[PHOTO OMITTED]
The
Gabelli
Global
Convertible
Securities
Fund
SEMI-ANNUAL REPORT
JUNE 30, 1998
<PAGE>
[GRAPHIC OMITTED]
Gabelli Global Series Funds, Inc.
The Gabelli Global
Convertible Securities Fund
Semi-Annual Report - June 30, 1998
[PHOTO OMITTED]
Hart Woodson
To Our Shareholders,
On a regional basis, North American and European markets provided solid
returns while Japan and Southeast Asia lagged behind over the first half of
1998. We anticipate that interest rates will likely remain low or even fall as
world economic growth slows going forward. Global convertible securities offer
an attractive investment with less volatility in such an environment.
Investment Performance
For the second quarter ended June 30, 1998, The Gabelli Global Convertible
Securities Fund's net asset value declined 0.7%. The UBS Global Convertible
Index, Merrill Lynch Global Bond Index and Morgan Stanley Capital International
World Free Index of global equity markets had returns of (1.1)%, 2.1% and 0.8%,
respectively, over the same period. Each index is an unmanaged indicator of
investment performance. Year-to-date, the Fund returned 10.3% versus returns of
7.9%, 3.2% and 14.8% for the UBS Global Convertible Index, Merrill Lynch Global
Bond Index and Morgan Stanley Capital International World Free Index,
respectively.
The Fund was up 5.2% over the trailing twelve month period. The UBS Global
Convertible Index, Merrill Lynch Global Bond Index and Morgan Stanley Capital
International World Free Index rose 2.7%, 6.2% and 13.7%, respectively, over the
same twelve month period. Since inception on February 3, 1994 through June 30,
1998, the Fund had a total return of 36.0%, which equates to an average annual
return of 7.2%.
Our Investment Objective
The Fund's objective is to obtain a high rate of total return by investing
in global convertible securities. We expect to achieve a competitive rate of
return by investing primarily in coupon paying convertible securities which meet
our selective investment criteria.
<PAGE>
INVESTMENT RESULTS (a)
- --------------------------------------------------------------------------------
Quarter
------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
1998: Net Asset Value .. $10.43 $10.36 -- -- --
Total Return ..... 11.1% (0.7)% -- -- --
- --------------------------------------------------------------------------------
1997: Net Asset Value .. $10.27 $10.98 $11.15 $ 9.39 $ 9.39
Total Return ..... 0.9% 6.9% 1.5% (6.1)% 2.8%
- --------------------------------------------------------------------------------
1996: Net Asset Value .. $11.34 $11.55 $11.41 $10.18 $10.18
Total Return ..... 5.1% 1.9% (1.2)% (0.3)% 5.5%
- --------------------------------------------------------------------------------
1995: Net Asset Value .. $10.09 $10.64 $11.05 $10.79 $10.79
Total Return ..... 1.6% 5.5% 3.9% 1.2% 12.6%
- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------
- --------------------------------------------------
Average Annual Returns -- June 30, 1998 (a)
-------------------------------------------
1 Year............................ 5.2%
3 Year............................ 7.9%
Life of Fund (b).................. 7.2%
- --------------------------------------------------
Dividend History
- --------------------------------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
December 30, 1997 $1.070 $ 9.33
December 31, 1996 $1.200 $10.18
December 29, 1995 $0.393 $10.79
December 30, 1994 $0.160 $ 9.93
(a) Total returns and average annual returns reflect changes in share price and
reinvestment of dividends and are net of expenses. The net asset value of the
Fund is reduced on the ex-dividend (payment) date by the amount of the dividend
paid. Of course, returns represent past performance and do 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. Note:
Investing in foreign securities involves risks not ordinarily associated with
investments in domestic issues, including currency fluctuation, economic and
political risks.
- --------------------------------------------------------------------------------
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 increase
in industrial demand.
2
<PAGE>
Global Allocation
The accompanying chart represents the Fund's holdings by geographic region
as of June 30, 1998. 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.
Holdings By Geographic Region -- 6/30/98
[THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Europe 43.8%
United States 39.2%
Asia/Pacific Rim 7.2%
Japan 6.6%
Latin America 2.8%
South Africa 0.4%
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. They can be thought of as a straight bond together with an embedded
call option (or warrant) on the underlying equity.
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, in which investors are 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.
COMMENTARY
Global View -- Europe
European equity markets are outperforming their global counterparts,
advancing 6.2% in the second quarter and 27.2% year-to-date. Greece, Finland and
Belgium led the way, followed by a 15.7% rise in Germany that reflects renewed
optimism of economic recovery. Norway and Denmark lagged, falling 8.8% and 4.6%,
respectively, as weak commodity prices took their toll.
