The
Gabelli Convertible and Income Securities Fund Inc.
Schedule
of Investments (Continued) — June 30, 2022 (Unaudited)
Shares |
| |
Cost | | |
Market
Value | |
|
| |
|
COMMON STOCKS (Continued) |
|
| |
|
Financial Services (Continued) | | |
| | |
|
1,200 | |
|
The
PNC Financial Services Group Inc. | |
$ | 74,166 | | |
$ | 189,324 | |
|
| |
|
| |
| 1,694,229 | | |
| 2,298,847 | |
|
| |
|
Food and Beverage — 0.2% | | |
| | |
|
600 | |
|
Pernod Ricard SA | |
| 67,942 | | |
| 110,223 | |
|
600 | |
|
Remy
Cointreau SA | |
| 73,781 | | |
| 104,816 | |
|
| |
|
| |
| 141,723 | | |
| 215,039 | |
|
| |
|
Health
Care — 1.4% | |
| | | |
| | |
|
8,000 | |
|
Covetrus Inc.† | |
| 166,240 | | |
| 166,000 | |
|
14,666 | |
|
Enovis Corp.† | |
| 620,823 | | |
| 806,630 | |
|
500 | |
|
Johnson & Johnson | |
| 59,862 | | |
| 88,755 | |
|
1,500 | |
|
Merck & Co. Inc. | |
| 47,803 | | |
| 136,755 | |
|
12,000 | |
|
Roche
Holding AG, ADR | |
| 390,026 | | |
| 500,520 | |
|
| |
|
| |
| 1,284,754 | | |
| 1,698,660 | |
|
| |
|
Real Estate Investment Trusts — 2.2% | | |
| | |
|
15,205 | |
|
Crown
Castle International Corp. | |
| 1,753,161 | | |
| 2,560,218 | |
|
| |
|
| |
| | | |
| | |
|
| |
|
Retail — 0.1% | | |
| | |
|
300 | |
|
Costco
Wholesale Corp. | |
| 12,745 | | |
| 143,784 | |
|
| |
|
| |
| | | |
| | |
|
| |
|
Telecommunications — 0.4% | | |
| | |
|
600 | |
|
Swisscom AG | |
| 217,232 | | |
| 331,472 | |
|
3,500 | |
|
Verizon
Communications Inc. | |
| 161,640 | | |
| 177,625 | |
|
| |
|
| |
| 378,872 | | |
| 509,097 | |
|
| |
|
TOTAL
COMMON STOCKS | |
| 8,633,136 | | |
| 12,307,347 | |
Principal
Amount | |
|
| |
| | | |
| | |
|
| |
|
U.S. GOVERNMENT OBLIGATIONS — 4.1% | | |
| | |
$ |
4,845,000 | |
|
U.S.
Treasury Bills, 1.033% to 1.647%††, 08/25/22 to 09/22/22 | |
| 4,832,423 | | |
| 4,830,548 | |
| |
| | | |
| | |
TOTAL INVESTMENTS — 100.0% | |
$ | 117,716,045 | | |
| 118,482,240 | |
| |
|
| |
| | | |
| | |
Other Assets and Liabilities (Net) | | |
| 234,384 | |
| |
|
| |
| | | |
| | |
PREFERRED STOCK | |
| | | |
| | |
(337,600 preferred shares outstanding) | | |
| (33,760,000 | ) |
| |
|
| |
| | | |
| | |
NET ASSETS — COMMON STOCK | | |
| | |
(19,040,029 common shares outstanding) | | |
$ | 84,956,624 | |
| |
|
| |
| | | |
| | |
NET ASSET VALUE PER COMMON SHARE | | |
| | |
($84,956,624 ÷ 19,040,029 shares outstanding) | | |
$ | 4.46 | |
| (a) | Securities
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. |
| (b) | At
June 30, 2022, the Fund held an investment in a restricted and illiquid security amounting
to $1,422,225 or 1.20% of total investments, which was valued under methods approved
by the Board of Directors as follows: |
Acquisition
Principal Amount | | |
Issuer | |
Acquisition
Date | | |
Acquisition
Cost | | |
06/30/22
Carrying Value Per Bond | |
| | |
| |
| | |
| | |
| |
$ | 630,000 | | |
Digitalbridge
Operating Co. LLC, 5.750%, 07/15/25 | |
| 07/17/20 | | |
$ | 769,626 | | |
$ | 2,257.5000 | |
| (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, 2022 (Unaudited)
Assets: | |
| |
Investments,
at value (cost $117,716,045) | |
$ | 118,482,240 | |
Cash | |
| 20,334 | |
Deposit
at brokers | |
| 50 | |
Dividends
and interest receivable | |
| 374,973 | |
Deferred
offering expense | |
| 114,136 | |
Prepaid
expenses | |
| 833 | |
Total
Assets | |
| 118,992,566 | |
Liabilities: | |
| | |
Distributions
payable | |
| 18,755 | |
Payable
for investment advisory fees | |
| 101,012 | |
Payable
for payroll expenses | |
| 39,690 | |
Payable
for accounting fees | |
| 7,500 | |
Series
E Cumulative Preferred Stock, callable and mandatory redemption 10/16/23 (See Notes 2 and 6) | |
| 33,760,000 | |
Other
