seller defaults and the value of the collateral declines, or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
4. Investment Advisory Contract. The Fund employs Gabelli Funds, Inc. (the
"Advisor") to provide a continuous investment program for the Fund's portfolio,
provide all facilities and personnel, including officers, required for its
administrative management, and pay the compensation of all officers and
Directors of the Fund who are affiliated with the Advisor. As compensation for
the services rendered and related expenses borne by the Advisor, the Fund pays
the Advisor a fee, computed and accrued daily and payable monthly, equal to
1.00% per annum of the Fund's average daily net assets. The Advisor is obligated
to reimburse the Fund in the event the Fund's expenses exceed the most
restrictive expense ratio limitation imposed by any state, currently believed to
be 2.5% of the first $30 million of the Fund's average daily net assets
(excluding taxes, interest, distribution expenses and extraordinary items). No
such reimbursement was required during 1994.
5. Organization Expenses. The organization expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.
6. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") under Section 12(b) of the Investment Company Act of 1940 and
Rule 12b-1 thereunder. For the period ended December 31, 1994, the Fund has
incurred distribution costs of $21,569 or 0.25% of average net assets, the
annual limitation under the Plan, payable to Gabelli & Company, Inc., an
affiliate of the Advisor. The Board of Directors has approved that Distribution
costs incurred by Gabelli & Company, Inc., totalling $226,044 which are in
excess of the .25% limitation may be recovered from the Fund in future periods,
subject to such limitation.
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout the period
February 3, 1994 (Commencement of Operations) through December 31, 1994:
Operating Performance:
Net asset value, beginning of period ........................ $ 10.00
-------
Net investment income ....................................... 0.16
Net realized and unrealized loss on securities .............. (0.07)
-------
Total from investment operations ............................ 0.09
Less Distributions:
Dividends from net investment income ........................ (0.16)
-------
Net asset value, end of period ................................ $ 9.93
=======
Total Return ................................................ 0.90%
Ratios to average net assets/supplemental data:
Net assets, end of period (in thousands) .................... $15,574
Ratio of operating expenses to average net assets ........... 2.49%*
Ratio of net investment income to average net assets ........ 2.80%*
Portfolio turnover rate ..................................... 328.70%
- ----------
* Annualized
<PAGE>
The Gabelli Global Convertible Securities Fund
Report of Grant Thornton LLP, Independent Auditors
================================================================================
Shareholders and Board of Directors
The Gabelli Global Convertible Securities Fund
We have audited the accompanying statement of assets and liabilities of The
Gabelli Global Convertible Securities Fund (one of the series constituting
Gabelli Global Series Funds, Inc.), including the portfolio of investments as of
December 31, 1994, and the related statements of operations, changes in net
assets and financial highlights for the period from February 3, 1994
(commencement of operations) through December 31, 1994. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material aspects, the financial position of The
Gabelli Global Convertible Securities Fund of Gabelli Global Series Funds, Inc.
at December 31, 1994, the results of its operations, the changes in its net
assets and the financial highlights for the period indicated above, in
conformity with generally accepted accounting principles.
/s/ Grant Thornton LLP
New York, New York
February 5, 1995
- --------------------------------------------------------------------------------
1994 TAX NOTICE TO SHAREHOLDERS (UNAUDITED)
On December 30, 1994 the Fund paid to shareholders an ordinary income
dividend of $0.160 per share. For 1994, 27.3% of such ordinary income dividend
qualifies for the dividend received deduction available to corporations.
U.S. Government Income:
The percentage of the ordinary income dividend paid by the Fund during 1994
which was derived from U.S. Treasury securities was 26.14%. Such income is
exempt from state and local income tax in most states. However, many states,
including New York and California, allow a tax exemption for a portion of the
income earned only if a mutual fund has invested at least 50% of its assets at
the end of each quarter of the Fund's fiscal year in U.S. Government securities.
The Gabelli Global Convertible Securities Fund did not meet this strict
requirement in 1994.
- --------------------------------------------------------------------------------
<PAGE>
The Gabelli Global Convertible Securities Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
Board of Directors
Mario J. Gabelli, CFA
Chairman and Chief
Investment Officer
Gabelli Funds, Inc.
Felix J. Christiana
Former Senior
Vice President
Dollar Dry Dock Savings Bank
Anthony J. Colavita
Attorney-at-Law
Anthony J. Colavita, P.C.
John D. Gabelli
Vice President
Gabelli & Company, Inc.
Karl Otto Pohl
Former President
Deutsche Bundesbank
Werner J. Roeder, MD
Director of Surgery
Lawrence Hospital
Anthonie C. van Ekris
Managing Director
BALMAC International, Inc.
Officers
Mario J. Gabelli, CFA
President
J. Hamilton Crawford, Jr.
Secretary
A. Hartswell Woodson, III
Vice President-
Portfolio Manager
Bruce N. Alpert
Vice President
and Treasurer
Distributor
Gabelli & Company, Inc.
Custodian, Transfer Agent and Dividend Agent
State Street Bank and Trust Company
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
Independent Auditors
Grant Thornton LLP
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This report is submitted for the general information of the shareholders of The
Gabelli Global Convertible Securities Fund. It is not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
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