|
|
|
|
|
|
|
|
Market
|
|
Shares
|
|
|
|
|
Cost
|
|
|
Value
|
|
|
|
|
MANDATORY
CONVERTIBLE SECURITIES(c) (Continued)
|
|
|
|
|
Diversified Industrial — 1.3%
|
|
|
|
|
|
|
11,000
|
|
|
Colfax Corp.,
|
|
|
|
|
|
|
|
|
|
|
|
|
5.750%, 01/15/22
|
|
$
|
1,145,650
|
|
|
$
|
2,048,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
and Utilities — 2.4%
|
|
|
|
|
|
|
|
|
|
NextEra Energy Inc.
|
|
|
|
|
|
|
|
|
|
17,400
|
|
|
5.279%, 03/01/23
|
|
|
848,250
|
|
|
|
851,904
|
|
|
38,030
|
|
|
6.219%, 09/01/23
|
|
|
1,889,154
|
|
|
|
1,878,682
|
|
|
5,000
|
|
|
Sempra Energy, Ser.
B,
|
|
|
|
|
|
|
|
|
|
|
|
|
6.750%, 07/15/21
|
|
|
509,073
|
|
|
|
493,850
|
|
|
11,150
|
|
|
Spire Inc., Ser.
A,
|
|
|
|
|
|
|
|
|
|
|
|
|
7.500%, 03/01/24
|
|
|
564,500
|
|
|
|
602,880
|
|
|
|
|
|
|
|
|
3,810,977
|
|
|
|
3,827,316
|
|
|
|
|
|
Financial
Services — 1.6%
|
|
|
|
|
|
|
2,115
|
|
|
2020 Cash Mandatory
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchangeable Trust,
|
|
|
|
|
|
|
|
|
|
|
|
|
5.250%, 06/01/23
|
|
|
2,278,684
|
|
|
|
2,670,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
Care — 2.3%
|
|
|
|
|
|
|
|
|
|
12,060
|
|
|
Avantor Inc., Ser.
A,
|
|
|
|
|
|
|
|
|
|
|
|
|
6.250%, 05/15/22
|
|
|
668,605
|
|
|
|
1,321,294
|
|
|
750
|
|
|
Danaher Corp., Ser.
B,
|
|
|
|
|
|
|
|
|
|
|
|
|
5.000%, 04/15/23
|
|
|
978,709
|
|
|
|
1,106,453
|
|
|
24,990
|
|
|
Elanco Animal Health
Inc.,
|
|
|
|
|
|
|
|
|
|
|
|
|
5.000%, 02/01/23
|
|
|
1,360,293
|
|
|
|
1,340,963
|
|
|
|
|
|
|
|
|
3,007,607
|
|
|
|
3,768,710
|
|
|
|
|
|
Semiconductors —
1.9%
|
|
|
|
|
|
|
|
|
|
2,085
|
|
|
Broadcom Inc., Ser.
A,
|
|
|
|
|
|
|
|
|
|
|
|
|
8.000%, 09/30/22
|
|
|
2,162,593
|
|
|
|
3,168,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
MANDATORY
|
|
|
|
|
|
|
|
|
|
|
|
|
CONVERTIBLE
|
|
|
|
|
|
|
|
|
|
|
|
|
SECURITIES
|
|
|
14,528,612
|
|
|
|
18,700,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON
STOCKS — 9.0%
|
|
|
|
|
|
|
|
|
|
Agriculture —
0.1%
|
|
|
|
|
|
|
|
|
|
2,000
|
|
|
Corteva Inc.
|
|
|
93,396
|
|
|
|
88,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive:
Parts and Accessories — 0.3%
|
|
|
|
|
|
|
|
|
|
400
|
|
|
Dana Inc.
|
|
|
9,597
|
|
|
|
9,504
|
|
|
500
|
|
|
Genuine Parts Co.
|
|
|
48,610
|
|
|
|
63,235
|
|
|
10,000
|
|
|
Navistar International
|
|
|
|
|
|
|
|
|
|
|
|
|
Corp.†
|
|
|
441,060
|
|
|
|
445,000
|
|
|
|
|
|
|
|
|
499,267
|
|
|
|
517,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcasting —
0.0%
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
Grupo Televisa SAB, ADR
|
|
|
51,560
|
|
|
|
57,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
Services — 0.1%
|
|
|
|
|
|
|
1,200
|
|
|
US
Concrete Inc.†
|
|
|
88,560
|
|
|
|
88,560
|
|
|
|
|
|
|
|
|
|
Market
|
|
Shares
|
|
|
|
|
Cost
|
|
|
Value
|
|
|
|
|
|
Communications
Equipment — 1.3%
|
|
|
|
|
|
|
8,113
|
|
|
American
Tower Corp.,
|
|
|
|
|
|
|
|
|
|
|
|
|
REIT
|
|
$
|
941,239
|
|
|
$
|
2,191,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computer
Hardware — 0.1%
|
|
|
|
|
|
|
600
|
|
|
International Business
|
|
|
|
|
|
|
|
|
|
|
|
|
Machines Corp.
