UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-05715
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The Gabelli Convertible and Income Securities Fund Inc.
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(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-422-3554
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Date of fiscal year end: December 31
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Date of reporting period: March 31, 2008
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Form N-Q is to be used by management investment companies, other than small
business investment companies registered on Form N-5 (ss.ss. 239.24 and 274.5 of
this chapter), to file reports with the Commission, not later than 60 days after
the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under
the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use
the information provided on Form N-Q in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-Q, and
the Commission will make this information public. A registrant is not required
to respond to the collection of information contained in Form N-Q unless the
Form displays a currently valid Office of Management and Budget ("OMB") control
number. Please direct comments concerning the accuracy of the information
collection burden estimate and any suggestions for reducing the burden to the
Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC
20549. The OMB has reviewed this collection of information under the clearance
requirements of 44 U.S.C. ss. 3507.
ITEM 1. SCHEDULE OF INVESTMENTS.
The Schedule(s) of Investments is attached herewith.
[LOGO]
THE GABELLI
CONVERTIBLE AND
INCOME SECURITIES
FUND INC.
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
First Quarter Report
March 31, 2008
TO OUR SHAREHOLDERS,
The Gabelli Convertible and Income Securities Fund's (the "Fund") net
asset value ("NAV") total return was (5.7)% during the first quarter of 2008,
compared with declines of 9.4% and 6.2% for the Standard & Poor's ("S&P") 500
Index and the Lipper Convertible Securities Fund Average, respectively, and a
gain of 2.5% for the Lehman Brothers Government/Corporate Bond Index. The total
return for the Fund's publicly traded shares was (2.4)% during the first
quarter. On March 31, 2008, the Fund's NAV per share was $7.25, while the price
of the publicly traded shares closed at $7.29 on the New York Stock Exchange
("NYSE").
Enclosed is the investment portfolio as of March 31, 2008.
COMPARATIVE RESULTS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2008 (a)
-------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year 15 Year (07/03/89)
------- -------- ------ ------ ------- ------- ----------
GABELLI CONVERTIBLE AND INCOME SECURITIES FUND
NAV TOTAL RETURN (b) ................................ (5.71)% (3.76)% 6.23% 6.82% 4.68% 6.22% 7.28%
INVESTMENT TOTAL RETURN (c) ......................... (2.35) (11.81) 1.67 3.83 5.25 N/A(d) 6.13(d)
S&P 500 Index .......................................... (9.44) (5.08) 5.84 11.32 3.50 9.45 10.23(e)
Lehman Brothers Government/Corporate Bond Index ........ 2.53 8.35 5.55 4.62 6.12 6.40 7.31(e)
Lipper Convertible Securities Fund Average ............. (6.24) (1.95) 5.93 9.30 5.31 8.09 9.22(e)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE. WHEN SHARES ARE SOLD, THEY MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE DATA PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE
INFORMATION AS OF THE MOST RECENT MONTH END. PERFORMANCE RETURNS FOR
PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. INVESTORS SHOULD CAREFULLY
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE
FUND BEFORE INVESTING. THE S&P 500 INDEX IS AN UNMANAGED INDICATOR OF
STOCK MARKET PERFORMANCE. THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND
INDEX IS AN UNMANAGED MARKET VALUE WEIGHTED INDEX THAT TRACKS THE TOTAL
RETURN PERFORMANCE OF FIXED RATE, PUBLICLY PLACED, DOLLAR DENOMINATED
OBLIGATIONS. THE LIPPER CONVERTIBLE SECURITIES FUND AVERAGE REFLECTS THE
AVERAGE PERFORMANCE OF OPEN-END MUTUAL FUNDS CLASSIFIED IN THIS PARTICULAR
CATEGORY. DIVIDENDS AND INTEREST INCOME ARE CONSIDERED REINVESTED. YOU
CANNOT INVEST DIRECTLY IN AN INDEX.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN THE NAV PER
SHARE, REINVESTMENT OF DISTRIBUTIONS AT NAV ON THE EX-DIVIDEND DATE, AND
ADJUSTMENTS FOR RIGHTS OFFERINGS AND ARE NET OF EXPENSES. SINCE INCEPTION
RETURN IS BASED ON AN INITIAL NAV OF $10.00.
(c) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN CLOSING MARKET
VALUES ON THE NEW YORK STOCK EXCHANGE, REINVESTMENT OF DISTRIBUTIONS, AND
ADJUSTMENTS FOR RIGHTS OFFERINGS. SINCE INCEPTION RETURN IS BASED ON AN
INITIAL OFFERING PRICE OF $11.25.
