[GRAPHIC OMITTED]
The
Gabelli
Global
Convertible
Securities
Fund
ANNUAL REPORT
DECEMBER 31, 1997
<PAGE>
Gabelli Global Series Funds, Inc.
The Gabelli Global
Convertible Securities Fund
Annual Report - December 31, 1997
[PHOTO OMITTED]
Hart Woodson
To Our Shareholders,
During the fourth quarter, the currency crisis originating in Thailand
spread across Asia impacting capital markets worldwide. Equity markets fell and
credit spreads widened. Even the United States was hit when the fear of a
collapse of the Hong Kong dollar peg sent the Dow Jones Industrial Average
(DJIA) tumbling 554 points on October 27, 1997. At year end, the crisis had not
yet been contained despite the International Monetary Fund (IMF) initiatives. We
anticipate that the liquidity crisis in Asia will be resolved, but that world
economic growth will slow. Consequently, interest rates are likely to remain low
or even fall. Global convertible securities offer an attractive investment in
such an environment. Lower interest rates
<TABLE>
<CAPTION>
INVESTMENT RESULTS (a)
- -------------------------------------------------------------------------------------------------------------------
Quarter
-----------------------------------------------
1st 2nd 3rd 4th Year
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
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)
- -------------------------------------------------------------------------------------------------------------------
Dividend History
---------------------------------------------------------
Average Annual Returns - December 31, 1997(a) Payment (ex) Date Rate Per Share Reinvestment Price
--------------------------------------------- ----------------- -------------- ------------------
1 Year...................................... 2.8% December 30, 1997 $1.070 $ 9.33
3 Year...................................... 6.9% December 31, 1996 $1.200 $10.18
Life of Fund (b)............................ 5.5% 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.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
GABELLI GLOBAL CONVERTIBLE SECURITIES FUND, THE LIPPER
CONVERTIBLE SECURITIES FUND AVERAGE AND THE UBS GLOBAL
CONVERTIBLE INDEX
[The following table was depicted as a line graph in the printed material]
Gabelli Global Convertible Lipper Convertible UBS Global
Securities Fund* Securities Fund Average Convertible Index
-------------------------- ----------------------- -----------------
2/3/94 10000 10000 10000
12/31/94 10090 9324 9709
12/31/95 11360 11262 11146
12/31/96 11900 12940 11883
12/31/97 12236 15219 12058
- ----------
* Past Performance is not predictive of future performance.
will bolster bond values while higher current yield will reduce volatility.
Stock selection remains foremost, as we continue to uncover attractive
investment opportunities on a global basis.
Investment Performance
The net asset value of the Gabelli Global Convertible Securities Fund
declined by 6.1% in the fourth quarter ended December 31, 1997. 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 (6.2)%,
1.0% and (3.3)%, respectively, over the same period. Each index is an unmanaged
indicator of investment performance. The Fund was up 2.8% for 1997. The UBS
Global Convertible Index, Merrill Lynch Global Bond Index and Morgan Stanley
Capital International World Free Index rose 1.5%, 3.1% and 15.0%, respectively,
over the same twelve month period. Since inception on February 3, 1994 through
December 31, 1997, the Fund has a total return of 23.2%, which equates to an
average annual return of 5.5%.
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.
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
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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
commodi ties, it is the increase in industrial demand.
Global Allocation
The accompanying chart represents the Fund's holdings by geographic region
as of December 31, 1997. The geographic allocation will change based on current
global market con ditions. 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 was depicted as a pie chart in the printed material]
HOLDINGS BY GEOGRAPHIC REGION - 12/31/97
Europe 25.7%
Asia/Pacific Rim 15.3%
Japan 9.7%
Latin America 4.8%
United States 44.3%
Other 0.2%
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.
World View and the Year Ahead
The U.S. stock market, as measured by the Standard & Poor's (S&P) 500
Index, rose 2.9% in the fourth quarter and 33.4% for 1997. The economy remained
firm with low inflation. Third quarter Gross Domestic Product (GDP) rose at an
annual rate of 3.3% versus 3.6% in the second quarter. Fourth quarter growth is
expected to moderate to 2.7%, while the Asian crisis is anticipated to reduce
1998 growth to roughly 2%. Inflation was benign with the Producer Price Index
falling 1.2% in 1997, the largest annual drop since 1986, after rising 2.8% in
1996. Commodity prices fell with gold reaching an 18 year low at USD 278 per
ounce. Bond prices benefited with the yield on the thirty year U.S. Treasury
falling 47 basis points during the quarter to 5.92 percent.
Due to the relatively favorable outlook in the U.S., we have increased our
weighting in the region from 33.6% to 44.3%. A neutral weighting would be 28.9%.
We believe lower interest rates will raise the disposable income of home owners
who refinance their mortgages and boost consumer spending. This in turn will
benefit the retail, leisure and housing sectors. Companies in our portfolio
which offer value in this area include Federated Department Stores, Cablevision
and Home Depot.
