The Gabelli Convertible and Income Securities Fund Inc.
Schedule of Investments (Continued) — December 31, 2019
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Shares
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Cost
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Market
Value
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COMMON STOCKS (Continued)
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Food and Beverage — 0.5%
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6,000
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Maple Leaf Foods Inc.
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|
$
|
115,566
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|
|
$
|
119,580
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2,020
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Pernod Ricard SA
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170,831
|
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361,176
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1,500
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Remy Cointreau SA
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141,963
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184,240
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428,360
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664,996
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Health Care — 1.6%
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4,000
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Bristol-Myers Squibb Co.
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228,520
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256,760
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980,000
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Elite Pharmaceuticals Inc.†
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112,969
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90,650
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1,000
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Johnson & Johnson
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111,887
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145,870
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1,500
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Merck & Co. Inc.
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49,950
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136,425
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40,000
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Roche Holding AG, ADR
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913,791
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1,626,400
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1,417,117
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2,256,105
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Hotels and Gaming — 0.4%
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6,700
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Ryman Hospitality Properties Inc., REIT
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286,063
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580,622
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Retail — 0.3%
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800
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Costco Wholesale Corp.
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34,140
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235,136
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7,500
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Hertz Global Holdings Inc.†
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113,802
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118,125
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147,942
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353,261
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Telecommunications — 1.0%
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1,000
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Swisscom AG
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366,378
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529,655
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13,500
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Verizon Communications Inc.
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586,548
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828,900
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952,926
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1,358,555
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Transportation — 0.1%
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1,000
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GATX Corp.
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33,964
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82,850
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Wireless Communications — 1.3%
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22,566
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T-Mobile US Inc.†
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953,116
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1,769,626
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TOTAL COMMON STOCKS
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13,002,138
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22,210,346
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PREFERRED STOCKS — 0.0%
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Energy and Utilities — 0.0%
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699
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Bristow Group Inc., 10.00%
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25,423
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25,423
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Shares
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Cost
|
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Market
Value
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RIGHTS — 0.0%
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Health Care — 0.0%
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|
4,000
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|
|
Bristol-Myers Squibb Co., CVR†
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|
$ 9,200
|
|
$
|
12,040
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Principal
Amount
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U.S. GOVERNMENT OBLIGATIONS — 7.8%
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|
$11,120,000
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|
U.S. Treasury Bills,
1.487% to 1.640%††, 01/02/20 to 04/16/20
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|
11,092,324
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|
11,093,747
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|
TOTAL INVESTMENTS — 100.0%
|
|
$119,946,122
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|
141,818,086
|
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Other Assets and Liabilities (Net)
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|
28,634
|
|
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|
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|
PREFERRED STOCK
(350,000 preferred shares outstanding)
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|
(35,000,000
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)
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NET ASSETS — COMMON STOCK
(18,821,385 common shares outstanding)
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|
$
|
106,846,720
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NET ASSET VALUE PER COMMON SHARE
($106,846,720 ÷ 18,821,385 shares
outstanding)
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|
$
|
5.68
|
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|
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(a)
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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.
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(b)
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Mandatory convertible securities are required to be converted on the dates listed; they generally may be converted
prior to these dates at the option of the holder.
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(c)
|
Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.
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†
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Non-income producing security.
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|
††
|
Represents annualized yields at dates of purchase.
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ADR
|
American Depositary Receipt
|
|
CVR
|
Contingent Value Right
|
|
REIT
|
Real Estate Investment Trust
|
See accompanying notes to financial
statements.
7
The Gabelli Convertible and Income Securities Fund Inc.
Statement of Assets and Liabilities
December 31, 2019
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Assets:
|
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Investments, at value (cost $119,946,122)
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|
$
|
141,818,086
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|
|
Foreign currency, at value (cost $944)
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|
|
949
|
|
|
Cash
|
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|
1,012,679
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|
Deposit at brokers
|
|
|
50
|
|
|
Receivable for investments sold
|
|
|
212,081
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|
|
Dividends and interest receivable
|
|
|
574,458
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|
|
Deferred offering expense
|
|
|
255,103
|
|
|
Prepaid expenses
|
|
|
1,315
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
143,874,721
|
|
|
|
|
|
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|
|
Liabilities:
|
|
|
|
|
|
Distributions payable
|
|
|
19,444
|
|
|
Payable for investments purchased
|
|
|
1,748,749
|
|
|
Payable for investment advisory fees
|
|
|
108,008
|
|
|
Payable for payroll expenses
|
|
|
29,095
|
|
|
Payable for accounting fees
|
|
|
11,250
|
|
|
Series E Cumulative Preferred Stock (4.00%, $100 liquidation value, $0.001 par value, 350,000 shares
authorized with 350,000 shares issued and outstanding)(See Notes 2 and 5)
|
|
|
35,000,000
|
|
|
Other accrued expenses
|
|
|
111,455
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
37,028,001
|
|
|
|
|
|
|
|
|
Net Assets Attributable to Common Shareholders
|
|
$
|
106,846,720
|
|
|
|
|
|
|
|
|
Net Assets Attributable to Common Shareholders Consist of:
|
|
|
|
|
|
Paid-in capital
|
|
$
|
85,702,247
|
|
|
Total distributable earnings
|
|
|
21,144,473
|
|
|
|
|
|
|
|
|
Net Assets
|
|
$
|
106,846,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value per Common Share:
|
|
|
($106,846,720 ÷ 18,821,385 shares outstanding at $0.001 par value; 998,000,000 shares
authorized)
|
|
|
|
|
$5.68
|
|
|
|
|
|
|
|
|
|
Statement of Operations
For
the Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
Investment Income:
|
|
|
|
|
|
Dividends (net of foreign withholding taxes of $19,305)
|
|
$
|
1,657,746
|
|
|
Interest
|
|
|
1,624,562
|
|
|
|
|
|
|
|
|
Total Investment Income
|
|
|
3,282,308
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Investment advisory fees
|
|
|
1,300,644
|
|
|
Interest expense on preferred stock
|
|
|
291,674
|
|
|
Shareholder communications expenses
|
|
|
88,200
|
|
|
Directors’ fees
|
|
|
81,500
|
|
|
Payroll expenses
|
|
|
65,743
|
|
|
Legal and audit fees
|
|
|
61,793
|
|
|
Shareholder services fees
|
|
|
48,097
|
|
|
Accounting fees
|
|
|
45,000
|
|
|
Custodian fees
|
|
|
14,993
|
|
|
Shelf registration expense
|
|
|
5,474
|
|
|
Interest expense
|
|
|
186
|
|
|
Miscellaneous expenses
|
|
|
92,201
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
2,095,505
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
Expenses paid indirectly by broker (See Note 3)
|
|
|
(2,143
|
)
|
|
|
|
|
|
|
|
Net Expenses
|
|
|
2,093,362
|
|
|
|
|
|
|
|
|
Net Investment Income
|
|
|
1,188,946
|
|
|
|
|
|
|
|
|
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency:
|
|
|
|
|
|
Net realized gain on investments
|
|
|
8,532,122
|
|
|
Net realized loss on foreign currency transactions
|
|
|
(4,070
|
)
|
|
|
|
|
|
|
|
Net realized gain on investments and foreign currency transactions
|
|
|
8,528,052
|
|
|
|
|
|
|
|
|
Net change in unrealized appreciation/depreciation:
|
|
|
|
|
|
on investments
|
|
|
16,441,281
|
|
|
on foreign currency translations
|
|
|
3,310
|
|
|
|
|
|
|
|
|
Net change in unrealized appreciation/depreciation on investments and foreign currency translations
|
|
|
16,444,591
|
|
|
|
|
|
|
|
|
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency
|
|
|
24,972,643
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets Resulting from Operations
|
|
|
26,161,589
|
|
|
|
|
|
|
|
|
Total Distributions to Preferred Stock Shareholders
|
|
|
(1,275,360
|
)
|
|
|
|
|
|
|
|
Net Increase in Net Assets Attributable to Common Shareholders Resulting from Operations
|
|
$
|
24,886,229
|
|
|
|
|
|
|
|
See accompanying notes to financial
statements.
8
The Gabelli Convertible and Income Securities Fund Inc.
Statement of Changes in Net Assets Attributable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2019
|
|
Year Ended
December 31, 2018
|
|
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
$
|
1,188,946
|
|
|
|
$
|
1,153,330
|
|
|
Net realized gain on investments and foreign currency transactions
|
|
|
|
8,528,052
|
|
|
|
|
7,219,062
|
|
|
Net change in unrealized appreciation/depreciation on investments and foreign currency translations
|
|
|
|
16,444,591
|
|
|
|
|
(11,922,065
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase/(Decrease) in Net Assets Resulting from Operations
|
|
|
|
26,161,589
|
|
|
|
|
(3,549,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Preferred Shareholders
|
|
|
|
(1,275,360
|
)
|
|
|
|
(1,448,322
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders Resulting from
Operations
|
|
|
|
24,886,229
|
|
|
|
|
(4,997,995
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated earnings
|
|
|
|
(8,396,913
|
)
|
|
|
|
(7,399,621
|
)
|
|
Return of capital
|
|
|
|
(606,699
|
)
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Distributions to Common Shareholders
|
|
|
|
(9,003,612
|
)
|
|
|
|
(7,399,621
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Share Transactions:
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets from common shares issued upon reinvestment of distributions
|
|
|
|
360,817
|
|
|
|
|
1,221,471
|
|
|
Net increase from common shares issued in rights offering
|
|
|
|
—
|
|
|
|
|
22,655,750
|
|
|
Offering costs for common shares charged to paid-in capital
|
|
|
|
58,236
|
|
|
|
|
(241,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets from Fund Share Transactions
|
|
|
|
419,053
|
|
|
|
|
23,636,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets Attributable to Common Shareholders
|
|
|
|
16,301,670
|
|
|
|
|
11,238,605
|
|
|
|
|
|
|
Net Assets Attributable to Common Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
|
90,545,050
|
|
|
|
|
79,306,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year
|
|
|
$
|
106,846,720
|
|
|
|
$
|
90,545,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial
statements.