accrued expenses | |
| 108,985 | |
Total
Liabilities | |
| 34,035,942 | |
Net
Assets Attributable to Common Stockholders | |
$ | 84,956,624 | |
Net
Assets Attributable to Common Stockholders Consist of: | |
| | |
Paid-in
capital | |
$ | 84,506,918 | |
Total
distributable earnings | |
| 449,706 | |
Net
Assets | |
$ | 84,956,624 | |
Net
Asset Value per Common Share: | |
| | |
($84,956,624 ÷
19,040,029 shares outstanding at $0.001 par value; 998,000,000 shares authorized) | |
$ | 4.46 | |
Statement
of Operations
For
the Six Months Ended June 30, 2022 (Unaudited)
Investment
Income: | |
| |
Dividends
(net of foreign withholding taxes of $8,952) | |
$ | 352,202 | |
Interest | |
| 486,446 | |
Total
Investment Income | |
| 838,648 | |
Expenses: | |
| | |
Investment advisory
fees | |
| 672,524 | |
Interest expense on
preferred stock | |
| 675,200 | |
Payroll expenses | |
| 42,131 | |
Directors’ fees | |
| 41,687 | |
Stockholder communications
expenses | |
| 39,117 | |
Legal and audit fees | |
| 36,613 | |
Accounting fees | |
| 22,500 | |
Stockholder services
fees | |
| 21,267 | |
Shelf offering expense | |
| 15,836 | |
Custodian fees | |
| 7,850 | |
Interest expense | |
| 461 | |
Miscellaneous expenses | |
| 34,072 | |
Total
Expenses | |
| 1,609,258 | |
Less: | |
| | |
Expenses paid indirectly
by broker (See Note 5) | |
| (1,688 | ) |
Net
Expenses | |
| 1,607,570 | |
Net
Investment Loss | |
| (768,922 | ) |
Net
Realized and Unrealized Gain/(Loss) on Investments
and Foreign Currency: | |
| | |
Net realized gain
on investments | |
| 2,816,624 | |
Net realized gain
on foreign currency transactions | |
| 787 | |
Net realized gain
on investments and foreign currency transactions | |
| 2,817,411 | |
Net change in unrealized
appreciation/depreciation : | |
| | |
on investments | |
| (32,849,425 | ) |
on foreign currency
translations | |
| (2,239 | ) |
Net change in unrealized
appreciation/depreciation on investments and foreign currency translations | |
| (32,851,664 | ) |
Net
Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | |
| (30,034,253 | ) |
Net
Decrease in Net Assets Attributable to Common Stockholders Resulting from Operations | |
$ | (30,803,175 | ) |
| |
|
| |
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, 2022 (Unaudited) | |
|
| |
Year Ended December 31, 2021 | |
Operations: |
| |
| |
|
| |
| |
Net investment loss |
| |
$ | (768,922 | ) |
|
| |
$ | (1,199,627 | ) |
Net realized gain on investments and foreign currency transactions |
| |
| 2,817,411 | |
|
| |
| 11,732,999 | |
Net change in unrealized appreciation/depreciation on investments and foreign currency translations |
| |
| (32,851,664 | ) |
|
| |
| (8,118,828 | ) |
Net Increase/(Decrease) in Net Assets Attributable to Common Stockholders Resulting from Operations |
| |
| (30,803,175 | ) |
|
| |
| 2,414,544 | |
|
| |
| | |
|
| |
| | |
Distributions to Common Stockholders: |
| |
| | |
|
| |
| | |
Accumulated Earnings |
| |
| (2,348,836 | )* |
|
| |
| (10,542,282 | ) |
Return of capital |
| |
| (2,197,299 | )* |
|
| |
| — | |
|
| |
| | |
|
| |
| | |
Total Distributions to Common Stockholders |
| |
| (4,546,135 | ) |
|
| |
| (10,542,282 | ) |
|
| |
| | |
|
| |
| | |
Fund Share Transactions: |
| |
| | |
|
| |
| | |
Net increase in net assets from common shares issued upon reinvestment of distributions |
| |
| 797,674 | |
|
| |
| 491,633 | |
Net Increase in Net Assets from Fund Share Transactions |
| |
| 797,674 | |
|
| |
| 491,633 | |
|
| |
| | |
|
| |
| | |
Net Decrease in Net Assets Attributable to Common Stockholders |
| |
| (34,551,636 | ) |
|
| |
| (7,636,105 | ) |
|
| |
| | |
|
| |
| | |
Net Assets Attributable to Common Stockholders: |