|
|
|
55,824
|
|
|
|
87,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computer Software and Services — 1.3%
|
|
|
8,987
|
|
|
Alibaba Group Holding
Ltd.,
|
|
|
|
|
|
|
|
|
|
|
|
|
ADR†
|
|
|
1,344,455
|
|
|
|
2,038,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
Products — 0.4%
|
|
|
|
|
|
|
75,000
|
|
|
Swedish Match AB
|
|
|
159,856
|
|
|
|
639,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
and Utilities — 0.1%
|
|
|
|
|
|
|
515,000
|
|
|
Bristow Group Inc.,
|
|
|
|
|
|
|
|
|
|
|
|
|
Escrow†
|
|
|
0
|
|
|
|
0
|
|
|
2,000
|
|
|
PNM Resources Inc.
|
|
|
96,660
|
|
|
|
97,540
|
|
|
|
|
|
|
|
|
96,660
|
|
|
|
97,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Services — 2.0%
|
|
|
|
|
|
|
2,500
|
|
|
American Express Co.
|
|
|
221,594
|
|
|
|
413,075
|
|
|
5,000
|
|
|
Bank of America Corp.
|
|
|
138,527
|
|
|
|
206,150
|
|
|
1,400
|
|
|
Citigroup Inc.
|
|
|
77,224
|
|
|
|
99,050
|
|
|
500
|
|
|
JPMorgan Chase &
Co.
|
|
|
35,921
|
|
|
|
77,770
|
|
|
2,500
|
|
|
Julius Baer Group Ltd.
|
|
|
68,193
|
|
|
|
163,145
|
|
|
300
|
|
|
Morgan Stanley
|
|
|
12,661
|
|
|
|
27,507
|
|
|
9,000
|
|
|
State Street Corp.
|
|
|
413,587
|
|
|
|
740,520
|
|
|
18,000
|
|
|
The Bank of New York
|
|
|
|
|
|
|
|
|
|
|
|
|
Mellon Corp.
|
|
|
496,304
|
|
|
|
922,140
|
|
|
3,300
|
|
|
The PNC Financial Services
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Inc.
|
|
|
199,775
|
|
|
|
629,508
|
|
|
|
|
|
|
|
|
1,663,786
|
|
|
|
3,278,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food
and Beverage — 0.4%
|
|
|
|
|
|
|
4,000
|
|
|
Maple Leaf Foods Inc.
|
|
|
70,315
|
|
|
|
83,027
|
|
|
1,000
|
|
|
Pernod Ricard SA
|
|
|
113,236
|
|
|
|
221,972
|
|
|
1,500
|
|
|
Remy Cointreau SA
|
|
|
141,963
|
|
|
|
309,659
|
|
|
|
|
|
|
|
|
325,514
|
|
|
|
614,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
Care — 0.6%
|
|
|
|
|
|
|
|
|
|
500
|
|
|
Johnson & Johnson
|
|
|
59,862
|
|
|
|
82,370
|
|
|
20,000
|
|
|
Kindred Biosciences Inc.†
|
|
|
184,000
|
|
|
|
183,400
|
|
|
1,500
|
|
|
Merck & Co. Inc.
|
|
|
47,803
|
|
|
|
116,655
|
|
|
500
|
|
|
Organon & Co.†
|
|
|
12,510
|
|
|
|
15,130
|
|
|
13,500
|
|
|
Roche Holding AG, ADR
|
|
|
419,359
|
|
|
|
634,365
|
|
|
|
|
|
|
|
|
723,534
|
|
|
|
1,031,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
Estate Investment Trusts — 1.8%
|
|
15,205
|
|
|
Crown Castle International
|
|
|
|
|
|
|
|
|
|
|
|
|
Corp.
|
|
|
1,787,223
|
|
|
|
2,966,495
|
|
See
accompanying notes to financial statements.