9
The Gabelli Convertible and Income Securities Fund Inc.
Statement of Cash Flows
For the Year Ended December 31, 2019
|
|
|
|
|
|
|
Net increase in net assets attributable to common shareholders resulting from operations
|
|
$
|
24,886,229
|
|
|
|
|
Adjustments to Reconcile Net Increase in Net Assets Resulting from Operations to Net Cash from
Operating Activities:
|
|
|
Purchase of long term investment securities
|
|
|
(80,828,557
|
)
|
|
Proceeds from sales of long term investment securities
|
|
|
65,915,228
|
|
|
Net purchases of short term investment securities
|
|
|
12,286,657
|
|
|
Net realized gain on investments
|
|
|
(8,532,122
|
)
|
|
Net change in unrealized appreciation/depreciation on investments
|
|
|
(16,441,281
|
)
|
|
Net amortization of discount
|
|
|
(155,394
|
)
|
|
Decrease in receivable for investments sold
|
|
|
75,919
|
|
|
Increase in dividends and interest receivable
|
|
|
(51,309
|
)
|
|
Increase in payable for investments purchased
|
|
|
1,748,749
|
|
|
Increase in deferred offering expense
|
|
|
(220,757
|
)
|
|
Decrease in distributions payable
|
|
|
(672
|
)
|
|
Increase in prepaid expenses
|
|
|
(212
|
)
|
|
Increase in payable for investment advisory fees
|
|
|
28,915
|
|
|
Decrease in payable for payroll expenses
|
|
|
(4,771
|
)
|
|
Increase in payable for accounting fees
|
|
|
3,750
|
|
|
Decrease in payable for legal and audit fees
|
|
|
(54,208
|
)
|
|
Decrease in payable for shareholder communications expenses
|
|
|
(23,918
|
)
|
|
Increase in other accrued expenses
|
|
|
96,110
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in) operating activities:
|
|
|
(1,271,644
|
)
|
|
|
|
|
|
|
|
Net increase in net assets resulting from financing activities:
|
|
|
|
|
|
Redemption of Series B 6.000% Cumulative Preferred Stock
|
|
|
(24,138,700
|
)
|
|
Offering costs for common stock charged to paid-in capital
|
|
|
58,236
|
|
|
Distributions to Common Shareholders
|
|
|
(9,003,612
|
)
|
|
Net increase in net assets from common shares issued upon reinvestment of distributions
|
|
|
360,817
|
|
|
Issuance of Series E 4.000% Cumulative Preferred Stock
|
|
|
35,000,000
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in) financing activities
|
|
|
2,276,741
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
1,005,097
|
|
|
|
|
|
|
|
|
Cash (including foreign currency):
|
|
|
|
|
|
Beginning of year
|
|
|
8,581
|
|
|
|
|
|
|
|
|
End of year
|
|
$
|
1,013,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information:
|
|
|
|
|
|
Interest paid on preferred stock
|
|
$
|
272,230
|
|
|
Interest paid on bank overdrafts
|
|
$
|
186
|
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of cash, cash held at broker, and foreign currency
reported within the Statement of Assets and Liabilities that sum to the total of the same amount above at December 31, 2019:
|
|
|
|
|
|
Cash
|
|
$
|
1,012,679
|
|
|
Foreign currency, at value
|
|
|
949
|
|
|
Cash held at broker
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
$
|
1,013,678
|
|
|
|
|
|
|
|
See accompanying notes to financial
statements.
10
The Gabelli Convertible and Income Securities Fund Inc.
Financial Highlights
Selected data for a common share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
Operating Performance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
|
|
$
|
4.83
|
|
|
|
|
|
|
$
|
5.57
|
|
|
|
|
|
|
$
|
5.30
|
|
|
|
|
|
|
$
|
5.30
|
|
|
|
|
|
|
$
|
6.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
0.06
|
|
|
|
|
|
|
|
0.09
|
|
|
|
|
|
|
|
0.09
|
|
|
|
|
|
|
|
0.12
|
|
|
|
|
|
|
|
0.07
|
|
|
Net realized and unrealized gain/(loss) on investments, securities sold short, swap contracts, and foreign
currency transactions
|
|
|
|
|
1.34
|
|
|
|
|
|
|
|
(0.22
|
)
|
|
|
|
|
|
|
0.77
|
|
|
|
|
|
|
|
0.39
|
|
|
|
|
|
|
|
(0.28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment operations
|
|
|
|
|
1.40
|
|
|
|
|
|
|
|
(0.13
|
)
|
|
|
|
|
|
|
0.86
|
|
|
|
|
|
|
|
0.51
|
|
|
|
|
|
|
|
(0.21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Preferred Shareholders: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
(0.01
|
)
|
|
Net realized gain
|
|
|
|
|
(0.06
|
)
|
|
|
|
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
(0.08
|
)
|
|
|
|
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to preferred shareholders
|
|
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
(0.09
|
)
|
|
|
|
|
|
|
(0.11
|
)
|
|
|
|
|
|
|
(0.10
|
)
|
|
|
|
|
|
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders Resulting from
Operations
|
|
|
|
|
1.33
|
|
|
|
|
|
|
|
(0.22
|
)
|
|
|
|
|
|
|
0.75
|
|
|
|
|
|
|
|
0.41
|
|
|
|
|
|
|
|
(0.31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
(0.08
|
)
|
|
|
|
|
|
|
(0.10
|
)
|
|
|
|
|
|
|
(0.12
|
)
|
|
|
|
|
|
|
(0.10
|
)
|
|
|
|
|
|
|
(0.05
|
)
|
|
Net realized gain
|
|
|
|
|
(0.37
|
)
|
|
|
|
|
|
|
(0.38
|
)
|
|
|
|
|
|
|
(0.36
|
)
|
|
|
|
|
|
|
(0.30
|
)
|
|
|
|
|
|
|
(0.32
|
)
|
|
Return of capital
|
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
(0.11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to common shareholders
|
|
|
|
|
(0.48
|
)
|
|
|
|
|
|
|
(0.48
|
)
|
|
|
|
|
|
|
(0.48
|
)
|
|
|
|
|
|
|
(0.41
|
)
|
|
|
|
|
|
|
(0.48
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Share Transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in net asset value from common share transactions
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
(0.00
|
)(b)
|
|
Decrease in net asset value from common shares issued in rights offering
|
|
|
|
|
—
|
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
Increase in net asset value from common shares issued upon reinvestment of distributions
|
|
|
|
|
—
|
|
|
|
|
|
|
|
0.00
|
(b)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
Offering costs for common shares charged to paid-in capital
|
|
|
|
|
0.00
|
(b)
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fund share transactions
|
|
|
|
|
0.00
|
(b)
|
|
|
|
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
(0.00
|
)(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value Attributable to Common Shareholders, End of Year
|
|
|
|
$
|
5.68
|
|
|
|
|
|
|
$
|
4.83
|
|
|
|
|
|
|
$
|
5.57
|
|
|
|
|
|
|
$
|
5.30
|
|
|
|
|
|
|
$
|
5.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAV total return †
|
|
|
|
|
28.40
|
%
|
|
|
|
|
|
|
(5.08
|
)%
|
|
|
|
|
|
|
14.59
|
%
|
|
|
|
|
|
|
8.34
|
%
|
|
|
|
|
|
|
(5.39
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value, end of year
|
|
|
|
$
|
5.85
|
|
|
|
|
|
|
$
|
4.39
|
|
|
|
|
|
|
$
|
5.90
|
|
|
|
|
|
|
$
|
4.69
|
|
|
|
|
|
|
$
|
4.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment total return ††
|
|
|
|
|
45.68
|
%
|
|
|
|
|
|
|
(14.12
|
)%
|
|
|
|
|
|
|
37.53
|
%
|
|
|
|
|
|
|
6.97
|
%
|
|
|
|
|
|
|
(14.18
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial
statements.
11
The Gabelli Convertible and Income Securities Fund Inc.
Financial Highlights (Continued)
Selected data for a common share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
Ratios to Average net assets and Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets including liquidation value of preferred shares, end of year (in 000’s)
|
|
|
|
$
|
141,847
|
|
|
|
|
|
|
$
|
114,684
|
|
|
|
|
|
|
$
|
103,445
|
|
|
|
|
|
|
$
|
98,733
|
|
|
|
|
|
|
$
|
98,742
|
|
|
Net assets attributable to common shares, end of year (in 000’s)
|
|
|
|
$
|
106,847
|
|
|
|
|
|
|
$
|
90,545
|
|
|
|
|
|
|
$
|
79,306
|
|
|
|
|
|
|
$
|
74,594
|
|
|
|
|
|
|
$
|
74,603
|
|
|
Ratio of net investment income to average net assets attributable to common shares before preferred share
distributions
|
|
|
|
|
1.17
|
%
|
|
|
|
|
|
|
1.37
|
%
|
|
|
|
|
|
|
1.56
|
%
|
|
|
|
|
|
|
2.37
|
%
|
|
|
|
|
|
|
1.19
|
%
|
|
Ratio of operating expenses to average net assets attributable to common shares before fees
waived (c)(d)
|
|
|
|
|
2.06
|
%(e)
|
|
|
|
|
|
|
1.89
|
%
|
|
|
|
|
|
|
1.96
|
%
|
|
|
|
|
|
|
1.95
|
%(f)(g)
|
|
|
|
|
|
|
1.88
|
%(f)
|
|
Ratio of operating expenses to average net assets attributable to common shares net of advisory fee
reduction, if any (c)(h)
|
|
|
|
|
2.06
|
%(e)
|
|
|
|
|
|
|
1.60
|
%
|
|
|
|
|
|
|
1.96
|
%
|
|
|
|
|
|
|
1.95
|
%(f)(g)
|
|
|
|
|
|
|
1.59
|
%(f)
|
|
Portfolio turnover rate
|
|
|
|
|
45
|
%
|
|
|
|
|
|
|
42
|
%
|
|
|
|
|
|
|
27
|
%
|
|
|
|
|
|
|
71
|
%
|
|
|
|
|
|
|
24
|
%
|
|
Cumulative Preferred Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.000% Series B Preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidation value, end of year (in 000’s)
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
24,139
|
|
|
|
|
|
|
$
|
24,139
|
|
|
|
|
|
|
$
|
24,139
|
|
|
|
|
|
|
$
|
24,139
|
|
|
Total shares outstanding (in 000’s)
|
|
|
|
|
—
|
|
|
|
|
|
|
|
966
|
|
|
|
|
|
|
|
966
|
|
|
|
|
|
|
|
966
|
|
|
|
|
|
|
|
966
|
|
|
Liquidation preference per share
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
25.00
|
|
|
|
|
|
|
$
|
25.00
|
|
|
|
|
|
|
$
|
25.00
|
|
|
|
|
|
|
$
|
25.00
|
|
|
Average market value (i)
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
25.91
|
|
|
|
|
|
|
$
|
26.45
|
|
|
|
|
|
|
$
|
26.52
|
|
|
|
|
|
|
$
|
25.81
|
|
|
Asset coverage per share
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
118.78
|
|
|
|
|
|
|
$
|
107.14
|
|
|
|
|
|
|
$
|
102.26
|
|
|
|
|
|
|
$
|
102.26
|
|
|
4.000% Series E Preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidation value, end of year (in 000’s)
|
|
|
|
$
|
35,000
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
Total shares outstanding (in 000’s)
|
|
|
|
|
350
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
Liquidation preference per share
|
|
|
|
$
|
100.00
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
Average market value (j)
|
|
|
|
$
|
100.00
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
Asset coverage per share
|
|
|
|
$
|
405.28
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
Asset Coverage
|
|
|
|
|
405
|
%
|
|
|
|
|
|
|
475
|
%
|
|
|
|
|
|
|
429
|
%
|
|
|
|
|
|
|
409
|
%
|
|
|
|
|
|
|
409
|
%
|
|
†
|
Based on net asset value per share, adjusted for the rights offering and for reinvestment of distributions at the net
asset value per share on the ex-dividend dates.
