The Board of Directors of The Gabelli Convertible and Income Securities
Fund Inc. (NYSE:GCV) (the “Fund”) reaffirmed its 8% distribution policy
and declared a $0.12 per share cash distribution payable on September
23, 2013 to common stock shareholders of record on September 16, 2013.
The Fund intends to pay a quarterly distribution of an amount determined
each quarter by the Board of Directors. Under the Fund’s current
distribution policy, the Fund intends to pay a minimum annual
distribution of 8% of the average net asset value of the Fund within a
calendar year or an amount sufficient to satisfy the minimum
distribution requirements of the Internal Revenue Code, whichever is
greater. The average net asset value of the Fund is based on the average
net asset values as of the last day of the four preceding calendar
quarters during the year. We note that 8% of the average net asset value
of the Fund would be $0.47 based on the ending net asset values per
share as of December 31, 2012, March 31, 2013, and June 30, 2013 of
$5.62, $6.14, and $6.05, respectively. The net asset value per share
fluctuates daily.
Each quarter, the Board of Directors reviews the amount of any potential
distribution from the income, capital gain, or capital available. The
Board of Directors will continue to monitor the Fund’s distribution
level, taking into consideration the Fund’s net asset value and the
financial market environment. The Fund’s distribution policy is subject
to modification by the Board of Directors at any time. The distribution
rate should not be considered the dividend yield or total return on an
investment in the Fund.
All or part of the distribution may be treated as long-term capital gain
or qualified dividend income (or a combination of both) for individuals,
each subject to the maximum federal income tax rate, which is currently
20% in taxable accounts for individuals. In addition, for taxable years
beginning on or after January 1, 2013, certain U.S. shareholders who are
individuals, estates or trusts and whose income exceeds certain
thresholds will be required to pay a 3.8% Medicare tax on their "net
investment income", which includes dividends received from the Fund and
capital gains from the sale or other disposition of shares of the Fund.
If the Fund does not generate sufficient earnings (dividends and
interest income and realized net capital gain) equal to or in excess of
the aggregate distributions paid by the Fund in a given year, then the
amount distributed in excess of the Fund’s earnings would be deemed a
return of capital. Since this would be considered a return of a portion
of a shareholder’s original investment, it is generally not taxable and
is treated as a reduction in the shareholder’s cost basis. Under federal
tax regulations, some or all of the return of capital distributed by the
Fund may be taxable as ordinary income in certain circumstances. This
may occur when the Fund has a capital loss carry forward, net capital
gains are realized in a fiscal year, and distributions are made in
excess of investment company taxable income.
Long-term capital gains, qualified dividend income, ordinary income, and
paid-in capital, if any, will be allocated on a pro-rata basis to all
distributions to common shareholders for the year. Based on the
accounting records of the Fund as of August 16, 2013, each of the
distributions paid to common shareholders in 2013 would include
approximately 6% from net investment income, 4% from net capital gains
and 90% from paid-in capital on a book basis. The estimated components
of each distribution are updated and provided to shareholders of record
in a notice accompanying the distribution and are available on our
website (www.gabelli.com).
The final determination of the sources of all distributions in 2013 will
be made after year end and can vary from the quarterly estimates. All
shareholders with taxable accounts will receive written notification
regarding the components and tax treatment for all 2013 distributions in
early 2014 via Form 1099-DIV.
It should be noted that the Fund’s total assets include capital from
preferred stock issued in prior years. Gabelli Funds, LLC (the
“Investment Adviser”) does not receive a management fee on the
incremental assets attributable to the Fund’s outstanding preferred
stock unless the total return of the net asset value of the common stock
during the year, including distributions and management fee subject to
reduction, exceeds the stated dividend rate or corresponding swap rate
of each particular series of preferred stock for the fiscal year.
Investors should carefully consider the investment objectives, risks,
charges, and expenses of the Fund before investing. More
information regarding the Fund’s distribution policy and other
information about the fund is available by calling 800-GABELLI
(800-422-3554) or visiting www.gabelli.com.
The Gabelli Convertible and Income Securities Fund Inc. is a
diversified, closed-end management investment company with $108 million
in total net assets whose primary investment objective is to seek a high
level of total return on its assets through a combination of current
income and capital appreciation. The Investment Adviser is a subsidiary
of GAMCO Investors, Inc. (NYSE:GBL), which is a publicly traded NYSE
listed company.
Copyright Business Wire 2013