UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21309
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Advent Claymore Convertible Securities and Income Fund
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(Exact name of registrant as specified in charter)
1065 Avenue of the Americas, New York, NY 10018
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(Address of principal executive offices) (Zip code)
Robert White, Treasurer
1065 Avenue of the Americas, New York, NY 10018
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(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 479-0675
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Date of fiscal year end: October 31
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Date of reporting period: October 31, 2009
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
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 Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The registrant's annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), is as follows:
ANNUAL ADVENT CLAYMORE CONVERTIBLE |
REPORT SECURITIES AND INCOME FUND | AVK
October 31, 2009
ADVENT LOGO:
CAPITAL MANAGEMENT CLAYMORE (R)
WWW.CLAYMORE.COM/AVK
... YOUR BRIDGE TO THE LATEST,
MOST UP-TO-DATE INFORMATION ABOUT THE
ADVENT CLAYMORE CONVERTIBLE SECURITIES AND INCOME FUND
The shareholder report you are reading right now is just the beginning of the
story. Online at WWW.CLAYMORE.COM/AVK, you will find:
o Daily, weekly and monthly data on share prices, net asset values, dividends
and more
o Portfolio overviews and performance analyses
o Announcements, press releases and special notices
o Fund and adviser contact information
Advent Capital Management and Claymore are continually updating and expanding
shareholder information services on the Fund's website, in an ongoing effort to
provide you with the most current information about how your Fund's assets are
managed, and the results of our efforts. It is just one more small way we are
working to keep you better informed about your investment in the Fund.
2 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
TRACY V. MAITLAND
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dear SHAREHOLDER |
We thank you for your investment in the Advent Claymore Convertible Securities
and Income Fund (the "Fund"). This report covers the Fund's performance for the
fiscal year ended October 31, 2009.
The Fund's investment objective is to provide total return through a
combination of capital appreciation and current income. Under normal market
conditions, the Fund will invest at least 80% of its managed assets in a
diversified portfolio of convertible securities and non-convertible income
securities. Under normal market conditions, the Fund will invest at least 60%
of its managed assets in convertible securities and up to 40% in lower grade,
non-convertible income securities. Convertible securities represented 81.9% of
the portfolio as of October 31, 2009.
All Fund returns cited--whether based on net asset value ("NAV") or market
price--assume the reinvestment of all distributions. For the fiscal year ending
October 31, 2009, the Fund generated a total return based on market price of
20.34% and a return of 42.52% based on NAV. As of October 31, 2009, the Fund's
market price of $14.24 represented a discount of 12.53% to the Fund's NAV of
$16.28. As of October 31, 2008, the Fund's market price of $13.11 had
represented a premium of 4.71% to the Fund's NAV of $12.52. The market price of
the Fund's shares fluctuates from time to time, and it may be higher or lower
than the Fund's NAV. During the 12 months from October 31, 2008, through
October 31, 2009, the swing from a premium over NAV to a discount from NAV
inhibited the share price performance.
The Fund currently implements its leverage strategy through the issuance of
Auction Market Preferred Shares ("AMPS(SM)"). At the beginning of the fiscal
year, as of October 31, 2008, the Fund's leverage was $275 million. On December
1, 2008, the Fund announced a partial at-par redemption of its outstanding
AMPS, liquidation preference $25,000 per share. Between December 23, 2008, and
January 14, 2009, the Fund redeemed $13 million of its outstanding AMPS at
prices equal to the liquidation preference per share, plus accumulated but
unpaid dividends as of the applicable redemption date. Since January 14, 2009,
the Fund's leverage has been maintained at $262 million. In recent months the
Fund has maintained a higher than usual cash balance in order to mute
volatility and also to have funds available to take advantage of attractive
investment opportunities that may arise. The Fund's leverage represented 40.6%
of managed assets as of October 31, 2009, however this additional cash in the
portfolio has the effect of causing effective economic leverage to be less than
the stated leverage.
The Fund has six series of AMPS, three that auction each week and three that
auction every 28 days. The broad auction-rate preferred securities market
remains frozen, as it has been since February 2008. The auctions for nearly all
auction-rate preferred shares, including those issued by the Fund, continue to
fail. Investors need to be aware that a failed auction is not a default, nor
does it require the redemption of a fund's auction-rate preferred shares.
Provisions in the offering documents of the Fund's AMPS provide a mechanism to
set a maximum rate in the event of a failed auction, and, thus, investors will
continue to be entitled to receive payment for holding these AMPS. This maximum
rate is determined based upon a multiple of or a spread to LIBOR, whichever is
greater. During the fiscal year ended October 31, 2009, established maximum
rates were based on a spread of 125 basis points over the applicable LIBOR
rates, with the maximum rates ranging from 1.47% to 5.76% . In recent months,
the cost of leverage has been 1.50% or less.
We continue to evaluate the benefits and effects of leverage on the Fund, as
well as to explore other types of leverage. Given the very low maximum rates
that have been established for the Fund's AMPS over the last few months, the
leverage has been helpful as the market has
Annual Report | October 31, 2009 | 3
AVK | Advent Claymore Convertible Securities and Income Fund | DEAR SHAREHOLDER
continued
rebounded. During this period, leverage has helped to create capital
appreciation and has contributed to income, since the portfolio is yielding
more than the cost of leverage.
In each month from December 2008 through October 2009, the Fund declared
monthly dividends of $0.0939 per share. This monthly dividend rate reflects a
reduction from the previous monthly distribution rate of $0.1718 per share,
which was maintained through November 2008. The current dividend represents an
annualized distribution rate of 7.91% based upon the closing market price of
$14.24 on October 31, 2009. There is no guarantee of any future distributions
or that the current returns and distribution rate will be maintained.
We encourage shareholders to consider the opportunity to reinvest their
distributions from the Fund through the Dividend Reinvestment Plan ("DRIP"),
which is described in detail on page 30 of this report. When shares trade at a
discount to NAV, the DRIP takes advantage of the discount by reinvesting the
monthly dividend distribution in common shares of the Fund purchased in the
market at a price less than NAV. Conversely, when the market price of the
Fund's common shares is at a premium above NAV, the DRIP reinvests
participants' dividends in newly-issued common shares at NAV, subject to an IRS
limitation that the purchase price cannot be more than 5% below the market
price per share. The DRIP provides a cost-effective means to accumulate
additional shares and enjoy the benefits of compounding returns over time.
Since the Fund endeavors to maintain a steady monthly distribution rate, the
DRIP plan effectively provides an income averaging technique, which causes
shareholders to accumulate a larger number of Fund shares when the share price
is depressed than when the price is higher.
On July 17, 2009, Claymore Group Inc., the parent of Claymore Securities, Inc.
(the "Servicing Agent"), entered into an Agreement and Plan of Merger between
and among Claymore Group Inc., Claymore Holdings, LLC and GuggClay Acquisition,
Inc. (with the latter two entities being wholly-owned, indirect subsidiaries of
Guggenheim Partners, LLC ("Guggenheim")), whereby GuggClay Acquisition, Inc.
would merge into Claymore Group Inc., which would be the surviving entity. This
transaction was completed on October 14, 2009, and resulted in a
change-of-control whereby Claymore Group Inc. and its subsidiaries, including
the Servicing Agent, became indirect, wholly-owned subsidiaries of Guggenheim.
The transaction is not expected to negatively affect the daily operations of
the Fund or the Servicing Agent.
The following Questions & Answers section provides more information about the
factors that affected the Fund's performance.
We are honored that you have chosen the Advent Claymore Convertible Securities
and Income Fund as part of your investment portfolio. For the most up-to-date
information on your investment, please visit the Fund's website at
www.claymore.com/avk.
Sincerely,
Tracy V. Maitland
/s/ Tracy V. Maitland
President and Chief Executive Officer of the Advent Claymore Convertible
Securities and Income Fund
December 2, 2009
4 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | QUESTIONS &
ANSWERS
QUESTIONS & ANSWERS |
Advent Claymore Convertible Securities and Income Fund (the "Fund") is managed
by a team of seasoned professionals at Advent Capital Management, LLC
("Advent"), led by Tracy V. Maitland, Advent's President and Chief Investment
Officer. In the following interview, Mr. Maitland discusses the convertible
securities and high-yield markets and the performance of the Fund during the
Fund's fiscal year ended October 31, 2009.
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WILL YOU REMIND US OF THIS FUND'S OBJECTIVES AND HOW YOU SEEK TO ACHIEVE THEM?
The Fund's investment objective is to provide total return through a
combination of capital appreciation and current income. Under normal market
conditions, the Fund will invest at least 80% of its managed assets in a
diversified portfolio of convertible securities and non-convertible income
securities. Under normal market conditions, the Fund will invest at least 60%
of its managed assets in convertible securities and may invest up to 40% in
lower grade, non-convertible income securities, although the portion of the
Fund's assets invested in convertible securities and non-convertible income
securities will vary from time to time consistent with the Fund's investment
objective, changes in equity prices, and changes in interest rates and other
economic and market factors. The Fund expects to invest approximately 70% of
its assets in lower-grade securities; however, from time to time it is possible
that all of the Fund's assets may be invested in lower-grade securities.
More than half of the convertible market and a large portion of the Fund's
convertible investments are in securities issued by growth
companies--particularly companies within the health care and technology
sectors. Growth companies generally issue convertible bonds as a means of
raising capital to build their businesses. Convertibles represent something of
a hybrid between equity and debt as a way to raise capital for growth;
convertibles generally have a lower interest rate than non-convertible bonds,
but entail less dilution than issuing common stock. Convertible preferreds are
often issued by financial companies in order to raise capital while helping to
keep their credit ratings higher than if they offered bonds. This is because
issuing bonds would increase the proportion of debt on an issuing company's
balance sheet, making a downgrade in credit rating more likely, while preferred
stock is classified as equity. Credit ratings are especially important to
financial companies, which are significant issuers of convertible preferred
securities, since a lower credit rating generally results in higher borrowing
costs.
The Fund's flexibility to shift between convertibles and high-yield bonds, also
known as "junk" bonds, helps provide diversification on an asset, sector and
security level. Among the attractions of convertible securities are that they
generally offer a yield advantage over common stocks; they have tended to
capture much of the upside when equity prices move up in stronger markets; and
the yield advantage has historically provided inherent downside protection in
weaker markets. However, there is no assurance that convertible securities will
participate significantly in any upward movement of the underlying common stock
or that they will provide protection from downward movements.
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PLEASE TELL US ABOUT THE ECONOMIC AND MARKET ENVIRONMENT OVER THE LAST 12
MONTHS.
The Fund's annual report for the 2008 fiscal year discussed a financial crisis
that originated with the end of a housing boom fueled by excessively easy
credit. After the September 2008 failure of Lehman Brothers Holdings Inc., the
credit markets became so intolerant of risk that they were essentially frozen.
As fearful investors sought the protection of U.S. Treasury securities,
interest rate spreads between Treasury securities and corporate bonds widened
dramatically, and there were pronounced declines in the market values of
convertibles, high-yield bonds and other asset classes that carried any degree
of credit risk.
The market for convertible securities, which in the past was much less volatile
than equities, was already in the red prior to the Lehman failure. Then the
convertible market, as measured by the Merrill Lynch All U.S. Convertibles
Index, lost 14.59% and 17.99%, respectively, in September and October 2008--an
unprecedented setback. A major reason for the severe decline was selling by
hedge funds, which had made leveraged investments in convertibles while
shorting the underlying common stocks. Having lost their prime brokerage
accounts and other sources of credit, hedge funds were forced to sell their
convertible securities at any price, regardless of fundamentals, causing prices
to drop precipitously. The return of the Merrill Lynch All U.S. Convertibles
Index, which measures performance for the domestic convertible market as a
whole, was -35.73% for calendar year 2008, the worst one-year performance in
the 50-plus years for which historical records are available.
The dramatic sell-off that occurred in the last few months of 2008 attracted
unusual interest in convertible securities, whereas historically, many
investors have overlooked convertibles as an asset class. In early 2009, there
was considerable buying by managers of equity and bond accounts, many of whom
are permitted to invest in convertibles, since convertibles are fixed-income
securities that convert into equities. These "cross-over" investors had been
less prevalent in recent years when hedge funds were more dominant in the
convertible market.
Both equity and corporate bond markets have been in a strong recovery since
March 2009 and convertibles have enjoyed an especially strong rebound during
the Fund's fiscal year ended October 31, 2009. Return of the Merrill Lynch All
U.S. Convertibles Index for the 12-month period was 37.27% . The Standard &
Poor's 500 Index, which is generally regarded as an indicator of the broad
stock market, returned 9.80% for the 12 months ended October 31, 2009, despite
a negative return of -8.53% in the six-month period from October 31, 2008,
through April 30, 2009. The Barclays Capital US Aggregate Bond Index (formerly
known as the "Lehman Aggregate")--which measures the return of the high-quality
U.S. bond market--returned 13.79% for the same 12-month period. After a period
of
Annual Report | October 31, 2009 | 5
AVK | Advent Claymore Convertible Securities and Income Fund | QUESTIONS &
ANSWERS continued
extreme weakness in late 2008, the high-yield bond market experienced a
dramatic recovery as investors once again tolerated credit risk. The return of
the Merrill Lynch High Yield Master II Index, which measures performance of the
high-yield bond market, was 48.79% for the 12 months ended October 31, 2009--a
rare example of high-yield securities significantly outperforming convertibles
in a strong market. High yield lagged lower rated convertible securities,
however; the Merrill Lynch All Speculative Quality Convertibles Index returned
56.8% during the Fund's fiscal year.