|
|
††
|
Based on market value per share, adjusted for the rights offering and for reinvestment of distributions at prices
obtained under the Fund’s dividend reinvestment plan.
|
|
(a)
|
Calculated based on average common shares outstanding on the record dates throughout the years.
|
|
(b)
|
Amount represents less than $0.005 per share.
|
|
(c)
|
The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the years
ended December 31, 2019, 2018, 2017, 2016, and 2015, there was no impact on the expense ratios.
|
|
(d)
|
Ratio of operating expenses to average net assets including liquidation value of preferred shares before fee waived for
the years ended December 31, 2019, 2018, 2017, 2016, and 2015 would have been 1.61%, 1.47%, 1.50%, 1.46%, and 1.46%, respectively.
|
|
(e)
|
The Fund incurred interest expense on the Series E Preferred Shares issued October 16, 2019. (see Footnotes 2 and
5).
|
|
(f)
|
The Fund incurred dividend expenses on securities sold short. If this expense had not been incurred, the expense ratios
for the year ended December 31, 2015 would have been 1.87% attributable to common shares before fees waived, 1.57% attributable to common shares net of advisory fee reduction, 1.44% including liquidation value of preferred shares before fees waived,
and 1.22% including liquidation value of preferred shares net of advisory fee reduction. For the year ended December 31, 2016, the impact was minimal.
|
|
(g)
|
During the year ended December 31, 2016, the Fund received a one time reimbursement of custody expenses paid in
prior years. Had such reimbursement been included in this period, the expenses ratios would have been 1.69% attributable to common shares before fees waived, 1.69% attributable to common shares net of advisory fee reduction, 1.26% including
liquidation value of preferred shares before fees waived, and 1.26% including liquidation value of preferred shares net of advisory fee reduction.
|
|
(h)
|
Ratio of operating expenses to average net assets including liquidation value of preferred shares net of advisory fee
reduction for the years ended December 31, 2019, 2018, 2017, 2016, and 2015 would have been 1.61%, 1.24%, 1.50%, 1.46%, and 1.23%, respectively.
|
|
(i)
|
Based on weekly prices.
|
|
(j)
|
The Series E Preferred is a private placement and is not listed on an exchange, nor does the Fund expect a secondary
market to develop. The average market price shown is the $100 liquidation preference of the Series E Preferred.
|
See accompanying notes to financial
statements.
12
The Gabelli Convertible and Income Securities Fund Inc.
Notes to Financial Statements
1. Organization. The Gabelli Convertible and Income Securities Fund Inc. is
a diversified closed-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), whose investment objective is to seek a high level of total return through
a combination of current income and capital appreciation by investing in convertible securities. The Fund was incorporated in Maryland on December 19, 1988 as a diversified open-end management investment
company and commenced investment operations on July 3, 1989 as The Gabelli Convertible Securities Fund, Inc. At a special meeting of shareholders held on February 17, 1995, the Board of Directors (the Board) voted to approve the conversion
of the Fund to closed-end status, effective March 31, 1995.
2. Significant Accounting Policies.
As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (GAAP) that may require the use of management estimates and assumptions in the
preparation of its 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.
New Accounting Pronouncements. To improve the effectiveness of fair value disclosure requirements, the Financial Accounting Standards Board
recently issued Accounting Standard Update (ASU) 2018-13, Fair Value Measurement Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13), which adds, removes, and modifies certain aspects relating to fair value disclosure. ASU 2018-13 is effective for interim and annual reporting periods beginning
after December 15, 2019; early adoption of the additions relating to ASU 2018-13 is not required, even if early adoption is elected for the removals and modifications under ASU 2018-13. Management has early adopted the removals and modifications set forth in ASU 2018-13 in these financial statements and has not early adopted the additions set forth
in ASU 2018-13.
Security Valuation. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price
or a market’s official closing price 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. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board so determines, by such other
method as the Board shall determine in good faith to reflect its fair market value. 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 Gabelli Funds, LLC (the Adviser).
Portfolio securities primarily traded on a foreign market are generally valued at the preceding
closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on
the day the securities are being valued. Debt obligations for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the securities are valued
using the closing bid price, unless the Board determines such amount does not reflect the securities’ fair value, in which case these securities will be fair valued as determined by the Board. Certain securities are valued principally using
dealer quotations. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. OTC
13
The Gabelli Convertible and Income Securities Fund Inc.
Notes to Financial Statements (Continued)
futures and options on futures for which market quotations are readily available will be valued by
quotations received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one or more dealers in the instrument in question by the Adviser.
Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons with the valuation and changes in valuation of similar
securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of
the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as
described in the hierarchy below:
|
|
●
|
|
Level 1 – quoted prices in active markets for identical securities;
|
|
|
●
|
|
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates,
prepayment speeds, credit risk, etc.); and
|
|
|
●
|
|
Level 3 – significant unobservable inputs (including the Board’s determinations as to the fair value of
investments).
|
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both
individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of
the Fund’s investments in securities by inputs used to value the Fund’s investments as of December 31, 2019 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation Inputs
|
|
|
|
|
|
Level 1
Quoted Prices
|
|
Level 2 Other Significant
Observable Inputs
|
|
Level 3 Significant
Unobservable Inputs
|
|
Total Market Value
at 12/31/19
|
|
INVESTMENTS IN SECURITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS (Market Value):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Corporate Bonds (a)
|
|
|
|
—
|
|
|
|
$
|
81,698,186
|
|
|
|
|
—
|
|
|
|
$
|
81,698,186
|
|
|
Convertible Preferred Stocks (a)
|
|
|
$
|
3,372,989
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
3,372,989
|
|
|
Mandatory Convertible Securities (a)
|
|
|
|
23,405,355
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
23,405,355
|
|
|
Common Stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy and Utilities
|
|
|
|
1,665,377
|
|
|
|
|
350,934
|
|
|
|
$
|
0
|
|
|
|
|
2,016,311
|
|
|
Other Industries (a)
|
|
|
|
20,194,035
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
20,194,035
|
|
|
Total Common Stock
|
|
|
|
21,859,412
|
|
|
|
|
350,934
|
|
|
|
|
0
|
|
|
|
|
22,210,346
|
|
|
Preferred Stocks (a)
|
|
|
|
—
|
|
|
|
|
25,423
|
|
|
|
|
—
|
|
|
|
|
25,423
|
|
|
Rights (a)
|
|
|
|
12,040
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
12,040
|
|
|
U.S. Government Obligations
|
|
|
|
—
|
|
|
|
|
11,093,747
|
|
|
|
|
—
|
|
|
|
|
11,093,747
|
|
|
TOTAL INVESTMENTS IN SECURITIES –
ASSETS
|
|
|
$
|
48,649,796
|
|
|
|
$
|
93,168,290
|
|
|
|
$
|
0
|
|
|
|
$
|
141,818,086
|
|
|
(a)
|
Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings.
|
During the year ended December 31, 2019, the Fund did not have transfers into or out of Level 3.
14
The Gabelli Convertible and Income Securities Fund Inc.
Notes to Financial Statements (Continued)
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the
Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity
securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds are ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices
supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a
broker/dealer that trades that security or similar securities.
Fair Valuation. Fair valued securities may be common or
preferred equities, warrants, options, rights, or fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids
are not available, or which are restricted as to transfer. Among the factors to be considered to fair value a security are recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of
valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3
securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The
Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously
recognized.
Derivative Financial Instruments. The Fund may engage in various portfolio investment strategies by investing in
derivative financial instruments for the purposes of increasing the income of the Fund, hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase, or hedging against a specific transaction
with respect to either the currency in which the transaction is denominated or another currency. Investing in certain derivative financial instruments, including participation in the options, futures, or swap markets, entails certain execution,
liquidity, hedging, tax, and securities, interest, credit, or currency market risks. Losses may arise if the Adviser’s prediction of movements in the direction of the securities, foreign currency, and interest rate markets is inaccurate. Losses
may also arise if the counterparty does not perform its duties under a contract, or, in the event of default, the Fund may be delayed in or prevented from obtaining payments or other contractual remedies owed to it under derivative contracts. The
creditworthiness of the counterparties is closely monitored in order to minimize these risks. Participation in derivative transactions involves investment risks, transaction costs, and potential losses to which the Fund would not be subject absent
the use of these strategies. The consequences of these risks, transaction costs, and losses may have a negative impact on the Fund’s ability to pay distributions.