| |
| | |
|
| |
| | |
Beginning of year |
| |
| 119,508,260 | |
|
| |
| 127,144,365 | |
End of period |
| |
$ | 84,956,624 | |
|
| |
$ | 119,508,260 | |
| * | 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, 2022 (Unaudited)
Net decrease in net assets attributable to common stockholders resulting from operations | |
$ | (30,803,175 | ) |
| |
| | |
Adjustments to Reconcile Net Decrease in Net Assets Resulting from Operations to Net Cash from Operating Activities: | |
| | |
Purchase of long term investment securities | |
| (35,840,853 | ) |
Proceeds from sales of long term investment securities | |
| 33,537,070 | |
Net sales of short term investment securities | |
| 7,156,667 | |
Net realized gain on investments | |
| (2,816,624 | ) |
Net change in unrealized depreciation on investments | |
| 32,849,425 | |
Net amortization of discount | |
| 230,141 | |
Decrease in dividends and interest receivable | |
| 43,991 | |
Decrease in deferred offering expense | |
| 15,835 | |
Increase in prepaid expenses | |
| (518 | ) |
Decrease in distributions payable | |
| (566,949 | ) |
Decrease in payable for investment advisory fees | |
| (28,509 | ) |
Increase in payable for payroll expenses | |
| 6,874 | |
Increase in payable for accounting fees | |
| 3,750 | |
Decrease in other accrued expenses | |
| (73,703 | ) |
Net cash provided by operating activities | |
| 3,713,422 | |
| |
| | |
Net decrease in net assets resulting from financing activities: | |
| | |
Distributions to common stockholders | |
| (4,546,135 | ) |
Net increase in net assets from common shares issued upon reinvestment of distributions | |
| 797,674 | |
Net cash used in financing activities | |
| (3,748,461 | ) |
Net decrease in cash | |
| (35,039 | ) |
Cash : | |
| | |
Beginning of year | |
| 55,423 | |
End of period | |
$ | 20,384 | |
| |
| | |
Supplemental disclosure of cash flow information and non-cash activities: | |
| | |
Interest paid on preferred stock | |
$ | 675,200 | |
Interest paid on bank overdrafts | |
| 461 | |
Increase in net assets from common shares issued upon reinvestment of distributions | |
| 797,674 | |
Value of shares received as part of mergers of certain Fund investments | |
| (13,664,383 | ) |
| |
| | |
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, 2022: | |
| |
Cash | |
$ | 20,334 | |
Cash held at broker | |
| 50 | |
| |
$ | 20,384 | |
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, 2022 | | |
Year Ended December 31, | |
| |
(Unaudited) | | |
2021 | | |
2020 | | |
2019 | | |
2018 | | |
2017 | |
Operating Performance: | |
| | |
| | |
| | |
| | |
| | |
| |
Net asset value, beginning of year | |
$ | 6.32 | | |
$ | 6.76 | | |
$ | 5.68 | | |
$ | 4.83 | | |
$ | 5.57 | | |
$ | 5.30 | |
Net investment income/(loss) | |
| (0.04 | ) | |
| (0.06 | ) | |
| (0.01 | ) | |
| 0.06 | | |
| 0.09 | | |
| 0.09 | |
Net realized and unrealized gain/(loss) on
investments, securities sold short, swap contracts, and foreign currency transactions | |
| (1.58 | ) | |
| 0.18 | | |
| 1.57 | | |
| 1.34 | | |
| (0.22 | ) | |
| 0.77 | |
Total from investment operations | |
| (1.62 | ) | |
| 0.12 | | |
| 1.56 | | |
| 1.40 | | |
| (0.13 | ) | |
| 0.86 | |
Distributions
to Preferred Stockholders: (a) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net investment income | |
| — | | |
| — | | |
| — | | |
| (0.01 | ) | |
| (0.02 | ) | |
| (0.03 | ) |
Net realized gain | |
| — | | |
| — | | |
| — | | |
| (0.06 | ) | |
| (0.07 | ) | |
| (0.08 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total distributions to preferred stockholders | |
| — | | |
| — | | |
| — | | |
| (0.07 | ) | |
| (0.09 | ) | |
| (0.11 | ) |