(d) THE FUND CONVERTED TO CLOSED-END STATUS ON MARCH 31, 1995 AND HAD NO
OPERATING HISTORY ON THE NEW YORK STOCK EXCHANGE PRIOR TO THAT DATE.
(e) FROM JUNE 30, 1989, THE DATE CLOSEST TO THE FUND'S INCEPTION FOR WHICH
DATA IS AVAILABLE.
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We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The financial
statements and investment portfolio are mailed separately from the commentary.
Both the commentary and the financial statements, including the portfolio of
investments, will be available on our website at www.gabelli.com.
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THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
SCHEDULE OF INVESTMENTS
MARCH 31, 2008 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
------------ ---------------
CONVERTIBLE CORPORATE BONDS -- 20.3%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 4.0%
$ 6,000,000 Standard Motor Products Inc., Sub. Deb. Cv., 6.750%, 07/15/09 ................................... $ 5,745,000
---------------
BROADCASTING -- 3.8%
1,500,000 Sinclair Broadcast Group Inc., Cv. (STEP), 4.875%, 07/15/18 ..................................... 1,372,500
4,500,000 Sinclair Broadcast Group Inc., Sub. Deb. Cv., 6.000%, 09/15/12 .................................. 4,016,250
---------------
5,388,750
---------------
BUSINESS SERVICES -- 0.0%
900,000 BBN Corp., Sub. Deb. Cv., 6.000%, 04/01/12+ (a) ................................................. 0
---------------
CABLE AND SATELLITE -- 0.0%
400,000 Adelphia Communications Corp., Sub. Deb. Cv., 3.250%, 05/01/21+ (a) ............................. 0
---------------
COMMUNICATIONS EQUIPMENT -- 4.9%
3,000,000 Agere Systems Inc., Sub. Deb. Cv., 6.500%, 12/15/09 ............................................. 3,045,000
4,000,000 Nortel Networks Corp., Cv., 4.250%, 09/01/08 .................................................... 3,970,000
---------------
7,015,000
---------------
CONSUMER PRODUCTS -- 0.1%
100,000 Church & Dwight Co. Inc., Deb. Cv., 5.250%, 08/15/33 (b) ........................................ 149,284
1,500,000 Pillowtex Corp., Sub. Deb. Cv., 9.000%, 12/15/08 (a) ............................................ 0
---------------
149,284
---------------
DIVERSIFIED INDUSTRIAL -- 0.8%
1,400,000 Roper Industries Inc., Cv. (STEP), 1.481%, 01/15/34 ............................................. 1,051,750
50,000 Trinity Industries Inc., Sub. Deb. Cv., 3.875%, 06/01/36 ........................................ 42,625
---------------
1,094,375
---------------
ELECTRONICS -- 0.1%
10,000 Artesyn Technologies Inc., Sub. Deb. Cv., 5.500%, 08/15/10 (b) .................................. 13,691
100,000 CTS Corp., Sub. Deb. Cv., 2.125%, 05/01/24 ...................................................... 95,375
---------------
109,066
---------------
ENERGY AND UTILITIES -- 0.9%
500,000 Devon Energy Corp., Deb. Cv., 4.950%, 08/15/08 .................................................. 800,000
PRINCIPAL MARKET
AMOUNT VALUE
------------ ---------------
$ 100,000 Texas Competitive Electric Holdings Co. LLC, Cv., 10.250%, 11/01/15 (b) ......................... $ 100,125
400,000 Unisource Energy Corp., Cv., 4.500%, 03/01/35 (b) ............................................... 345,000
---------------
1,245,125
---------------
EQUIPMENT AND SUPPLIES -- 0.0%
10,000 Regal-Beloit Corp., Sub. Deb. Cv., 2.750%, 03/15/24 ............................................. 14,550
---------------
FINANCIAL SERVICES -- 0.9%
500,000 Conseco Inc., Cv. (STEP), 3.500%, 09/30/35 (b) .................................................. 416,250
1,000,000 PrivateBancorp Inc., Cv., 3.625%, 03/15/27 ...................................................... 957,500
---------------
1,373,750
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HEALTH CARE -- 0.6%
900,000 Advanced Medical Optics Inc., Sub. Deb. Cv., 3.250%, 08/01/26 ................................... 655,875
100,000 Millipore Corp., Cv., 3.750%, 06/01/26 .......................................................... 102,875
150,000 Sabratek Corp., Sub. Deb. Cv., 6.000%, 04/15/08+ (a) ............................................ 0
150,000 Thoratec Corp., Sub. Deb. Cv. (STEP), 1.380%, 05/16/34 .......................................... 85,687
---------------
844,437
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MANUFACTURED HOUSING AND
RECREATIONAL VEHICLES -- 0.1%
100,000 Fleetwood Enterprises Inc., Sub. Deb. Cv., 5.000%, 12/15/23 (b) ................................. 92,500
---------------
REAL ESTATE -- 0.9%
2,500,000 Palm Harbor Homes Inc., Cv., 3.250%, 05/15/24 ................................................... 1,309,375
---------------
RETAIL -- 2.2%
60,000 Costco Wholesale Corp., Sub. Deb. Cv., Zero Coupon, 08/19/17 .................................... 88,800
100,000 Pier 1 Imports Inc., Cv. (STEP), 6.375%, 02/15/36 ............................................... 84,125
3,000,000 The Great Atlantic & Pacific Tea Co. Inc., Cv., 5.125%, 06/15/11 ................................ 2,977,500
---------------
3,150,425
---------------
TELECOMMUNICATIONS -- 0.0%
AMNEX Inc., Sub. Deb. Cv.,
30,000 8.500%, 09/25/49+ (a)(b) ..................................................................... 0
50,000 8.500%, 09/25/49+ (a)(b)(c) .................................................................. 0
See accompanying notes to schedule of investments.