Collateral requirements differ by type of derivative. Collateral requirements are set by the broker or exchange clearing house for exchange traded
derivatives, while collateral terms are contract specific for derivatives traded over-the-counter. Securities pledged to cover obligations of the Fund under derivative
contracts are noted in
15
The Gabelli Convertible and Income Securities Fund Inc.
Notes to Financial Statements (Continued)
the Schedule of Investments. Cash collateral, if any, pledged for the same purpose will be reported separately in the Statement of Assets and Liabilities.
The Fund’s policy with respect to offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the master
agreement does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the Fund and the applicable counterparty. The enforceability of the right
to offset may vary by jurisdiction.
The Fund’s derivative contracts held at December 31, 2019, if any, are not accounted for as hedging
instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.
Swap
Agreements. The Fund may enter into equity contract for difference swap transactions for the purpose of increasing the income of the Fund. The use of swaps is a highly specialized activity that involves investment techniques and risks
different from those associated with ordinary portfolio security transactions. In an equity contract for difference swap, a set of future cash flows is exchanged between two counterparties. One of these cash flow streams will typically be based on a
reference interest rate combined with the performance of a notional value of shares of a stock. The other will be based on the performance of the shares of a stock. Depending on the general state of short term interest rates and the returns on the
Fund’s portfolio securities at the time an equity contract for difference swap transaction reaches its scheduled termination date, there is a risk that the Fund will not be able to obtain a replacement transaction or that the terms of the
replacement will not be as favorable as on the expiring transaction.
Unrealized gains related to swaps are reported as an asset and unrealized
losses are reported as a liability in the Statement of Assets and Liabilities. The change in value of swaps, including the accrual of periodic amounts of interest to be received or paid on swaps, is reported as unrealized gain or loss in the
Statement of Operations. A realized gain or loss is recorded upon receipt or payment of a periodic payment or termination of swap agreements. During the year ended December 31, 2019, the Fund held no investments in equity contract for
difference swap agreements.
Limitations on the Purchase and Sale of Futures Contracts, Certain Options, and Swaps. Subject to the
guidelines of the Board, the Fund may engage in “commodity interest” transactions (generally, transactions in futures, certain options, certain currency transactions, and certain types of swaps) only for bona fide hedging or other
permissible transactions in accordance with the rules and regulations of the Commodity Futures Trading Commission (CFTC). Pursuant to amendments by the CFTC to Rule 4.5 under the Commodity Exchange Act (CEA), the Adviser has filed a notice of
exemption from registration as a “commodity pool operator” with respect to the Fund. The Fund and the Adviser are therefore not subject to registration or regulation as a commodity pool operator under the CEA. In addition, certain trading
restrictions are now applicable to the Fund which permit the Fund to engage in commodity interest transactions that include (i) “bona fide hedging” transactions, as that term is defined and interpreted by the CFTC and its staff, without
regard to the percentage of the Fund’s assets committed to margin and options premiums and (ii) non-bona fide hedging transactions, provided that the Fund does not enter into such non-bona fide hedging transactions if, immediately thereafter, either (a) the sum of the amount of initial margin deposits on the Fund’s existing futures positions or swaps positions and option or swaption
premiums would exceed 5% of the market value of the Fund’s liquidating value, after taking into account unrealized profits and unrealized losses on any such transactions, or (b) the aggregate net notional value of the Fund’s commodity
interest transactions would not exceed 100% of the market value of the Fund’s
16
The Gabelli Convertible and Income Securities Fund Inc.
Notes to Financial Statements (Continued)
liquidating value, after taking into account unrealized profits and unrealized losses on any such transactions. Therefore, in order to claim the Rule 4.5 exemption, the Fund is limited in its
ability to invest in commodity futures, options, and certain types of swaps (including securities futures, broad based stock index futures, and financial futures contracts). As a result, in the future the Fund will be more limited in its ability to
use these instruments than in the past, and these limitations may have a negative impact on the ability of the Adviser to manage the Fund, and on the Fund’s performance.
Securities Sold Short. The Fund may enter into short sale transactions. Short selling involves selling securities that may or may not be
owned and, at times, borrowing the same securities for delivery to the purchaser, with an obligation to replace such borrowed securities at a later date. The proceeds received from short sales are recorded as liabilities and the Fund records an
unrealized gain or loss to the extent of the difference between the proceeds received and the value of an open short position on the day of determination. The Fund records a realized gain or loss when the short position is closed out. By entering
into a short sale, the Fund bears the market risk of an unfavorable change in the price of the security sold short. Dividends on short sales are recorded as an expense by the Fund on the ex-dividend date and
interest expense is recorded on the accrual basis. The broker retains collateral for the value of the open positions, which is adjusted periodically as the value of the position fluctuates. At December 31, 2019, there were no short sales
outstanding.
Series E Cumulative Preferred Stock. For financial reporting purposes only, the liquidation value of preferred stock that
has a mandatory call date is classified as a liability within the Statement of Assets and Liabilities and the dividends paid on this preferred stock are included as a component of “Interest expense on preferred stock” within the Statement
of Operations. Offering costs are amortized over the life of the preferred stock.
Foreign Currency Translations. The books and records
of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. 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 that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized
appreciation/depreciation on investments and foreign currency translations. 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 purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.
Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves
special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future
adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may
be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
17
The Gabelli Convertible and Income Securities Fund Inc.
Notes to Financial Statements (Continued)
Restricted Securities. The Fund may invest up to 15% of its net assets in securities for
which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage
charges or dealer discounts and other selling expenses than the sale of securities eligible for trading on national securities exchanges or in the over-the-counter
markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated
as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and, accordingly, the Board will monitor their liquidity. As of
December 31, 2019, the Fund did not hold restricted securities.
Securities Transactions and Investment Income. Securities
transactions are accounted for on the trade date with realized gain/(loss) on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded on an accrual basis.
Premiums and discounts on debt securities are amortized using the effective yield to maturity method. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities
that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
Custodian Fee Credits. When cash balances are maintained in the custody account, the Fund receives credits which are used to offset
custodian fees. The gross expenses paid under the custody arrangement are included in custodian fees in the Statement of Operations with the corresponding expense offset, if any, shown as “Custodian fee credits.”
Distributions to Shareholders. Distributions to common shareholders are recorded on the ex-dividend
date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due
to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment
income for federal income tax purposes include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the
appropriate capital accounts in the period when the differences arise. Permanent differences were primarily due to reclassification of convertible bond premiums at disposition and non-deductible offering
expense. For the year ended December 31, 2019, reclassifications were made to decrease paid-in capital by $5,474, with an offsetting adjustment to total distributable earnings. These reclassifications
have no impact on the NAV of the Fund.
Distributions to shareholders of the Fund’s 4.000% Series E Cumulative Preferred Stock (Series E
Preferred) are recorded on a daily basis and are determined as described in Note 5.
The Fund declares and pays quarterly distributions from net
investment income, capital gains, and paid-in capital. The actual source of the distribution is determined after the end of the year. Distributions during the year may be made in excess of required
distributions. To the extent such distributions are made from current earnings and profits, they are considered ordinary income or long term capital gains. Distributions sourced from paid-in capital should not
be considered as dividend yield or the total return from an investment in the
18
The Gabelli Convertible and Income Securities Fund Inc.
Notes to Financial Statements (Continued)
Fund. The Board will continue to monitor the Fund’s distribution level, taking into consideration
the Fund’s NAV and the financial market environment. The Fund’s distribution policy is subject to modification by the Board at any time.
The tax character of distributions paid during the years ended December 31, 2019 and 2018 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
|
|
Common
|
|
|
Preferred
|
|
|
Common
|
|
|
Preferred
|
|
|
Distributions paid from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (inclusive of short term capital gains)
|
|
$
|
2,326,549
|
|
|
$
|
353,366
|
|
|
$
|
1,995,748
|
|
|
$
|
390,626
|
|
|
Net long term capital gains
|
|
|
6,070,364
|
|
|
|
921,994
|
|
|
|
5,403,873
|
|
|
|
1,057,696
|
|
|
Return of capital
|
|
|
606,699
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions paid
|
|
$
|
9,003,612
|
|
|
$
|
1,275,360
|
|
|
$
|
7,399,621
|
|
|
$
|
1,448,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes. The Fund intends to continue to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net
investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
As of December 31, 2019,
the components of accumulated earnings/losses on a tax basis were as follows:
|
|
|
|
|
|
|
Net unrealized appreciation on investments and foreign currency translations
|
|
$
|
21,163,917
|
|
|
Other temporary differences*
|
|
|
(19,444
|
)
|
|
|
|
|
|
|
|
Total
|
|
$
|
21,144,473
|
|
|
|
|
|
|
|
|
*
|
Other temporary differences are due to preferred share class distributions payable.
|
At December 31, 2019, the temporary differences between book basis and tax basis net unrealized appreciation on investments were primarily due to
losses from wash sales for tax purposes, bond conversion premium adjustments, and basis adjustments on hybrid securities.
The following summarizes
the tax cost of investments and the related net unrealized appreciation at December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
|
|
|
Unrealized
|
|
Unrealized
|
|
Net Unrealized
|
|
|
|
Cost
|
|
Appreciation
|
|
Depreciation
|
|
Appreciation
|
|
Investments
|
|
|
$
|
120,655,201
|
|
|
|
$
|
23,996,771
|
|
|
|
$
|
(2,833,886
|
)
|
|
|
$
|
21,162,885
|
|
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s
tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by
the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the year ended December 31, 2019, the Fund did not incur any
income tax, interest, or penalties. As of December 31, 2019, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax
returns for the prior three years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.
19
The Gabelli Convertible and Income Securities Fund Inc.