Net Increase/(Decrease)
in Net Assets Attributable to Common Stockholders Resulting from Operations | |
| (1.62 | ) | |
| 0.12 | | |
| 1.56 | | |
| 1.33 | | |
| (0.22 | ) | |
| 0.75 | |
Distributions to Common Stockholders: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net investment income | |
| — | | |
| — | | |
| (0.02 | ) | |
| (0.08 | ) | |
| (0.10 | ) | |
| (0.12 | ) |
Net realized gain | |
| (0.12 | )* | |
| (0.56 | ) | |
| (0.46 | ) | |
| (0.37 | ) | |
| (0.38 | ) | |
| (0.36 | ) |
Return of capital | |
| (0.12 | )* | |
| — | | |
| — | | |
| (0.03 | ) | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total distributions to common stockholders | |
| (0.24 | ) | |
| (0.56 | ) | |
| (0.48 | ) | |
| (0.48 | ) | |
| (0.48 | ) | |
| (0.48 | ) |
Fund Share Transactions: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Decrease in net asset value from common share transactions | |
| — | | |
| — | | |
| — | | |
| — | | |
| (0.02 | ) | |
| — | |
Increase in net asset value from common shares issued upon reinvestment
of distributions | |
| 0.00 | (b) | |
| 0.00 | (b) | |
| — | | |
| — | | |
| 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) | |
| 0.00 | (b) | |
| — | | |
| 0.00 | (b) | |
| (0.04 | ) | |
| — | |
Net Asset Value Attributable to Common Stockholders, End of
Period | |
$ | 4.46 | | |
$ | 6.32 | | |
$ | 6.76 | | |
$ | 5.68 | | |
$ | 4.83 | | |
$ | 5.57 | |
NAV total return † | |
| (25.91 | )% | |
| 1.72 | % | |
| 30.17 | % | |
| 28.40 | % | |
| (5.08 | )% | |
| 14.59 | % |
Market value, end of period | |
$ | 5.40 | | |
$ | 6.88 | | |
$ | 6.25 | | |
$ | 5.85 | | |
$ | 4.39 | | |
$ | 5.90 | |
Investment total return †† | |
| (18.08 | )% | |
| 20.11 | % | |
| 16.97 | % | |
| 45.68 | % | |
| (14.12 | )% | |
| 37.53 | % |
Ratios to Average Net Assets and Supplemental
Data: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net assets including liquidation value of preferred shares, end
of period (in 000’s) | |
$ | 118,717 | | |
$ | 153,268 | | |
$ | 160,904 | | |
$ | 141,847 | | |
$ | 114,684 | | |
$ | 103,445 | |
Net assets attributable to common shares, end of period (in 000’s) | |
$ | 84,957 | | |
$ | 119,508 | | |
$ | 127,144 | | |
$ | 106,847 | | |
$ | 90,545 | | |
| 79,306 | |
Ratio of net investment income/(loss) to average net assets attributable
to common shares before preferred share distributions | |
| (1.52 | )%(c) | |
| (0.94 | )% | |
| (0.14 | )% | |
| 1.17 | % | |
| 1.37 | % | |
| 1.56 | % |
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, 2022 | | |
Year
Ended December 31, | |
| |
(Unaudited) | | |
2021 | | |
2020 | | |
2019 | | |
2018 | | |
2017 | |
Ratio of operating expenses to average net assets attributable
to common shares before fees waived (d)(e) | |
| 3.19 | %(c)(f) | |
| 2.87 | %(f) | |
| 3.13 | %(f) | |
| 2.06 | %(f) | |
| 1.89 | % | |
| 1.96 | % |
Ratio of operating expenses to average net assets attributable to
common shares net of advisory fee reduction, if any (e)(g) | |
| 3.18 | %(c)(f) | |
| 2.87 | %(f) | |
| 3.13 | %(f) | |
| 2.06 | %(f) | |
| 1.60 | % | |
| 1.96 | % |
Portfolio turnover rate | |
| 26 | % | |
| 35 | % | |
| 44 | % | |
| 45 | % | |
| 42 | % | |
| 27 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cumulative Preferred Stock: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
6.000% Series B Preferred | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Liquidation value, end of period (in 000’s) | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 24,139 | | |
$ | 24,139 | |
Total shares outstanding (in 000’s) | |
| — | | |
| — | | |
| — | | |
| — | | |
| 966 | | |
| 966 | |