2
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 2008 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
------------ ---------------
CONVERTIBLE CORPORATE BONDS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
$ 50,000 Commonwealth Telephone Enterprises Inc., Ser. A, Cv., 3.250%, 07/15/23 (a) ...................... $ 51,357
---------------
51,357
---------------
WIRELESS COMMUNICATIONS -- 1.0%
1,500,000 Nextel Communications Inc., Cv., 5.250%, 01/15/10 ............................................... 1,383,750
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TOTAL CONVERTIBLE CORPORATE BONDS ............................................................... 28,966,744
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SHARES
------------
CONVERTIBLE PREFERRED STOCKS -- 2.7%
AEROSPACE -- 0.7%
6,500 Northrop Grumman Corp., 7.000% Cv. Pfd., Ser. B ................................................. 916,630
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AUTOMOTIVE -- 0.0%
1,000 General Motors Corp., 6.250% Cv. Pfd., Ser. C ................................................... 16,500
---------------
BUSINESS SERVICES -- 0.0%
15,143 Interep National Radio Sales Inc., 4.000% Cv. Pfd., Ser. A+ (a)(b)(c) ........................... 30,287
20,000 Key3Media Group Inc. (STEP), 5.500% Cv. Pfd., Ser. B+ (a) ....................................... 117
---------------
30,404
---------------
COMMUNICATIONS EQUIPMENT -- 0.3%
600 Lucent Technologies Capital Trust I, 7.750% Cv. Pfd. ............................................ 420,000
---------------
ENERGY AND UTILITIES -- 0.7%
6,000 AES Trust III, 6.750% Cv. Pfd. .................................................................. 279,000
500 El Paso Corp., 4.990% Cv. Pfd. (b) .............................................................. 681,154
300 El Paso Energy Capital Trust I, 4.750% Cv. Pfd., Ser. C ......................................... 10,920
---------------
971,074
---------------
ENTERTAINMENT -- 0.2%
20,000 Six Flags Inc., 7.250% Cv. Pfd. ................................................................. 243,000
---------------
FINANCIAL SERVICES -- 0.0%
100 Alleghany Corp., 5.750% Cv. Pfd. ................................................................ 31,487
---------------
HEALTH CARE -- 0.1%
100 Elite Pharmaceuticals Inc., $2.32 Cv. Pfd. Ser. C (a)(c)+ ....................................... 100,000
---------------
MARKET
SHARES VALUE
------------ ---------------
TELECOMMUNICATIONS -- 0.4%
14,000 Cincinnati Bell Inc., 6.750% Cv. Pfd., Ser. B ................................................... $ 593,600
---------------
TRANSPORTATION -- 0.3%
2,500 GATX Corp., $2.50 Cv. Pfd. ...................................................................... 484,150
---------------
TOTAL CONVERTIBLE PREFERRED STOCKS .............................................................. 3,806,845
---------------
COMMON STOCKS -- 31.7%
AEROSPACE -- 0.6%
12,842 Kaman Corp. ..................................................................................... 363,300
52,500 Rolls-Royce Group plc+ .......................................................................... 419,900
4,704,000 Rolls-Royce Group plc, Cl. B .................................................................... 9,336
---------------
792,536
---------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 1.4%
50,000 Genuine Parts Co. ............................................................................... 2,011,000
---------------
BROADCASTING -- 0.6%
26,100 Clear Channel Communications Inc. ............................................................... 762,642
10,000 Emmis Communications Corp., Cl. A+ .............................................................. 34,800
---------------
797,442
---------------
BUSINESS SERVICES -- 1.3%
15,000 ChoicePoint Inc.+ ............................................................................... 714,000
322,000 Trans-Lux Corp.+ (d) ............................................................................ 1,127,000
---------------
1,841,000
---------------
CABLE AND SATELLITE -- 0.6%
493,409 Adelphia Recovery Trust+ (a) .................................................................... 0
37,000 Cablevision Systems Corp., Cl. A+ ............................................................... 792,910
2,000 Rogers Communications Inc., Cl. B ............................................................... 71,840
---------------
864,750
---------------
COMMUNICATIONS EQUIPMENT -- 0.5%
30,000 Corning Inc. .................................................................................... 721,200
---------------
COMPUTER HARDWARE -- 1.1%
14,000 International Business Machines Corp. ........................................................... 1,611,960
---------------
COMPUTER SOFTWARE AND SERVICES -- 2.7%
150,000 BEA Systems Inc.+ ............................................................................... 2,872,500
15,000 Diebold Inc. .................................................................................... 563,250
48,859 Furmanite Corp.+ ................................................................................ 415,301