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HOW DID THE FUND PERFORM IN THIS ENVIRONMENT?
It is gratifying to note that the Fund's net asset value ("NAV") return was
higher than the 37.27% return of the Merrill Lynch All U.S. Convertibles Index
for the past fiscal year, as it has been for most periods since the Fund's
inception; however, past performance is not a guarantee of future results. For
the fiscal year ended October 31, 2009, the Fund generated a total return based
on market price of 20.34% and a return of 42.52% based on NAV. As of October
31, 2009, the Fund's market price of $14.24 represented a discount of 12.53% to
the Fund's NAV of $16.28. As of October 31, 2008, at the start of the fiscal
year, the Fund's market price of $13.11 represented a premium of 4.71% to the
Fund's NAV of $12.52. The market price of the Fund's shares fluctuates from
time to time, and it may be higher or lower than the Fund's NAV. During the 12
months from October 31, 2008, through October 31, 2009, the swing from a
premium over NAV to a discount from NAV caused the market price performance to
lag behind the Fund's portfolio return as reflected in the NAV return. All Fund
returns cited--whether based on NAV or market price--assume the reinvestment of
all distributions.
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WHAT WERE THE MAJOR INVESTMENT DECISIONS THAT AFFECTED THE FUND'S PERFORMANCE?
Throughout the fiscal year, the Fund's portfolio maintained a weighted average
credit rating of approximately BB+ (the highest rating for below
investment-grade bonds). Historically, Advent has regarded BB+ as a sweet spot
on the rating spectrum. But in the first two months of the Fund's fiscal year,
the best returns were derived from investment-grade convertibles. Then,
starting in January 2009, as the credit panic of 2008 began to abate,
lower-quality convertibles outperformed the broad convertible indices every
month until October, when the convertible indices suffered the first down month
since February. The best returns for most of the Fund's fiscal year were
derived from the lowest quality issues.
A second dimension of the Fund's portfolio was its heavy investment in
convertible securities as opposed to high-yield bonds and other more purely
income vehicles. As the name of the Fund suggests, it is primarily a convertible
fund, although it is permitted to invest up to 40% in various non-convertible
income-producing securities. During the Fund's fiscal year, the Fund's
investments in high-yield bonds never exceeded 15% and this asset allocation
inhibited performance as the Merrill Lynch High Yield Master II Index made a
remarkable recovery of 48.79% during the Fund's fiscal year--a rare if not
singular example of high-yield bonds significantly outperforming convertible
securities during an extremely strong market. In retrospect, the strength of
high yield--as well as the strength of sub-investment-grade convertible
securities--reflected the market bounce after the remarkable credit panic in
2008.
The Fund's exposure to the financial sector was reduced somewhat in autumn of
2008 when frozen credit markets and unprecedented regulatory
pressures--including the potential nationalization of major banks--made some of
the Fund's financial investments seem too risky, especially the positions in
formerly high-quality financial convertible preferreds. The decision to reduce
exposure to such securities hurt performance for the fiscal year, especially
early in 2009, when issues of financial institutions were exceptionally strong.
A major challenge over the last year has been to analyze the risks inherent in
the loan portfolios of many financial firms. This task has been especially
difficult for external analysts given that managements and regulators of
financial institutions have often appeared unable to understand the risks; when
in doubt, Advent made the judgment that it was wise to minimize the exposure.
The Fund's current position in financials is approximately 20.7% of the
portfolio, somewhat less than has been typical in the past. Historically, banks
in need of capital have been big issuers of convertible preferreds because
preferreds have been a superior alternative to bonds, given that issuance of
bonds tends to expose the companies to potential ratings downgrades. It is
essential for financial institutions to maintain investment-grade credit
ratings in order to protect their funding sources. After the preferred issues
of some major financial institutions that failed were rendered worthless late
in 2008, there have been very few new preferred issues from financial
institutions, presumably because the market remains skittish about buying
financial preferreds. As in the past, the Fund's managers would welcome the
opportunity to invest in new issues of convertible preferreds of financial
institutions that appear sound. Indeed, we reinvested in XL Capital Ltd. (1.5%
of long-term investments), a provider of insurance and reinsurance, as the
insurer's fundamentals began to improve amid stronger capital markets and under
the positive influence of a new CEO who had been recruited outside the company.
Moreover, the company had issued an attractive Baa2/BBB- rated 10.75%
convertible preferred in July 2008, and we were able to accumulate a
substantial position at what we considered to be attractive prices.
The Fund's largest economic sector is health care, which represented
approximately 26.8% of the portfolio as of October 31, 2009, and contributed
positively to performance over the last year. Health care companies such as
Teva Pharmaceutical Industries Ltd., (3.0% of long-term investments, and our
second largest investment), the world's largest generic drug company; Amgen,
Inc. (2.9% of long-term investments, the Fund's third largest investment), the
world's largest biotechnology company; and medical device manufacturer
Medtronic, Inc. (2.6% of long-
6 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | QUESTIONS &
ANSWERS continued
term investments, our fourth largest position) have enjoyed growing cash flows
and strong balance sheets. There really was no recession in health care. Early
in the fiscal year, health care companies appeared undervalued, presumably
because of market concerns about health care reform. More recently, these
holdings have performed well, as the likelihood of a conclusion to health care
legislation has the potential to reduce the market uncertainty surrounding
health care companies.
The Fund's largest individual investment at October 31, 2009, was Intel Corp.,
which was consistently among the top 10 holdings during the fiscal year. At
fiscal year end, the Fund held two Intel convertible bonds (3.1% of long-term
investments).
The highest percentage returns were from convertible preferred investments, of
which some smaller positions of 1% or less of total investments returned over
50% after the convertibles were accumulated during the fiscal year rather than
being held for the entire year. These included Simon Property Group, Inc. 6%
(1.1% of long-term investments) and Whiting Petroleum Corp. 6.25% (0.9% of
long-term investments). The Simon Property preferred appreciated along with a
strong market for REITs in general. Whiting Petroleum had good operational
results and is a relatively rare example of a mid-size domestic exploration &
development company that is primarily an oil producer (at a time when natural
gas--which is more prevalent domestically--appears to have weaker prospects).
Moreover, Whiting enjoyed better than expected drilling results.
The two highest dollar contributions to the Fund's returns were also from
preferreds: Vale Capital Ltd 5.5% (2.1% of long-term investments, and one of
the Fund's top 10 holdings) and New York Community Bancorp, Inc. 6% (1.3% of
long-term investments, a former top-10 position). The Vale convertible,
dollar-denominated preferred appreciated as the Brazil-based Vale's production
of iron ore and other minerals enjoyed continued robust demand from emerging
markets. New York Community performed well as financial stocks rebounded and as
the company maintained its traditional record of low loan losses despite
economic weakness.
There were no major losses among issues held at the close of the fiscal year.
Earlier in the year, however, the Fund had realized some losses in situations
that faced deteriorating fundamentals combined with a need for refinancing, for
example, ProLogis Trust 2.25% convertible bonds (not held in the portfolio at
period end) and YRC Worldwide, Inc. 5% convertible bonds (not held in the
portfolio at period end). Prologis is a global warehouse company that was hit
both by the recession and by a need to restructure its balance sheet. YRC
Worldwide's trucking operations were depressed by the economic downturn and the
company had significant leverage. The largest dollar loss--like the largest
gains--also came from the convertible preferred portion of the portfolio, which
tends to be the most volatile of the Fund's investments. The Fund sold the Avery
Dennison Corp. 7.875% convertible preferred (not held in the portfolio at period
end) at a substantial loss after the manufacturer of office supplies turned out
to be surprisingly susceptible to the weak economy.
A significant positive for the Fund's performance during the 2009 fiscal year
was the use of leverage, which is discussed in the response to the next
question. Leverage has been a major factor in the Fund's success over
time--with the exception of the negative returns in fiscal year 2008. The
managers' strategy has been to invest in relatively conservative convertibles,
avoiding a high degree of credit risk, and then to leverage the performance of
these relatively strong companies.
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HOW HAS THE FUND'S LEVERAGE STRATEGY AFFECTED PERFORMANCE?
During the fiscal year ended October 31, 2009, the cost of leverage was much
less than the return of the Fund's investments; accordingly, leverage made a
significant contribution to the Fund's total return to common shareholders--the
highest return of any of our six fiscal years. (The Fund's inception was in
April 2003, so the initial October 2003 fiscal reporting period was effectively
only six months.) The Fund utilizes leverage as part of its investment
strategy, to finance the purchase of additional securities that provide
increased income and potentially greater appreciation potential to common
shareholders than could be achieved from an unleveraged portfolio. Of course,
leverage results in greater NAV volatility and entails more downside risk than
an unlever-aged portfolio--as was evident during the market panic in fiscal
2008. Leverage adds to performance when the cost of leverage is less than the
total return generated by investments, which has been the case during most of
the Fund's history since inception.
The Fund currently implements its leverage strategy through the issuance of
Auction Market Preferred Shares ("AMPS(SM)"). At the beginning of the fiscal
year, as of October 31, 2008, the Fund's leverage was $275 million. Early in
the fiscal year, the Fund's managers made the decision to reduce leverage at a
time when the ability to make distributions to common shareholders was
threatened by certain asset coverage restrictions. On December 1, 2008, the
Fund announced a partial at-par redemption of its outstanding AMPS, liquidation
preference $25,000 per share. Between December 23, 2008, and January 14, 2009,
the Fund redeemed $13 million of its outstanding AMPS at prices equal to the
liquidation preference per share, plus accumulated but unpaid dividends as of
the applicable redemption date. Since January 14, 2009, the Fund's leverage has
been maintained at $262 million. Throughout the fiscal year, the Fund has
maintained a higher than normal cash balance in order to mute volatility and
also to have funds available to take advantage of attractive investment
opportunities that may arise. The Fund's leverage represented 40.6% of managed
assets as of October 31, 2009, however this additional cash in the portfolio
has the effect of causing effective economic leverage to be less than the
stated leverage.
The Fund has six series of AMPS, three that auction each week and three that
auction every 28 days. The broad auction-rate preferred securities market
remains frozen, as it has been since February 2008. The auctions for nearly all
auction-rate preferred
Annual Report | October 31, 2009 | 7
AVK | Advent Claymore Convertible Securities and Income Fund | QUESTIONS &
ANSWERS continued
shares, including those issued by the Fund, continue to fail. Investors need to
be aware that a failed auction is not a default, nor does it require the
redemption of a fund's auction-rate preferred shares. Provisions in the
offering documents of the Fund's AMPS provide a mechanism to set a maximum rate
in the event of a failed auction, and, thus, investors will continue to be
entitled to receive payment for holding these AMPS. This maximum rate is
determined based upon a multiple of or a spread to LIBOR, whichever is greater.
During the fiscal year ended October 31, 2009, established maximum rates were
based on a spread of 125 basis points over the applicable LIBOR rates, with the
maximum rates ranging from 1.47% to 5.76% . In recent months, the cost of
leverage has been 1.50% or less.
The Fund's managers will continue to evaluate the benefits and effects of
leverage on the Fund, as well as to explore other types of leverage. Given the
very low rates that have been established for the Fund's AMPS over the last few
months, the leverage has been beneficial as the market has rebounded. During
this period, leverage has helped to create capital appreciation and has
contributed to income, since the portfolio is yielding more than the cost of
leverage.
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PLEASE DISCUSS THE FUND'S DISTRIBUTIONS DURING THE LAST FISCAL YEAR.
In each month from December 2008 through October 2009, the Fund declared a
monthly distribution of $0.0939 per common share. This monthly distribution
rate reflects a reduction from the previous monthly distribution rate of
$0.1718 per common share, which was maintained through November 2008. The
current monthly distribution represents an annualized distribution rate of
7.91% based upon the last closing market price of $14.24 as of October 31,
2009. There is no guarantee of any future distributions or that the current
returns and distribution rate will be maintained.
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WHAT IS THE CURRENT OUTLOOK FOR THE MARKETS AND THE FUND?
The Fund's managers are cautiously optimistic about the market for convertible
securities and high-yield bonds, in large part because credit spreads are still
wider than the historic norm. This means that, despite the recovery experienced
over the last few months, it still appears likely that prices of corporate
bonds--which carry credit risk--could rise a bit more. That would directly
elevate the high-yield portion of the Fund, which is relatively small, and
would also tend to drive up the prices of convertible securities, which are
affected by many of the same factors as high yield bonds. Recent research
published by Bank of America Merrill Lynch indicates that convertible
securities remain somewhat "cheap"; this suggests that the convertible market
has not fully recovered from the remarkably undervalued conditions in late
2008, and that convertible securities could therefore continue to perform well
in the near future, even if the stock market fails to enjoy strong
appreciation.