Notes to Financial Statements (Continued)
3. Investment Advisory Agreement and Other Transactions. 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, equal on an annual basis to 1.00% of the value of its average daily net assets including the
liquidation value of preferred stock. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio and oversees the administration of all aspects of the Fund’s business and
affairs.
During the year ended December 31, 2019, the Fund paid $2,638 in brokerage commissions on security trades to G.research, LLC, an
affiliate of the Adviser.
During the year ended December 31, 2019, the Fund received credits from a designated broker who agreed to pay certain
Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during this period was $2,143.
The cost of
calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement between the Fund and the Adviser. Under the sub-administration agreement with Bank of New York Mellon, the fees
paid include the cost of calculating the Fund’s NAV. The Fund reimburses the Adviser for this service. During the year ended December 31, 2019, the Fund accrued $45,000 in accounting fees in the Statement of Operations.
As per the approval of the Board, the Fund compensates officers of the Fund, who are employed by the Fund and are not employed by the Adviser (although
the officers may receive incentive based variable compensation from affiliates of the Adviser). During the year ended December 31, 2019, the Fund accrued $65,743 in payroll expenses in the Statement of Operations.
The Fund pays each Director who is not considered an affiliated person an annual retainer of $3,000 plus $750 for each Board meeting attended. Each
Director is reimbursed by the Fund for any out of pocket expenses incurred in attending meetings. All Board committee members receive $500 per meeting attended, the Audit Committee Chairman receives an annual fee of $3,000, the Nominating Committee
Chairman receives an annual fee of $2,000, and the Lead Director receives an annual fee of $1,000. A Director may receive a single meeting fee, allocated among the participating funds, for participation in certain meetings held on behalf of multiple
funds. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Fund.
4. Portfolio Securities. Purchases and sales of securities during the year ended December 31, 2019, other than short term securities and U.S.
Government obligations, aggregated $66,771,202 and $51,728,376, respectively. Purchases and sales of U.S. Government Obligations for the year ended December 31, 2019, aggregated $83,662,623 and $95,949,280, respectively.
5. Capital. The charter permits the Fund to issue 998,000,000 shares of common stock (par value $0.001). The Board has authorized the repurchase
of up to 500,000 common shares on the open market when the shares are trading at a discount of 10% or more (or such other percentage as the Board may determine from time to time) from the NAV of the shares. During the years ended December 31,
2019 and 2018, the Fund did not repurchase any shares of its common stock in the open market.
20
The Gabelli Convertible and Income Securities Fund Inc.
Notes to Financial Statements (Continued)
During the year ended December 31, 2018, the Fund completed a rights offering whereby one
transferable right was issued for each common share held as of September 5, 2018. Three rights were required to purchase one additional common share at the subscription price of $5.25. On October 22, 2018, the Fund issued 4,315,381 common
shares receiving net proceeds of $22,472,986, after the deduction of offering expenses of $182,764. The NAV of the Fund was reduced by $0.02 per share on the day the additional common shares were issued due to the additional common shares being
issued below NAV.
For the years ended December 31, 2019 and 2018, transactions in common stock were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Net increase from common shares issued upon reinvestment of distributions
|
|
|
63,861
|
|
|
$
|
360,817
|
|
|
|
214,024
|
|
|
$
|
1,221,471
|
|
|
Net increase from common shares issued in rights offering
|
|
|
—
|
|
|
|
—
|
|
|
|
4,315,381
|
|
|
|
22,655,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
|
|
|
63,861
|
|
|
$
|
360,817
|
|
|
|
4,529,405
|
|
|
$
|
23,877,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Fund’s Articles of Incorporation authorize the issuance of up to 1,995,000 shares of $0.001 par value
Preferred Stock. The Preferred Stock is senior to the common stock and results in the financial leveraging of the common stock. Such leveraging tends to magnify both the risks and opportunities to common shareholders. Dividends on shares of the
Preferred Stock are cumulative. The Fund is required by the 1940 Act and by the Fund’s Articles Supplementary to meet certain asset coverage tests with respect to the Preferred Stock. If the Fund fails to meet these requirements and does not
correct such failure, the Fund may be required to redeem, in part or in full, the Series E Preferred at a redemption price of $100 per share plus an amount equal to the accumulated and unpaid dividends whether or not declared on such shares in order
to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability to pay dividends to common shareholders and could lead to sales of portfolio securities at inopportune times.
The income received on the Fund’s assets may vary in a manner unrelated to the fixed and variable rates, which could have either a beneficial or detrimental impact on net investment income and gains available to common shareholders.
On March 18, 2003, the Fund received net proceeds of $23,994,241 after underwriting discounts of $787,500 and offering expenses of $218,259 from the
public offering of 1,000,000 shares of Series B Preferred. On November 18, 2019, the Fund redeemed and retired all of the remaining outstanding shares of Series B Preferred.
On October 16, 2019, the Fund issued 350,000 shares of Series E 4.00% Cumulative Preferred Stock (Series E Preferred), receiving $34,900,000 after
the deduction of estimated offering expenses of $100,000. The Series E has a liquidation value of $100 per share and an annual dividend rate of 4.00%. The Series E Preferred is subject to mandatory redemption by the Fund on October 16, 2023. At
December 31, 2019, 350,000 shares of Series E Preferred were outstanding and accrued dividends amounted to $19,444.
From April 16, 2020 to
October 15, 2020 (the First Put Period), the Fund will accept for redemption, in aggregate, up to 10% of the outstanding Series E Preferred Shares. From October 16, 2020 to October 15, 2021 (the Second Put Period), the Fund will
accept for redemption, in aggregate, up to 20% of the outstanding Series E Preferred Shares, with the number of outstanding Series E Preferred Shares determined as of October 16, 2020. A Series E Preferred shareholder may, after notice to the
Fund 30 days prior to the respective put period,
21
The Gabelli Convertible and Income Securities Fund Inc.
Notes to Financial Statements (Continued)
submit one redemption request for part or all of such holdings in each put period, subject to the
respective foregoing percentage limitations. The Fund will redeem such Shares at the liquidation preference plus any accumulated and unpaid dividends. If the capacity limitations for the First Put Period or the Second Put Period are exceeded, the
Fund will redeem the Series E Preferred Shares on a pro rata basis.
During the period from October 16, 2021 to October 15, 2022 (the Third
Put Period), a Series E Preferred shareholder may, with notice 45 days prior to the Fund, submit part or all of such Shares without limitation for redemption at the liquidation preference plus any accumulated and unpaid dividends.
On October 16, 2023, the Fund will redeem any Series E Preferred Shares not previously liquidated at the liquidation preference plus any accumulated
and unpaid dividends.
The proceeds from the issuance of the Series E Preferred Shares were used to redeem all of the 965,548 remaining 6.000% Series
B Preferred Shares on November 18, 2019 at the liquidation value of $24,138,700, or $25 per share plus accrued and unpaid dividends.
The Fund
has an effective shelf registration authorizing an additional $67 million after the rights offering conducted during 2018 and the issuance of 4.000% Series E Preferred Shares in 2019.
The holders of Preferred Stock generally are entitled to one vote per share held on each matter submitted to a vote of shareholders of the Fund and will
vote together with holders of common stock as a single class. The holders of Preferred Stock voting together as a single class also have the right currently to elect two Directors and, under certain circumstances, are entitled to elect a majority of
the Board. In addition, the affirmative vote of a majority of the votes entitled to be cast by holders of all outstanding shares of the preferred stock, voting as a single class, will be required to approve any plan of reorganization adversely
affecting the preferred stock, and the approval of two-thirds of each class, voting separately, of the Fund’s outstanding voting stock must approve the conversion of the Fund from a closed-end to an open-end investment company. The approval of a majority (as defined in the 1940 Act) of the outstanding preferred stock and a majority (as defined in the 1940
Act) of the Fund’s outstanding voting securities are required to approve certain other actions, including changes in the Fund’s investment objectives or fundamental investment policies.
6. Convertible Securities Concentration. The Fund will invest at least 80% of its net assets, under normal market conditions, in a combination of
convertible securities and income producing securities (the 80% Policy). The Fund expects to continue its practice of focusing on convertible securities to the extent attractive opportunities are available. The 80% Policy may be changed without
shareholder approval. However, the Fund has adopted a policy to provide shareholders with notice at least 60 days prior to the implementation of any change in the 80% Policy.
7. Indemnifications. The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these
arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
8. Subsequent Events. Management has evaluated the impact of all subsequent events occurring through the date the financial statements were issued
and has determined that there were no other subsequent events requiring recognition or disclosure in the financial statements.
22
The Gabelli Convertible and Income Securities Fund Inc.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
The Gabelli Convertible and Income Securities Fund Inc.:
Opinion on the Financial
Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Gabelli
Convertible and Income Securities Fund Inc. (the “Fund”) as of December 31, 2019, the related statements of operations and cash flows for the year ended December 31, 2019, the statement of changes in net assets attributable to
common shareholders for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2019 (collectively referred to as
the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations and cash flows for the year then
ended, the changes in its net assets attributable to common shareholders for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the five years in the period ended December 31, 2019 in
conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these
financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 by
correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
New York, New York
February 27, 2020
We have served as the
auditor of one or more investment companies in Gabelli/GAMCO Fund Complex since 1986.
23
The Gabelli Convertible and Income Securities Fund Inc.