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Our Latin American exposure is contained in Argentina and Mexico, which
fell 16.4% and 5.2% in the fourth quarter but gained 28.3% and 52.4% for the
year, respectively. The Fund is overweighted in the region with 4.8% of total
assets versus a neutral weighting of 1.8%. We are encouraged by attractive
company valuations and strong economic fundamentals in these countries. However,
we continue to closely monitor macroeconomic events in Brazil which has received
a wake-up call from Asia.
Equity markets in Asia (ex-Japan) were the worst performing during the
fourth quarter, falling more than 30%. The South Korean market fell 67% in U.S.
dollar terms as the nation's debt was downgraded to junk status and the threat
of default loomed. We have concentrated our investments in those countries with
the strongest macroeconomic fundamentals such as China and Taiwan. Despite the
situation in Asia, China continues to be one of the fastest growing economies in
the world. GDP is expected to grow at over nine percent in 1997 with a trade
surplus of USD 40 billion and foreign exchange reserves of USD 142 billion. We
favor cash rich companies with strong balance sheets and stable earnings like
New World Infrastructure and Shanghai Industrial Holdings. Although we do not
expect the Hong Kong dollar peg to break, the risk remains. As a precaution, we
have hedged a portion of our currency exposure. We also seek high yielding
convertible securities of more leveraged companies whose earnings are
diversified and are the beneficiaries of the events in Asia, such as Filipino
port operator International Container Terminal Services. The neutral weighting
in this region is 5.1%. The Fund remains overweight at 15.3% but has reduced its
commitment from 22.3% during the third quarter.
The Nikkei 225 fell 21.3% during the quarter and 30.2% for 1997 in U.S.
dollar terms. Japan continues to suffer from a poor economy and weak banking
system. The quarter witnessed several high profile financial failures including
Yamaichi Securities and Hokkaido Takushoku Bank, the nation's tenth largest
bank. Measures are now being taken to stimulate demand (i.e. reduce taxes) and
support the financial sector. Until a pick-up in domestic demand becomes more
visible, we continue to favor exporters like Sony, which gained 35% during the
year despite a 13% decline in the yen. We remain bearish on the yen and continue
to hedge our currency exposure through the sale of forward contracts. We remain
underweighted in Japan at 10% versus a neutral weight of 42.9%.
Europe performed well in the fourth quarter, especially in the
"peripheral" markets where interest rates have been falling toward a central
"core" rate in preparation for European monetary union. Spain and Italy rose
2.6% and 5.1% during the quarter and 47.3% and 36.9% for 1997, respectively.
This provides a favorable environment for our investments in Telefonica de
Espana and Mediaset. We continue to find value in companies which are making
efforts to restructure their balance sheets and add shareholder value such
United News & Media and Veba. We maintain our weighting in Europe at 25.7%
versus a neutral weighting 21.3%.
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
December 31, 1997.
AirTouch Communications Inc. (ATI.C - $62.3125 - NYSE) provides wireless
communications services in cellular, paging and PCS (personal communications
services). ATI has operations in the U.S., Europe and Asia. The company also has
interests in Globalstar, Qualcomm and Mannesmann Arcor. Over the next three
years, we expect operating cash flow from the international properties to grow
at an
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impressive 36% versus only 7% from the domestic cellular business. Currently
trading at about nine times 1998 estimated operating cash flow, we think the
stock is too cheap. Our target price for year end 1998 is USD 47 based on a cash
flow multiple of just over 12 times.
The AirTouch 4.25 percent convertible preferred stock (series C) is a new
addition to the portfolio and gained 8.7% during the quarter. With the stock at
USD 41.5625, the convertible preferred was priced at USD 62.3125 on an 8.7%
premium and a current yield of 3.4%. The preferred is rated BBB by S&P and is
not callable until August 2000. The common stock pays no dividend.
Cablevision Systems Corp. (CVC. - $38.50 - AMEX) owns and operates cable
television systems clustered mainly in Boston, Cleveland and metropolitan New
York. The company's subsidiary, Rainbow Media Holdings, produces entertainment,
sports and news programming. Other assets include the Madison Square Garden
properties. Cablevision reported solid third quarter results. Over the previous
year, revenues grew 11% to USD 518 million and EBITDA rose 16% to USD 171
million. Growth was driven by both a three percent increase in subscribers as
well as a gain in revenues per subscriber. CVC plans to spend about USD 500
million in 1998 to further upgrade its systems. Meanwhile, leverage will be
reduced to 6.5 times EBITDA as the company continues to sell non-strategic cable
systems to reduce debt.