A key question is whether and to what degree the incipient economic recovery
will continue, a judgment that is very difficult to make. Historically, periods
of tightening credit spreads have been followed by periods of stronger economic
activity and stronger equity markets. Since credit spreads have tightened in
recent months, history would suggest further strength in the prices of equities
and convertible securities. An improving economy should also result in more new
issues of bonds and convertibles, as companies seek to fund future growth and to
strengthen their balance sheets. Moreover, the reopening of the capital markets
to new issuance means that viable companies should be able to refinance maturing
debt instruments, and this enhances the credit quality of convertible and other
corporate fixed-income securities independent of the potential credit
enhancement from a recovering economy.
--------------------------------------------------------------------------------
The conversion premium reflects the market price of a convertible relative to
the market value of the common shares into which the convertible security can
be converted. For example, a bond trading at a par value of $1,000 that is
convertible into 20 shares trading at $40 would have a conversion premium of
25% over its conversion value of $800. The lower the conversion premium, the
more upside there is for convertible investors. If the stock performs poorly,
the convertible normally provides downside protection based on its yield and
its fixed-income value.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
INDEX DEFINITIONS
Indices are unmanaged and it is not possible to invest directly in any index.
The Merrill Lynch All U.S. Convertibles Index is comprised of approximately 500
issues of convertible bonds and convertible preferred stock issues of all
qualities.
S&P 500 Index is a capitalization-weighted index of 500 stocks. The index is
designed to measure performance of the broad domestic economy through changes
in the aggregate market value of 500 stocks representing all major industries.
The Barclays Capital US Aggregate Bond Index covers the U.S.
dollar-denominated, investment-grade, fixed rate, taxable bond market of
SEC-registered securities. The Index includes bonds from the U.S. Treasury,
government-related, corporate, mortgage-backed securities (agency fixed-rate
and hybrid ARM passthroughs), asset-backed securities and collateralized
mortgage-backed securities sectors. U.S. Agency Hybrid Adjustable Rate Mortgage
(ARM) securities were added to the U.S. Aggregate Index on April 1, 2007, but
are not eligible for the Global Aggregate Index.
Merrill Lynch High Yield Master II Index is a commonly used benchmark index for
high yield corporate bonds. It is a measure of the broad high yield market.
Merrill Lynch All Speculative Quality Convertibles Index is an unmanaged index
of high-yield U.S. convertible securities.
8 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | QUESTIONS &
ANSWERS continued
--------------------------------------------------------------------------------
AVK RISKS AND OTHER CONSIDERATIONS
The views expressed in this report reflect those of the Portfolio Managers and
Claymore only through the report period as stated on the cover. These views are
subject to change at any time, based on market and other conditions and should
not be construed as a recommendation of any kind. The material may also contain
forward-looking statements that involve risk and uncertainty, and there is no
guarantee they will come to pass. There can be no assurance that the Fund will
achieve its investment objectives. The value of the Fund will fluctuate with
the value of the underlying securities. Historically, closed-end funds often
trade at a discount to their net asset value. The Fund is subject to investment
risk, including the possible loss of the entire amount that you invest. Past
performance does not guarantee future results.
CONVERTIBLE SECURITIES.The Fund is not limited in the percentage of its assets
that may be invested in convertible securities. Convertible securities
generally offer lower interest or dividend yields than non-convertible
securities of similar quality. The market values of convertible securities tend
to decline as interest rates increase and, conversely, to increase as interest
rates decline. However, the convertible securities market value tends to
reflect the market price of the common stock of the issuing company when that
stock price is greater than the convertible's''conversion price,'' which is the
predetermined price at which the convertible security could be exchanged for
the associated stock.
SYNTHETIC CONVERTIBLE SECURITIES. The value of a synthetic convertible security
will respond differently to market fluctuations than a convertible security
because a synthetic convertible security is composed of two or more separate
securities, each with its own market value. In addition, if the value of the
underlying common stock or the level of the index involved in the convertible
component falls below the exercise price of the warrant or option, the warrant
or option may lose all value.
LOWER GRADE SECURITIES. Investing in lower grade securities (commonly known
as"junk bonds") involves additional risks, including credit risk. Credit risk
is the risk that one or more securities in the Fund's portfolio will decline in
price, or fail to pay interest or principal when due, because the issuer of the
security experiences a decline in its financial status.
LEVERAGE RISK. Certain risks are associated with the leveraging of common
stock. Both the net asset value and the market value of shares of common stock
may be subject to higher volatility and a decline in value.
INTEREST RATE RISK. In addition to the risks discussed above, convertible
securities and nonconvertible income securities are subject to certain risks,
including:
o if interest rates go up, the value of convertible securities and
nonconvertible income securities in the Fund's portfolio generally will
decline;
o during periods of declining interest rates, the issuer of a security may
exercise its option to prepay principal earlier than scheduled, forcing the Fund
to reinvest in lower yielding securities. This is known as call or prepayment
risk. Lower grade securities have call features that allow the issuer to
repurchase the security prior to its stated maturity. An issuer may redeem a
lower grade security if the issuer can refinance the security at a lower cost
due to declining interest rates or an improvement in the credit standing of the
issuer; and
o during periods of rising interest rates, the average life of certain types of
securities may be extended because of slower than expected principal payments.
This may lock in a below market interest rate, increase the security's duration
(the estimated period until the security is paid in full) and reduce the value
of the security. This is known as extension risk.
ILLIQUID INVESTMENTS.The Fund may invest without limit in illiquid securities.
The Fund may also invest without limit in Rule 144A Securities. Although many
of the Rule 144A Securities in which the Fund invests may be, in the view of
the Investment Manager, liquid, if qualified institutional buyers are unwilling
to purchase these Rule 144A Securities, they may become illiquid. Illiquid
securities may be difficult to dispose of at a fair price at the times when the
Fund believes it is desirable to do so. The market price of illiquid securities
generally is more volatile than that of more liquid securities, which may
adversely affect the price that the Fund pays for or recovers upon the sale of
illiquid securities.
FOREIGN SECURITIES AND EMERGING MARKETS RISK. Investing in non-U.S. issuers may
involve unique risks, such as currency, political, economic and market risk. In
addition, investing in emerging markets entails additional risk including, but
not limited to (1) news and events unique to a country or region (2) smaller
market size, resulting in lack of liquidity and price volatility (3) certain
national policies which may restrict the Fund's investment opportunities.
STRATEGIC TRANSACTIONS.The Fund may use various other investment management
techniques that also involve certain risks and special considerations,
including engaging in hedging and risk management transactions, including
interest rate and foreign currency transactions, options, futures, swaps, caps,
floors, and collars and other derivatives transactions.
AUCTION MARKET PREFERRED SHARES (AMPS) RISK. The AMPS are redeemable, in whole
or in part, at the option of the Fund on any dividend payment date for the
AMPS, and are subject to mandatory redemption in certain circumstances. The
AMPS are not listed on an exchange. You may buy or sell AMPS only through an
order placed at an auction with or through a broker-dealer that has entered
into an agreement with the auction agent and the Fund or in a secondary market
maintained by certain broker-dealers. These broker-dealers are not required to
maintain this market, and it may not provide you with liquidity. In addition to
the risks described above, the Fund is also subject to: Management Risk, Market
Disruption Risk, and Anti-Takeover Provisions. Please see www.claymore.com/avk
for a more detailed discussion about Fund risks and considerations.
Annual Report | October 31, 2009 | 9
AVK | Advent Claymore Convertible Securities and Income Fund
Fund SUMMARY | AS OF OCTOBER 31, 2009 (unaudited)
FUND STATISTICS
-------------------------------------------------------------------
Share Price $14.24
Common Share Net Asset Value $16.28
Premium/Discount to NAV -12.53%
Net Assets Applicable to Common Shares ($000) $383,925
TOTAL RETURNS
-------------------------------------------------------------------
(INCEPTION 4/30/03) MARKET NAV
-------------------------------------------------------------------
One Year 20.34% 42.52%
Three Year - average annual -10.55% -6.92%
Five Year - average annual -1.42% 0.08%
Since Inception -average annual 1.08% 3.35%
-------------------------------------------------------------------
% OF LONG-TERM
TOP TEN INDUSTRIES INVESTMENTS
-------------------------------------------------------------------
Healthcare Products & Healthcare Services 12.1%
Pharmaceuticals 10.1%
Telecommunications 7.7%
Insurance 7.0%
Real Estate & Real Estate Investment Trusts 6.9%
Biotechnology 6.6%
Oil & Gas and Oil & Gas Services 6.2%
Semiconductors 5.2%
Banks 4.0%
Diversified Financial Services 3.5%
-------------------------------------------------------------------
% OF LONG-TERM
TOP TEN ISSUERS INVESTMENTS
-------------------------------------------------------------------
Intel Corp. 3.1%
Teva Pharmaceutical Industries Ltd. 3.0%
Amgen, Inc. 2.9%
Medtronic, Inc. 2.6%
Vale Capital Ltd. 2.1%
Transocean, Inc. 2.0%
Mylan, Inc. 1.9%
Omnicare, Inc. 1.8%
LifePoint Hospitals, Inc. 1.8%
Lucent 1.7%
-------------------------------------------------------------------
Past performance does not guarantee future results. All portfolio data is
subject to change daily. For more current information, please visit
www.claymore.com/avk. The above summaries are provided for informational
purposes only and should not be viewed as recommendations.