The
Gabelli Convertible and Income Securities Fund Inc.
|
Schedule
of Investments (Continued) — June 30, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
Market
|
|
Shares
|
|
|
|
|
Cost
|
|
|
Value
|
|
|
|
|
|
COMMON
STOCKS (Continued)
|
|
|
|
|
|
|
|
|
|
Retail — 0.2%
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
At Home Group
Inc.†
|
|
$
|
147,600
|
|
|
$
|
147,360
|
|
|
600
|
|
|
Costco Wholesale Corp.
|
|
|
25,582
|
|
|
|
237,402
|
|
|
|
|
|
|
|
|
173,182
|
|
|
|
384,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications
— 0.3%
|
|
|
|
|
|
|
600
|
|
|
Swisscom AG
|
|
|
217,232
|
|
|
|
342,524
|
|
|
4,000
|
|
|
Verizon Communications
|
|
|
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
184,732
|
|
|
|
224,120
|
|
|
|
|
|
|
|
|
401,964
|
|
|
|
566,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation —
0.0%
|
|
|
|
|
|
|
|
|
|
800
|
|
|
GATX Corp.
|
|
|
27,171
|
|
|
|
70,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
COMMON STOCKS
|
|
|
8,433,191
|
|
|
|
14,721,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
GOVERNMENT OBLIGATIONS — 3.2%
|
|
|
$
|
5,206,000
|
|
|
U.S. Treasury Bills,
|
|
|
|
|
|
|
|
|
|
|
|
|
0.005% to 0.030%††,
|
|
|
|
|
|
|
|
|
|
|
|
|
07/29/21 to 11/18/21
|
|
|
5,205,725
|
|
|
|
5,205,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENTS — 100.0%
|
|
$
|
123,679,999
|
|
|
|
163,154,808
|
|
|
|
|
|
|
|
|
|
|
Other Assets and Liabilities (Net)
|
|
|
|
|
|
|
(518,798
|
)
|
|
|
|
|
|
|
|
|
|
PREFERRED STOCK
|
|
|
|
|
|
|
|
|
(337,600 preferred shares outstanding)
|
|
|
|
|
|
|
(33,760,000
|
)
|
|
|
|
|
|
|
|
|
|
NET ASSETS — COMMON STOCK
|
|
|
|
|
|
|
|
|
(18,821,385
common shares outstanding)
|
|
|
|
|
|
$
|
128,876,010
|
|
|
|
|
|
|
|
|
|
|
NET ASSET VALUE PER COMMON SHARE
|
|
|
|
|
|
|
|
|
($128,876,010 ÷ 18,821,385 shares outstanding)
|
|
|
|
|
|
$
|
6.85
|
|
|
(a)
|
Security
exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
|
|
(b)
|
At
June 30, 2021, the Fund held an investment in a restricted and illiquid security amounting to $2,224,719 or 1.36% of total investments,
which was valued under methods approved by the Board of Directors as follows:
|
Acquisition
Principal
Amount
|
|
Issuer
|
|
Acquisition
Date
|
|
Acquisition
Cost
|
|
06/30/21
Carrying
Value
Per Bond
|
$630,000
|
|
Digitalbridge
Operating
|
|
|
|
|
|
|
|
|
Co. LLC,
|
|
|
|
|
|
|
|
|
5.750%, 07/15/25
|
|
07/17/20
|
|
$746,727
|
|
$3,531.3000
|
|
(c)
|
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.
|
†
|
Non-income
producing security.
|
††
|
Represents
annualized yields at dates of purchase.
|
ADR
|
American
Depositary Receipt
|
REIT
|
Real
Estate Investment Trust
|
See
accompanying notes to financial statements.
The Gabelli Convertible and Income Securities Fund Inc.
Statement of Assets and
Liabilities
|
June 30, 2021 (Unaudited)
|
Assets:
|
|
|
|
Investments,
at value (cost $123,679,999)
|
|
$
|
163,154,808
|
|
Foreign currency, at
value (cost $494)
|
|
|
494
|
|
Cash
|
|
|
62,213
|
|
Deposit at brokers
|
|
|
50
|
|
Dividends
and interest receivable
|
|
|
503,708
|
|
Deferred offering expense
|
|
|
244,685
|
|
Prepaid expenses
|
|
|
2,337
|
|
Total
Assets
|
|
|
163,968,295
|
|
Liabilities:
|
|
|
|
|
Distributions payable
|
|
|
18,756
|
|
Payable for investments
purchased
|
|
|
1,000,000
|
|
Payable for investment
advisory fees
|
|
|
132,753
|
|
Payable for payroll expenses
|
|
|
20,722
|
|
Payable for accounting
fees
|
|
|
3,750
|
|
Series E Cumulative Preferred
Stock (4.00%, $100 liquidation value, 350,000 shares authorized with 337,600 shares issued and outstanding)(See Notes 2 and
5)
|
|
|
33,760,000
|
|
Other accrued expenses
|
|
|
156,304
|