Interest rates in continental Europe remain low. As European Monetary
Union approaches in January 1999, the debate over where short term interest
rates will converge continues. It is anticipated that the newly created European
Central Bank will set rates at the lower end of expectations matching German
rates of 3.50%. This would allow further room for interest rate cuts in
countries like Italy, Spain and Portugal of up to 1.25% by year end. Lower
interest rates should benefit financial assets in these
3
<PAGE>
countries where the Fund has 15% of its assets invested. European economic
growth, relative insulation from the Asian crisis, a strong dollar and reduced
input costs have helped to stimulate earnings growth. The markets have also been
bolstered by an increasing flow of liquidity into mutual funds. For example,
Italian mutual fund flows through May 1998 totaled over 100 billion dollars
versus only 80 billion dollars in 1997. Finally, merger and acquisition activity
like Daimler-Benz/Chrysler and Volkswagen/Rolls Royce continues to underscore
the global rationalization process which is driving equity prices higher.
United States
Economic growth exceeded all expectations in the first quarter as Gross
Domestic Product (GDP) rose by 5.4%. However, much of this gain was due to a
record buildup in business inventories which rose by 106 billion dollars versus
the previous quarter. The accumulation in inventories is the result of the
strong dollar and weak demand in Asia which hurts U.S. exports. The U.S. trade
deficit totaled 35 billion dollars in the first quarter, up 24% from the year
ago period. With existing inventories needing to be worked off, second quarter
GDP growth is expected to slow to about 2.0%. Meanwhile, inflation remains in
check and consumer confidence is high. The price index for gross domestic
purchases grew at a scant 0.1% annual rate in the first quarter, the smallest
increase since 1954. Personal consumer spending, which accounts for two-thirds
of the nation's output, grew by 6.0%, the fastest pace since 1992.
With the Federal Reserve leaving interest rates unchanged for the tenth
consecutive session and consumer confidence high, the leisure, media and home
building sectors flourished. Portfolio holdings in Home Depot, Cablevision and
Time Warner all gained over 20% in the second quarter. Weak commodity prices,
including a twelve year low in the price of oil, caused oil service stocks like
Diamond Offshore to underperform. Overall, we remain positive about the U.S.
market which rose 3.3% in the quarter and 17.7% during the first half as
measured by the Standard and Poor's (S&P) 500 Index. Strong liquidity flows into
mutual funds, which increased 16.2% from last year's total, and the continuation
of "merger mania" bode well for U.S. financial assets.
Asia
The Japanese economy officially fell into recession during the first
quarter of 1998 as Gross National Product (GNP) fell by 1.5%, posting its second
consecutive quarterly decline. Disinflationary pressures continue to build,
while the unemployment rate reached a new post war high at 4.1%. Business and
consumer confidence remains low. Trade with the rest of Asia has fallen sharply.
Japanese imports from the rest of Asia dropped by 27% year over year in May.
Despite recent efforts by the U.S. to stabilize the yen, the currency
remains under pressure. Swift action is needed to resolve the banking crisis and
stimulate the economy. The government's efforts to establish a "bridge bank"
system, which would allow for an orderly liquidation of non-performing loans,
has been delayed by the forthcoming Upper House elections. Japan's failure to
act has far reaching consequences throughout Asia. Hong Kong's Hang Seng index
declined 25.8% in the quarter and speculation mounts that the Chinese will be
forced to devalue the yuan precipitating another leg down in the crisis.
4
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Asset Allocation
The negative macroeconomic environment in Asia explains the Fund's
underweight position in the region. In fact, as the situation in Japan
deteriorated in the second quarter, the Fund reduced its exposure to the region
from 20% to 11%. Although we see value in certain company specific situations,
we will await tangible policy initiatives in Japan before increasing our
exposure. However, our optimistic view on Europe and the U.S. is reflected in
the portfolio's nearly double overweight position in Europe (44% versus 25%) and
overweight position in the U.S. (39% versus 29%). Low inflation and benign
interest rates make convertible securities an attractive alternative for risk
adverse investors who seek equity participation with less volatility.
Let's Talk Converts
The following are specifics on selected holdings of our Fund. Favorable
earnings prospects do not necessarily translate into higher prices, but they do
express a positive trend which we believe will develop over time. The share
prices of foreign holdings are stated in U.S. dollar equivalent terms as of June
30, 1998.
AES Corp. (AES.T - $78.00 - NYSE) is the world's leading global power company
with 100 power plants that serve 13 million customers in 17 countries. Revenue
in 1997 totaled $1.4 billion: 24% was generated in North America; 41% in Latin
America; 23% in Asia; and 12% in Europe. As an independent power producer (IPP),
AES has strengthened its position in Southeast Asia, particularly in China and
Pakistan, while launching a new $120-140 million investment initiative in
Bangladesh. Consistent competitive performance in the U.S., Argentine and
Brazilian markets has resulted in 30% expected earnings per share growth in
1998. Currently, AES has $110 billion in backlog sales and is well positioned to
grow internationally and further improve its market share.