SHARE PRICE & NAV PERFORMANCE
SHARE PRICE NAV
10/31/08 13.11 12.52
13.38 12.67
13.81 13.28
13.5 12.91
13.44 12.47
13.35 12.66
13.34 12.61
12.4 12.34
11.71 11.84
11.67 12.19
11.01 12
10.41 11.65
9.96 11.49
9.7 10.99
8.49 10.23
8.18 10.23
9.23 10.6
9 10.84
9.59 11.11
10.09 11.12
9.31 10.7
8.8 10.81
8.73 10.84
8.37 10.67
8.37 10.82
8.59 11.06
8.55 11.04
8.71 11.14
8.07 10.86
7.99 10.97
7.81 10.93
8.08 11.3
8.38 11.37
8.81 11.4
9.18 11.49
9.6 11.35
10.04 11.41
10.2 11.44
10.2 11.42
9.81 11.5
10.17 11.72
10.95 11.89
11.71 12.08
12.06 12.29
12.06 12.66
11.55 12.57
11.63 12.64
11.85 12.58
11.7 12.41
11.64 12.44
11.53 12.17
11.4 12.09
11.7 12.1
11.6 11.61
11.65 11.85
11.7 11.71
11.52 11.72
11.65 11.83
11.55 11.89
12.15 12.36
12.29 12.11
11.99 11.93
11.75 11.84
11.99 11.95
11.83 11.92
11.73 12.08
11.87 12.26
11.9 12.29
11.74 11.98
11.38 11.99
11.4 12.02
11.21 11.96
10.32 11.56
10.03 11.58
10 11.5
9.75 11.42
9.26 11.29
9.78 11.54
9.77 11.54
10.1 11.34
9.56 11.16
9 10.84
8.74 10.8
9.44 10.93
8.75 10.68
8.51 10.65
8.2 10.62
8.71 10.93
9.05 10.89
9.45 11.08
9.45 11.16
9.54 11.12
9.44 11.23
9.51 11.36
9.41 11.37
9.39 11.31
10.34 11.74
10.23 11.63
10.38 11.61
10.43 11.8
10.18 11.73
9.86 11.4
9.92 11.63
10.18 11.71
10.54 12.06
10.55 12.17
10.36 12.15
10.37 12.01
10.58 12.14
11 12.64
10.94 12.56
10.61 12.48
10.89 12.53
11.21 12.79
11.42 12.74
10.88 12.2
10.82 12.43
10.74 12.44
10.85 12.51
11.01 12.76
11.21 12.59
11.14 12.55
11.32 12.84
4/30/09 11.4 12.89
12.3 12.93
12.25 13.36
12.05 13.32
12.27 13.47
12.05 13.39
12.3 13.69
12.07 13.52
12.13 13.46
11.66 13
11.44 13.1
11.31 13
11.67 13.25
11.69 13.32
11.81 13.34
11.79 13.25
11.89 13.25
11.93 13.48
11.93 13.44
12.15 13.55
12.26 13.8
12.6 13.96
12.51 14.02
12.4 13.83
12.54 13.97
12.78 13.92
12.62 13.89
12.61 14.04
12.52 14.05
12.59 14.15
12.57 14.09
12.13 13.85
11.93 13.7
11.9 13.62
11.99 13.65
12.05 13.78
11.72 13.39
11.74 13.41
11.9 13.56
12.02 13.76
12.03 13.8
12.12 13.87
12.01 13.83
12.13 13.88
12 13.65
11.98 13.57
11.94 13.49
11.84 13.41
11.95 13.54
12 13.53
12.19 13.61
12.35 13.76
12.49 14.08
12.54 14.26
12.64 14.28
12.72 14.69
12.77 14.53
12.87 14.56
13.06 14.84
13.3 14.96
13.3 15.01
13.37 15.02
13.19 15.03
13.41 15.2
13.5 15.26
13.64 15.56
13.84 15.62
14 15.6
14.04 15.57
14.15 15.73
14.2 15.67
14.08 15.51
14.05 15.53
14.02 15.65
13.76 15.52
13.33 15.22
13.45 15.35
13.46 15.39
13.68 15.48
13.78 15.7
13.85 15.72
13.85 15.79
13.74 15.76
13.82 15.83
13.85 15.89
13.7 15.82
13.47 15.56
13.33 15.56
13.45 15.68
13.66 15.82
13.84 15.97
13.94 16.13
14.07 16.29
14.1 16.23
14.06 16.33
14.23 16.46
14.54 16.66
14.5 16.58
14.45 16.58
14.34 16.56
14.5 16.69
14.54 16.65
14.64 16.49
14.53 16.45
14.65 16.65
14.7 16.64
14.73 16.64
14.6 16.33
14.38 16.27
14.49 16.46
14.59 16.62
14.69 16.66
14.76 16.84
14.83 16.89
14.94 16.92
14.93 16.79
15.11 17.06
15.1 17.08
15.12 16.97
15.26 17
15.3 16.97
15.17 16.99
15.3 17.04
15.19 16.85
15.21 16.68
14.99 16.57
14.42 16.3
14.69 16.55
10/31/09 14.24 16.28
MONTHLY DIVIDENDS PER SHARE
Nov 08 0.1718
Dec 0.0939
Jan 09 0.0939
Feb 0.0939
Mar 0.0939
Apr 0.0939
May 0.0939
June 0.0939
July 0.0939
Aug 0.0939
Sep 0.0939
Oct 0.0939
PORTFOLIO COMPOSITION (% of Total Investments)
ASSET CLASS
--------------------
Convertible Securities 81.9%
High Yield Securities 11.1%
Short-Term Investments 7.0%
10 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Portfolio of INVESTMENTS | OCTOBER 31, 2009
NUMBER
OF SHARES VALUE
-------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS -- 150.1%
CONVERTIBLE PREFERRED STOCKS -- 40.4%
AGRICULTURE -- 1.2%
109,100 Archer-Daniels-Midland Co., 6.25%, 2011 $ 4,664,025
-------------------------------------------------------------------------------------------
BANKS -- 6.0%
72,850 FifthThird Bancorp, Ser. G, 8.50%, 2049 8,268,475
72,176 Keycorp, Ser. A, 7.75%, 2049 5,853,473
6,000 Webster Financial Corp., Ser. A, 8.50%, 2049 4,537,500
4,842 Wells Fargo & Co., Ser. L, 7.50%, 2049 4,333,590
-------------------------------------------------------------------------------------------
22,993,038
-------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 0.9%
6,200 SLM Corp., Ser. C, 7.25%, 2010 3,445,650
-------------------------------------------------------------------------------------------
ELECTRIC -- 4.2%
176,504 FPL Group, Inc., 8.375%, 2012 8,604,570
123,400 Great Plains Energy, Inc., 12.00%, 2012 7,626,120
-------------------------------------------------------------------------------------------
16,230,690
-------------------------------------------------------------------------------------------
FOOD PRODUCTS -- 1.9%
623,200 Dole Food 2009 Automatic Common Exchange SecurityTrust,
7.00%, 2012 (a) 7,303,904
-------------------------------------------------------------------------------------------
HEALTHCARE SERVICES -- 2.9%
4,500 HealthSouth Corp., Ser. A, 6.50%, 2049 3,145,500
231,000 Omnicare CapitalTrust II, Ser. B, 4.00%, 2033 7,930,230
-------------------------------------------------------------------------------------------
11,075,730
-------------------------------------------------------------------------------------------
HOUSEWARES -- 0.8%
90,000 Newell FinancialTrust I, 5.25%, 2049 3,178,125
-------------------------------------------------------------------------------------------
INSURANCE -- 4.7%
69,000 Assured Guaranty Ltd., 8.50%, 2014 (Bermuda) 4,968,000
70,000 Reinsurance Group of America, Equity Security Unit, 5.75%, 2051 4,330,200
344,375 XL Capital Ltd., 10.75%, 2011 (Cayman Islands) 8,833,219
-------------------------------------------------------------------------------------------
18,131,419
-------------------------------------------------------------------------------------------
MINING -- 3.2%
250,000 Vale Capital Ltd., Ser. RIO, 5.50%, 2010 (Brazil) 12,262,500
-------------------------------------------------------------------------------------------
OIL & GAS -- 1.4%
33,612 Whiting Petroleum Corp., 6.25%, 2049 5,118,099
-------------------------------------------------------------------------------------------
PHARMACEUTICALS -- 2.8%
10,560 Mylan, Inc., 6.50%, 2010 10,876,800
-------------------------------------------------------------------------------------------
PIPELINES -- 1.5%
6,600 El Paso Corp., 4.99%, 2049 5,768,400
-------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 1.6%
106,000 Simon Property Group, Inc., Ser. I, 6.00%, 2049 6,254,000
-------------------------------------------------------------------------------------------
SAVINGS & LOANS -- 2.0%
192,788 New York Community CapitalTrustV, 6.00%, 2051 7,663,323
-------------------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 4.3%
128,095 Crown Castle International Corp., 6.25%, 2012 6,789,035
13,155 LucentTechnologies CapitalTrust I, 7.75%, 2017 (France) 9,668,925
-------------------------------------------------------------------------------------------
16,457,960
-------------------------------------------------------------------------------------------
TRANSPORTATION -- 1.0%
4,000 Kansas City Southern, 5.125%, 2049 3,799,776
-------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS -- 40.4%
(Cost $141,620,974) 155,223,439
-------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
-------------------------------------------------------------------------------------------
CONVERTIBLE BONDS -- 91.8%
AEROSPACE & DEFENSE -- 1.4%
$ 5,275,000 AlliantTechsystems, Inc., BB-, 2.75%, 9/15/11 $ 5,420,062
-------------------------------------------------------------------------------------------
AGRICULTURE -- 0.7%
2,500,000 Archer-Daniels-Midland Co., A, 0.875%, 2/15/14 2,534,375
-------------------------------------------------------------------------------------------
AIRLINES -- 0.5%
2,000,000 Continental Airlines, Inc., CCC+, 5.00%, 6/15/23 1,980,000
-------------------------------------------------------------------------------------------
BIOTECHNOLOGY -- 9.9%
8,500,000 Amgen, Inc., A+, 0.125%, 2/01/11 8,404,375
8,500,000 Amgen, Inc., A+, 0.375%, 2/01/13 8,404,375
6,250,000 Amylin Pharmaceuticals, Inc., NR, 3.00%, 6/15/14 4,781,250
5,000,000 Gilead Sciences, Inc., NR, 0.50%, 5/01/11 5,906,250
6,000,000 LifeTechnologies Corp., BB+, 3.25%, 6/15/25 6,967,500
3,500,000 Millipore Corp., BB-, 3.75%, 6/01/26 3,605,000
-------------------------------------------------------------------------------------------
38,068,750
-------------------------------------------------------------------------------------------
COAL -- 0.9%
4,500,000 Massey Energy Co., BB-, 3.25%, 8/01/15 3,633,750
-------------------------------------------------------------------------------------------
COMMERCIAL SERVICES -- 0.3%
1,050,000 Quanta Services, Inc., NR, 3.75%, 4/30/26 1,169,438
-------------------------------------------------------------------------------------------
COMPUTERS -- 4.3%
4,150,000 DST Systems, Inc., Ser. C, NR, 4.125%, 8/15/23 4,378,250
5,000,000 EMC Corp., A-, 1.75%, 12/01/11 5,906,250
2,000,000 EMC Corp., A-, 1.75%, 12/01/13 2,410,000
3,750,000 Maxtor Corp., B, 2.375%, 8/15/12 (Cayman Islands) 3,857,813
-------------------------------------------------------------------------------------------
16,552,313
-------------------------------------------------------------------------------------------
DISTRIBUTION/WHOLESALE -- 0.7%
2,160,000 WESCO International, Inc., B, 6.00%, 9/15/29 2,597,400
-------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 2.7%
5,000,000 Affiliated Managers Group, Inc., BBB-, 3.95%, 8/15/38 4,750,000
3,800,000 AmeriCredit Corp., B-, 0.75%, 9/15/11 3,434,250
2,681,000 Nasdaq OMX Group, Inc., BB+, 2.50%, 8/15/13 2,369,334
-------------------------------------------------------------------------------------------
10,553,584
-------------------------------------------------------------------------------------------
ELECTRICAL COMPONENTS & EQUIPMENT -- 1.4%
1,250,000 SunPower Corp., Ser. SPWR, NR, 1.25%, 2/15/27 1,100,000
4,250,000 Suntech Power Holdings Co. Ltd., NR, 0.25%, 2/15/12
(Cayman Islands) 4,175,625
-------------------------------------------------------------------------------------------
5,275,625
-------------------------------------------------------------------------------------------
ENERGY - ALTERNATE SOURCES -- 1.0%
3,500,000 Covanta Holding Corp., B, 3.25%, 6/01/14 (a) 3,937,500
-------------------------------------------------------------------------------------------
ENTERTAINMENT -- 1.5%
5,000,000 International GameTechnology, BBB, 3.25%, 5/01/14 (a) 5,912,500
-------------------------------------------------------------------------------------------
HEALTHCARE PRODUCTS -- 8.9%
3,300,000 Beckman Coulter, Inc., BBB, 2.50%, 12/15/36 3,749,625
10,569,000 Hologic, Inc., BB-, 2.00%, 12/15/37 (b) 8,626,946
2,500,000 Integra LifeSciences Holdings Corp., NR, 2.75%, 6/01/10 (a) 2,465,625
3,000,000 Integra LifeSciences Holdings Corp., NR, 2.375%, 6/01/12 (a) 2,647,500
15,600,000 Medtronic, Inc., AA-, 1.625%, 4/15/13 15,249,000
1,250,000 NuVasive, Inc., NR, 2.25%, 3/15/13 (a) 1,310,938
-------------------------------------------------------------------------------------------
34,049,634
-------------------------------------------------------------------------------------------
See notes to financial statements.