|
Total
Liabilities
|
|
|
35,092,285
|
|
Net
Assets Attributable to Common Stockholders
|
|
$
|
128,876,010
|
|
Net
Assets Attributable to Common Stockholders Consist of:
|
|
|
|
|
Paid-in capital
|
|
$
|
85,626,877
|
|
Total distributable earnings
|
|
|
43,249,133
|
|
Net
Assets
|
|
$
|
128,876,010
|
|
|
|
|
|
|
Net Asset Value per
Common Share:
|
|
|
|
|
($128,876,010 ÷ 18,821,385 shares outstanding
at $0.001 par value; 998,000,000 shares authorized)
|
|
$
|
6.85
|
|
Statement of Operations
|
For the Six Months Ended June 30, 2021 (Unaudited)
|
Investment
Income:
|
|
|
|
|
Dividends
(net of foreign withholding taxes of $7,040)
|
|
$
|
600,650
|
|
Interest
|
|
|
762,738
|
|
Total
Investment Income
|
|
|
1,363,388
|
|
Expenses:
|
|
|
|
|
Investment
advisory fees
|
|
|
804,777
|
|
Interest
expense on preferred stock
|
|
|
675,200
|
|
Stockholder
communications expenses
|
|
|
42,595
|
|
Directors’
fees
|
|
|
39,431
|
|
Legal
and audit fees
|
|
|
39,272
|
|
Payroll
expenses
|
|
|
38,933
|
|
Stockholder
services fees
|
|
|
22,614
|
|
Accounting
fees
|
|
|
22,500
|
|
Shelf
offering expense
|
|
|
16,686
|
|
Custodian
fees
|
|
|
8,598
|
|
Miscellaneous
expenses
|
|
|
35,618
|
|
Total
Expenses
|
|
|
1,746,224
|
|
Less:
|
|
|
|
|
Expenses
paid indirectly by broker (See Note 3)
|
|
|
(1,119
|
)
|
Net
Expenses
|
|
|
1,745,105
|
|
Net
Investment Loss
|
|
|
(381,717
|
)
|
Net
Realized and Unrealized Gain/(Loss) on
|
|
|
|
|
Investments
and Foreign Currency:
|
|
|
|
|
Net
realized gain on investments
|
|
|
8,890,476
|
|
Net
realized gain on foreign currency transactions
|
|
|
147
|
|
|
|
|
|
|
Net
realized gain on investments and foreign currency transactions
|
|
|
8,890,623
|
|
Net
change in unrealized appreciation/depreciation:
|
|
|
|
|
on
investments
|
|
|
(2,258,889
|
)
|
on
foreign currency translations
|
|
|
(1,240
|
)
|
|
|
|
|
|
Net
change in unrealized appreciation/depreciation on investments and foreign currency translations
|
|
|
(2,260,129
|
)
|
Net
Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency
|
|
|
6,630,494
|
|
Net
Increase in Net Assets Attributable to Common Stockholders Resulting from Operations
|
|
$
|
6,248,777
|
|
See
accompanying notes to financial statements.
The
Gabelli Convertible and Income Securities Fund Inc.
Statement of Changes in
Net Assets Attributable to Common Stockholders
|
|
|
Six
Months Ended
June 30, 2021
(Unaudited)
|
|
|
Year
Ended
December 31, 2020
|
|
|
|
|
|
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
Net
investment loss
|
|
$
|
(381,717
|
)
|
|
$
|
(153,952
|
)
|
Net
realized gain on investments and foreign currency transactions
|
|
|
8,890,623
|
|
|
|
9,622,026
|
|
Net
change in unrealized appreciation/depreciation on investments and foreign currency translations
|
|
|
(2,260,129
|
)
|
|
|
19,863,836
|
|
Net
Increase in Net Assets Attributable to Common Stockholders Resulting from Operations
|
|
|
6,248,777
|
|
|
|
29,331,910
|
|
|
|
|
|
|
|
|
|
|
Distributions
to Common Stockholders:
|
|
|
|
|
|
|
|
|
Accumulated
earnings
|
|
|
(4,517,132
|
)*
|
|
|
(9,034,265
|
)
|
|
|
|
|
|
|
|
|
|
Total
Distributions to Common Stockholders
|
|
|
(4,517,132
|
)
|
|
|
(9,034,265
|
)
|
|
|
|
|
|
|
|
|
|
Net
Increase in Net Assets Attributable to Common Stockholders
|
|
|
1,731,645
|
|
|
|
20,297,645
|
|
|
|
|
|
|
|
|
|
|
Net
Assets Attributable to Common Stockholders:
|
|
|
|
|
|
|
|
|
Beginning
of year
|
|
|
127,144,365
|
|
|
|
106,846,720
|
|
End
of period
|
|
$
|
128,876,010
|
|
|
$
|
127,144,365
|
|
|
*
|
Based
on year to date book income. Amounts are subject to change and recharacterization at
year end.
|
See
accompanying notes to financial statements.