The CVC 8.50% convertible preferred was the best performing security in
our portfolio last quarter with a gain of 33.4%. With the common stock at USD
95.75, the preferred trades at USD 38.50 on an 8.5% premium and 5.5% yield. The
preferred is BB- rated by S&P and enjoys hard call protection until November
1999. The common stock pays no dividend.
Canal + (Sub. Deb. Cv. 3.50%, 04/01/02), the French media company, monitized its
interest in Mediaset earlier this year by issuing a 3.50% French franc
denominated convertible bond due in April 2002 exchangeable into Mediaset common
stock at a price of IL 8,500. With the stock at IL 8,742, the bonds sold at
108.8% on a 7% premium and 3.3% current yield. The bonds are not callable until
April 2001.
Mediaset (MS.MI - $4.94 - Milan Stock Exchange) is the leading commercial
television group in Italy. Its operations include three national television
stations (Canale 5, Italia 1 and Retequattro) which achieved an aggregate daily
audience share of 42.5% and over 60% of TV advertising revenues last year.
During the first half of 1997, net profits rose 17.9% on a strong gain in
advertising revenues. The company's strong cash flow should permit further
investments in the European media sector and/or a share buyback.
Hamburgische Landesbank (Sub. Deb. Cv. 3.25%, 05/08/02) is exchangeable into
Veba common stock at a price of DM 111.6. With the stock at DM 122.3, the bonds
trade at USD 116% on an 11% premium and a 2.8% current yield. The bonds are not
callable until May 2000.
Veba AG (VEBG.F - $68.12 - Frankfurt Stock Exchange) is Germany's lowest cost
energy producer, supplying the country with one-fifth of its electricity needs.
The company is also involved in chemicals, oil, trading, transportation and
telecommunications. Through its 40% stake in O. TEL O., Veba owns stakes in
Iridium, the satellite communications project, and E-Plus Mobilfunk, a digital
wireless phone network. Other telecom assets include investments in Bouygues
Telecom, the third largest French mobile operator; Cablecom, the Swiss cable TV
company; and a 10% holding in UK-based Cable & Wireless. Veba is a classic
example of the restructuring efforts taking place in Europe today where return
on investment and shareholder value are being emphasized.
The Home Depot Inc. (3.25%, 10/01/01) sells building materials and home
improvement products through 589 stores in 40 states and four Canadian
provinces. The company recently launched an operation in Chile, which it plans
to use as a springboard in Latin America. Third quarter results were
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strong with sales up 26% to USD 6.2 billion and net earnings up 35% to USD 299
million. Growth was due to an increase in customer transactions and size per
ticket. The stock has demonstrated consistent stable earnings growth and is a
beneficiary of the ongoing consolidation in the USD 360 billion home improvement
market.
The 3.25 percent convertible bonds due in October 2001 were also a new
addition to the portfolio and rose 9.4% during the quarter. With the stock at
USD 58.875, the bonds were priced at 135.3125% on a 6% premium and a 2.4%
current yield versus a 0.3% yield on the common stock. The bonds are rated A+ by
S&P and are not callable until October 1999.
International Container Terminal Services (ICTSI)(Sub. Deb. Cv. 1.75%, 03/13/04)
is a Philippines-based container cargo handling operator which handles 60% of
the container traffic at the Port of Manila. ICTSI also has terminal operation
businesses in Argentina and Mexico and is building terminals in Pakistan and
Saudi Arabia. The economic downturn in the Philippines will depress trade volume
in 1998, but this will be partially offset by rate hikes and earnings from
foreign subsidiaries. The company's debt to equity ratio stands at 90% with
interest rate coverage at 1.4 times.
The ICTSI 1.75% convertible bonds due in March 2004 were trading at 72
with the stock at five pesos. With the conversion price at PP 11.91, the bonds
are far out of the money (i.e. busted) and thus trade like a straight bond on
over a 150% premium and an 18.2% yield to their March 2002 put price of 135.75.
We believe this is a compelling yield for a company with the diversity and
financial strength to withstand the current economic storm in Asia.
Shanghai Industrial Holdings (SIHL) (1.00%, 06/12/02) is 65.1% owned by Shanghai
Industrial Investment (Holdings) Company Ltd (SIIC), which is the Shanghai
municipal government's wholly-owned window company in Hong Kong. Consumer
products (i.e. cigarettes, cosmetics and pharmaceuticals) account for 38% of
earnings followed by infrastructure projects (36%) and automotive parts (24%).
At year end, SIIC was selling at about 14 times earnings which have been growing
at over 40%. The balance sheet is strong with 60% gearing and 3.5 times interest
coverage.
The 1.00% SIIC bonds due in June 2002 are convertible into SIHL at a price
of HKD 54.12. With the stock at HKD 28.875 the bonds traded at 96.5% on an 84%
premium. The bonds enjoy a premium redemption at a price of 138.57 at maturity.
The yield to maturity was 9.1%.