Selling at $78.00 with the stock at $54, the convertible preferred offers
upside participation with only an 8% premium and a 3.4% yield advantage over the
common stock.
AirTouch Communications Inc. (ATI.C - $82.50 - NYSE) is a wireless carrier with
holdings in the U.S. and eleven other countries including Italy, Portugal, Spain
and Sweden. The company specializes in providing cellular and paging services to
customers throughout the world. In April, the purchase of the cellular assets of
MediaOne (previously US West Media) boosted cellular subscribers by 55% making
AirTouch the largest cellular provider in the U.S. Additional domestic
investments in PrimeCo PCS helped to propel ATI's 48% EBITDA (earnings before
interest, taxes, depreciation and amortization) margins which are among the
highest in the industry. International growth continues to flourish for the
company as well. Mannesman Mobilfunk, ATI's 35%-owned operation in Germany,
added over 400,000 subscribers in April and May alone, an increase which
contributed over 200,000 proportionate subscribers to AirTouch in the quarter.
With a low premium of 4.15%, this convertible preferred shows nearly full
participation in the equity. Trading at $82.50, this preferred has a yield
advantage of 2.5% and is callable in August 2000.
Loral Space and Communications Ltd. (LOR.A - $75.75 - NYSE) has built an
extensive global satellite communications network that operates in satellite
design and construction, high speed satellite services, global Internet access,
mobile telephony and multimedia delivery. Capitalizing on the significant growth
5
<PAGE>
potential in satellite services, Loral is actively developing its
bandwidth-on-demand systems such as the new CyberStar system. The purchase of
Mexican SatMex and a joint venture with the EuropeStar satellite systems coupled
with aggressive acquisitions to increase capacity and secure entry to high
return, value-added markets compliment the company's service focus. Loral's 1998
expected EBITDA is $126 million, up over 60% from 1997. CEO Bernard Schwartz
expects rapid growth in 1998 and an EBITDA near $1 billion in 2000.
Deep in the money, this convertible preferred trades on a 9% premium with
a current yield of 3.9% versus no dividend on the common stock.
NTL Inc. (Sub. Deb. Cv. 7.00%, 06/15/08) is a large alternative
telecommunications and cable company based in New York that owns and operates
one of only five independent telecom networks in the United Kingdom. NTL bought
two British cable companies, Diamond Cable Communications and Comtel during the
first quarter of 1998. These acquisitions put 5.2 million households or 25% of
the U.K. population under NTL's cable telephone franchise, placing NTL at the
forefront of the British telecommunications industry. The addition of these two
companies increased quarterly revenues from $590 million to $984 million, while
EBITDA nearly doubled, rising from $55 million to $104 million.
With expected breakeven at 0.72 years, this in the money convertible bond
has a current yield advantage of 4.75% and a modest premium of 4%. June 1999
marks its call date.
Scandinavian Broadcasting System SA (Sub. Deb. Cv. 7.25%, 08/01/05) owns and
operates commercial television and radio broadcast stations throughout northern
Europe and anticipates net revenue of $325 million in 1998. Collaboration with
the Home Shopping Network (HSN) allowed for the recent HSN-SBS Italia venture,
which is broadcast via the Rete Mia network to 70% of Italian households. With
the award of the first license for Hungary's newly private national television
network, SBS is enjoying the success of Hungarian TV2 and its 32.5% share in
prime time viewing. Continuing in its development phase, SBS should realize
positive cash flow in 1998 and an enterprise value of $743 million in 1999. CEO
Harry Evans Sloan shows close ties to shareholder interests by his 13% ownership
interest. His strategic management has been further enhanced by the expertise of
Vice Chairman Michael Finkelstein, the former CEO of Renaissance Communications
Corp.
With the bonds at $112, SBS's 7.25% convertible bond due in August 2005
offers an attractive current yield of 6.5%. The common stock pays no dividend.
The premium is low at 6% reflecting that the bond is callable in August 1998.
Telefonica de Espana (Sub. Deb. Cv. 2.00%, 07/15/02) is the leading
telecommunications operator in the Spanish speaking world with 35.5 million
customers in Latin America and Spain. Latin America has become a key source of
revenue for the company with nearly a third of its $15.6 billion in consolidated
revenue coming from its investments in the region. Recently, Telefonica paid
$1.2 billion to gain control over the Brazilian-based CRT (Cia. Riograndense de
Telecomunicacoes SA) as an initial step to expand into the promising Brazilian
market.