2,000 Microsoft Corp. ................................................................................. 56,760
---------------
3,907,811
---------------
CONSUMER PRODUCTS -- 0.5%
2,000 Avon Products Inc. .............................................................................. 79,080
30,000 Swedish Match AB ................................................................................ 653,837
---------------
732,917
---------------
See accompanying notes to schedule of investments.
3
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 2008 (UNAUDITED)
MARKET
SHARES VALUE
------------ ---------------
COMMON STOCKS (CONTINUED)
DIVERSIFIED INDUSTRIAL -- 1.1%
40,000 General Electric Co. ............................................................................ $ 1,480,400
36,000 WHX Corp.+ ...................................................................................... 94,500
---------------
1,574,900
---------------
ELECTRONICS -- 0.3%
22,000 Intel Corp. ..................................................................................... 465,960
---------------
ENERGY AND UTILITIES -- 7.3%
6,000 Anadarko Petroleum Corp. ........................................................................ 378,180
10,000 BP plc, ADR ..................................................................................... 606,500
2,000 Cameron International Corp.+ .................................................................... 83,280
4,060 CH Energy Group Inc. ............................................................................ 157,934
14,000 Chevron Corp. ................................................................................... 1,195,040
5,000 ConocoPhillips .................................................................................. 381,050
2,000 Devon Energy Corp. .............................................................................. 208,660
2,000 Energy East Corp. ............................................................................... 48,240
18,000 Exxon Mobil Corp. ............................................................................... 1,522,440
10,100 FPL Group Inc. .................................................................................. 633,674
22,000 Great Plains Energy Inc. ........................................................................ 542,300
20,000 Halliburton Co. ................................................................................. 786,600
41,000 Mirant Corp.+ ................................................................................... 1,491,990
1,200,000 Mirant Corp., Escrow+ ........................................................................... 0
7,000 National Fuel Gas Co. ........................................................................... 330,470
15,000 Northeast Utilities ............................................................................. 368,100
10,000 Progress Energy Inc., CVO+ (a) .................................................................. 3,300
18,000 Royal Dutch Shell plc, Cl. A, ADR ............................................................... 1,241,640
7,000 SJW Corp. ....................................................................................... 200,130
10,000 Xcel Energy Inc. ................................................................................ 199,500
---------------
10,379,028
---------------
EQUIPMENT AND SUPPLIES -- 0.1%
3,000 Mueller Industries Inc. ......................................................................... 86,550
---------------
FINANCIAL SERVICES -- 2.5%
2,000 AllianceBernstein Holding LP .................................................................... 126,760
35,000 American Express Co. ............................................................................ 1,530,200
35,000 Citigroup Inc. .................................................................................. 749,700
5,000 Federal National Mortgage Association ........................................................... 131,600
10,000 Marsh & McLennan Companies Inc. ................................................................. 243,500
25,000 Wells Fargo & Co. ............................................................................... 727,500
---------------
3,509,260
---------------
FOOD AND BEVERAGE -- 3.9%
6,000 Anheuser-Busch Companies Inc. ................................................................... 284,700
22,000 Cadbury Schweppes plc, ADR ...................................................................... 972,840
23,000 General Mills Inc. .............................................................................. 1,377,240
213,860 Parmalat SpA, GDR (b)(c) ........................................................................ 825,157
2,700 Pernod-Ricard SA ................................................................................ 277,754
30,000 The Coca-Cola Co. ............................................................................... 1,826,100
---------------
5,563,791
---------------
MARKET
SHARES VALUE
------------ ---------------
HEALTH CARE -- 2.2%
20,000 Eli Lilly & Co. ................................................................................. $ 1,031,800