Annual Report | October 31, 2009 | 11
AVK | Advent Claymore Convertible Securities and Income Fund | PORTFOLIO OF
INVESTMENTS continued
PRINCIPAL
AMOUNT VALUE
-------------------------------------------------------------------------------------------
HEALTHCARE SERVICES -- 2.6%
$ 3,000,000 LifePoint Hospitals, Inc., B, 3.25%, 8/15/25 $ 2,700,000
8,265,000 LifePoint Hospitals, Inc., B, 3.50%, 5/15/14 7,438,500
-------------------------------------------------------------------------------------------
10,138,500
-------------------------------------------------------------------------------------------
INSURANCE -- 2.0%
6,760,000 Old Republic International Corp., BBB+, 8.00%, 5/15/12 7,664,150
-------------------------------------------------------------------------------------------
INTERNET -- 1.6%
5,600,000 Symmantec Corp., NR, 1.00%, 6/15/13 6,265,000
-------------------------------------------------------------------------------------------
IRON/STEEL -- 3.7%
3,600,000 ArcelorMittal, BBB, 5.00%, 5/15/14 (Luxembourg) 4,914,000
2,333,000 Steel Dynamics, Inc., BB+, 5.125%, 6/15/14 2,534,221
4,950,000 United States Steel Corp., BB, 4.00%, 5/15/14 6,583,500
-------------------------------------------------------------------------------------------
14,031,721
-------------------------------------------------------------------------------------------
LEISURE -- 2.5%
9,000,000 Carnival Corp., BBB+, 2.00%, 4/15/21 (Panama) 9,405,000
-------------------------------------------------------------------------------------------
MEDIA -- 0.5%
Euro1,250,000 UnitedGlobalCom, Inc., B-, 1.75%, 4/15/24 1,730,519
-------------------------------------------------------------------------------------------
MINING -- 1.0%
$ 3,250,000 Newmont Mining Corp., BBB+, 1.625%, 7/15/17 3,843,125
-------------------------------------------------------------------------------------------
MISCELLANEOUS MANUFACTURING -- 2.1%
4,250,000 Danaher Corp., A+, 0.00%, 1/22/21 4,292,500
4,850,000 Trinity Industries, Inc., BB-, 3.875%, 6/01/36 3,582,938
-------------------------------------------------------------------------------------------
7,875,438
-------------------------------------------------------------------------------------------
OIL & GAS-- 4.3%
4,100,000 Carrizo Oil & Gas, Inc., NR, 4.375%, 6/01/28 3,418,375
1,000,000 Chesapeake Energy Corp., BB, 2.75%, 11/15/35 965,000
4,850,000 Chesapeake Energy Corp., BB, 2.25%, 12/15/38 3,649,625
3,000,000 GMX Resources, Inc., NR, 5.00%, 2/01/13 2,568,300
2,750,000 Goodrich Petroleum Corp., NR, 3.25%, 12/01/26 2,526,563
3,500,000 SOCO Finance Jersey Ltd., Ser. SIA, NR, 4.50%, 5/16/13
(United Kingdom) 3,460,380
-------------------------------------------------------------------------------------------
16,588,243
-------------------------------------------------------------------------------------------
OIL & GAS SERVICES -- 3.6%
2,500,000 SESI LLC, BB+, 1.50%, 12/15/26 (b) 2,253,125
3,000,000 Transocean, Inc., Ser. B, BBB+, 1.50%, 12/15/37
(Cayman Islands) 2,951,250
9,049,000 Transocean, Inc., Ser. C, BBB+, 1.50%, 12/15/37
(Cayman Islands) 8,732,285
-------------------------------------------------------------------------------------------
13,936,660
-------------------------------------------------------------------------------------------
PHARMACEUTICALS -- 10.9%
7,500,000 Allergan, Inc., NR, 1.50%, 4/01/26 8,418,750
7,282,000 King Pharmaceuticals, Inc., BB, 1.25%, 4/01/26 6,262,520
4,000,000 Medicis Pharmaceutical Corp., NR, 2.50%, 6/04/32 3,835,000
3,000,000 Omnicare, Inc., Ser. OCR, B+, 3.25%, 12/15/35 2,403,750
4,000,000 Shire PLC, Ser. REGs, NR, 2.75%, 5/09/14 (Channel Islands) 3,753,232
15,150,000 Teva Pharmaceutical Industries Ltd., Ser. C, BBB+, 0.25%,
2/01/26 (Israel) (c) 17,252,062
-------------------------------------------------------------------------------------------
41,925,314
-------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
-------------------------------------------------------------------------------------------
REAL ESTATE -- 0.6%
$ 2,500,000 Forest City Enterprises, Inc., NR, 3.625%, 10/15/14 $ 2,108,750
-------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 8.2%
3,000,000 Boston Properties LP, A-, 2.875%, 2/15/37 2,902,500
2,170,000 Boston Properties LP, A-, 3.625%, 2/15/14 (a) 2,094,050
4,200,000 BRE Properties, Inc., BBB, 4.125%, 8/15/26 4,079,250
5,100,000 Digital RealtyTrust LP, NR, 5.50%, 4/15/29 (a) 6,292,125
2,700,000 Home Properties LP, NR, 4.125%, 11/01/26 (a) 2,551,500
7,005,000 Host Hotels & Resorts LP, BB+, 2.625%, 4/15/27 (a) 6,304,500
4,465,000 Macerich Co., NR, 3.25%, 3/15/12 (a) 4,135,706
3,000,000 UDR, Inc., BBB, 4.00%, 12/15/35 2,958,750
-------------------------------------------------------------------------------------------
31,318,381
-------------------------------------------------------------------------------------------
RETAIL -- 0.3%
1,500,000 Asbury Automotive Group, Inc., B-, 3.00%, 9/15/12 1,286,250
-------------------------------------------------------------------------------------------
SEMICONDUCTORS -- 7.8%
5,000,000 Advanced Micro Devices, Inc., CCC+, 5.75%, 8/15/12 4,237,500
10,000,000 Intel Corp., A-, 2.95%, 12/15/35 9,200,000
8,250,000 Intel Corp., A-, 3.25%, 8/01/39 (a) 8,930,625
7,840,000 LinearTechnology Corp., Ser. A, NR, 3.00%, 5/01/27 7,546,000
-------------------------------------------------------------------------------------------
29,914,125
-------------------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 5.9%
6,200,000 Anixter International, Inc., BB-, 1.00%, 2/15/13 5,711,750
5,850,000 Ciena Corp., B+, 0.25%, 5/01/13 4,497,187
8,600,000 NII Holdings, Inc., B+, 3.125%, 6/15/12 7,664,750
4,500,000 Virgin Media, Inc., B-, 6.50%, 11/15/16 (a) 4,781,250
-------------------------------------------------------------------------------------------
22,654,937
-------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS - 91.8%
(Cost $318,132,323) 352,371,044
-------------------------------------------------------------------------------------------
CORPORATE BONDS -- 17.9%
AUTO MANUFACTURERS -- 0.2%
800,000 Navistar International Corp., BB-, 8.25%, 11/01/21 785,000
-------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 1.6%
5,400,000 Capital One CapitalV, BB, 10.25%, 8/15/39 6,178,437
-------------------------------------------------------------------------------------------
HEALTHCARE PRODUCTS -- 1.1%
4,100,000 Hanger Orthopedic Group, Inc., B-, 10.25%, 6/01/14 4,366,500
-------------------------------------------------------------------------------------------
HEALTHCARE SERVICES -- 2.6%
4,000,000 Apria Healthcare Group, Inc., BB+, 11.25%, 11/01/14 (a) 4,350,000
3,000,000 HCA, Inc., BB-, 9.25%, 11/15/16 3,142,500
2,500,000 HCA, Inc., BB, 8.50%, 4/15/19 (a) 2,662,500
-------------------------------------------------------------------------------------------
10,155,000
-------------------------------------------------------------------------------------------
HOLDING COMPANIES - DIVERSIFIED -- 1.8%
6,800,000 Leucadia National Corp., BB+, 8.125%, 9/15/15 6,919,000
-------------------------------------------------------------------------------------------
HOME BUILDERS -- 0.8%
3,000,000 K Hovnanian Enterprises, Inc., CCC+, 10.625%, 10/15/16 (a) 3,000,000
-------------------------------------------------------------------------------------------
HOUSEWARES -- 1.0%
3,094,000 Newell Rubbermaid, Inc., BBB-, 10.60%, 4/15/19 3,819,487
-------------------------------------------------------------------------------------------
See notes to financial statements.
12 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | PORTFOLIO OF
INVESTMENTS continued
PRINCIPAL
AMOUNT VALUE
-------------------------------------------------------------------------------------------------
INSURANCE -- 3.7%
$ 7,200,000 Liberty Mutual Group, Inc., BB, 10.75%, 6/15/58 (a) (d) $ 7,632,000
5,500,000 MetLife, Inc., BBB, 10.75%, 8/01/39 6,681,840
--------------------------------------------------------------------------------------------
14,313,840
--------------------------------------------------------------------------------------------
MACHINERY - DIVERSIFIED -- 0.7%
2,500,000 Case New Holland, Inc., BB+, 7.75%, 9/01/13 (Netherlands) (a) 2,493,750
--------------------------------------------------------------------------------------------
MEDIA-- 0.7%
2,500,000 Univision Communication, Inc., B-, 12.00%, 7/01/14 (a) 2,715,625
--------------------------------------------------------------------------------------------
OFFICE/BUSINESS EQUIPMENT -- 0.9%
3,500,000 Xerox CapitalTrust I, BB+, 8.00%, 2/01/27 3,437,893
--------------------------------------------------------------------------------------------
PHARMACEUTICALS -- 1.4%
4,760,000 Axcan Intermediate Holdings, Inc., B, 12.75%, 3/01/16 5,236,000
--------------------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 1.4%
5,150,000 CC Holdings GSV LLC, BB, 7.75%, 5/01/17 (a) 5,433,250
--------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS - 17.9%
(Cost $62,371,676) 68,853,782
--------------------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS - 150.1%
(Cost $522,124,973) 576,448,265
--------------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------------------
MONEY MARKET FUNDS - 11.3%
21,416,481 DreyfusTreasury & Agency Cash Management - Investor Shares $ 21,416,481
21,814,898 Goldman Sachs Financial Prime Obligations 21,814,898
--------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $43,231,379) 43,231,379
-------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 161.4%
(Cost $565,356,352) 619,679,644
Other assets in excess of liabilities -- 6.8% 26,244,943
Preferred Stock, at redemption value -- (-68.2% of Net Assets
Applicable to Common Shareholders or -42.3% of
Total Investments) (262,000,000)
-------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS -- 100.0% $ 383,924,587
-------------------------------------------------------------------------------------------------
LLC - Limited Liability Corp.
LP - Limited Partnership
PLC - Public Limited Company
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
2009, these securities amounted to 22.6% of net assets.
(b) Security is a "step down" bond where the coupon decreases or steps down at
a predetermined date.
(c) All or a portion of these securities have been physically segregated in
connection with swap agreements.
(d) Floating rate security. The rate shown is as of October 31, 2009. Ratings
shown are per Standard & Poor's. Securities classified as NR are not rated
by Standard & Poor's.
Ratings shown are per Standard & Poor's. Securities classified as NR are not
rated by Standard & Poor's.
All percentages shown in the Portfolio of Investments are based on Net Assets
Applicable to Common Shareholders unless otherwise noted.
See notes to financial statements.
Annual Report | October 31, 2009 | 13
AVK | Advent Claymore Convertible Securities and Income Fund
Statement of ASSETS AND LIABILITIES | OCTOBER 31, 2009
ASSETS
Investments in securities, at value (cost $522,124,973) $ 576,448,265
Short term investments, at value (cost $43,231,379) 43,231,379
-----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at value (cost $565,356,352) 619,679,644
-----------------------------------------------------------------------------------------------------------------------------------
Cash 1,225,743
Receivable for securities sold 20,233,817
Interest receivable 4,632,093
Dividends receivable 982,099
Other assets 44,024
-----------------------------------------------------------------------------------------------------------------------------------
Total assets 646,797,420
-----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fee payable 284,717
Dividends payable - preferred shares 124,566
Unrealized depreciation on swaps 97,273
Servicing fee payable 94,906
Administration fee payable 11,630
Accrued expenses and other liabilities 259,741
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 872,833
-----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK, AT REDEMPTION VALUE
Auction Market Preferred Shares
$0.001 par value per share; 10,480 authorized, issued and outstanding at $25,000
per share liquidation preference 262,000,000
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $ 383,924,587
-----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
Common Stock, $0.001 par value per share; unlimited number of shares authorized,
23,580,877 shares issued and outstanding $ 23,581
Additional paid-in capital 557,792,246
Net unrealized appreciation on investments, swaps and foreign currency translation 54,226,019
Accumulated net realized gain (loss) on investments, swaps and foreign currency transactions (224,885,545)
Distributions in excess of net investment income (3,231,714)
-----------------------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shareholders $ 383,924,587
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE APPLICABLE TO COMMON SHAREHOLDERS
(based on 23,580,877 common shares outstanding $ 16.28
-----------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
14 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Statement of OPERATIONS | FOR THE YEAR ENDED OCTOBER 31, 2009
INVESTMENT INCOME
Interest $ 19,216,444
Dividends 11,503,688
------------------------------------------------------------------------------------------------------------------------------------
Total income $ 30,720,132
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Advisory fee 3,122,461
Servicing agent fee 1,214,290
Preferred share maintenance 683,230
Professional fees 294,084
Trustees'fees and expenses 153,327
Fund accounting 134,347
Administration fee 126,735
Printing 123,374
Custodian 90,079
Insurance 81,921
ICI dues 33,197
Rating agency fee 22,152
NYSE listing fee 21,351
Transfer agent 21,000
Miscellaneous 15,396
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 6,136,944
Advisory and Servicing agent fees waived (565,611)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 5,571,333
------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 25,148,799
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
SWAPS, OPTIONS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Investments (106,594,431)
Swaps (8,068,612)
Options 48,784
Foreign currency transactions 22,521
Net change in unrealized appreciation (depreciation) on:
Investments 204,774,736
Swaps 6,390,603
Foreign currency translation 59,044
------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS, SWAPS, OPTIONS AND FOREIGN CURRENCY TRANSACTIONS 96,632,645
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS FROM NET INVESTMENT INCOME (4,771,917)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS $ 117,009,527
====================================================================================================================================
See notes to financial statements.