The $525 million 2.00% convertible bond due in July 2002 is highly liquid
and participates fully in the equity's movements with only a 2% premium. Rated
AA- by Standard and Poor's, this convertible provides a solid alternative to the
common stock.
6
<PAGE>
Minimum Initial Investment - $1,000
The Fund's minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent investment minimums. No initial
minimum is required for those establishing an Automatic Investment Plan.
Additionally, The Gabelli Global Convertible Securities Fund and other Gabelli
Funds are available through the no-transaction fee programs at many major
discount brokerage firms.
In Conclusion
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
business day for further information.
Investing in foreign equity markets can be rewarding but volatile. As we await a
recovery in Japan and the rest of Asia, global convertible securities offer a
risk adverse way to participate in foreign markets. We thank you for your
loyalty and will continue striving to provide competitive risk-adjusted returns.
Sincerely,
/s/ Hart Woodson
A. Hartswell Woodson, III
Portfolio Manager
August 1, 1998
- --------------------------------------------------------------------------------
Top Ten Holdings
June 30, 1998
-------------
Telefonica Europe BV Houston Industries Inc./Time Warner Inc.
Cablevision Systems Corp. Alcatel Alsthom SA
United News & Media plc Loral Space and Communications Ltd.
International CableTel Inc. AES Corp.
Home Depot Inc. Hamburgische Landesbank/Veba
- --------------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period of this report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
7
<PAGE>
The Gabelli Global Convertible Securities Fund
Portfolio of Investments -- June 30, 1998 (Unaudited)
================================================================================
Principal Market
Amount Cost Value
------ ---- -----
CONVERTIBLE CORPORATE BONDS -- 61.1%
Automotive -- 2.3%
$ 100,000 Volkswagen International
Finance Sub. Deb. Cv.
3.00%, 01/24/02 ................ $ 112,094 $ 184,500
---------- ----------
Broadcasting-- 5.4%
1,000,000(b) Canal + / Mediaset Sub. Deb. Cv.
3.50%, 04/01/02 185,453 223,287
200,000 Scandinavian Broadcasting
System SA Sub. Deb. Cv.
7.25%, 08/01/05 ................ 208,834 217,500
---------- ----------
394,287 440,787
---------- ----------
Building and Construction -- 1.1%
250,000 Bacnotan Consolidated
Industries Inc. Sub. Deb. Cv.
5.50%, 06/21/04 ................ 243,900 93,750
---------- ----------
Business Services -- 1.3%
100,000 Interim Services Inc.
Sub. Deb. Cv.
4.50%, 06/01/05 ................ 100,000 104,375
---------- ----------
Cable -- 3.7%
200,000 International CableTel Inc.
Sub. Deb. Cv.
7.00%, 06/15/08 ................ 245,956 299,000
---------- ----------
Consumer Products -- 7.6%
150,000 Central Garden and Pet Co.
Sub. Deb. Cv.
6.00%, 11/15/03 (a) ............ 150,000 191,250
150,000 Nestle Holdings Inc.
3.00%, 06/17/02 ................ 170,811 210,375
20,000,000(c) Sony Corp. Sub. Deb. Cv.
1.40%, 03/31/05 ................ 195,755 221,205
---------- ----------
516,566 622,830
---------- ----------
Diversified Industrial -- 2.2%
20,000,000(c) Matsushita Electric Works Ltd.
Sub. Deb. Cv.
2.70%, 05/31/02 ................ 230,798 183,017
---------- ----------
Energy -- 6.9%
125,000 Diamond Offshore Drilling Inc.
Sub. Deb. Cv.
3.75%, 02/15/07 ................ 181,770 145,000
200,000 Hamburgische Landesbank /
Veba Sub. Deb. Cv.
3.25%, 05/08/02 ................ 226,207 232,000
100,000(d) National Grid Co. plc
4.25%, 02/17/08 (a) ............ 165,530 188,124
---------- ----------
573,507 565,124
---------- ----------
Equipment and Supplies -- 1.4%
100,000 Antec Corp. Sub. Deb. Cv.
4.50%, 05/15/03 ................ 100,000 116,000
---------- ----------
Financial Services -- 2.3%
150,000 Cregem Finance NV
Sub. Deb. Cv.
2.75%, 01/06/04 ................ 167,672 188,250
---------- ----------
Food and Beverage -- 4.4%
400,000 Moevenpick Finance Ltd. Cv.
0.0%, 02/11/13 ................. 182,453 168,418
150,000 Parmalat Finance Corp.
Sub. Deb. Cv.