The
Gabelli Convertible and Income Securities Fund Inc.
|
Statement of Cash Flows
|
For the Six Months Ended June 30, 2021 (Unaudited)
|
Net increase
in net assets attributable to common shareholders resulting from operations
|
|
$
|
6,248,777
|
|
|
|
|
|
|
Adjustments
to Reconcile Net Increase in Net Assets Resulting from Operations to Net Cash from Operating Activities:
|
|
|
|
|
Purchase of long term
investment securities
|
|
|
(31,570,615
|
)
|
Proceeds from sales of
long term investment securities
|
|
|
35,962,424
|
|
Net sales of short term
investment securities
|
|
|
766,870
|
|
Net realized gain on
investments
|
|
|
(8,890,476
|
)
|
Net change in unrealized
depreciation on investments
|
|
|
2,258,889
|
|
Net amortization of discount
|
|
|
238,754
|
|
Decrease in dividends
and interest receivable
|
|
|
26,851
|
|
Decrease in deferred
offering expense
|
|
|
13,364
|
|
Decrease in prepaid expenses
|
|
|
2,434
|
|
Increase in payable for
investments purchased
|
|
|
1,000,000
|
|
Decrease in payable for
investment advisory fees
|
|
|
(1,417
|
)
|
Decrease in payable for
payroll expenses
|
|
|
(8,795
|
)
|
Decrease in other accrued
expenses
|
|
|
(16,903
|
)
|
Decrease in payable to
custodian
|
|
|
(1,450,745
|
)
|
Net cash provided by
operating activities
|
|
|
4,579,412
|
|
|
|
|
|
|
Net decrease in net assets
resulting from financing activities:
|
|
|
|
|
Distributions to Common
Stockholders
|
|
|
(4,517,132
|
)
|
Net cash used in financing
activities
|
|
|
(4,517,132
|
)
|
Net increase in cash
|
|
|
62,280
|
|
Cash (including foreign
currency):
|
|
|
|
|
Beginning of year
|
|
|
477
|
|
End of period
|
|
$
|
62,757
|
|
Supplemental disclosure
of cash flow information and non-cash activities:
|
|
|
|
|
Interest paid on preferred
stock
|
|
$
|
675,200
|
|
Value of shares received as part of mergers of
certain Fund investments
|
|
|
13,536,311
|
|
Value of shares received
as part of an exchange offer from one of the Fund’s investments
|
|
|
159,856
|
|
|
|
|
|
|
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 June 30, 2021:
|
Cash
|
|
$
|
62,213
|
|
Foreign currency, at
value
|
|
|
494
|
|
Cash held at broker
|
|
|
50
|
|
|
|
$
|
62,757
|
|
See
accompanying notes to financial statements.
The
Gabelli Convertible and Income Securities Fund Inc.
|
Financial
Highlights
|
Selected
data for a common share outstanding throughout each period:
|
|
Six Months Ended
|
|
|
|
|
|
|
June 30, 2021
|
|
|
Year Ended December 31,
|
|
|
|
(Unaudited)
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Operating
Performance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
asset value, beginning of year
|
|
$
|
6.76
|
|
|
$
|
5.68
|
|
|
$
|
4.83
|
|
|
$
|
5.57
|
|
|
$
|
5.30
|
|
|
$
|
5.30
|
|
Net
investment income/(loss)
|
|
|
(0.25
|
)
|
|
|
(0.01
|
)
|
|
|
0.06
|
|
|
|
0.09
|
|
|
|
0.09
|
|
|
|
0.12
|
|
Net
realized and unrealized gain/(loss) on investments, securities sold short, swap contracts, and foreign currency transactions
|
|
|
0.58
|
|
|
|
1.57
|
|
|
|
1.34
|
|
|
|
(0.22
|
)
|
|
|
0.77
|
|
|
|
0.39
|
|
Total
from investment operations
|
|
|
0.33
|
|
|
|
1.56
|
|
|
|
1.40
|
|
|
|
(0.13
|
)
|
|
|
0.86
|
|
|
|
0.51
|
|
Distributions
to Preferred Stockholders: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.01
|
)
|
|
|
(0.02
|
)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
Net
realized gain
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.06
|
)
|
|
|
(0.07
|
)
|
|
|
(0.08
|
)
|
|
|
(0.07
|
)
|
Total
distributions to preferred stockholders
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.07
|
)
|
|
|
(0.09
|
)
|
|
|
(0.11
|
)
|
|
|
(0.10
|
)
|
Net
Increase/(Decrease) in Net Assets Attributable to Common Stockholders Resulting from Operations
|
|
|
0.33
|
|
|
|
1.56
|
|
|
|
1.33
|
|
|
|
(0.22
|
)
|
|
|
0.75
|
|
|
|
0.41
|
|
Distributions
to Common Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
|
(0.01
|
)*
|
|
|
(0.02
|
)
|
|
|
(0.08
|
)
|
|
|
(0.10
|
)
|
|
|
(0.12
|
)
|
|
|
(0.10
|
)
|
Net
realized gain
|
|
|
(0.23
|
)*
|
|
|
(0.46
|
)
|
|
|
(0.37
|
)
|
|
|
(0.38
|
)
|
|
|
(0.36
|
)
|
|
|
(0.30
|
)
|
Return
of capital
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.03
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.01
|
)
|
Total
distributions to common stockholders
|
|
|
(0.24
|
)
|
|
|
(0.48
|
)
|
|
|
(0.48
|
)
|
|
|
(0.48
|
)
|
|
|
(0.48
|
)
|
|
|
(0.41
|
)
|
Fund
Share Transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