2,143 Elite Pharmaceuticals Inc., Cl. A+ (a) .......................................................... 1,972
2,500 Johnson & Johnson ............................................................................... 162,175
2,000 Merck & Co. Inc. ................................................................................ 75,900
75,000 Pfizer Inc. ..................................................................................... 1,569,750
8,000 UnitedHealth Group Inc. ......................................................................... 274,880
---------------
3,116,477
---------------
HOTELS AND GAMING -- 1.1%
260,037 Ladbrokes plc ................................................................................... 1,606,298
---------------
PUBLISHING -- 0.0%
3,000 PRIMEDIA Inc. ................................................................................... 22,050
---------------
RETAIL -- 1.0%
5,000 Costco Wholesale Corp. .......................................................................... 324,850
15,000 Wal-Mart Stores Inc. ............................................................................ 790,200
10,000 Walgreen Co. .................................................................................... 380,900
---------------
1,495,950
---------------
TELECOMMUNICATIONS -- 1.0%
7,000 Philippine Long Distance Telephone Co., ADR ..................................................... 465,220
27,000 Verizon Communications Inc. ..................................................................... 984,150
---------------
1,449,370
---------------
TRANSPORTATION -- 0.3%
11,000 GATX Corp. ...................................................................................... 429,770
---------------
WIRELESS COMMUNICATIONS -- 1.6%
50,100 Rural Cellular Corp., Cl. A+ .................................................................... 2,215,923
49 Winstar Communications Inc.+ (a) ................................................................ 0
---------------
2,215,923
---------------
TOTAL COMMON STOCKS ............................................................................. 45,195,943
---------------
PREFERRED STOCKS -- 0.0%
TELECOMMUNICATIONS -- 0.0%
3,679 PTV Inc., 10.000% Pfd., Ser. A .................................................................. 1,288
---------------
PRINCIPAL
AMOUNT
------------
CORPORATE BONDS -- 0.3%
DIVERSIFIED INDUSTRIAL -- 0.3%
$ 486,300 GP Strategies Corp., Sub. Deb., 6.000%, 08/14/08 (a)(c) ......................................... 436,103
---------------
See accompanying notes to schedule of investments.
4
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 2008 (UNAUDITED)
MARKET
SHARES VALUE
------------ ---------------
WARRANTS -- 0.0%
CONSUMER PRODUCTS -- 0.0%
4,331 Pillowtex Corp., expire 11/24/09+ (a) ........................................................... $ 0
---------------
DIVERSIFIED INDUSTRIAL -- 0.0%
379,703 National Patent Development Corp., expire 08/14/08+ (a)(c) ...................................... 6,774
---------------
FOOD AND BEVERAGE -- 0.0%
1,300 Parmalat SpA, GDR, expire 12/31/15+ (a)(b)(c) ................................................... 2,117
---------------
HEALTH CARE -- 0.0%
12,930 Elite Pharmaceuticals Inc., expire 04/24/12+ (a)(c) ............................................. 8,498
---------------
TOTAL WARRANTS .................................................................................. 17,389
---------------
PRINCIPAL
AMOUNT
------------
U.S. GOVERNMENT OBLIGATIONS -- 45.0%
U.S. TREASURY BILLS -- 42.6%
$ 60,866,000 U.S. Treasury Bills, 1.017% to 3.168%++, 04/03/08 to 09/18/08 ................................... 60,662,943
---------------
U.S. TREASURY NOTES -- 2.4%
3,302,000 U.S. Treasury Note, 5.000%, 07/31/08 ............................................................ 3,341,987
---------------
TOTAL U.S. GOVERNMENT OBLIGATIONS ............................................................... 64,004,930
---------------
TOTAL INVESTMENTS -- 100.0%
(Cost $143,861,170) .......................................................................................... $ 142,429,242
===============
Aggregate book cost ............................................................................... $ 144,185,017
===============
Gross unrealized appreciation ..................................................................... $ 7,437,256
Gross unrealized depreciation ..................................................................... (9,193,031)
---------------
Net unrealized appreciation/depreciation ........................................................ $ (1,755,775)
===============
----------
(a) Security fair valued under procedures established by the Board of
Directors. The procedures may include reviewing available financial
information about the company and reviewing the valuation of comparable
securities and other factors on a regular basis. At March 31, 2008, the
market value of fair valued securities amounted to $640,525 or 0.45% of
total investments.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At March
31, 2008, the market value of Rule 144A securities amounted to $2,655,565
or 1.86% of total investments. Except as noted in (c), these securities
are liquid.