United News & Media plc (Sub. Deb. Cv. 6.125%, 12/03/03) is a UK-based media and
information group. The group's four main activities include consumer publishing
(newspapers and advertising periodicals), broadcasting and entertainment (ITV
and Channel 5), financial services and business services. Business services is
the largest contributor to group profits with subsidiary Miller Freeman being
the world's largest trade-show organizer. On the broadcasting side, we expect
United to be the greatest beneficiary of the upcoming ITV license renewal
process, which could save the company STG 59 million in 1999.
The United News & Media 6.125% sterling denominated convertible bonds due
in December 2003 traded at 103.5% with the stock at 693 pence. This represents a
well balanced bond on a 20% premium and 5.9% current yield. The bond enjoys call
protection until December 2001.
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.
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Internet
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Funds, Inc., the
Gabelli Mutual Funds, IRAs, 401(k)s, quarterly reports, closing prices and other
current news. You can send us e-mail at [email protected]. In Conclusion
In the year ahead, we believe solid economic growth and benign interest
rates in the U.S. and Europe will prove to be a favorable environment for
convertible investors. As we await a recovery in Japan and the rest of Asia,
convertibles offer a more defensive entry point than common stocks. In Latin
America, our convertible investments dampen the regions volatility. We thank you
for your confidence in our convertible selection process. We will strive to
preserve the assets you have entrusted to us and to provide competitive
risk-adjusted returns. We wish you a happy, healthy, and prosperous 1998.
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.
Sincerely,
A. Hartswell Woodson, III
Portfolio Manager
February 1, 1998
- --------------------------------------------------------------------------------
Top Ten Holdings
December 31, 1997
-----------------
Nortel Inversora SA Globalstar Telecommunications
Fixana Hamburgische Landesbank/Veba
Telefonica Europa BV Sony Corp.
United News & Media plc Triathlon Broadcasting Co.
Tecnomatix Technologies Ltd. Banco Comercial Portugues
- --------------------------------------------------------------------------------
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.
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The Gabelli Global Convertible Securities Fund
Portfolio of Investments -- December 31, 1997
================================================================================
Principal Market
Amount Cost Value
------ ---- -----
CONVERTIBLE CORPORATE BONDS -- 67.6%
AUTOMOTIVE -- 4.8%
$ 200,000 Mahindra and Mahindra Ltd.
Sub. Deb. Cv. .................... $ 200,274 $ 192,000
5.00%, 07/09/01
150,000 Qingling Motors Co. Ltd.
Sub. Deb. Cv. .................... 143,558 135,375
3.50%, 01/22/02
100,000 Volkswagen International Finance
Cv. 3.00%, 01/24/02................ 121,713 118,000
---------- ----------
465,545 445,375
---------- ----------
BROADCASTING -- 4.0%
1,000,000(b) Canal+ Sub. Deb. Cv.
3.50%, 04/01/02.................... 187,036 179,459
200,000 Scandinavian Broadcasting
System SA Sub. Deb. Cv.
7.25%, 08/01/05 .................. 210,080 201,000
---------- ----------
397,116 380,459
---------- ----------
BUILDING and CONSTRUCTION -- 2.7%
250,000 Bacnotan Consolidated
Industries Inc. Sub. Dev. Cv.
5.50%, 06/21/04 .................. 243,484 156,250
100,000 New World Infrastructure Ltd.
Sub. Deb. Cv.
5.00%, 07/15/01.................... 100,000 98,000
---------- ----------
343,484 254,250
---------- ----------
BUSINESS SERVICES -- 1.8%
125,000 Cendant Corp. Sub. Deb. Cv.
4.75%, 03/01/03.................... 152,891 166,750
---------- ----------
CABLE -- 2.1%
200,000 International CableTel Inc.
Sub. Deb. Cv.
7.25%, 04/15/05 (d)................ 202,660 197,000
---------- ----------
COMPUTER SOFTWARE and SERVICES -- 2.7%
250,000 Technomatix Technologies Cv.
5.25%, 08/15/04 (d)................ 253,041 248,750
---------- ----------
CONSUMER PRODUCTS -- 9.8%
150,000 Central Garden and Pet Co. Cv.
6.00%, 11/15/03 (d)................ 150,000 172,125
100,000 Grand Metropolitan plc Cv.
6.50%, 01/31/00.................... 110,938 132,000
20,000,000(a) Matsushita Electric
Industrial Co. Ltd.
Sub. Deb. Cv.
1.30%, 03/29/02.................... 224,655 192,277
200,000 Shanghai Investment Holdings
1.00%, 06/12/02 (d)................ 220,826 194,500
20,000,000(a) Sony Corp. Sub. Deb. Cv.
1.40%, 03/31/05.................... 198,232 228,423
---------- ----------
904,651 919,325
---------- ----------
DIVERSIFIED INDUSTRIAL -- 7.1%
90,000 Alfa SA de CV Sub. Deb. Cv.