in net asset value from common share transactions issued in rights offerings
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.02
|
)
|
|
|
—
|
|
|
|
—
|
|
Increase
in net asset value from common shares issued upon reinvestment of distributions
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.00
|
(b)
|
|
|
—
|
|
|
|
—
|
|
Offering
costs and adjustment to offering costs for preferred shares charged to paid-in capital
|
|
|
—
|
|
|
|
—
|
|
|
|
0.00
|
(b)
|
|
|
(0.02
|
)
|
|
|
—
|
|
|
|
—
|
|
Total
Fund share transactions
|
|
|
—
|
|
|
|
—
|
|
|
|
0.00
|
(b)
|
|
|
(0.04
|
)
|
|
|
—
|
|
|
|
—
|
|
Net
Asset Value Attributable to Common Stockholders, End of Period
|
|
$
|
6.85
|
|
|
$
|
6.76
|
|
|
$
|
5.68
|
|
|
$
|
4.83
|
|
|
$
|
5.57
|
|
|
$
|
5.30
|
|
NAV
total return †
|
|
|
4.97
|
%
|
|
|
30.17
|
%
|
|
|
28.40
|
%
|
|
|
(5.08
|
)%
|
|
|
14.59
|
%
|
|
|
8.34
|
%
|
Market
value, end of period
|
|
$
|
6.59
|
|
|
$
|
6.25
|
|
|
$
|
5.85
|
|
|
$
|
4.39
|
|
|
$
|
5.90
|
|
|
$
|
4.69
|
|
Investment
total return ††
|
|
|
9.47
|
%
|
|
|
16.97
|
%
|
|
|
45.68
|
%
|
|
|
(14.12
|
)%
|
|
|
37.53
|
%
|
|
|
6.97
|
%
|
Ratios
to Average Net Assets and Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets including liquidation value of preferred shares, end of period (in 000’s)
|
|
$
|
162,636
|
|
|
$
|
160,904
|
|
|
$
|
141,847
|
|
|
$
|
114,684
|
|
|
$
|
103,445
|
|
|
$
|
98,733
|
|
Net
assets attributable to common shares, end of period (in 000’s)
|
|
$
|
128,876
|
|
|
$
|
127,144
|
|
|
$
|
106,847
|
|
|
$
|
90,545
|
|
|
$
|
79,306
|
|
|
$
|
74,594
|
|
Ratio
of net investment income/(loss) to average net assets attributable to common shares before preferred share
distributions
|
|
|
(0.60
|
)%(c)
|
|
|
(0.14
|
)%
|
|
|
1.17
|
%
|
|
|
1.37
|
%
|
|
|
1.56
|
%
|
|
|
2.37
|
%
|
See
accompanying notes to financial statements.
The
Gabelli Convertible and Income Securities Fund Inc.
|
Financial
Highlights (Continued)
|
Selected
data for a common share outstanding throughout each period:
|
|
Six Months Ended
|
|
|
|
|
|
|
June 30, 2021
|
|
|
Year Ended December 31,
|
|
|
|
(Unaudited)
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Ratio of operating expenses to average net assets attributable to common shares before fees waived (d)(e)
|
|
|
2.74
|
%(c)(f)
|
|
|
3.13
|
%(f)
|
|
|
2.06
|
%(f)
|
|
|
1.89
|
%
|
|
|
1.96
|
%
|
|
|
1.95
|
%(g)(h)
|
Ratio of operating expenses to average net assets
attributable to common shares net of advisory fee reduction, if any (d)(i)
|
|
|
2.74
|
%(c)(f)
|
|
|
3.13
|
%(f)
|
|
|
2.06
|
%(f)
|
|
|
1.60
|
%
|
|
|
1.96
|
%
|
|
|
1.97
|
%(g)(h)
|
Portfolio turnover rate
|
|
|
20
|
%
|
|
|
44
|
%
|
|
|
45
|
%
|
|
|
42
|
%
|
|
|
27
|
%
|
|
|
71
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative Preferred Stock:
6.000% Series B Preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidation value, end of period (in 000’s)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
24,139
|
|
|
$
|
24,139
|
|
|
$
|
24,139
|
|
Total shares outstanding (in 000’s)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
966
|
|
|
|
966
|
|
|
|
966
|
|
Liquidation preference per share
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
25.00
|
|
|
$
|
25.00
|
|
|
$
|
25.00
|
|
Average market value (j)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
25.91
|
|
|
$
|
26.45
|
|
|
$
|
26.52
|
|
Asset coverage per share
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
118.78
|
|
|
$
|
107.14
|
|
|
$
|
102.26
|
|
4.000% Series E Preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidation value, end of period (in 000’s)
|
|
$
|
33,760
|
|
|
$
|
33,760
|
|
|
$
|
35,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total shares outstanding (in 000’s)
|
|
|
338
|
|
|
|
338
|
|
|
|
350
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Liquidation preference per share
|
|
$
|
100.00
|
|
|
$
|
100.00
|
|
|
$
|
100.00
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Average market value (j)(k)
|
|
$
|
100.00
|
|
|
$
|
100.00
|
|
|
$
|
100.00
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Asset coverage per share
|
|
$
|
481.74
|
|
|
$
|
476.61
|
|
|
$
|
405.28
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Asset Coverage
|
|
|
482
|
%
|
|
|
477
|
%
|
|
|
405
|
%
|
|
|
475
|
%
|
|
|
429
|
%
|
|
|
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. Total return
for a period of less than one year is not annualized.