Annual Report l October 31, 2009 l 15
AVK | Advent Claymore Convertible Securities and Income Fund
Statement of CHANGES IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS |
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, 2009 OCTOBER 31, 2008
====================================================================================================================================
CHANGE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS:
Net investment income $ 25,148,799 $ 39,162,979
Net realized gain (loss) on investments, swaps, options and foreign currency transactions (114,591,738) (90,749,975)
Net change in unrealized appreciation (depreciation) on investments,
swaps and foreign currency translation 211,224,383 (254,292,055)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
From net investment income (4,771,917) (11,491,856)
From net realized gains -- (716,084)
------------------------------------------------------------------------------------------------------------------------------------
(4,771,917) (12,207,940)
------------------------------------------------------------------------------------------------------------------------------------
Net increase/decrease in net assets applicable to Common Shareholders resulting from operations 117,009,527 (318,086,991)
------------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON
SHAREHOLDERS:
From and in excess of net investment income (28,249,227) (48,148,533)
From net realized gains -- (3,000,244)
Return of capital (152,176) (363,640)
------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to common shareholders (28,401,403) (51,512,417)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Reinvestment of dividends 214,968 395,146
------------------------------------------------------------------------------------------------------------------------------------
Total increase/decrease in net assets 88,823,092 (369,204,262)
------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
Beginning of period 295,101,495 664,305,757
------------------------------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of net investment income
of $3,231,714 and $2,482,381, respectively) $ 383,924,587 $ 295,101,495
------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
16 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Financial HIGHLIGHTS |
FOR THE FOR THE FOR THE FOR THE FOR THE
PER SHARE OPERATING PERFORMANCE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD 2009 2008 2007 2006 2005
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.52 $ 28.23 $ 26.82 $ 25.69 $ 26.10
-----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) 1.06 1.66 1.94 1.99 2.33
Net realized and unrealized gain/loss on investments,
swaps, options and foreign currency transactions 4.10 (14.66) 2.68 2.28 0.10
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
From net investment income (common share equivalent basis) (0.20) (0.49) (0.52) (0.56) (0.35)
From net realized gains (common share equivalent basis) -- (0.03) (0.11) -- --
------------------------------------------------------------------------------------------------------------------------------------
Total preferred distributions (common share equivalent basis) (0.20) (0.52) (0.63) (0.56) (0.35)
------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 4.96 (13.52) 3.99 3.71 2.08
------------------------------------------------------------------------------------------------------------------------------------
COMMON AND PREFERRED SHARES' OFFERING
EXPENSES CHARGED TO PAID-IN-CAPITAL IN EXCESS OF PAR VALUE -- -- -- --* --
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
From and in excess of net investment income (1.19) (2.05) (2.08) (2.58) (2.49)
From net realized gain -- (0.13) (0.50) -- --
Return of capital (0.01) (0.01) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total distributions to Common Shareholders (1.20) (2.19) (2.58) (2.58) (2.49)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.28 $ 12.52 $ 28.23 $ 26.82 $ 25.69
------------------------------------------------------------------------------------------------------------------------------------
Market value, end of period $ 14.24 $ 13.11 $ 25.15 $ 27.03 $ 23.62
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN (b)
Net asset value 42.52% -51.06% 15.63% 15.15% 8.14%
Market value 20.34% -41.96% 2.48% 26.86% 2.52%
RATIOS AND SUPPLEMENTAL DATA
Net assets, applicable to Common Shareholders, end of
period (thousands) $ 383,925 $ 295,101 $ 664,306 $ 627,383 $ 599,998
Preferred shares, at redemption value ($25,000 per share
liquidation preference) (thousands) $ 262,000 $ 275,000 $ 275,000 $ 275,000 $ 275,000
Preferred shares asset coverage per share $ 61,634 $ 51,827 $ 85,391 $ 82,035 $ 79,545
RATIOS TO AVERAGE NET ASSETS APPLICABLE TO COMMON SHARES:
Net Expenses, after fee waiver 1.77% 1.22% 1.08% 1.12% 1.12%
Net Expenses, before fee waiver 1.95% 1.47% 1.37% 1.41% 1.41%
Net Investment Income, after fee waiver, prior to effect
of dividends to preferred shares 7.98% 7.14% 7.09% 7.62% 8.90%
Net Investment Income, before fee waiver, prior to effect
of dividends to preferred shares 7.80% 6.89% 6.80% 7.33% 8.61%
Net Investment Income, after fee waiver, after effect of
dividends to preferred shares 6.47% 4.92% 4.80% 5.49% 7.56%
Net Investment Income, before fee waiver, after effect
of dividends to preferred shares 6.29% 4.67% 4.51% 5.20% 7.27%
Portfolio turnover rate 121% 87% 76% 81% 64%
* Amount less than $0.01.
(a) Based on average shares outstanding during the period.
(b) Total investment return is calculated assuming a purchase of a common share
at the beginning of the period and a sale on the last day of the period
reported either at net asset value ("NAV") or market price per share.
Dividends and distributions are assumed to be reinvested at NAV for NAV
returns or the prices obtained under the Fund's Dividend Reinvestment Plan
for market value returns.Total investment return does not reflect brokerage
commissions. A return calculated for a period of less than one year is not
annualized.
See notes to financial statements.
Annual Report | October 31, 2009 | 17
AVK | Advent Claymore Convertible Securities and Income Fund
Notes to FINANCIAL STATEMENTS | OCTOBER 31, 2009
Note 1 -- ORGANIZATION:
Advent Claymore Convertible Securities and Income Fund (the "Fund") was
organized as a Delaware statutory trust on February 19, 2003. The Fund is
registered as a diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended.
Note 2 -- ACCOUNTING POLICIES:
The preparation of the financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from these estimates.
In June 2009, the Financial Accounting Standards Board ("FASB") established the
FASB Accounting Standards Codification(TM) ("ASC") as the single source of
authoritative accounting principles reorganized by the FASB in preparation of
financial statements in conformity with U.S. generally accepted accounting
principles ("GAAP"). The ASC superseded existing non-grandfathered, non-U.S.
Securities and Exchange Commission ("SEC") accounting and reporting standards.
The ASC did not change GAAP but rather organized it into a hierarchy where all
guidance with the ASC carried an equal level of authority. The ASC became
effective for financial statements issued for interim and annual periods ending
after September 15, 2009. The implementation of the ASC did not have a material
effect on the Fund's financial statements.
The following is a summary of significant accounting policies followed by the
Fund.
(a) VALUATION OF INVESTMENTS
Equity securities listed on an exchange are valued at the last reported sale
price on the primary exchange on which they are traded. Equity securities
traded on an exchange for which there are no transactions on a given day are
valued at the mean of the closing bid and asked prices. Securities traded on
NASDAQ are valued at the NASDAQ Official Closing Price. Equity securities not
listed on a securities exchange or NASDAQ are valued at the mean of the closing
bid and asked prices. Debt securities are valued by independent pricing
services or dealers using the mean of the closing bid and asked prices for such
securities or, if such prices are not available, at prices for securities of
comparable maturity, quality and type. Exchange-traded options are valued at
the closing price, if traded that day. If not traded, they are valued at the
mean of the bid and asked prices on the primary exchange on which they are
traded. Futures contracts are valued using the settlement price established
each day on the exchange on which they are traded. Short-term securities with
remaining maturities of 60 days or less are valued at amortized cost, which
approximates market value.
For those securities where quotations or prices are not available, the
valuations are determined in accordance with procedures established in good
faith by the Board of Trustees. Valuations in accordance with these procedures
are intended to reflect each security's (or asset's) "fair value". Such "fair
value" is the amount that the Fund might reasonably expect to receive for the
security (or asset) upon its current sale. Each such determination should be
based on a consideration of all relevant factors, which are likely to vary from
one pricing context to another. Examples of such factors may include, but are
not limited to: (i) the type of security, (ii) the initial cost of the
security, (iii) the existence of any contractual restrictions on the security's
disposition, (iv) the price and extent of public trading in similar securities
of the issuer or of comparable companies, (v) quotations or evaluated prices
from broker-dealers and/or pricing services, (vi) information obtained from the
issuer, analysts, and/or the appropriate stock exchange (for exchange traded
securities), (vii) an analysis of the company's financial statements, and
(viii) an evaluation of the forces that influence the issuer and the market(s)
in which the security is purchased and sold (e.g. the existence of pending
merger activity, public offerings or tender offers that might affect the value
of the security).There are no securities fair valued in accordance with such
procedures established by the Board of Trustees at October 31, 2009.
GAAP requires disclosure of fair valuation measurements as of each measurement
date. In compliance with GAAP, the Fund follows a fair value hierarchy that
distinguishes between market data obtained from independent sources (observable
inputs) and the Fund's own market assumptions (unobservable inputs). These
inputs are used in determining the value of the Fund's investments and
summarized in the following fair value hierarchy:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- quoted prices in inactive markets or other significant observable
inputs (e.g. quoted prices for similar securities; interest rates; prepayment
speed; credit risk; yield curves)
Level 3 -- significant unobservable inputs (e.g. discounted cash flow analysis;
non-market based methods used to determine fair value)
18 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
Observable inputs are those based upon market data obtained from independent
sources, and unobservable inputs reflect the Fund's own assumptions based on
the best information available. The various input levels are not an indication
of the risk associated with investing in those securities.
The following table represents the Fund's investments carried on the Statement
of Assets and Liabilities by caption and by level within the fair value
hierarchy as of October 31, 2009:
QUOTED PRICES IN SIGNIFICANT
ACTIVE MARKETS FOR SIGNIFICANT OTHER UNOBSERVABLE
IDENTICAL ASSETS OBSERVABLE INPUTS INPUTS
(VALUE IN $000S) (LEVEL 1) (LEVEL 2) (LEVEL 3) TOTAL
==============================================================================================
Description
Assets:
Convertible Preferred Stocks:
Agriculture $ 4,664 $ -- $ -- $ 4,664
Banks 18,456 4,537 -- 22,993
Diversified Financial Services -- 3,446 -- 3,446
Electric 7,626 8,605 -- 16,231
Food Products -- 7,304 -- 7,304
Healthcare Services 7,930 3,146 -- 11,076
Housewares -- 3,178 -- 3,178
Insurance 13,163 4,968 -- 18,131
Mining 12,263 -- -- 12,263
Oil & Gas 5,118 -- -- 5,118
Pharmaceuticals 10,877 -- -- 10,877
Pipelines -- 5,768 -- 5,768
Real Estate InvestmentTrusts 6,254 -- -- 6,254
Savings & Loans 7,663 -- -- 7,663
Telecommunications -- 16,458 -- 16,458
Transportation -- 3,800 -- 3,800
Convertible Bonds -- 352,371 -- 352,371
Corporate Bonds -- 68,854 -- 68,854
Money Market Fund 43,231 -- -- 43,231
----------------------------------------------------------------------------------------------
Total $137,245 $482,435 $ -- $619,680
----------------------------------------------------------------------------------------------
Liabilities:
Derivatives $ -- $97 $ -- $97
----------------------------------------------------------------------------------------------
Total $ -- $97 $ -- $97
==============================================================================================
(b) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized gains and
losses on investments are determined on the identified cost basis. Dividend
income is recorded on the ex-dividend date and interest income is recorded on
an accrual basis. Discounts or premiums on debt securities purchased are
accreted or amortized to interest income over the lives of the respective
securities using the effective interest method.
(c) CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the mean of the bid and asked price of respective exchange
rates on the last day of the period. Purchases and sales of investments and
income and expenses denominated in foreign currencies are translated at the
exchange rate on the date of the transaction.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Foreign exchange realized gain or loss resulting from the holding of a foreign
currency, expiration of a currency exchange contract, difference in exchange
rates between the trade date and settlement date of an investment purchased or
sold, and the difference between dividends or interest actually received
compared to the amount shown in the Fund's accounting records on the date of
receipt is shown as net realized gains or losses on foreign currency
transactions in the Fund's Statement of Operations.
Annual Report | October 31, 2009 | 19
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
Foreign exchange unrealized gain or loss on assets and liabilities, other than
investments, is shown as unrealized appreciation (depreciation) on foreign
currency translation in the Fund's Statement of Operations.
(d) COVERED CALL OPTIONS
The Fund may employ an option strategy of writing (selling) covered call
options on securities held in the portfolio of the Fund. The Fund uses options
as part of a portfolio management or hedging technique to seek to protect
against possible adverse changes in the market value of securities held in or
to be purchased for the Fund's portfolio, or to protect the value of the Fund's
portfolio.
When an option is written, the premium received is recorded as an asset with an
equal liability and is subsequently marked to market to reflect the current
market value of the option written. These liabilities are reflected as options
written in the Statement of Assets and Liabilities. Premiums received from
writing options which expire unexercised are recorded on the expiration date as
a realized gain. The difference between the premium received and the amount
paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium is less than
the amount paid for the closing purchase transactions, as a realized loss. If a
call option is exercised, the premium is added to the proceeds from the sale of
the underlying security in determining whether there has been a realized gain
or loss.
(e) SWAPS
A swap is an agreement to exchange the return generated by one instrument for
the return generated by another instrument.The Fund may enter into swap
agreements to manage its exposure to interest rates and/or credit risk or to
generate income. The swaps are valued daily at current market value and any
unrealized gain or loss is included in the Statement of Assets and Liabilities.
Gain or loss is realized upon periodic payments and ultimately upon the
termination of the swap and is equal to the difference between the Fund's basis
in the swap and the proceeds of the closing transaction, including any fees.
During the period that the swap agreement is open, the Fund may be subject to
risk from the potential inability of the counterparty to meet the terms of the
agreement. The swaps involve elements of both market and credit risk in excess
of the amounts reflected on the Statement of Assets and Liabilities. Upon
termination of a swap agreement, a payable to or receivable from swap
counterparty is established on the Statement of Assets and Liabilities to
reflect the net gain/loss, including interest income/expense, on terminated swap
positions of such amounts with the counterparty upon settlement according to the
terms of the swap agreement.