8.00%, 09/15/00 ................... 137,595 129,150
20,000,000(a) Matsushita Electric Works Ltd.
Sub. Deb. Cv.
2.70%, 05/31/02 .................. 233,159 204,581
20,000,000(a) Mitsui and Co. Ltd. Sub. Deb. Cv.
1.50%, 03/31/03.................... 212,156 175,356
150,000 U.S. Filter Corp. Cv.
4.50%, 12/15/01 ................... 150,000 155,250
---------- ----------
732,910 664,337
---------- ----------
ELECTRONICS -- 1.0%
100,000 Siliconware Precision
Industries Co. Cv.
0.50%, 07/21/04 (d) ............... 100,000 97,750
---------- ----------
ENERGY -- 6.5%
125,000 Diamond Offshore Drilling Inc. Cv.
3.75%, 02/15/07 ................... 185,239 166,875
200,000 Hamburgische Landesbank
Sub. Deb. Cv.
3.25%, 05/08/02.................... 229,591 229,500
150,000 Harken Energy Corp. Cv.
5.50%, 06/11/02 ................... 174,606 211,500
---------- ----------
589,436 607,875
---------- ----------
ENTERTAINMENT -- 2.2%
200,000 Speedway Motorsports Inc. Cv.
5.75%, 09/30/03.................... 204,057 207,000
---------- ----------
EQUIPMENT and SUPPLIES -- 1.8%
816,000(b) Alcatel Alsthom SA Cv.
6.50%, 01/01/00.................... 162,791 165,921
---------- ----------
FINANCIAL SERVICES -- 3.0%
1,468,000(b) Fixana Sub. Deb. Cv.
3.00%, 01/01/01.................... 285,361 288,474
---------- ----------
HEALTH CARE -- 1.6%
100,000 Sandoz Capital Novartis Cv.
2.00%, 10/06/02.................... 125,293 154,000
---------- ----------
PUBLISHING -- 4.8%
250,000 Medya Holding Sub. Deb. Cv.
10.00%, 06/28/01................... 249,626 190,000
150,000(c) United News & Media plc
Sub. Deb. Cv.
6.125%, 12/03/03................... 252,499 260,385
---------- ----------
502,125 450,385
---------- ----------
RETAIL -- 3.5%
100,000 Federated Department Stores Inc.
Sub. Deb. Cv.
5.00%, 10/01/03.................... 100,000 136,000
145,000 Home Depot Inc. Cv.
3.25%, 10/01/01 .................. 188,616 194,300
---------- ----------
288,616 330,300
---------- ----------
TELECOMMUNICATIONS -- 2.9%
250,000 Telefonica Europe BV
Sub. Deb. Cv.
2.00%, 07/15/02 (d) ............... 269,143 268,125
---------- ----------
TRANSPORTATION -- 5.3%
100,000(c) British Airport Authority plc
Sub. Deb. Cv.
5.75%, 03/29/06.................... 153,760 175,441
150,000 Halter Marine Group Inc. Cv.
4.50%, 09/15/04 (d)................ 168,161 167,438
The accompanying notes are an integral part of the financial statements.
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The Gabelli Global Convertible Securities Fund
Portfolio of Investments (Continued) -- December 31, 1997
================================================================================
Principal Market
Amount Cost Value
------ ---- -----
CONVERTIBLE CORPORATE BONDS (continued)
TRANSPORTATION (continued)
$ 207,000 International Container Terminal
Services Sub. Deb. Cv.
1.75%, 03/13/04 (d)................ $ 194,845 $ 153,180
---------- ----------
516,766 496,059
---------- ----------
TOTAL CONVERTIBLE
CORPORATE BONDS...................... 6,495,886 6,342,135
---------- ----------
Shares
------
CONVERTIBLE PREFERRED STOCKS -- 30.2%
BROADCASTING -- 3.4%
2,000 Granite Broadcasting Corp.
Cv. Pfd............................ 110,500 97,000
20,000 Triathlon Broadcasting Co.
Cv. Pfd............................ 210,000 225,000
---------- ----------
320,500 322,000
---------- ----------
BUILDING and CONSTRUCTION -- 1.3%
800 Case Corp. $4.50 Cv. Pfd., Cl. A .... 105,400 117,706
---------- ----------
CABLE -- 4.3%
5,500 Cablevision Systems Corp.
8.50% Cv. Pfd., Ser. I............ 153,275 211,750
3,500 Houston Industries Inc.
7.00% Cv. Pfd...................... 190,050 199,719
---------- ----------
343,325 411,469
---------- ----------
ENERGY -- 4.2%
3,000 AES Trust Corp. 5.375% Cv. Pfd. ..... 183,900 215,250
4,000 EVI Inc. Cv. Pfd.(d)................. 200,000 184,001
---------- ----------
383,900 399,251
---------- ----------
EQUIPMENT and SUPPLIES -- 2.7%
7,000 Cooper Industries Inc.