1.00%, 12/31/05 ................ 213,072 189,390
---------- ----------
395,525 357,808
---------- ----------
Health Care -- 1.9%
100,000 Sandoz Capital Novartis
Sub. Deb. Cv.
2.00%, 10/06/02 ................ 122,491 158,500
---------- ----------
Publishing -- 6.1%
250,000 Medya Holding Sub. Deb. Cv.
10.00%, 06/28/01 ............... 249,672 198,750
150,000(d) United News & Media plc
Sub. Deb. Cv.
6.125%, 12/03/03 ............... 252,296 301,581
---------- ----------
501,968 500,331
---------- ----------
Retail -- 5.3%
100,000 Federated Department Stores
Inc. Sub. Deb. Cv.
5.00%, 10/01/03 ................ 100,000 160,375
145,000 Home Depot Inc.
Sub. Deb. Cv.
3.25%, 10/01/01 ................ 182,449 270,788
---------- ----------
282,449 431,163
---------- ----------
Telecommunications -- 4.6%
250,000 Telefoncia Europe BV
Sub. Deb. Cv.
2.00%, 07/15/02 ................ 267,049 379,375
---------- ----------
Transportation -- 2.2%
207,000 International Container Terminal
Services Sub. Deb. Cv.
1.75%, 03/13/04 ................ 195,713 177,503
---------- ----------
Wireless Communications -- 2.4%
175,000 Swiss Life / Mannesmann AG
Sub. Deb. Cv.
1.50%, 05/20/03 (a) ............ 202,903 199,261
---------- ----------
TOTAL CONVERTIBLE
CORPORATE BONDS ................ 4,652,878 5,001,574
---------- ----------
Shares
------
CONVERTIBLE PREFERRED STOCKS -- 28.2%
Automotive -- 1.0%
150,000 Quingling Motors Co. Ltd.
3.50% Cv. Pfd. ................. 144,283 78,750
---------- ----------
Cable -- 7.4%
5,500 Cablevision Systems Corp.
8.50% Cv. Pfd., Ser. I ......... 153,275 351,656
3,500 Houston Industries Inc./
Time Warner Inc.
7.00% Cv. Pfd. ................. 190,050 260,750
---------- ----------
343,325 612,406
---------- ----------
See accompanying notes to financial statements.
8
<PAGE>
The Gabelli Global Convertible Securities Fund
Portfolio of Investments (Continued) -- June 30, 1998 (Unaudited)
================================================================================
Principal Market
Amount Cost Value
------ ---- -----
CONVERTIBLE PREFERRED STOCKS (Continued)
Consumer Services -- 2.2%
4,800 Cendant Corp.
7.50% Cv. Pfd. ................. $ 230,078 $ 179,400
---------- ----------
Energy -- 4.9%
3,000 AES Trust Corp.
5.375% Cv. Pfd. ................ 183,900 234,000
4,000 EVI Inc. 5.00% Cv. Pfd. (a) ...... 200,000 170,000
---------- ----------
383,900 404,000
---------- ----------
Financial Services -- 2.6%
2,000 Banco Comercial Portugues
SA 8.00% Cv. Pfd. .............. 102,100 212,000
---------- ----------
Telecommunications -- 4.7%
4,000 Nortel Inversora SA
10.00% Cv. Pfd. ................ 168,000 216,500
3,000 Winstar Communications
7.00% Cv. Pfd. (a) ............. 150,000 165,375
---------- ----------
318,000 381,875
---------- ----------
Wireless Communications -- 5.4%
2,500 AirTouch Communications Inc.