Additional Fund Information (Unaudited)
The business and affairs of the Fund are managed under the direction of the Fund’s Board of Directors. Information pertaining to the Directors and
officers of the Fund is set forth below. The Fund’s Statement of Additional Information includes additional information about the Fund’s Directors and is available without charge, upon request, by calling
800-GABELLI (800-422-3554) or by writing to The Gabelli Convertible and Income Securities Fund Inc. at One Corporate Center, Rye,
NY 10580-1422.
|
|
|
|
|
|
|
|
|
|
|
Name, Position(s)
|
|
Term of Office
|
|
Number of Funds
|
|
|
|
|
|
Address1
|
|
and Length of
|
|
in Fund Complex
|
|
Principal Occupation(s)
|
|
Other Directorships
|
|
and Age
|
|
Time Served2
|
|
Overseen by Director
|
|
During Past Five Years
|
|
Held by Director3
|
|
|
|
|
|
|
INTERESTED
DIRECTORS4:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mario J. Gabelli, CFA Chairman and Chief Investment Officer
Age: 77
|
|
Since 1989***
|
|
33
|
|
Chairman, Chief Executive Officer, and Chief Investment Officer– Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer– Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.;
Director/ Trustee or Chief Investment Officer of other registered investment companies within the Gabelli/GAMCO Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive Chairman of Associated Capital Group, Inc.
|
|
Director of Morgan Group Holdings, Inc. (holding company) (2001-2019); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and
wireless communications); Director of ICTC Group Inc. (communications)
(2013-2018)
|
|
|
|
|
|
|
|
Thomas H. Dinsmore, CFA
Director
Age: 66
|
|
Since 2016***
|
|
1
|
|
Portfolio Manager for Gabelli Funds, LLC; Former Chairman and Chief Executive Officer of the Bancroft Fund Ltd. and the Ellsworth Growth and Income Fund Ltd. (1996-2015)
|
|
—
|
|
|
|
|
|
|
|
INDEPENDENT DIRECTORS5:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Birch6
Director
Age: 68
|
|
Since 2018**
|
|
4
|
|
Partner, The Cardinal Partners Global; Chief Operating Officer of Sentinel Asset Management and Chief Financial Officer and Chief Risk Officer of Sentinel Group Funds (2005-2015)
|
|
—
|
|
|
|
|
|
|
|
E. Val Cerutti
Director
Age: 80
|
|
Since 1989**
|
|
7
|
|
Chief Executive Officer of Cerutti Consultants, Inc.
|
|
Director of The LGL Group, Inc. (diversified manufacturing) (1990-2009)
|
|
|
|
|
|
|
|
Anthony S. Colavita7,8 Director
Age: 58
|
|
Since 2018*
|
|
18
|
|
Attorney, Anthony S. Colavita, P.C.
|
|
—
|
|
|
|
|
|
|
|
Vincent D. Enright
Director
Age: 76
|
|
Since 2016*
|
|
17
|
|
Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998)
|
|
Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008-2014); Director of The LGL Group, Inc. (diversified manufacturing)
(2011-2014)
|
|
|
|
|
|
|
|
Leslie F. Foley9
Director
Age: 51
|
|
Since 2017**
|
|
9
|
|
Attorney; Serves on the Boards of the Addison Gallery of American Art at Phillips Academy Andover, National Humanities Center, and Greenwich Country Day School; Vice President, Global Ethics & Compliance and Associate
General Counsel for News Corporation (2008-2010)
|
|
—
|
24
The Gabelli Convertible and Income Securities Fund Inc.
Additional Fund Information (Continued) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Name, Position(s)
|
|
Term of Office
|
|
Number of Funds
|
|
|
|
|
|
Address1
|
|
and Length of
|
|
in Fund Complex
|
|
Principal Occupation(s)
|
|
Other Directorships
|
|
and Age
|
|
Time Served2
|
|
Overseen by Director
|
|
During Past Five Years
|
|
Held by Director3
|
|
|
|
|
|
|
|
Daniel D. Harding
Director
Age: 67
|
|
Since 2016***
|
|
3
|
|
Managing General Partner of the Global Equity Income Fund (private investment fund); Director of TRC (private asset management); General Partner of Latitude Capital Partners, LLC (private investment)
|
|
Moristown Medical Center, Atlantic Health Systems, Ocean Reef Community Foundation and Ocean Reef Medical Center Foundation
|
|
|
|
|
|
|
|
Michael J. Melarkey
Director
Age: 70
|
|
Since 2011**
|
|
21
|
|
Of Counsel in the law firm of McDonald Carano Wilson LLP; Partner in the law firm of Avansino, Melarkey, Knobel, Mulligan & McKenzie (1980-2015)
|
|
Chairman of Southwest Gas Corporation (natural gas utility)
|
|
|
|
|
|
|
|
Kuni Nakamura
Director
Age: 51
|
|
Since 2016**
|
|
33
|
|
President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate)
|
|
—
|
|
|
|
|
|
|
|
Werner J. Roeder7
Director
Age: 79
|
|
Since 2001**
|
|
21
|
|
Retired physician; Former Vice President of Medical Affairs (Medical Director) of New York Presbyterian/Lawrence Hospital
(1999-2014)
|
|
—
|
|
|
|
|
|
|
|
Anthonie C. van Ekris6,7 Director
Age: 85
|
|
Since 1992*
|
|
23
|
|
Chairman and Chief Executive Officer of BALMAC International, Inc. (global import/export company)
|
|
—
|
|
|
|
|
|
|
|
Salvatore J. Zizza7,10
Director
Age: 74
|
|
Since 1991*
|
|
31
|
|
President of Zizza & Associates Corp. (private holding company); President of Bergen Cove Realty Inc.; Chairman of Harbor Diversified, Inc. (pharmaceuticals) (2009-2018); Chairman of BAM (semiconductor and aerospace
manufacturing)(2000-2018); Chairman of Metropolitan Paper Recycling Inc. (recycling) (2005-2014)
|
|
Director and Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals) (2009-2018)
|
|
|
|
|
|
|
|
Name, Position(s)
|
|
Term of Office
|
|
|
|
Address1
|
|
and Length of
|
|
Principal Occupation(s)
|
|
and Age
|
|
Time Served2
|
|
During Past Five Years
|
|
|
|
|
|
OFFICERS:
|
|
|
|
|
|
|
|
|
|
Bruce N. Alpert
President
Age: 68
|
|
Since 1989
|
|
Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of registered investment companies within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since
2008
|
|
|
|
|
|
John C. Ball
Treasurer
Age: 43
|
|
Since 2017
|
|
Treasurer of funds within the Gabelli/GAMCO Fund Complex since 2017; Vice President and Assistant Treasurer of AMG Funds, 2014-2017; Vice President of State Street Corporation,
2007-2014
|
|
|
|
|
|
Agnes Mullady
Vice President
Age: 61
|
|
Since 2006
|
|
Officer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2006; President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2015; Chief Executive Officer of G.distributors, LLC
since 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Executive Vice President of Associated Capital Group, Inc. since 2016
|
|
|
|
|
|
Andrea R. Mango
Secretary and
Vice President
Age: 47
|
|
Since 2013
|
|
Vice President of GAMCO Investors, Inc. since 2016; Counsel of Gabelli Funds, LLC since 2013; Secretary of registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President of closed-end funds within the Gabelli/GAMCO Fund Complex since 2014
|
|
|
|
|
|
Richard J. Walz
Chief Compliance Officer
Age: 60
|
|
Since 2013
|
|
Chief Compliance Officer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2013
|
25
The Gabelli Convertible and Income Securities Fund Inc.
Additional Fund Information (Continued) (Unaudited)
|
|
|
|
|
|
|
Name, Position(s)
|
|
Term of Office
|
|
|
|
Address1
|
|
and Length of
|
|
Principal Occupation(s)
|
|
and Age
|
|
Time Served2
|
|
During Past Five Years
|
|
|
|
|
|
Laurissa M. Martire
Vice President and
Ombudsman
Age: 43
|
|
Since 2004
|
|
Vice President and/or Ombudsman of closed-end funds within the Gabelli/GAMCO Fund Complex; Senior Vice President (since 2019) and other positions (2003-2019) of GAMCO Investors, Inc.
|
|
|
|
|
|
Bethany A. Uhlein
Vice President and
Ombudsman
Age: 29
|
|
Since 2019
|
|
Vice President and/or Ombudsman of closed-end funds within the Gabelli/GAMCO Fund Complex since 2017; Vice President (since 2019); Assistant Vice President (2015-2018) and Associate
(2013-2015) for GAMCO Asset Management Inc.
|
|
1
|
Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
|
|
2
|
The Fund’s Board of Directors is divided into three classes, each class having a term of three years. Each year
the term of office of one class expires and the successor or successors elected to such class serve for a three year term. The three year term for each class expires as follows:
|
|
|
*
|
Term expires at the Fund’s 2020 Annual Meeting of Shareholders or until their successors are duly elected and
qualified.
|
|
|
**
|
Term expires at the Fund’s 2021 Annual Meeting of Shareholders or until their successors are duly elected and
qualified.
|
|
|
***
|
Term expires at the Fund’s 2022 Annual Meeting of Shareholders or until their successors are duly elected and
qualified.
|
|
|
For officers, includes time served in prior positions with the Fund. Each officer will hold office for an indefinite
term until the date he or she resigns or retires or until his or her successor is elected and qualified.
|
|
3
|
This column includes directorships of companies required to report to the SEC under the Securities Exchange Act of
1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act, and other noteworthy directorships.
|
|
4
|
“Interested person” of the Fund, as defined in the 1940 Act. Messrs. Gabelli and Dinsmore are each considered
an “interested person” because of their affiliation with Gabelli Funds, LLC, which acts as the Fund’s investment adviser.
|
|
5
|
Directors who are not interested persons are considered “Independent” Directors.
|
|
6
|
Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund LDC, Gama Capital
Opportunities Master Ltd., and GAMCO International SICAV, and Mr. Birch is an independent director of Gabelli Merger Plus+ Trust Plc and an independent director of the GAMCO International SICAV, all of which may be deemed to be controlled by
Mario J. Gabelli and/or affiliates and, in that event, would be deemed to be under common control with the Fund’s Adviser.
|
|
7
|
This Director is elected solely by and represents the stockholders of the preferred stock issued by this Fund.
|
|
8
|
Mr. Colavita’s father, Anthony J. Colavita, serves as a director of other funds in the Fund Complex.
|
|
9
|
Ms. Foley’s father, Frank J. Fahrenkopf, Jr., serves as a director of other funds in the Fund Complex.