Realized gain (loss) upon termination of swap contracts is recorded on the
Statement of Operations. Fluctuations in the value of swap contracts are
recorded as a component of net change in unrealized appreciation (depreciation)
of swap contracts. Net periodic payments received by the Fund are included as
part of realized gains (losses) and, in the case of accruals for periodic
payments, are included as part of unrealized appreciation (depreciation) on the
Statement of Operations.
(f) SECURITIES LENDING
The Fund may lend its securities to broker-dealers and financial institutions.
The loans are collateralized by cash or securities at least equal at all times
to the market value of the securities loaned. The Fund may bear the risk of
delay in recovery of, or loss of rights in, the securities loaned should the
borrower of the securities experience financial difficulty. The Fund receives
compensation for lending its securities in the form of fees or it retains a
portion of interest on the investment of any cash received as collateral. The
Fund also continues to receive interest and dividends on the securities loaned,
and any gain or loss in the market price of the securities loaned that may
occur during the term of the loan will be for the account of the Fund. As of
October 31, 2009, the Fund had no securities on loan.
(g) CONCENTRATION OF RISK
It is the Fund's policy to invest a significant portion of its assets in
convertible securities. Although convertible securities do derive part of their
value from that of the securities into which they are convertible, they are not
considered derivative financial instruments. However, certain of the Fund's
investments include features which render them more sensitive to price changes
in their underlying securities. Consequently, this exposes the Fund to greater
downside risk than traditional convertible securities, but still less than that
of the underlying common stock.
(h) DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and pays monthly dividends to common shareholders. These
dividends consist of investment company taxable income, which generally
includes qualified dividend income, ordinary income and short-term capital
gains. Any net realized long-term gains are distributed annually to common
shareholders. Dividends and distributions to preferred shareholders are accrued
and determined as described in Note 7.
20 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
Distributions to shareholders are recorded on the ex-dividend date. The amount
and timing of distributions are determined in accordance with federal income
tax regulations, which may differ from U.S. generally accepted accounting
principles.
Note 3 -- INVESTMENT MANAGEMENT AGREEMENT, SERVICING AGREEMENT AND OTHER
AGREEMENTS:
Pursuant to the Investment Management Agreement (the "Agreement") between the
Fund and Advent Capital Management, LLC, the Fund's investment adviser (the
"Advisor"), the Advisor is responsible for the daily management for the Fund's
portfolio of investments, which includes buying and selling securities for the
Fund, as well as investment research. The Advisor will receive an annual fee
from the Fund based on the average value of the Fund's Managed Assets, which
includes the amount from the issuance of the Preferred Shares. In addition,
subject to the approval of the Fund's Board of Trustees, a pro rata portion of
the salaries, bonuses, health insurance, retirement benefits and similar
employment costs for the time spent on Fund operations (other than the
provision of services required under the Agreement) of all personnel employed
by the Advisor who devote substantial time to Fund operations may be reimbursed
by the Fund to the Advisor. For the year ended October 31, 2009, the Advisor
was not reimbursed by the Fund for these items. The annual fee will be
determined as follows:
(a) If the average value of the Fund's Managed Assets (calculated monthly) is
greater than $250 million, the fee will be a maximum amount equal to 0.54%
of the average value of the Fund's Managed Assets. In addition, the Advisor
agreed to waive receipt of a portion of the management fee or other
expenses of the Fund in the amount of 0.115% of the average value of
Managed Assets for the first five years of the Fund's operations ending
April 30, 2008. Effective May 1, 2008, the Advisor waived receipt of a
portion of the management fee or other expenses of the Fund in the amount
of 0.065% of the average value of Managed Assets for an additional one
year. Effective May 1, 2009, the Advisory Fee waiver was reduced to 0.03%
of the average value of Managed Assets for an addi- tional year. For the
year ended October 31, 2009, the Advisor waived advisory fees of $267,298.
Pursuant to a Servicing Agreement between the Fund and Claymore Securities,
Inc., the Fund's servicing agent (the "Servicing Agent"), the Servicing Agent
will act as servicing agent to the Fund. The Servicing Agent will receive an
annual fee from the Fund, which will be based on the average value of the
Fund's Managed Assets. The fee will be determined as follows:
(a) If the average value of the Fund's Managed Assets (calculated monthly) is
greater than $250 million, the fee will be a maximum amount equal to 0.21%
of the average value of the Fund's Managed Assets. In addition, the
Servicing Agent agreed to waive receipt of a portion of the servicing fee
of the Fund in the amount of 0.085% of the average value of Managed Assets
for the first five years of the Fund's operations ending April 30, 2008.
Effective May 1, 2008, the Servicing Agent waived receipt of a portion of
the servicing fee of the Fund in the amount of 0.065% of the average value
of Managed Assets for an additional one year. Effective May 1, 2009, the
Servicing Fee waiver was reduced to 0.04% of the average value of Managed
Assets for an additional year. For the year ended October 31, 2009, the
Servicing Agent waived fees of $298,313.
The fee waivers of the Advisor and the Servicing Agent are contractual
commitments of more than one year and are not subject to recoupment.
On July 17, 2009, Claymore Group Inc., the parent of the Servicing Agent,
entered into an Agreement and Plan of Merger between and among Claymore Group
Inc., Claymore Holdings, LLC and GuggClay Acquisition, Inc. (with the latter
two entities being wholly-owned, indirect subsidiaries of Guggenheim Partners,
LLC ("Guggenheim")), whereby GuggClay Acquisition, Inc. merged into Claymore
Group Inc. which is the surviving entity. This transaction was completed on
October 14, 2009 (the "Effective Date") and resulted in a change-of-control
whereby Claymore Group Inc. and its subsidiaries, including the Servicing
Agent, became indirect, wholly-owned subsidiaries of Guggenheim. The
transaction is not expected to negatively affect the daily operations of the
Fund or Servicing Agent.
The Servicing Agreement automatically terminated as a result of the
transaction. On September 29, 2009, the Board of Trustees approved a new
servicing agreement between the Fund and the Servicing Agent (the "New
Servicing Agreement"); however, shareholder approval of the New Servicing
Agreement was not required. Other than effective dates, there are no material
differences between the terms of the New Servicing Agreement and those of the
original servicing agreement.
The Bank of New York Mellon ("BNY") acts as the Fund's custodian, accounting
agent, auction agent and transfer agent. As custodian, BNY is responsible for
the custody of the Fund's assets. As accounting agent, BNY is responsible for
maintaining the books and records of the Fund's securities and cash. As auction
agent, BNY is responsible for conducting the auction of the preferred shares.
As transfer agent, BNY is responsible for performing transfer agency services
for the Fund.
Claymore Advisors, LLC provides fund administration services to the Fund. As
compensation for its services performed under the Administration Agreement,
Claymore Advisors, LLC receives an administration fee payable monthly at the
annual rate set forth below as a percentage of the average daily managed assets
of the Fund:
Annual Report | October 31, 2009 | 21
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
MANAGED ASSETS RATE
----------------------------
First $200,000,000 0.0275%
Next $300,000,000 0.0200%
Next $500,000,000 0.0150%
Over $1,000,000,000 0.0100%
----------------------------
Certain officers and trustees of the Fund are also officers and directors of
the Advisor or Servicing Agent. The Fund does not compensate its officers or
trustees who are officers of the aforementioned firms.
Note 4 -- FEDERAL INCOME TAXES:
The Fund intends to continue to comply with the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies. Accordingly, no provision for U.S. federal income taxes
is required. In addition, by distributing substantially all of its ordinary
income and long-term capital gains, if any, during each calendar year, the Fund
can avoid a 4% federal excise tax that is assessed on the amount of the
under-distribution.
In order to present paid-in capital in excess of par and accumulated net
realized gains or losses on the Statement of Assets and Liabilities that more
closely represent their tax character, certain adjustments have been made to
undistributed net investment income and accumulated net realized gains or
losses on investments. For the year ended October 31, 2009, the adjustments
were to increase accumulated net realized loss on investments by $6,964,015,
decrease paid-in capital by $158,997 and decrease distributions in excess of
net investment income by $7,123,012 due to the difference in the treatment for
book and tax purposes of trust preferreds, distribution reclass, convertible
bonds, contingent payment debt instruments, swaps and foreign currency.
Subsequent to the October 31, 2008 reporting period, it was determined that a
reclassification of $158,997 was required between ordinary income and capital
gain. This reclassification related to real estate investment trusts and
partnerships held by the Fund and was the result of information becoming
available on the investments after the prior year-end. This resulted in a
recharacterization of $158,997 between distributions paid to common
shareholders from and in excess of net investment income and distributions paid
to common shareholders from return of capital.
At October 31, 2009, the cost and related gross unrealized appreciation and
depreciation on investments for tax purposes, excluding swap agreements are as
follows:
NET TAX
COST OF NET TAX UNREALIZED
INVESTMENTS GROSS TAX GROSS TAX UNREALIZED DEPRECIATION
FOR TAX UNREALIZED UNREALIZED APPRECIATION ON ON DERIVATIVES AND
PURPOSES APPRECIATION DEPRECIATION INVESTMENTS FOREIGN CURRENCY
-----------------------------------------------------------------------------
$ 569,754,025 $ 58,597,736 $ (8,672,117) $ 49,925,619 $ (97,273)
-----------------------------------------------------------------------------
As of October 31, 2009, the components of accumulated earnings/(losses)
(excluding paid-in capital) on a tax basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED
ORDINARY LONG-TERM
INCOME/ GAINS/
(ACCUMULATED (ACCUMULATED
ORDINARY LOSS) CAPITAL LOSS)
-------------------------------
$ -- $ (223,595,020)
The differences between book basis and tax basis unrealized
appreciation/(depreciation) are attributable to the tax deferral of losses on
wash sales and income adjustments for tax purposes on certain convertible
securities.
At October 31, 2009, for federal income tax purposes, the Fund had a capital
loss carryforward of $223,595,020 available to offset possible future capital
gains. Of the capital loss carryforward, $96,628,168 is set to expire on
October 31, 2016, and $126,966,852 is set to expire on October 31, 2017.
For the years ended October 31, 2009 and October 31, 2008, the tax character of
distributions paid of $33,021,144 and $54,863,421 was ordinary income, $- and
$8,493,296 was long-term capital gain, and $152,176 and $363,640 was return of
capital, respectively.
22 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
For all open tax years and all major jurisdictions, management of the Fund has
concluded that there are no significant uncertain tax positions that would
require recognition in the financial statements. Open tax years are those that
are open for examination by taxing authorities (i.e. generally the last four
tax year ends and the interim tax period since then). Furthermore, management
of the Fund is also not aware of any tax positions for which it is reasonably
possible that the total amounts of unrecognized tax benefits will significantly
change in the next twelve months.
Note 5 -- INVESTMENTS IN SECURITIES:
For the year ended October 31, 2009, purchases and sales of investments,
excluding options and short-term securities, were $597,682,018 and
$602,880,032, respectively.
Note 6 -- DERIVATIVES:
(a) COVERED CALL OPTION
The Fund may employ an option strategy of writing (selling) covered call
options on securities held in the portfolio of the Fund. The Fund uses options
as part of a portfolio management or hedging technique to seek to protect
against possible adverse changes in the market value of securities held in or
to be purchased for the Fund's portfolio, or to protect the value of the Fund's
portfolio.
An option on a security is a contract that gives the holder of the option, in
return for a premium, the right to buy from (in the case of a call) or sell to
(in the case of a put) the writer of the option the security underlying the
option at a specified exercise or "strike" price. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price (in the case of a call)
or to pay the exercise price upon delivery of the underlying security (in the
case of a put).
There are several risks associated with transactions in options on securities.
As the writer of a covered call option, the Fund forgoes, during the option's
life, the opportunity to profit from increases in the market value of the
security covering the call option above the sum of the premium and the strike
price of the call, but has retained the risk of loss should the price of the
underlying security decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as writer of the option.
Once an option writer has received an exercise notice, it cannot effect a
closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying security at the exercise price.
The Fund entered into written option contracts during the year ended October
31, 2009. Details of the transactions were as follows:
NUMBER OF CONTRACTS PREMIUMS RECEIVED
----------------------------------------------------------------------------
Options outstanding, beginning of year -0- $ -0-
Options written during the period 8,178 661,509
Options expired during the period (3,148) (234,478)
Options closed during the period (4,805) (413,356)
Options assigned during the period (225) (13,675)
----------------------------------------------------------------------------
Options outstanding, end of period -0- $ -0-
----------------------------------------------------------------------------
(b) SWAPS
Swap agreements are contracts between parties in which one party agrees to make
periodic payments to the other party (the "Counterparty") based on the change
in market value or level of a specified rate, index or asset. In return, the
Counterparty agrees to make periodic payments to the first party based on the
return of a different specified rate, index or asset. Swap agreements will
usually be done on a net basis, the Fund receiving or paying only the net
amount of the two payments. The net amount of the excess, if any, of each
Fund's obligations over its entitlements with respect to each swap is accrued
on a daily basis and an amount of cash or highly liquid securities having an
aggregate value at least equal to the accrued excess is maintained in an
account at the Fund's custodian bank.