|
|
††
|
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. Total return for
a period of less than one year is not annualized.
|
|
*
|
Based
on year to date book income. Amounts are subject to change and recharacterization at
year end.
|
|
(a)
|
Calculated
based on average common shares outstanding on the record dates throughout the periods.
|
|
(b)
|
Amount
represents less than $0.005 per share.
|
|
(d)
|
The
Fund received credits from a designated broker who agreed to pay certain Fund operating
expenses. For all periods presented there was no impact on the expense ratios.
|
|
(e)
|
Ratio
of operating expenses to average net assets including liquidation value of preferred
shares before fee waived for the six months ended June 30, 2021 and years ended December
31, 2020, 2019, 2018, 2017, and 2016 would have been 2.17%, 2.37%, 1.61%, 1.47%, 1.50%,
and 1.46%, respectively.
|
|
(f)
|
The
Fund incurred interest expense on the Series E Preferred Shares issued October 16, 2019.
(see Footnotes 2 and 5).
|
|
(g)
|
The
Fund incurred dividend expenses on securities sold short. For the year ended December
31, 2016, the impact was minimal.
|
|
(h)
|
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.
|
|
(i)
|
Ratio
of operating expenses to average net assets including liquidation value of preferred
shares net of advisory fee reduction for the six months ended June 30, 2021 and years
ended December 31, 2020, 2019, 2018, 2017, and 2016 would have been 2.17%, 2.37%, 1.61%,
1.24%, 1.50%, and 1.46%, respectively.
|
|
(j)
|
Based
on weekly prices.
|
|
(k)
|
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.
The
Gabelli Convertible and Income Securities Fund Inc.
|
Notes
to Financial Statements (Unaudited)
|
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 stockholders 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.
The
global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies, sectors, nations,
regions and the markets in general, and may continue for an unpredictable duration. The effects of this pandemic may materially
impact the value and performance of the Fund, its ability to buy and sell fund investments at appropriate valuations, and its
ability to achieve its investment objectives.
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 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.
The
Gabelli Convertible and Income Securities Fund Inc.
|
Notes
to Financial Statements (Unaudited) (Continued)
|
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 and other financial instruments by inputs used to value the Fund’s investments as of June 30, 2021 is as follows:
|
|
Valuation Inputs
|
|
|
|
|
|
|
|
Level 1
Quoted Prices
|
|
|
Level 2 Other Significant
Observable Inputs
|
|
|
Total Market Value
at 06/30/21
|
|
INVESTMENTS IN SECURITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS (Market Value):
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Corporate Bonds (a)
|
|
|
—
|
|
|
$
|
122,981,422
|
|
|
$
|
122,981,422
|
|
Convertible Preferred Stocks (a)
|
|
$
|
1,546,170
|
|
|
|
—
|
|
|
|
1,546,170
|
|
Mandatory Convertible Securities (a)
|
|
|
16,030,357
|
|
|
|
2,670,357
|
|
|
|
18,700,714
|
|
Common Stocks (a)
|
|
|
14,721,020
|
|
|
|
0
|
|
|
|
14,721,020
|
|
U.S. Government Obligations
|
|
|
—
|
|
|
|
5,205,482
|
|
|
|
5,205,482
|
|
TOTAL INVESTMENTS IN SECURITIES – ASSETS
|
|
$
|
32,297,547
|
|
|
$
|
130,857,261
|
|
|
$
|
163,154,808
|
|
|
(a)
|
Please
refer to the Schedule of Investments for the industry classifications of these portfolio holdings.
|
There
were no level 3 investments held at June 30, 2021 and December 31, 2020.