4.25% Cv. Pfd., Cl. C .......... 149,188 206,250
3,100 Loral Space and Communications
Ltd. 6.00% Cv. ................. 240,249 234,825
---------- ----------
389,437 441,075
---------- ----------
TOTAL CONVERTIBLE
PREFERRED STOCKS ............... 1,911,123 2,309,506
---------- ----------
COMMON STOCKS -- 6.4%
Aviation: Parts and Services -- 1.0%
10,000 Jamco Corp. ...................... 109,901 81,421
---------- ----------
Equipment and Supplies -- 3.0%
1,200 Alcatel Alsthom SA+ .............. 181,276 248,494
---------- ----------
Food and Beverage -- 1.8%
12,592 Diageo plc ....................... 97,093 149,169
---------- ----------
Metals and Mining -- 0.3%
10,000 Durban Roodepoort Deep Ltd.+ ..... 63,453 22,071
---------- ----------
Real Estate and Development -- 0.1%
19,700 Hemaraj Land Development Co.+ .... 98,215 2,794
135,000 Tanayong Co. Ltd.+ ............... 125,146 4,149
---------- ----------
223,361 6,943
---------- ----------
Wireless Communications -- 0.2%
13,000 Total Access Communications
plc+ ........................... 100,100 13,910
---------- ----------
TOTAL COMMON STOCKS.. ............ 775,184 522,008
---------- ----------
WARRANTS -- 0.5%
Diversified Industrial -- 0.4%
100 Mori Seiki+ ...................... 60,000 30,000
---------- ----------
Entertainment -- 0.0%
50 Shochiku Co. Ltd.+ ............... 53,125 2,500
---------- ----------
Metals and Mining -- 0.1%
15,000 Durban Roodepoort Deep Ltd.+ ..... 27,307 6,095
---------- ----------
TOTAL WARRANTS ................... 140,432 38,595
---------- ----------
TOTAL INVESTMENTS
-- 96.2% ........................ $7,479,617 $7,871,683
==========
Other Assets and
Liabilities (Net) -- 3.8% 313,664
----------
NET ASSETS -- 100.0%
(790,346 shares outstanding) 8,185,347
==========
NET ASSET VALUE,
Offering and Redemption
Price Per Share ................ $10.36
======
FORWARD FOREIGN EXCHANGE CONTRACTS
Net Unrealized
Expiration Appreciation/
Date (Depreciation)
---- --------------
2,045,375(e) Sold Hong Kong Dollars
in exchange for
USD 250,000 .................... 11/26/98 $ (9,850)
56,630,000(c) Sold Japanese Yen
in exchange for
USD 475,682 .................... 07/31/98 $57,928
- ----------
For Federal tax purposes:
Aggregate cost ................... $7,479,617
==========
Gross unrealized appreciation .... $1,363,202
Gross unrealized depreciation .... (971,136)
----------
Net unrealized appreciation ...... $ 392,066
==========
- ----------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At June 30,
1998, the market value of Rule 144A securities amounted to $914,010 or
11.2% of net assets.
(b) Principal amount denoted in French Francs.
(c) Principal amount denoted in Japanese Yen.
(d) Principal amount denoted in British Pounds.
(e) Principal amount denoted in Hong Kong Dollars.
+ Non-income producing security.
% of
Market Market
Geographic Diversification Value Value
- -------------------------- ----- -----
Europe 43.8% $3,450,224
North America 39.2% 3,089,044
Asia/Pacific Rim 7.2% 569,606
Japan 6.6% 518,143
Latin America 2.8% 216,500
South Africa 0.4% 28,166
----- ----------
100.0% $7,871,683
===== ==========
See accompanying notes to financial statements.
9
<PAGE>
The Gabelli Global Convertible Securities Fund
Statement of Assets and Liabilities
June 30, 1998 (Unaudited)
================================================================================
Assets:
Investments, at value (Cost $7,479,617) .................. $7,871,683
Foreign currency, at value (Cost $359,973) ............... 358,994
Dividends and interest receivable ........................ 45,283
Receivable for capital shares sold ....................... 24,318
Deferred organizational expenses ......................... 7,640
Net unrealized appreciation on forward
foreign exchange contracts ............................. 48,078
----------
Total Assets ........................................... $8,355,996
----------
Liabilities:
Payable for investment advisory fees ..................... 6,720
Payable for distribution fees ............................ 1,673
Payable to custodian ..................................... 127,827
Other accrued expenses ................................... 34,429
----------
Total Liabilities ...................................... 170,649
----------
Net Assets applicable to 790,346
shares outstanding ................................... $8,185,347
==========
Net Assets consist of:
Capital stock, at par value .............................. $ 790
Additional paid-in capital ............................... 7,644,693
Accumulated net investment loss .......................... (44,998)
Accumulated net realized gain on investments
and foreign currency transactions ...................... 145,517
Net unrealized appreciation on investments
and foreign currency transactions ...................... 439,345
----------
Total Net Assets ....................................... $8,185,347
==========
Net Asset Value, offering and redemption
price per share ($8,185,347/790,346
shares outstanding; 1,000,000,000
shares authorized of $0.001 par value) ............... $10.36
======
Statement of Operations
For the Six Months Ended June 30, 1998
(Unaudited)
================================================================================
Investment Income:
Dividends ................................................ $ 66,442
Interest ................................................. 17,555
--------
Total Investment Income ................................ 83,997
--------
Expenses:
Investment advisory fees ................................. 44,171
Distribution fees ........................................ 11,043
Shareholder services fees ................................ 11,040
Legal and audit fees ..................................... 9,398
Shareholder report expenses .............................. 8,271
Registration fees ........................................ 6,880
Organizational expenses .................................. 6,460
Miscellaneous expenses ................................... 8,752
--------
Total Expenses ......................................... 106,015
--------
Net Investment Loss .................................... (22,018)
--------
Net Realized and Unrealized Gain
on Investments:
Net realized gain on investments and
foreign currency transactions .......................... 145,517
Net change in unrealized appreciation
on investments and foreign currency
transactions ........................................... 766,225
--------
Net realized and unrealized gain
on investments and foreign currency
transactions ........................................... 911,742
--------
Net increase in net assets resulting
from operations .......................................... $889,724
========
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31,
(Unaudited) 1997
---------------- ------------
<S> <C> <C>
Operations:
Net investment income (loss) ...................................... $ (22,018) $ 130,370
