TCW convertible fund looks to broaden investment options in response to changed market

New York, July 12 - TCW Convertible Securities Fund, Inc. said it intends to expand its investment options in response to current market conditions.

The fund is looking to increase its ability to use leverage, broaden the range of securities it may buy and expand its ability to generate income through the use of call options.

The changes are intended to improve shareholder value and reduce the fund's discount to net asset value.

"Lower interest rates and the emergence of hedge funds have dramatically impacted the convertibles securities marketplace over the last several years," said Alvin R. Albe, Jr., president and chief executive officer of the fund, which trades under the symbol "CVT," in a news release.

"We currently find ourselves in a situation where the fund persistently trades at a discount to net asset value and a significant portion of the quarterly dividend is a return of capital.

"These initiatives give the board additional tools and reflect their determination to increase the yield on the portfolio, reduce the return of capital and reduce the fund's discount to net asset value."

The easing of the limitation on leverage will end the current restriction to 5% of the value of its assets and instead allow the maximum of 33 1/3% permitted under the Investment Company Act of 1940.

TCW Convertible Securities is also looking to broaden its investments to include dividend-paying equity securities, non-convertible debt securities including high-yield debt securities, mortgage-related securities and asset-backed securities.

At present, the fund's policies require it to put 65% of its assets into convertibles under normal market conditions and in line with a Securities and Exchange Commission rule the fund has a "non-fundamental investment policy" that raises the proportion to 80%.

Under the proposed change, the focus on convertibles will be eliminated. Instead, the fund will simply concentrate on delivering a "consistent income stream."

A meeting of shareholders to approve the change will be held on Sept. 29.

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