(c) At March 31, 2008, the Fund held investments in restricted and illiquid
securities amounting to $1,408,936 or 0.99% of total investments, which
were valued under methods approved by the Board of Directors as follows:
ACQUISITION
SHARES/ 03/31/2008
PRINCIPAL ACQUISITION ACQUISITION CARRYING VALUE
AMOUNT ISSUER DATE COST PER UNIT
------------ ------ ----------- ----------- --------------
$ 50,000 Amnex Inc., Sub. Deb., Cv.,
8.500%, 09/25/49 ............................................ 09/15/97 $ 48,801 --
100 Elite Pharmaceuticals Inc.,
$2.32 Cv. Pfd. Ser C ........................................ 04/25/07 91,465 $ 1,000.0000
12,930 Elite Pharmaceuticals Inc.
Warrants expire 04/24/12 .................................... 04/25/07 8,535 0.6572
$ 486,300 GP Strategies Corp.,
Sub. Deb., 6.000%, 08/14/08 ................................. 08/14/03 338,548 89.6778
15,143 Interep National Radio Sales Inc.,
4.000% Cv. Pfd., Ser. A ..................................... 05/03/02 1,347,184 2.0001
379,703 National Patent Development Corp.
Warrants expire 08/14/08 .................................... 11/24/04 -- 0.0178
213,860 Pamalat SpA, GDR ............................................... 04/10/03 -- 3.8584
1,300 Pamalat SpA, GDR,
Warrants expire 12/31/15 .................................... 11/09/05 -- 1.6285
(d) Security considered an affiliated holding because the Fund owns at least
5% of its outstanding shares.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depositary Receipt
CVO Contingent Value Obligation
GDR Global Depositary Receipt
STEP Step coupon bond. The rate disclosed is that in effect at March 31, 2008.
See accompanying notes to schedule of investments.
5
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
NOTES TO SCHEDULE OF INVESTMENTS (UNAUDITED)
1. 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 of Directors (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
instruments with remaining maturities of 60 days or less that are not credit
impaired are valued at amortized cost, 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. Debt instruments having a maturity
greater than 60 days 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 security is valued using the closing bid price.
Futures contracts are valued at the closing settlement price of the exchange or
board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available are
fair valued as determined by the Board.
ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 157 "FAIR VALUE
MEASUREMENTS" ("SFAS 157")
On January 1, 2008, the Fund adopted SFAS 157 that clarifies the definition of
fair value for financial reporting, establishes a framework for measuring fair
value, and requires additional disclosures about the use of fair value
measurements. The three levels of the fair value hierarchy under SFAS 157 are
described below:
o Level 1 - quoted prices in active markets for identical securities;
o Level 2 - other significant observable inputs (including quoted
prices for similar securities, interest rates, prepayment speeds,
credit risk, etc.); and
o Level 3 - significant unobservable inputs (including the Fund's
determinations as to the fair value of investments).
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 inputs used to value the Fund's net assets as of March 31, 2008 is as
follows:
INVESTMENTS IN OTHER FINANCIAL INSTRUMENTS
SECURITIES (UNREALIZED
VALUATION INPUTS (MARKET VALUE) DEPRECIATION)*
---------------- -------------- ---------------------------
Level 1 - Quoted Prices $ 54,615,372 --
Level 2 - Other Significant Observable Inputs 87,274,350 $(22,070)
Level 3 - Significant Unobservable Inputs 539,520 --
------------ --------
Total $142,429,242 $(22,070)
============ ========
----------
* Other financial instruments are derivative instruments not reflected in the
Schedule of Investments, such as futures, forwards and swaps which are valued at
the unrealized appreciation/depreciation on the investment.
6
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
NOTES TO SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
Following is a reconciliation of Level 3 investments for which significant
unobservable inputs were used to determine fair value:
INVESTMENTS IN
SECURITIES
(MARKET VALUE)
--------------
BALANCE AS OF 12/31/07 $437,162
Accrued discounts/premiums 10,684
Realized gain (loss) --
Change in unrealized appreciation/depreciation 91,674
Net purchases (sales) --
Transfers in and/or out of Level 3 --
--------
BALANCE AS OF 3/31/08 $539,520
========
2. SWAP AGREEMENTS. The Fund may enter into equity and contract for difference
swap transactions. 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 a swap, a set of future cash flows
are 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. There is no assurance that the swap
contract counterparties will be able to meet their obligations pursuant to the
swap contracts, or that, in the event of default, the Fund will succeed in
pursuing contractual remedies. The Fund thus assumes the risk that it may be
delayed in or prevented from obtaining payments owed to it pursuant to the swap
contracts. The creditworthiness of the swap contract counterparties is closely
monitored in order to minimize the risk. Depending on the general state of
short-term interest rates and the returns of the Fund's portfolio securities at
that point in time, such a default could negatively affect the Fund's ability to
make dividend payments. In addition, at the time a 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.