6.00% Cv. Pfd...................... 114,463 127,750
2,500 Timet Capital Trust $3.3125
Cv. Pfd............................ 137,188 123,750
---------- ----------
251,651 251,500
---------- ----------
FINANCIAL SERVICES -- 4.2%
3,000 Banco Comercial Portugues SA
8.00% Cv. Pfd...................... 153,150 222,750
5,000 WBK Strypes Trust
10.00% Cv. Pfd..................... 156,750 167,500
---------- ----------
309,900 390,250
---------- ----------
METALS and MINING -- 0.2%
10,000 Durban Roodepoort Deep Ltd.
8.00% Cv. Pfd. .................... 80,677 14,384
---------- ----------
PUBLISHING -- 2.3%
4,000 Golden Books Family
Entertainment Inc.
8.75% Cv. Pfd. (d)................. 214,000 212,000
---------- ----------
TELECOMMUNICATIONS -- 3.4%
5,000 Nortel Inversora SA Cv. Pfd. ........ 210,000 317,188
---------- ----------
WIRELESS COMMUNICATIONS -- 4.2%
2,500 AirTouch Communications Inc.
4.25% Cv. Pfd., Cl. C.............. 149,188 155,781
3,000 Globalstar Telecommunications
6.50% Cv. Pfd. (d)................. 150,000 242,250
---------- ----------
299,188 398,031
---------- ----------
TOTAL CONVERTIBLE
PREFERRED STOCKS..................... 2,518,541 2,833,779
---------- ----------
COMMON STOCKS -- 1.3%
AVIATION: PARTS and SERVICES -- 0.9%
10,000 Jamco Corp. ......................... 109,901 74,680
---------- ----------
REAL ESTATE and DEVELOPMENT -- 0.4%
19,700 Hemaraj Land Development Co. ........ 98,215 20,866
135,000 Tanayong Co. Ltd.+ .................. 125,146 17,384
---------- ----------
223,361 38,250
---------- ----------
WIRELESS COMMUNICATIONS -- 0.0%
13,000 Total Access Communications
plc (d)............................ 100,100 4,420
---------- ----------
TOTAL COMMON STOCKS 433,362 117,350
---------- ----------
WARRANTS -- 0.4%
DIVERSIFIED INDUSTRIAL -- 0.3%
100 Fujikura Ltd. Warrants+.............. 42,500 3,750
100 Mori Seiki Warrants+................. 60,000 12,500
---------- ----------
102,500 16,250
---------- ----------
ENERGY -- 0.1%
500 Cosmo Oil Co. Ltd. Warrants+ ........ 81,250 12,750
---------- ----------
ENTERTAINMENT -- 0.0%
50 Shochiku Co. Ltd. Warrants+ ......... 53,125 3,125
---------- ----------
METALS and MINING -- 0.0%
5,000 Durban Roodepoort Deep Ltd.+ ........ 10,084 2,826
---------- ----------
TOTAL WARRANTS....................... 246,959 34,951
---------- ----------
TOTAL INVESTMENTS --
99.5%.............................. $9,694,748 9,328,215
==========
Other Assets and Liabilities
(Net)-- 0.5%....................... 46,447
----------
NET ASSETS -- 100.0%
(998,148 shares outstanding) $9,374,662
==========
NET ASSET VALUE,
Offering and Redemption
Price Per Share.................... $9.39
=====
- ----------
For Federal income tax purposes:
Aggregate cost................................... $9,694,748
==========
Gross unrealized appreciation.................... 664,994
Gross unrealized depreciation.................... (1,031,526)
----------
Net unrealized appreciation...................... $ (366,532)
==========
- ----------
(a) Principal amount denoted in Japanese Yen.
(b) Principal amount denoted in French Francs.
(c) Principal amount denoted in British Pounds.
(d) 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 December
31, 1997, the market value of Rule 144A securities amounted to $2,141,539
or 22.8% of net assets.