Liquidation preference per share | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 25.00 | | |
$ | 25.00 | |
Average market value (h) | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 25.91 | | |
$ | 26.45 | |
Asset coverage per share | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 118.78 | | |
$ | 107.14 | |
4.000% Series E Preferred | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Liquidation value, end of period (in 000’s) | |
$ | 33,760 | | |
$ | 33,760 | | |
$ | 33,760 | | |
$ | 35,000 | | |
| — | | |
| — | |
Total shares outstanding (in 000’s) | |
| 338 | | |
| 338 | | |
| 338 | | |
| 350 | | |
| — | | |
| — | |
Liquidation preference per share | |
$ | 100.00 | | |
$ | 100.00 | | |
$ | 100.00 | | |
$ | 100.00 | | |
| — | | |
| — | |
Average market value (h)(i) | |
$ | 100.00 | | |
$ | 100.00 | | |
$ | 100.00 | | |
$ | 100.00 | | |
| — | | |
| — | |
Asset coverage per share | |
$ | 351.65 | | |
$ | 453.99 | | |
$ | 476.61 | | |
$ | 405.28 | | |
| — | | |
| — | |
Asset Coverage | |
| 352 | % | |
| 454 | % | |
| 477 | % | |
| 405 | % | |
| 475 | % | |
| 429 | % |
| † | 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) | Ratio
of operating expenses to average net assets including liquidation value of preferred
shares before fee waived for the six months ended June 30, 2022 and years ended December
31, 2021, 2020, 2019, 2018, and 2017 would have been 2.39%, 2.27%, 2.37%, 1.61%, 1.47%,
and 1.50%, respectively. |
| (e) | The
Fund received credits from a designated broker who agreed to pay certain Fund operating
expenses. For the six months ended June 30, 2022, if credits had not been received, the
expense ratios would have been 3.19%. For the years ended December 31, 2021, 2020, 2019,
2018, and 2017, there was no impact on the expense ratios. |
| (f) | The
Fund incurred interest expense on the Series E Preferred Shares issued October 16, 2019.
(see Footnotes 2 and 6). |
| (g) | 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, 2022 and years
ended December 31, 2021, 2020, 2019, 2018, and 2017 would have been 2.39%, 2.27%, 2.37%,
1.61%, 1.24%, and 1.50%, respectively. |
| (h) | Based
on weekly prices. |
| (i) | 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 was incorporated on December 19, 1988 in Maryland. The Fund
is a diversified closed-end management investment company registered under the Investment Company Act of 1940, as amended (the
1940 Act). The 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 commenced investment operations on July 3, 1989. 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.
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
The
Gabelli Convertible and Income Securities Fund Inc.
Notes
to Financial Statements (Unaudited) (Continued)
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, 2022 is as follows:
| |
Valuation
Inputs | |
| |
| |
Level
1 Quoted Prices | |
Level
2 Other Significant Observable Inputs | |
Total
Market Value at 06/30/22 |
INVESTMENTS IN SECURITIES: | |
| | |
| | |
| |
ASSETS (Market Value): | |
| | |
| | |
| |
Convertible Corporate Bonds (a) | |
| — | | |
$ | 90,031,188 | | |
$ | 90,031,188 | |
Mandatory Convertible Securities (a) | |
$ | 8,882,811 | | |
| 2,430,346 | | |
| 11,313,157 | |
Common Stocks (a) | |
| 12,307,347 | | |
| — | | |
| 12,307,347 | |
U.S. Government Obligations | |
| — | | |
| 4,830,548 | | |
| 4,830,548 | |
TOTAL
INVESTMENTS IN SECURITIES – ASSETS | |
$ | 21,190,158 | | |
$ | 97,292,082 | | |
$ | 118,482,240 | |
| (a) | Please
refer to the Schedule of Investments for the industry classifications of these portfolio
holdings. |
The
Fund held no level 3 investments at June 30, 2022 and December 31, 2021.