The use of derivative instruments may involve, to varying degrees, elements of
market and counterparty risk in excess of the amount recognized below.
The Fund has entered into a contract for difference swap agreement with Bear,
Stearns International Limited. Details of the swap at March 31, 2008 is as
follows:
NET
NOTIONAL EQUITY SECURITY INTEREST RATE/ TERMINATION UNREALIZED
AMOUNT RECEIVED EQUITY SECURITY PAID DATE DEPRECIATION
------------------------- --------------------- -------------------------------- ----------- ------------
Market Value Overnight LIBOR plus 40 bps plus
Appreciation on: Market Value Depreciation on:
$ 401,418 (47,500 shares) Rolls-Royce Group plc Rolls-Royce Group plc 12/15/08 $(22,070)
7
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLANS
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Convertible and Income Securities Fund
Inc. (the "Fund") to automatically reinvest dividends payable to common
shareholders. As a "registered" shareholder you automatically become a
participant in the Fund's Automatic Dividend Reinvestment Plan (the "Plan"). The
Plan authorizes the Fund to credit shares of common stock to participants upon
an income dividend or a capital gains distribution regardless of whether the
shares are trading at a discount or a premium to net asset value. All
distributions to shareholders whose shares are registered in their own names
will be automatically reinvested pursuant to the Plan in additional shares of
the Fund. Plan participants may send their stock certificates to Computershare
Trust Company, N.A. ("Computershare") to be held in their dividend reinvestment
account. Registered shareholders wishing to receive their distributions in cash
must submit this request in writing to:
The Gabelli Convertible and Income Securities Fund Inc.
c/o Computershare
P.O. Box 43010
Providence, RI 02940-3010
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan or requesting a copy of the terms of the
plan may contact Computershare at (800) 336-6983.
If your shares are held in the name of a broker, bank, or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and re-registered in your own name.
Once registered in your own name your dividends will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of common stock distributed to participants in the
Plan in lieu of cash dividends is determined in the following manner. Under the
Plan, whenever the market price of the Fund's common stock is equal to or
exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of common stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Fund's common stock. The valuation date is
the dividend or distribution payment date or, if that date is not a New York
Stock Exchange ("NYSE") trading day, the next trading day. If the net asset
value of the common stock at the time of valuation exceeds the market price of
the common stock, participants will receive shares from the Fund valued at
market price. If the Fund should declare a dividend or capital gains
distribution payable only in cash, Computershare will buy common stock in the
open market, or on the NYSE or elsewhere, for the participants' accounts, except
that Computershare will endeavor to terminate purchases in the open market and
cause the Fund to issue shares at net asset value if, following the commencement
of such purchases, the market value of the common stock exceeds the then current
net asset value.
The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
8
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Fund. In order to participate
in the Voluntary Cash Purchase Plan, shareholders must have their shares
registered in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to Computershare for investments in the Fund's shares
at the then current market price. Shareholders may send an amount from $250 to
$10,000. Computershare will use these funds to purchase shares in the open
market on or about the 1st and 15th of each month. Computershare will charge
each shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to Computershare, P.O. Box 43010, Providence, RI
02940-3010 such that Computershare receives such payments approximately 10 days
before the 1st and 15th of the month. Funds not received at least five days
before the investment date shall be held for investment until the next purchase
date. A payment may be withdrawn without charge if notice is received by
Computershare at least 48 hours before such payment is to be invested.
SHAREHOLDERS WISHING TO LIQUIDATE SHARES HELD AT COMPUTERSHARE must do so
in writing or by telephone. Please submit your request to the above mentioned
address or telephone number. Include in your request your name, address, and
account number. The cost to liquidate shares is $2.50 per transaction as well as
the brokerage commission incurred. Brokerage charges are expected to be less
than the usual brokerage charge for such transactions.
For more information regarding the Automatic Dividend Reinvestment Plan
and Voluntary Cash Purchase Plan, brochures are available by calling (914)
921-5070 or by writing directly to the Fund.
The Fund reserves the right to amend or terminate the Plan as applied to
any voluntary cash payments made and any dividend or distribution paid
subsequent to written notice of the change sent to the members of the Plan at
least 90 days before the record date for such dividend or distribution. The Plan
also may be amended or terminated by Computershare on at least 90 days written
notice to participants in the Plan.
9
--------------------------------------------------------------------------------
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
AND YOUR PERSONAL PRIVACY
WHO ARE WE?