|
|
10
|
Mr. Zizza is an independent director of Gabelli International Ltd., which may be deemed to be controlled by Mario
J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. On September 9, 2015, Mr. Zizza entered into a settlement with the SEC to resolve an inquiry relating to an alleged
violation regarding the making of false statements or omissions to the accountants of a company concerning a related party transaction. The company in question is not an affiliate of, nor has any connection to, the Fund. Under the terms of the
settlement, Mr. Zizza, without admitting or denying the SEC’s findings and allegation, paid $150,000 and agreed to cease and desist committing or causing any future violations of Rule 13b2-2 of the
Securities Exchange Act of 1934, as amended. The Board has discussed this matter and has determined that it does not disqualify Mr. Zizza from serving as an independent director.
|
26
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
INCOME TAX INFORMATION (Unaudited)
December 31, 2019
Cash Dividends and Distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable
Date
|
|
|
Record
Date
|
|
|
Ordinary
Investment
Income(a)
|
|
|
Long Term
Capital
Gains
|
|
|
Return of
Capital
|
|
|
Total Amount
Paid
Per Share(b)
|
|
|
Dividend
Reinvestment
Price
|
|
|
Common Shares
|
|
|
|
|
|
03/22/19
|
|
|
|
03/15/19
|
|
|
|
$0.03310
|
|
|
|
$0.07850
|
|
|
|
$0.00840
|
|
|
|
$0.12000
|
|
|
|
$5.19530
|
|
|
|
|
|
06/21/19
|
|
|
|
06/14/19
|
|
|
|
0.03310
|
|
|
|
0.07850
|
|
|
|
0.00840
|
|
|
|
0.12000
|
|
|
|
5.12680
|
|
|
|
|
|
09/23/19
|
|
|
|
09/16/19
|
|
|
|
0.03310
|
|
|
|
0.07850
|
|
|
|
0.00840
|
|
|
|
0.12000
|
|
|
|
5.36330
|
|
|
|
|
|
12/20/19
|
|
|
|
12/13/19
|
|
|
|
0.03310
|
|
|
|
0.07850
|
|
|
|
0.00840
|
|
|
|
0.12000
|
|
|
|
5.65000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.13240
|
|
|
|
$0.31400
|
|
|
|
$0.03360
|
|
|
|
$0.48000
|
|
|
|
|
|
|
6.000% Series B Cumulative Preferred Stock(c)
|
|
|
|
|
|
03/26/19
|
|
|
|
03/19/19
|
|
|
|
$0.11100
|
|
|
|
$0.26400
|
|
|
|
—
|
|
|
|
$0.37500
|
|
|
|
|
|
|
|
|
|
06/26/19
|
|
|
|
06/19/19
|
|
|
|
0.11150
|
|
|
|
0.26350
|
|
|
|
—
|
|
|
|
0.37500
|
|
|
|
|
|
|
|
|
|
09/26/19
|
|
|
|
09/19/19
|
|
|
|
0.11150
|
|
|
|
0.26350
|
|
|
|
—
|
|
|
|
0.37500
|
|
|
|
|
|
|
|
|
|
11/18/19
|
|
|
|
11/18/19
|
|
|
|
0.06440
|
|
|
|
0.15230
|
|
|
|
—
|
|
|
|
0.21670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.39840
|
|
|
|
$0.94330
|
|
|
|
—
|
|
|
|
$1.34170
|
|
|
|
|
|
|
4.000% Series E Cumulative Preferred Stock
|
|
|
|
|
|
12/26/19
|
|
|
|
12/18/19
|
|
|
|
$0.23110
|
|
|
|
$0.54670
|
|
|
|
—
|
|
|
|
$0.77780
|
|
|
|
|
|
A Form 1099-DIV has been mailed to all shareholders of record
for the distributions mentioned above, setting forth specific amounts to be included in the 2019 tax returns. Ordinary income distributions include net investment income and net realized short term capital gains, if any. Ordinary income is reported
in box 1a of Form 1099-DIV. Capital gain distributions are reported in box 2a of Form 1099-DIV. The long term gain distributions for the year ended December 31,
2019 were $6,992,358 or the maximum allowable.
Corporate Dividends Received Deduction, Qualified Dividend Income, and U.S. Government
Securities Income
The Fund paid to common, 6.000% Series B, and 4.000% Series E Cumulative Preferred shareholders ordinary
income dividends of $0.1324, $0.3984, and $0.2311 per share, respectively, in 2019. For the year ended December 31, 2019, 48.29% of the ordinary dividend qualified for the dividends received deduction available to corporations, 54.04% of the
ordinary income distribution was qualified dividend income, 48.38% of the ordinary income distribution was qualified interest income, and 100.00% of ordinary income distribution was qualified short term capital gain. The percentage of ordinary
income dividends paid by the Fund during 2019 derived from U.S. Treasury securities was 3.15%. Such income is exempt from state and local 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 50.00% of its assets at the end of each quarter of the Fund’s fiscal year in U.S. Government securities. The Fund did not meet this strict requirement in 2019. The percentage of
U.S. Treasury securities held as of December 31, 2019 was 7.82%.
27
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
INCOME TAX INFORMATION (Unaudited) (Continued)
December 31, 2019
Historical Distribution Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Income(a)
|
|
|
Short Term
Capital
Gains(a)
|
|
|
Long Term
Capital
Gains
|
|
|
Return of
Capital(d)
|
|
|
Total
Distributions(b)
|
|
|
Adjustment
to Cost
Basis(e)
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
$0.08920
|
|
|
|
$0.04320
|
|
|
|
$0.31400
|
|
|
|
$0.03360
|
|
|
|
$0.48000
|
|
|
|
$0.03360
|
|
|
2018
|
|
|
0.10340
|
|
|
|
0.02260
|
|
|
|
0.35400
|
|
|
|
—
|
|
|
|
0.48000
|
|
|
|
—
|
|
|
2017
|
|
|
0.12160
|
|
|
|
0.02320
|
|
|
|
0.33520
|
|
|
|
—
|
|
|
|
0.48000
|
|
|
|
—
|
|
|
2016
|
|
|
0.10490
|
|
|
|
—
|
|
|
|
0.28430
|
|
|
|
0.02080
|
|
|
|
0.41000
|
|
|
|
0.02080
|
|
|
2015
|
|
|
0.05456
|
|
|
|
0.11576
|
|
|
|
0.19872
|
|
|
|
0.11096
|
|
|
|
0.48000
|
|
|
|
0.11096
|
|
|
2014
|
|
|
0.04693
|
|
|
|
0.04547
|
|
|
|
0.17693
|
|
|
|
0.24067
|
|
|
|
0.51000
|
|
|
|
0.24067
|
|
|
2013
|
|
|
0.09120
|
|
|
|
0.31320
|
|
|
|
—
|
|
|
|
0.07560
|
|
|
|
0.48000
|
|
|
|
0.07560
|
|
|
2012
|
|
|
0.05040
|
|
|
|
0.03880
|
|
|
|
—
|
|
|
|
0.39080
|
|
|
|
0.48000
|
|
|
|
0.39080
|
|
|
2011
|
|
|
0.04210
|
|
|
|
0.01850
|
|
|
|
—
|
|
|
|
0.41940
|
|
|
|
0.48000
|
|
|
|
0.41940
|
|
|
2010
|
|
|
0.05040
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.41960
|
|
|
|
0.47000
|
|
|
|
0.41960
|
|
|
6.00% Series B Cumulative Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
$0.26840
|
|
|
|
$0.13000
|
|
|
|
$0.94330
|
|
|
|
—
|
|
|
|
$1.34170
|
|
|
|
—
|
|
|
2018
|
|
|
0.32170
|
|
|
|
0.07080
|
|
|
|
1.10750
|
|
|
|
—
|
|
|
|
1.50000
|
|
|
|
—
|
|
|
2017
|
|
|
0.37960
|
|
|
|
0.07280
|
|
|
|
1.04760
|
|
|
|
—
|
|
|
|
1.50000
|
|
|
|
—
|
|
|
2016
|
|
|
0.40400
|
|
|
|
—
|
|
|
|
1.09600
|
|
|
|
—
|
|
|
|
1.50000
|
|
|
|
—
|
|
|
2015
|
|
|
0.22180
|
|
|
|
0.47048
|
|
|
|
0.80772
|
|
|
|
—
|
|
|
|
1.50000
|
|
|
|
—
|
|
|
2014
|
|
|
0.26144
|
|
|
|
0.25316
|
|
|
|
0.98540
|
|
|
|
—
|
|
|
|
1.50000
|
|
|
|
—
|
|
|
2013
|
|
|
0.33800
|
|
|
|
1.16200
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.50000
|
|
|
|
—
|
|
|
2012
|
|
|
0.84560
|
|
|
|
0.65440
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.50000
|
|
|
|
—
|
|
|
2011
|
|
|
1.04200
|
|
|
|
0.45800
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.50000
|
|
|
|
—
|
|
|
2010
|
|
|
1.50000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.50000
|
|
|
|
—
|
|
|
4.000% Series E Cumulative Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
$0.15570
|
|
|
|
$0.07540
|
|
|
|
$0.54670
|
|
|
|
—
|
|
|
|
$0.77780
|
|
|
|
—
|
|
|
(a)
|
Taxable as ordinary income for Federal tax purposes.
|
|
(b)
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Total may differ due to rounding.
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(c)
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Represents the payment of accrued dividends attributable to 965,548 shares of Series B Cumulative Preferred Stock
redeemed on November 18, 2019.
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(e)
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Decrease in cost basis.
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All designations are
based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the
regulations thereunder.
28
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLANS
Under the Fund’s Automatic Dividend Reinvestment Plan and Voluntary Cash Purchase Plan (the “Plan”), a shareholder whose
shares of common stock are registered in his or her own name will have all distributions reinvested automatically by Computershare Trust Company, N.A. (“Computershare”), which is an agent under the Plan, unless the shareholder elects to
receive cash. Distributions with respect to shares registered in the name of a broker-dealer or other nominee (that is, in “street name”) will be reinvested by the broker or nominee in additional shares under the Plan, unless the service
is not provided by the broker or nominee or the shareholder elects to receive distributions in cash. Investors who own shares of common stock registered in street name should consult their broker-dealers for details regarding reinvestment. All
distributions to investors who do not participate in the Plan will be paid by check mailed directly to the record holder by Computershare as dividend-disbursing agent.