+ Non-income producing security
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
The Gabelli Global Convertible Securities Fund
Statement of Assets and Liabilities
December 31, 1997
================================================================================
Assets:
Investments, at value (cost $9,694,748) ................ $ 9,328,215
Foreign cash, at value (cost $15,244) .................. 15,092
Dividends and interest receivable ...................... 100,160
Deferred organizational expenses ....................... 14,100
Other assets ........................................... 46,609
-----------
Total Assets ......................................... 9,504,176
-----------
Liabilities:
Payable to custodian ................................... 44,108
Payable for Fund shares redeemed ....................... 2,009
Payable for investment advisory fees ................... 8,049
Payable for distribution fees .......................... 6,292
Other accrued expenses ................................. 69,056
-----------
Total Liabilities .................................... 129,514
-----------
Net Assets (applicable to 998,148
shares outstanding) ................................ $ 9,374,662
===========
Net Asset Value, offering and
redemption price per share ......................... $ 9.39
===========
Net Assets consist of:
Capital stock, at par value ............................ $ 998
Additional paid-in capital ............................. 9,723,524
Distributions in excess of net
investment income .................................... (22,980)
Net unrealized depreciation on
investments and assets and liabilities
denominated in foreign currencies .................... (326,880)
-----------
Total Net Assets ..................................... $ 9,374,662
===========
Statement of Operations
For the Year Ended December 31, 1997
================================================================================
Investment Income:
Dividends (net of foreign taxes of $1,529) .................... $ 143,801
Interest ...................................................... 263,798
---------
Total Investment Income ..................................... 407,599
---------
Expenses:
Investment advisory fees ...................................... 111,722
Distribution fees ............................................. 28,273
Shareholder services fees ..................................... 36,196
Legal and audit fees .......................................... 33,950
Shareholder report expenses ................................... 17,846
Registration fees ............................................. 15,155
Amortization of organizational expenses ....................... 13,027
Interest expense .............................................. 1,951
Miscellaneous expenses ........................................ 20,864
---------
Total Expenses .............................................. 278,984
Custodian fee credit .......................................... (1,755)
---------
Total Net Expenses .......................................... 277,229
---------
Net Investment Income ............................................. 130,370
---------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized gain on investments
and foreign currency transactions ........................... 815,188
Net change in unrealized depreciation on
investments and assets and liabilities
denominated in foreign currencies ........................... (554,352)
---------
Net realized and unrealized gain on
investments and foreign currency
transactions ................................................ 260,836
---------
Net increase in net assets resulting from
operations .................................................... $ 391,206
=========
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Operations:
Net investment income ................................................. $ 130,370 $ 347,664
Net realized gain on investments and foreign currency transactions .... 815,188 1,105,102
Net change in unrealized (depreciation) on investments and assets
and liabilities denominated in foreign currencies ................... (554,352) (606,409)
------------ ------------
Net increase in net assets resulting from operations ................ 391,206 846,357
------------ ------------
Distributions to shareholders:
From net investment income ............................................ (125,474) (347,664)
From net realized gain on investments ................................. (815,188) (170,846)
In excess of net realized gain on investments ......................... (27,877) (928,495)
------------ ------------
Total distributions to shareholders ................................. (968,539) (1,447,005)
------------ ------------
Share transactions:
Net (decrease) in net assets from Fund share transactions ............. (3,574,685) (1,614,764)
------------ ------------
Net (decrease) in net assets ........................................ (4,152,018) (2,215,412)
Net Assets:
Beginning of period ................................................... 13,526,680 15,742,092
------------ ------------
End of period ......................................................... $ 9,374,662 $ 13,526,680
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements
================================================================================
1. Significant Accounting Policies. The Gabelli Global Convertible Securities
Fund (the "Fund"), a series of Gabelli Global Series Funds, Inc. (the
"Corporation"), was organized on July 16, 1993 as a Maryland corporation. The
Fund is a non-diversified, open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Act"), and one of
five separately managed portfolios of the Corporation, whose primary objective
is to obtain a high rate of total return. The Fund commenced operations on
February 3, 1994. 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 (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. 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 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 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 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 writer 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.
11
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Continued)
================================================================================
During the year ended December 31, 1997, the Fund utilized put options to hedge
the value of the Fund's portfolio. Transactions in options for the year ended
December 31, 1997:
<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, 1997 . 50 $ 58,598 50 $ 75,150
Options opened ......................... 220 200,214 310 349,285
Options closed ......................... (220) (200,214) (290) (328,725)
Options expired ........................ (50) (58,598) (70) (95,710)
--------- --------- --------- ---------
Options outstanding at December 31, 1997 0 $ 0 0 $ 0
========= ========= ========= =========
</TABLE>
Foreign Currency Translations. 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 fluctuations
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 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 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.
At December 31, 1997, the Fund had open positions in the following forward
foreign currency sale contracts:
<TABLE>
<CAPTION>
Amount/Currency Settlement Date Proceeds Value Unrealized Gain (Loss)
--------------- --------------- ------------ ------------ ----------------------
<S> <C> <C> <C> <C> <C>
456,050 German Marks 01/30/98 $ (264,316) $ (254,039) $ 10,277
2,045,375 Hong Kong Dollars 11/26/98 (250,000) (251,732) (1,732)
89,287,500 Japanese Yen 11/25/98 (750,000) (718,165) 31,835
------------ ------------ ------------
$ (1,264,316) $ (1,223,936) $ 40,380
============ ============ ============
</TABLE>
Securities Transactions and Investment Income. Securities transactions are
accounted for on the trade date, with realized gain or loss on the sale of
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.