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
The
Gabelli Convertible and Income Securities Fund Inc.
|
Notes
to Financial Statements (Unaudited) (Continued)
|
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.
When fair valuing a security, factors to consider include 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 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
Gabelli Convertible and Income Securities Fund Inc.
|
Notes
to Financial Statements (Unaudited) (Continued)
|
The
Fund’s derivative contracts held at June 30, 2021, 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 six months ended June 30, 2021, 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 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.
The
Gabelli Convertible and Income Securities Fund Inc.
|
Notes
to Financial Statements (Unaudited) (Continued)
|
Securities
Sold Short. The Fund enters 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 June 30, 2021, 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.
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
The
Gabelli Convertible and Income Securities Fund Inc.
|
Notes
to Financial Statements (Unaudited) (Continued)
|
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. For the restricted security held at June 30, 2021, refer to the Schedule of Investments.
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 or amortized to earliest call date, if applicable. 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 Stockholders.
Distributions to common stockholders are recorded on the ex-dividend date. Distributions to stockholders 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. These reclassifications
have no impact on the NAV of the Fund.
Distributions
to stockholders 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 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
Gabelli Convertible and Income Securities Fund Inc.
|
Notes
to Financial Statements (Unaudited) (Continued)
|
The
tax character of distributions paid during the year ended December 31, 2020 was as follows:
|
|
Common
|
|
Distributions paid from:
|
|
|
|
|
Ordinary income (inclusive of short term capital gains)
|
|
$
|
2,490,977
|
|
Net long term capital gains
|
|
|
6,543,288
|
|
Total distributions paid
|
|
$
|
9,034,265
|
|
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.
The
following summarizes the tax cost of investments and the related net unrealized appreciation at June 30, 2021:
|
|
Cost
|
|
Gross
Unrealized
Appreciation
|
|
Gross
Unrealized
Depreciation
|
|
Net
Unrealized
Appreciation
|
Investments
|
|
$123,725,239
|
|
$40,234,864
|
|
$(805,295)
|
|
$39,429,569
|
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. For the six months ended June
30, 2021, the Fund did not incur any income tax, interest, or penalties. As of June 30, 2021, 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 fiscal 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.
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 six months ended June 30, 2021, the Fund paid $360 in brokerage commissions on security trades to G.research, LLC, an
affiliate of the Adviser.
During
the six months ended June 30, 2021, 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
$1,119.
The
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Notes
to Financial Statements (Unaudited) (Continued)
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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 six months ended June 30, 2021, the Fund accrued
$22,500 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
six months ended June 30, 2021, the Fund accrued $38,933 in payroll expenses in the Statement of Operations.
The
Fund pays retainer and per meeting fees to Directors not affiliated with the Adviser, plus specified amounts to the Lead Director
and Audit Committee Chairman. Directors are also reimbursed for out of pocket expenses incurred in attending meetings. 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 six months ended June 30, 2021, other than short term securities
and U.S. Government obligations, aggregated $31,631,992 and $35,959,455, respectively. Purchases and sales of U.S. Government
Obligations for the six months ended June 30, 2021, aggregated $25,084,379 and $25,851,249, 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 six months ended
June 30, 2021 and the year ended December 31, 2020, the Fund did not repurchase any shares of its common stock in the open
market.
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 stockholders. 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 stockholders
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 stockholders.
On
October 16, 2019, the Fund issued 350,000 shares of Series E Preferred 4.00% Cumulative Preferred Stock, receiving $34,876,680
after the deduction of offering expenses of $123,320. 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
The
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Notes
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redemption
by the Fund on October 16, 2023. At June 30, 2021, 337,600 shares of Series E Preferred were outstanding and accrued dividends
amounted to $18,756.
From
April 16, 2020 to October 15, 2020 (the First Put Period), the Fund would accept for redemption, in aggregate, up to 10% of the
outstanding Series E Preferred. 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, with the number of outstanding Series E Preferred determined as
of October 16, 2020. A Series E Preferred stockholder may, after notice to the Fund 30 days prior to the respective put period,
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
on a pro rata basis. During the period from October 16, 2021 to October 15, 2022 (the Third Put Period), a Series E Preferred
stockholder 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 not previously liquidated at the liquidation preference plus any
accumulated and unpaid dividends.
On
May 17, 2020, 12,400 shares of the Series E were put back to the Fund at their liquidation preference of $100 per share plus accrued
and unpaid dividends.
The
holders of Preferred Stock generally are entitled to one vote per share held on each matter submitted to a vote of stockholders
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 stockholder approval. However, the Fund has adopted a policy to provide stockholders 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.
The
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Notes
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8.
Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the
financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in
the financial statements.