Enrollment in the Plan
It is the policy of
The Gabelli Convertible and Income Securities Fund Inc. (the “Fund”) to automatically reinvest dividends payable to common shareholders. As a “registered” shareholder you automatically become a participant in the Fund’s
Automatic Dividend Reinvestment Plan (the “Plan”). The Plan authorizes the Fund to credit shares of common stock to participants upon an income dividend or a capital gains distribution regardless of whether the shares are trading at a
discount or a premium to net asset value. All distributions to shareholders whose shares are registered in their own names will be automatically reinvested pursuant to the Plan in additional shares of the Fund. Plan participants may send their stock
certificates to Computershare Trust Company, N.A. (“Computershare”) to be held in their dividend reinvestment account. Registered shareholders wishing to receive their distributions in cash may submit this request through the Internet, by
telephone or in writing to:
The Gabelli Convertible and Income Securities Fund Inc.
c/o Computershare
P.O. Box 505000
Louisville, KY 40233-5000
Telephone: (800) 336-6983
Website: www.computershare.com/investor
Shareholders requesting this cash election must include the shareholder’s name and address as they appear on the Fund’s
records. Shareholders with additional questions regarding the Plan or requesting a copy of the terms of the Plan, may contact Computershare at the website or telephone number above.
If your shares are held in the name of a broker, bank, or nominee, you should contact such institution. If such institution is not
participating in the Plan, your account will be credited with a cash dividend. In order to participate in the Plan through such institution, it may be necessary for you to have your shares taken out of “street name” and re-registered in your own name. Once registered in your own name your dividends will be automatically reinvested. Certain brokers participate in the Plan. Shareholders holding shares in “street name” at
participating institutions will have dividends automatically reinvested. Shareholders wishing a cash dividend at such institution must contact their broker to make this change.
The number of shares of common stock distributed to participants in the Plan in lieu of cash dividends is determined in the following
manner. Under the Plan, whenever the market price of the Fund’s common stock is equal to or exceeds net asset value at the time shares are valued for purposes of determining the number of shares equivalent to the cash dividends or capital gains
distribution, participants are issued shares of common stock valued at the greater of (i) the net asset value as most recently determined or (ii) 95% of the then current market price of the Fund’s common stock. The valuation date is the
dividend or distribution payment date or, if that date is not a New York Stock Exchange (“NYSE”) trading day, the next trading day. If the net asset value of the common stock at the time of valuation exceeds the market price of the common
stock, participants will receive shares from the Fund valued at market price. If the Fund should declare a dividend or capital gains distribution payable only in cash, Computershare will buy common stock in the open market, or on the NYSE or
elsewhere, for the participants’ accounts, except that Computershare will endeavor to terminate purchases in the open market and cause the Fund to issue shares at net asset value if, following the commencement of such purchases, the market
value of the common stock exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains
distributions will not relieve participants of any income tax which may be payable on such distributions. A participant in the Plan will be treated for federal income tax purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received instead of shares.
Voluntary Cash Purchase Plan
The Voluntary Cash Purchase Plan is yet another vehicle for our shareholders to increase their investment in the Fund. In order to
participate in the Voluntary Cash Purchase Plan, shareholders must have their shares registered in their own name.
Participants in
the Voluntary Cash Purchase Plan have the option of making additional cash payments to Computershare for investments in the Fund’s shares at the then current market price. Shareholders may send an amount from $250 to $10,000. Computershare will
use these funds to purchase shares in the open market on or about the 1st and 15th of each month. Computershare will charge each shareholder who participates $0.75, plus a per share fee (currently $0.02 per share). Per share fees include any
applicable brokerage commissions Computershare is required to pay and fees for such purchases are expected to be less than the usual fees for such transactions. It is suggested that any voluntary cash payments be sent to Computershare, P.O. Box
6006, Carol Stream, IL 60197-6006 such that Computershare receives such payments approximately two business days before the 1st and 15th of the month. Funds not received at least two business days before the investment date shall be held for
investment
29
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLANS
(Continued)
until the next purchase date. A payment may be withdrawn without charge if notice is received by
Computershare at least two business days before such payment is to be invested.
Shareholders wishing to liquidate shares held at
Computershare may do so through the Internet, in writing or by telephone to the above-mentioned website, address or telephone number. Include in your request your name, address, and account number. Computershare will sell such shares through a
broker-dealer selected by Computershare within 5 business days of receipt of the request. The sale price will equal the weighted average price of all shares sold through the Plan on the day of the sale, less applicable fees. Participants should note
that Computershare is unable to accept instructions to sell on a specific date or at a specific price. The cost to liquidate shares is $2.50 per transaction as well as the per share fee (currently $0.10 per share) Per share fees include any
applicable brokerage commissions Computershare is required to pay and are expected to be less than the usual fees for such transactions.
More information regarding the Automatic Dividend Reinvestment Plan and Voluntary Cash Purchase Plan is available by calling (914) 921-5070 or by writing directly to the Fund.
The Fund reserves the right to amend or
terminate the Plan as applied to any voluntary cash payments made and any dividend or distribution paid subsequent to written notice of the change sent to the members of the Plan at least 30 days before the record date for such dividend or
distribution. The Plan also may be amended or terminated by Computershare on at least 30 days written notice to participants in the Plan.
30
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
One Corporate Center
Rye, NY 10580-1422
Portfolio Management Team Biographies
Mario J. Gabelli, CFA, is Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios of GAMCO Investors, Inc. that he
founded in 1977, and Chief Investment Officer - Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. He is also Executive Chairman of Associated Capital Group, Inc. Mr. Gabelli is a summa cum laude graduate of Fordham
University and holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams University.
James A. Dinsmore, CFA, joined Gabelli Funds, LLC in 2015. He currently serves as a portfolio manager of Gabelli Funds, LLC and manages several
funds within the Gabelli/GAMCO Funds Complex. Mr. Dinsmore received a BA in Economics from Cornell University and an MBA degree from Rutgers University.
Thomas H. Dinsmore, CFA, joined Gabelli Funds, LLC in 2015. He currently serves as a portfolio manager of Gabelli Funds, LLC and manages several
funds within the Gabelli/GAMCO Funds Complex. Previously Mr. Dinsmore was Chairman and CEO of Dinsmore Capital Management; CEO and Portfolio Manager of Bancroft Fund Ltd; and CEO, Portfolio Manager, and
co-founder of Ellsworth Growth and Income Fund Ltd. He received a BS in Economics from the Wharton School of Business and an MA degree in Economics from Fairleigh Dickinson University.
Jane D. O’Keeffe joined Gabelli Funds, LLC in 2015. She currently serves as a portfolio manager of Gabelli Funds, LLC and manages several
funds within the Gabelli/GAMCO Funds Complex. Previously Ms. O’Keeffe was President and Director of Dinsmore Capital Management where she was also a Portfolio Manager of Bancroft Fund Ltd. and Ellsworth Growth and Income Fund Ltd. Prior to
joining Dinsmore Capital Management, Ms. O’Keeffe held positions of increasing responsibilities at IDS Progressive Fund, Soros Fund Management Company, Simms Capital Management, and Fiduciary Trust International. She earned a BA from the
University of New Hampshire and attended the Lubin Graduate School of Business at Pace University.
We have separated the portfolio managers’ commentary from the financial statements and investment
portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio managers’ commentary is unrestricted. Both the commentary and the financial
statements, including the portfolio of investments, will be available on our website at www.gabelli.com.
The Net Asset Value per share
appears in the Publicly Traded Funds column, under the heading “Convertible Securities Funds,” in Monday’s The Wall Street Journal. It is also listed in Barron’s Mutual Funds/Closed-End
Funds section under the heading “Convertible Securities Funds.”
The Net Asset Value per share may be obtained each day by calling (914) 921-5070 or visiting www.gabelli.com.
The NASDAQ symbol for the Net Asset Value is “XGCVX.”
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, that the Fund may, from time to time, purchase its common shares in the open market when the Fund’s shares are trading at a discount of 10% or more from the net asset value of the shares.
THE GABELLI CONVERTIBLE AND
INCOME SECURITIES FUND INC.
One Corporate
Center
Rye, NY 10580-1422
|
t
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800-GABELLI
(800-422-3554)
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DIRECTORS
Mario J. Gabelli, CFA
Chairman and
Chief Executive Officer,
GAMCO Investors, Inc.
Executive Chairman,
Associated Capital Group, Inc.
John Birch
Partner,
The Cardinal Partners Global
E. Val Cerutti
Chief Executive Officer,
Cerutti Consultants, Inc.
Anthony S. Colavita
President,
Anthony S. Colavita, P.C.
Thomas H. Dinsmore, CFA
Portfolio Manager,
Gabelli Funds LLC
Vincent D. Enright
Former Senior Vice President
and Chief Financial Officer,
KeySpan Corp.
Leslie F. Foley
Attorney
Daniel D. Harding
Managing General Director,
Global Equity Income Fund
Michael J. Melarkey
Of Counsel,
McDonald Carano Wilson LLP
Kuni Nakamura
President,
Advanced Polymer, Inc.
Werner J. Roeder
Former Medical Director,
Lawrence Hospital
|
|
Anthonie C. van Ekris
Chairman,
BALMAC International, Inc.
Salvatore J. Zizza
Chairman,
Zizza & Associates Corp.
OFFICERS
Bruce N. Alpert
President
John C. Ball
Treasurer
Agnes Mullady
Vice President
Andrea R. Mango
Secretary & Vice President
Richard J. Walz
Chief Compliance Officer
Laurissa M. Martire
Vice President & Ombudsman
Bethany A. Uhlein
Vice President & Ombudsman
INVESTMENT ADVISER
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
State Street Bank and Trust
Company
COUNSEL
Skadden, Arps, Slate, Meagher &
Flom LLP
TRANSFER AGENT AND
REGISTRAR
Computershare Trust Company, N.A.
|
GCV Q4/2019