Net realized gain on investments and foreign currency transactions 145,517 815,188
Net change in unrealized appreciation (depreciation) on investments
and foreign currency transactions ............................... 766,225 (554,352)
---------- -----------
Net increase in net assets resulting from operations ............ 889,724 391,206
---------- -----------
Distributions to shareholders:
Net investment income ............................................. -- (125,474)
In excess of net investment income ................................ -- (815,188)
In excess of net realized gain on investments ..................... -- (27,877)
---------- -----------
Total distributions to shareholders ............................. -- (968,539)
---------- -----------
Capital share transactions:
Net decrease in net assets from capital transactions .............. (2,079,039) (3,574,685)
---------- -----------
Net decrease in net assets ...................................... (1,189,315) (4,152,018)
Net Assets:
Beginning of period ............................................... 9,374,662 13,526,680
---------- -----------
End of period...................................................... $8,185,347 $ 9,374,662
========== ===========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Unaudited)
================================================================================
1. Description. The Gabelli Global Convertible Securities Fund (the "Fund") is a
series of Gabelli Global Series Funds, Inc. (the "Corporation"), which was
incorporated in Maryland on July 16, 1993. The Fund is a non-diversified,
open-end management investment company and one of four separately managed
portfolios of the Corporation registered under the Investment Company Act of
1940, as amended (the "1940 Act"), whose primary objective is to obtain a high
rate of total return. The Fund commenced investment operations on February 3,
1994.
2. Significant Accounting Policies. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Security Valuation. Portfolio securities listed or traded on a nationally
recognized securities exchange, 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 as of the close of business on
the day the securities are being valued (if there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day). 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. Portfolio securities traded on more
than one national securities exchange or market are valued according to the
broadest and most representative market, as determined by the Adviser. 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 Board of 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. Debt instruments having a greater maturity are
valued at the highest bid price obtained from a dealer maintaining an active
market in those securities. Options are valued at the last sale price on the
exchange on which they are listed. If no sales of such options have taken place
that day, they will be valued at the mean between their closing bid and asked
prices.
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 credit guidelines established by the Directors. Under the terms of a
typical repurchase agreement, the Fund takes possession of an underlying debt
obligation subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Fund's holding period. 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. 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
11
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Unaudited)
================================================================================
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.
Options. The Fund may purchase or write call or put options on securities or
indices. As a writer of put options, the Fund receives a premium at the outset
and then bears the 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 premium, if the price of the financial instrument
increases between those dates.
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. If the price of the underlying security
declines, the Fund would realize a gain upon sale or exercise. If the price of
the underlying security increases, the Fund would realize a loss upon sale or at
the expiration date, but only to the extent of the premium paid.
During the six months ended June 30, 1998, the Fund utilized put options to
hedge the value of the Fund's portfolio. Transactions in options for the six
months ended June 30, 1998:
<TABLE>
<CAPTION>
Written Put Options Purchased Put Options
------------------- ---------------------
Number of Number of
Contracts Premium Contracts Premium
--------- ------- --------- --------
<S> <C> <C> <C> <C>
Options outstanding at January 1, 1998 ..... 0 $ 0 0 $ 0
Options opened ............................. 90 57,730 210 215,550
Options closed ............................. (40) (42,880) (140) (162,840)
Options expired ............................ (50) (14,850) (70) (52,710)
--- ------- ---- --------
Options outstanding at June 30, 1998 ....... 0 $ 0 0 $ 0
=== ======== ==== =========
</TABLE>
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. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin". Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the contract are included in
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed. At June 30, 1998, there were no open futures contracts.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of future contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
12
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Unaudited)
================================================================================
Forward Foreign Exchange Contracts. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments. 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 exchange 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
exchange 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.
Foreign Currency Translation. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
Securities Transactions and Investment Income. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
For the year ended December 31, 1997, reclassifications were made to increase
distributions in excess of net investment income for $201,509 and accumulated
net realized loss on investments and foreign currency transactions for $89,891
with an offsetting adjustment to additional paid-in-capital.
13
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Unaudited)
================================================================================
Provision for Income Taxes. The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. As a result, a Federal income tax provision is
not 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 up 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 the value of more than 50%
of the Fund's total net 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.