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.
The
Gabelli Convertible and Income Securities Fund Inc.
Notes
to Financial Statements (Unaudited) (Continued)
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
Fund’s derivative contracts held at June 30, 2022, 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
The
Gabelli Convertible and Income Securities Fund Inc.
Notes
to Financial Statements (Unaudited) (Continued)
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, 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.
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
The
Gabelli Convertible and Income Securities Fund Inc.
Notes
to Financial Statements (Unaudited) (Continued)
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, 2022,
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 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, 2022, 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
The
Gabelli Convertible and Income Securities Fund Inc.
Notes
to Financial Statements (Unaudited) (Continued)
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.
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.
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 6.
The
tax character of distributions paid during the year ended December 31, 2021 was as follows:
| |
Common | |
Distributions paid from: | |
| | |
Ordinary income (inclusive of short term capital gains)
| |
$ | 524,233 | |
Net long term capital gains | |
| 10,018,049 | |
Total distributions paid | |
$ | 10,542,282 | |
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
Gabelli Convertible and Income Securities Fund Inc.
Notes
to Financial Statements (Unaudited) (Continued)
The
following summarizes the tax cost of investments and the related net unrealized appreciation at June 30, 2022:
| | |
Cost | |
Gross
Unrealized Appreciation | |
Gross
Unrealized Depreciation | |
Net
Unrealized Appreciation |
Investments
| | |
| $117,748,030 | | |
| $11,746,483 | | |
| $(11,012,273) | | |
| $734,210 | |
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 six months ended June 30, 2022, the Fund
did not incur any income tax, interest, or penalties. As of June 30, 2022, 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.
4.
Portfolio Securities. Purchases and sales of securities during the six months ended June 30, 2022, other than short term securities
and U.S. Government obligations, aggregated $35,906,616 and $33,498,361, respectively. Purchases and sales of U.S. Government
Obligations for the six months ended June 30, 2022, aggregated $20,522,249 and $27,678,916, respectively.
5.
Transactions with Affiliates and Other Arrangements. During the six months ended June 30, 2022, the Fund paid $348 in
brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser.
During the six months ended
June 30, 2022, 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 $1,688.
The
cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. 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, 2022, 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, 2022, the Fund accrued $42,131 in payroll expenses in the Statement of Operations.
The
Gabelli Convertible and Income Securities Fund Inc.
Notes
to Financial Statements (Unaudited) (Continued)
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.
6.
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, 2022 and the year ended December 31, 2021, the Fund did not repurchase any shares of its common
stock in the open market.
For
the six months ended June 30, 2022 and the year ended December 31, 2021, transactions in common stock were as follows:
| |
Six
Months Ended June 30, 2022 (Unaudited) | |
Year
Ended
December 31, 2021
|
| |
Shares | |
Amount | |
Shares | |
Amount |
Net increase
in net assets from common shares issued upon reinvestment of distributions | |
| 141,749 | | |
$ | 797,674 | | |
| 76,895 | | |
$ | 491,633 | |
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.
As
of June 30, 2022, the Fund had an effective shelf registration authorizing the issuance of $125 million in common or preferred
shares.
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 redemption by the Fund on October 16, 2023.
At June 30, 2022, 337,600 shares of Series E Preferred were outstanding and accrued dividends amounted to $18,755.
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
The
Gabelli Convertible and Income Securities Fund Inc.
Notes
to Financial Statements (Unaudited) (Continued)
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.
7.
Significant Shareholder. As of June 30, 2022, approximately XX.X% of the Common Shares were beneficially owned by the
Adviser and its affiliates, including managed accounts for which the affiliates of the Adviser have voting control but
disclaim pecuniary interest.
8.
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.
9.
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
Gabelli Convertible and Income Securities Fund Inc.
Notes
to Financial Statements (Unaudited) (Continued)
10.
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.