12
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Continued)
================================================================================
As of December 31, 1997, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments made to additional
paid-in-capital:
Distributions in Excess of Accumulated Net Realized (Loss) on Investments
Net Investment Income and Foreign Currency Transactions
--------------------- ---------------------------------
$201,509 $(89,891)
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 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. 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
3. Organizational Expenses. The organizational expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.
4. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940. For the year ended December 31, 1997, the Fund incurred distribution costs
payable to Gabelli & Company, Inc., an indirect wholly-owned subsidiary of the
Adviser, of $28,273, or 0.25% of average net assets, the annual limitation under
the Plan.
5. Portfolio Securities. Purchases and sales of securities for the year ended
December 31, 1997, other than short term securities, aggregated $11,062,627 and
$14,823,928, respectively.
6. 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 December 31, 1997.
The average daily amount of borrowings outstanding during the year ended
December 31, 1997 was $274, with a related weighted average interest rate of
6.28%. The maximum amount borrowed at any time during the year ended December
31, 1997 was $100,000.
7. Capital Stock Transactions. Transactions in shares of common stock were as
follows:
<TABLE>
<CAPTION>
Year ended December 31, 1997 Year ended December 31, 1996
----------------------------- -----------------------------
Shares Amount Shares Amount
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold ................................ 139,305 $ 1,573,440 211,765 $ 2,394,898
Shares issued upon reinvestment of dividends 103,239 904,417 132,658 1,350,457
Shares redeemed ............................ (573,320) (6,052,542) (474,195) (5,360,119)
----------- ----------- ----------- -----------
Net (decrease) ........................... (330,776) $(3,574,685) (129,772) $(1,614,764)
=========== =========== =========== ===========
</TABLE>
13
<PAGE>
The Gabelli Global Convertible Securities Fund
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1997 1996 1995 1994+
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of period ... $ 10.18 $ 10.79 $ 9.93 $ 10.00
-------- -------- -------- --------
Net investment income .................. 0.11 0.43 0.39 0.16
Net realized and unrealized gain (loss)
on investments ....................... 0.17 0.16 0.86 (0.07)
-------- -------- -------- --------
Total from investment operations ....... 0.28 0.59 1.25 0.09
-------- -------- -------- --------
Distributions to shareholders:
From net investment income ............. (0.14) (0.43) (0.39) (0.16)
From 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 .............. $ 9.39 $ 10.18 $ 10.79 $ 9.93
======== ======== ======== ========
Total return(a) ........................ 2.8% 5.5% 12.6% 0.9%
======== ======== ======== ========
Ratios to average net assets and
supplemental data:
Net assets, end of period (in 000's) ... $ 9,375 $ 13,527 $ 15,742 $ 15,574
Ratio of net investment income to
average net assets ................... 1.17% 2.00% 2.90% 2.80%(c)
Ratio of operating expenses to
average net assets(b) ................ 2.48% 2.35% 2.41% 2.49%(c)
Portfolio turnover rate ................ 100% 126% 152% 329%
Average commission rate per share (d) .. $ 0.0083 $ 0.0175 -- --
</TABLE>
- ----------
+ From commencement of operations on February 3, 1994.
(a) 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.
(b) The Fund incurred interest expense during the year ended December 31,
1997. If interest expense had not been incurred, the ratio of operating
expenses to average net assets would have been 2.46%. In addition, the
ratio does not include a reduction of expenses for custodian fee credits.
Including such credits, the ratio would have been 2.47%.
(c) Annualized.
(d) For fiscal years beginning on or after September 1, 1995, the SEC requires
a fund to disclose its average commission rate paid per share.
14
<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,
including the portfolio of investments, of The Gabelli Global Convertible
Securities Fund (one of the Funds constituting Gabelli Global Series Funds,
Inc.) as of December 31, 1997, the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years in
the period then ended and financial highlights for each of the periods
presented. 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 audits 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, 1997 by correspondence with the custodian. 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 respects, the financial position of The
Gabelli Global Convertible Securities Fund of Gabelli Global Series Funds, Inc.
as of December 31, 1997, and the results of its operations, the changes in its
net assets and the financial highlights for the respective stated periods,
presented in conformity with generally accepted accounting principles.
New York, New York /s/ Grant Thornton LLP
February 26, 1998
- --------------------------------------------------------------------------------
1997 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the year ended December 31, 1997, the Fund paid to shareholders, on December
30, 1997, an ordinary income dividend (comprised of net investment income and
short-term capital gains) totaling $0.323 per share and long-term capital gains
totaling $0.747 per share. For the year ended December 31, 1997, 46.87% of the
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 1997
which was derived from U.S. Treasury securities was 0.55%. Such income is exempt
from state and local income tax in all 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 1997. Due to the diversity in state and local tax law, it is recommended that
you consult your personal tax advisor for the applicability of the information
provided as to your own situation.
- --------------------------------------------------------------------------------
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 accompa nied by an
effective prospectus.
- --------------------------------------------------------------------------------