3. Investment Advisory Agreement. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of the Fund's average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs and pays the compensation of all
Officers and Directors of the Fund who are its affiliates.
4. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the six months
ended June 30, 1998 the Fund incurred distribution costs payable to Gabelli &
Company, Inc., an indirect wholly-owned subsidiary of the Adviser, of $11,043,
or 0.25% of average net assets, the annual limitation under the Plan. Such
payments are accrued daily and paid monthly.
5. Organizational Expenses. The organizational expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.
6. Portfolio Securities. Purchases and sales of securities for the six months
ended June 30, 1998, other than short term securities, aggregated $3,449,619 and
$5,722,956, respectively.
7. Bank Loan. The Fund has access to an unsecured line of credit from the
custodian for temporary purposes. Borrowings under this arrangement bear
interest at 0.75% above the Federal Funds rate on outstanding balances. There
were no borrowings outstanding at June 30, 1998.
8. Capital Stock Transactions. Transactions in shares of capital stock were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31, 1997
------------- -----------------
Shares Amount Shares Amount
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold ................................ 432,929 $ 4,479,938 139,305 $ 1,573,440
Shares issued upon reinvestment of dividends -- -- 103,239 904,417
Shares redeemed ............................ (640,751) (6,558,977) (573,320) (6,052,542)
-------- ----------- -------- -----------
Net (decrease) ........................... (207,802) $(2,079,039) (330,776) $(3,574,685)
======== =========== ======== ===========
</TABLE>
14
<PAGE>
The Gabelli Global Convertible Securities Fund
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30, 1998 -------------------------------------------------
(Unaudited) 1997 1996 1995 1994+
------------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of period ............ $ 9.39 $10.18 $10.79 $ 9.93 $10.00
------- ------ ------- ------- -------
Net investment income (loss) .................... (0.02) 0.11 0.43 0.39 0.16
Net realized and unrealized gain (loss)
on investments ................................ 0.99 0.17 0.16 0.86 (0.07)
------- ------ ------- ------- -------
Total from investment operations ................ 0.97 0.28 0.59 1.25 0.09
------- ------ ------- ------- -------
Distributions to shareholders:
Net investment income ........................... -- (0.14) (0.43) (0.16)
Net realized gain on investments ................ -- (0.90) (0.77) -- --
In excess of net realized gain
on investments ................................ -- (0.03) -- -- --
------- ------ ------- ------- -------
Total distributions ............................. -- (1.07) (1.20) (0.39) (0.16)
------- ------ ------- ------- -------
Net asset value, end of period .................. $10.36 $ 9.39 $10.18 $10.79 $ 9.93
======= ====== ======= ======= =======
Total return++ .................................. 10.3% 2.8% 5.5% 12.6% 0.9%
Ratios to average net assets and supplemental data:
Net assets, end of period (in 000's) $8,185 $9,375 $13,527 $15,742 $15,574
Ratio of net investment income
to average net assets............ (0.50)%(a) 1.17% 2.00% 2.90% 2.80%(a)
Ratio of operating expenses
to average net assets............ 2.40%(a) 2.48%(b) 2.35% 2.41% 2.49%(a)
Portfolio turnover rate.......... 39% 100% 126% 152% 329%
</TABLE>
- ----------
+ From commencement of operations on February 3, 1994.
++ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends. Total return for the period of less
than one year is not annualized.
(a) Annualized.
(b) The ratio of operating expenses to average net assets for the year ended
December 31, 1997 does not include a reduction of expenses for custodian fee
credits. Including such credits, the ratio would have been 2.47%.
See accompanying notes to financial statements.
15
<PAGE>
Gabelli Global Series Funds, Inc.
The Gabelli Global Convertible Securities Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
fax: 1-914-921-5118
http://www.gabelli.com
e-mail: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
Board of Directors
Mario J. Gabelli, CFA Karl Otto Pohl
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Funds, Inc.
Felix J. Christiana Werner J. Roeder, MD
Former Senior Vice President Director of Surgery
Dollar Dry Dock Savings Bank Lawrence Hospital
Anthony J. Colavita Anthonie C. van Ekris
Attorney-at-Law Managing DIrector
Anthony J. Colavita, P.C. BALMAC International, Inc.
John D. Gabelli
Vice President
Gabelli & Company, Inc.
Officers and Portfolio Managers
Mario J. Gabelli, CFA A. Hartswell Woodson, III
President and Chief Vice President and
Investment Officer Portfolio Manager
Bruce N. Alpert James E. McKee
Vice President and Secretary
Treasurer
Distributor
Gabelli & Company, Inc.
Custodian, Transfer Agent and Dividend Agent
State Street Bank and Trust Company
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