The Gabelli Convertible and Income Securities Fund Inc. (the "Fund") is a
closed-end management investment company registered with the Securities and
Exchange Commission under the Investment Company Act of 1940. We are managed by
Gabelli Funds, LLC, which is affiliated with GAMCO Investors, Inc. GAMCO
Investors, Inc. is a publicly held company that has subsidiaries that provide
investment advisory or brokerage services for a variety of clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
SHAREHOLDER?
When you purchase shares of the Fund on the New York Stock Exchange, you have
the option of registering directly with our transfer agent in order, for
example, to participate in our dividend reinvestment plan.
o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include your
name, address, telephone number, social security number, bank account
number, and other information.
o INFORMATION ABOUT YOUR TRANSACTIONS WITH US. This would include
information about the shares that you buy or sell; it may also include
information about whether you sell or exercise rights that we have issued
from time to time. If we hire someone else to provide services--like a
transfer agent--we will also have information about the transactions that
you conduct through them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers or
former customers to anyone other than our affiliates, our service providers who
need to know such information, and as otherwise permitted by law. If you want to
find out what the law permits, you can read the privacy rules adopted by the
Securities and Exchange Commission. They are in volume 17 of the Code of Federal
Regulations, Part 248. The Commission often posts information about its
regulations on its website, WWW.SEC.GOV.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the people
who need to know that information in order to provide services to you or the
Fund and to ensure that we are complying with the laws governing the securities
business. We maintain physical, electronic, and procedural safeguards to keep
your personal information confidential.
--------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
ONE CORPORATE CENTER, RYE, NY 10580-1422
DIRECTORS OFFICERS
Mario J. Gabelli, CFA Bruce N. Alpert
CHAIRMAN & CHIEF EXECUTIVE OFFICER, PRESIDENT
GAMCO INVESTORS, INC. Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
E. Val Cerutti
CHIEF EXECUTIVE OFFICER, Laurissa M. Martire
CERUTTI CONSULTANTS, INC. VICE PRESIDENT & OMBUDSMAN
Anthony J. Colavita Agnes Mullady
ATTORNEY-AT-LAW, TREASURER AND SECRETARY
ANTHONY J. COLAVITA, P.C.
INVESTMENT ADVISER
Dugald A. Fletcher Gabelli Funds, LLC
PRESIDENT, FLETCHER & COMPANY, INC. One Corporate Center
Rye, New York 10580-1422
Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT, CUSTODIAN
PROFESSOR EMERITUS, PACE UNIVERSITY State Street Bank and Trust Company
Werner J. Roeder, MD COUNSEL
MEDICAL DIRECTOR, Skadden, Arps, Slate, Meagher & Flom LLP
LAWRENCE HOSPITAL
TRANSFER AGENT AND REGISTRAR
Anthonie C. van Ekris Computershare Trust Company, N.A.
CHAIRMAN, BALMAC INTERNATIONAL, INC.
STOCK EXCHANGE LISTING
Salvatore J. Zizza
CHAIRMAN, ZIZZA & CO., LTD. 6.00%
Common Preferred
---------- ---------
NYSE-Symbol: GCV GCV PrB
Shares Outstanding: 12,693,456 990,800
The Net Asset Value per share appears in the Publicly Traded Funds column, under
the heading "Convertible Securities Funds," in Monday's The Wall Street Journal.
It is also listed in Barron's Mutual Funds/Closed End Funds section under the
heading "Convertible Securities Funds."
The Net Asset Value per share may be obtained each day by calling (914) 921-5070
or visiting www.gabelli.com.
--------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may, from time to time, purchase
shares of its common stock in the open market when the Fund's shares are trading
at a discount of 10% or more from the net asset value of the shares. The Fund
may also, from time to time, purchase shares of its preferred stock in the open
market when the preferred stock is trading at a discount to the liquidation
value.
--------------------------------------------------------------------------------
THE GABELLI CONVERTIBLE AND
INCOME SECURITIES FUND INC.
ONE CORPORATE CENTER
RYE, NY 10580-1422
(914) 921-5070
WWW.GABELLI.COM
FIRST QUARTER REPORT
MARCH 31, 2008
GCV Q1/2008
ITEM 2. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded
that the registrant's disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940,
as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective,
as of a date within 90 days of the filing date of the report that
includes the disclosure required by this paragraph, based on their
evaluation of these controls and procedures required by Rule
30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules
13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934,
as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940
Act (17 CFR 270.30a-3(d)) that occurred during the registrant's
last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 3. EXHIBITS.
Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of
the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Gabelli Convertible and Income Securities Fund Inc.
--------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date May 29, 2008
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date May 29, 2008
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer and Treasurer
Date May 29, 2008
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.