Interest rate swap agreements involve the exchange by the Fund with another
party of their respective commitments to pay or receive interest. Total return
swap agreements involve commitments to receive (and pay) interest over a
floating rate (LIBOR) based on a notional amount. To the extent the total
return of the security (price changes, interest paid/received, rebate earned on
collateral posted by the Fund) is positive, the Fund will receive a payment
from the counterparty (or if negative, make a payment to the counterparty).
Credit default swap transactions involve the Fund's agreement to exchange the
credit risk of an issuer. A buyer of a credit default swap is said to buy
protection by paying periodic fees in return for a contingent payment from the
seller if the issuer has a credit event such as bankruptcy, a failure to pay
outstanding obligations or
Annual Report | October 31, 2009 | 23
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
deteriorating credit while the swap is outstanding. A seller of a credit
default swap is said to sell protection and thus collects the periodic fees and
profits if the credit of the issuer remains stable or improves while the swap
is outstanding but the seller in a credit default swap contract would be
required to pay an agreed-upon amount, which approximates the notional amount
of the swap, to the buyer in the event of an adverse credit event of the
issuer.
The Fund entered into credit default swap agreements during the period ended
October 31, 2009 to potentially enhance return. Details of the swap agreements
outstanding as of October 31, 2009 are as follows:
CREDIT DEFAULT SWAP AGREEMENTS:
IMPLIED CREDIT
SPREAD AT NOTIONAL PAYING UNREALIZED
BUY/SELL TERMINATION OCTOBER 31, AMOUNT FIXED APPRECIATION/
COUNTERPARTY REFERENCE ENTITY PROTECTION DATE 2009 (1) (000) RATE (DEPRECIATION)
-------------------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets Home Depot, Inc. Buy 06/20/2014 59.50% $2,050 1.00% $(97,273)
-------------------------------------------------------------------------------------------------------------------------------
For the credit default swap noted, the Fund pays a fixed rate. The market value
of the swaps outstanding reflects the current payable for the underlying
asset.
(1) Implied credit spreads, represented in absolute terms, utilized in
determining the market value of credit default swap agreements on corporate
issues or sovereign issues of an emerging country as of period end serve as
an indicator of the current status of the payment/performance risk and
represent the likelihood or risk of default for the credit derivative. The
implied credit spread of a particular referenced entity's credit soundness
and a greater likelihood or risk of default or other credit event occurring
as defined under the terms of the agreement. A credit spread identified as
"Defaulted" indicates a credit event has occurred for the referenced entity
or obligation.
(c) ACCOUNTING PRONOUNCEMENT FOR DERIVATIVES:
The Fund is required by GAAP to improve financial reporting about derivative
instruments by requiring enhanced disclosures to enable investors to better
understand: a) how and why a fund uses derivative instruments, b) how
derivatives instruments and related hedge fund items are accounted for, and c)
how derivative instruments and related hedge items affect a fund's financial
position, results of operations and cash flows.
Derivative Notional amounts and values as of October 31, 2009 are indicative of
the volume of the Fund's derivatives activities over the reporting period,
except for swaps.
The Fund decreased the volume of activity in swaps during the period ended
October 31, 2009, with an average notional balance of approximately $10,001,000
during the period ended October 31, 2009 and an ending notional balance of
approximately $2,050,000 as of October 31, 2009.
The following table presents the types of derivatives in the Fund by location
as presented on the Statement of Assets and Liabilities as of October 31,
2009.
Statement of Assets and Liabilities Presentation of FairValues of Derivative Instruments:
------------------------------------------------------------------------------------------------------------------------------------
(amounts in thousands)
------------------------------------------------------------------------------------------------------------------------------------
Asset Derivatives Liability Derivatives
------------------------------------------------------------------------------------------------------------------------------------
Derivatives not accounted Statement of Assets Statement of Assets and
for as hedging instruments and Liabilities Location Fair Value Liabilities Location FairValue
------------------------------------------------------------------------------------------------------------------------------------
Credit default contracts Unrealized appreciation on swaps $ -- Unrealized depreciation on credit default swaps $ 97
------------------------------------------------------------------------------------------------------------------------------------
Total $ -- $ 97
====================================================================================================================================
The following table presents the effect of Derivatives Instruments on the
Statement of Operations for the year ended October 31, 2009.
Effect of Derivative Instruments on the Statement of Operations:
----------------------------------------------------------------------------------------------------------------------------------
(amounts in thousands)
----------------------------------------------------------------------------------------------------------------------------------
Amount of Realized Gain/(Loss) on Derivatives
----------------------------------------------------------------------------------------------------------------------------------
Derivatives not accounted for as hedging instruments Swaps Options Total
----------------------------------------------------------------------------------------------------------------------------------
Credit default contracts $(1,103) $ -- $(1,103)
----------------------------------------------------------------------------------------------------------------------------------
Total return contracts (6,966) -- (6,966)
----------------------------------------------------------------------------------------------------------------------------------
Equity contracts -- 49 49
----------------------------------------------------------------------------------------------------------------------------------
Total $(8,069) $49 $(8,020)
==================================================================================================================================
24 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
Change in Unrealized Appreciation/(Depreciation) on Derivatives
---------------------------------------------------------------------------------------------------------------------------------
Derivatives not accounted for as hedging instruments Swaps Options Total
---------------------------------------------------------------------------------------------------------------------------------
Credit default contracts $ (97) $ -- $ (97)
---------------------------------------------------------------------------------------------------------------------------------
Total return contracts 6,488 -- 6,488
---------------------------------------------------------------------------------------------------------------------------------
Total $6,391 $ -- $6,391
=================================================================================================================================
Note 7-- CAPITAL:
COMMON SHARES
The Fund has an unlimited amount of common shares, $0.001 par value, authorized
and 23,580,877 issued and outstanding. In connection with the Fund's dividend
reinvestment plan, the Fund issued 18,019 shares during the year ended October
31, 2009, and 31,536 shares during the year ended October 31, 2008. At October
31, 2009, Advent Capital Management LLC, the Fund's investment adviser, owned
7,671 shares of the Fund.
PREFERRED SHARES
On June 19, 2003, the Fund's Board of Trustees authorized the issuance of
Auction Market Preferred Shares ("AMPS"), as part of the Fund's leverage
strategy. AMPS issued by the Fund have seniority over the common shares.
On July 24, 2003, the Fund issued 2,150 shares of Series M7, 2,150 shares of
Series T28, 2,150 shares of Series W7 and 2,150 shares of Series TH28, each
with a liquidation value of $25,000 per share plus accrued dividends. In
addition, on March 16, 2004, the Fund issued 1,200 shares of Series F7 and
1,200 shares of Series W28 each with a liquidation value of $25,000 per share
plus accrued dividends.
During the year ended October 31, 2009, the following preferred share
redemptions occurred:
NUMBER OF
SHARES AMOUNT REDEMPTION
SERIES REDEEMED REDEEMED DATE
--------------------------------------------------------
M7 102 $2,550,000 December 23, 2008
T28 102 $2,550,000 January 14, 2009
W7 102 $2,550,000 December 26, 2008
W28 56 $1,400,000 January 2, 2009
TH28 102 $2,550,000 January 2, 2009
F7 56 $1,400,000 December 29, 2008
Dividends are accumulated daily at a rate set through an auction process. The
broad auction-rate preferred securities market, including the Fund's AMPS, has
experienced considerable disruption since mid-February 2008. The result has
been failed auctions on nearly all auction-rate preferred shares, including the
Fund's AMPS. A failed auction is not a default, nor does it require the
redemption of the Fund's AMPS.
Provisions in the AMPS offering documents establish a maximum rate in the event
of a failed auction. The AMPS reference rate is the seven-day LIBOR Rate for a
dividend period of 7 to 21 days, and the one-month LIBOR Rate for a dividend
period of more than 21 days but fewer than 49 days. The maximum rate, for
auctions for which the Fund has not given notice that the auction will consist
of net capital gains or other taxable income, is the higher of the reference
rate times 125% or the reference rate plus 1.25% . Distributions of net
realized gains, if any, are made annually.
Management will continue to monitor events in the marketplace and continue to
evaluate the Fund's leverage as well as any alternative that may be available.
For the year ended October 31, 2009, the annualized dividend rates ranged
from:
HIGH LOW AT OCTOBER 31, 2009
-----------------------------------------------------
Series M7 3.39% 1.48% 1.48%
Series T28 4.78 1.50 1.50
Series W7 3.27 1.47 1.47
Series W28 5.54 1.49 1.49
Series TH28 5.76 1.49 1.49
Series F7 3.41 1.48 1.48
Annual Report | October 31, 2009 | 25
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
The Fund is subject to certain limitations and restrictions while Preferred
Shares are outstanding. Failure to comply with these limitations and
restrictions could preclude the Fund from declaring any dividends or
distributions to common shareholders or repurchasing common shares and/or could
trigger the mandatory redemption of Preferred Shares at their liquidation
value.
Preferred Shares, which are entitled to one vote per share, generally vote with
the common stock but vote separately as a class to elect two Trustees and on
any matters affecting the rights of the Preferred Shares.
Note 8 -- INDEMNIFICATIONS:
In the normal course of business, the Fund enters into contracts that contain a
variety of representations, which provide general indemnifications. The Fund's
maximum exposure under these arrangements is unknown, as this would involve
future claims that may be made against the Fund that have not yet occurred.
However, the Fund expects the risk of loss to be remote.
Note 9 -- SUBSEQUENT EVENT:
On November 2, 2009, the Fund declared a monthly dividend to common
shareholders of $0.0939 per common share. This dividend is payable on November
30, 2009 to shareholders of record on November 13, 2009. On December 1, 2009,
the Fund declared a monthly dividend to common shareholders of $0.0939 per
common share. This dividend is payable on December 31, 2009 to shareholders of
record on December 15, 2009.
The Fund has performed an evaluation of subsequent events through December 24,
2009, which is the date the financial statements were issued, and determined
that no additional events have occurred that require disclosure.
26 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Report of INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM|
To the Board of Trustees and Shareholders of
Advent Claymore Convertible Securities and Income Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets applicable to common shareholders and the financial
highlights present fairly, in all material respects, the financial position of
the Advent Claymore Convertible Securities & Income Fund (the "Fund") at
October 31, 2009, the results of its operations for the year then ended, the
changes in its net assets applicable to common shareholders for each of the two
years in the period then ended and the financial highlights for each of the
five years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2009 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
December 24, 2009
Annual Report | October 31, 2009 | 27
AVK | Advent Claymore Convertible Securities and Income Fund
Supplemental INFORMATIONl(unaudited)
FEDERAL INCOME TAX INFORMATION
Qualified dividend income of as much as $6,516,711 was received by the Fund
through October 31, 2009. The Fund intends to designate the maximum amount of
dividends that qualify for the reduced tax rate pursuant to the Jobs and Growth
Tax Relief Reconciliation Act of 2003.
For corporate shareholders $6,686,750 of investment income (dividend income
plus short-term gains, if any) qualified for the dividends-received deduction.
In January 2010, you will be advised on IRS Form 1099 DIV or substitute 1099
DIV as to the federal tax status of the distributions received by you in the
calendar year 2009.
RESULTS OF SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Fund was held on September 29, 2009.
At this meeting, shareholders voted on the election of trustees.
With regard to the election of the following trustee by common shareholders of
the Fund:
# of Shares
-----------------------------------------------------------------------------------------------------------------------------------
In Favor Against Withheld
-----------------------------------------------------------------------------------------------------------------------------------
Tracy V. Maitland 20,540,912 591,981 401,155
With regard to the election of the following trustee by preferred shareholders of the Fund:
# of Shares
-----------------------------------------------------------------------------------------------------------------------------------
In Favor Against Withheld
-----------------------------------------------------------------------------------------------------------------------------------
Ronald A. Nyberg 5,056 1,009 82
The other trustees of the Fund whose terms did not expire in 2009 are Randall
C. Barnes, Daniel L. Black, Derek Medina, Gerald L. Seizert, and Michael A.
Smart.
TRUSTEES
The Trustees of the Advent Claymore Convertible Securities and Income Fund and
their principal occupations during the past five years:
NAME, ADDRESS, YEAR OF TERM OF OFFICE* PRINCIPAL OCCUPATIONS DURING NUMBER OF FUNDS
BIRTH AND POSITION(S) AND LENGTH OF THE PAST FIVE YEARS AND IN FUND COMPLEX** OTHER DIRECTORSHIPS
HELD WITH REGISTRANT TIME SERVED OTHER AFFILIATIONS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES:
------------------------------------------------------------------------------------------------------------------------------------
Daniel Black+ Since 2005 Partner, theWicks Group of Cos., LLC 3 Director of Penn
Year of birth: 1960 (2003-present). Formerly, Managing Director and Foster Education
Trustee Co-head of the Merchant Banking Group at BNY Group, Inc.
Capital Markets, a division of The Bank of New
York Co., Inc. (1998-2003).
------------------------------------------------------------------------------------------------------------------------------------
Randall C. Barnes++ Since 2005 Private Investor (2001-present). Formerly, 44 None.
Year of birth: 1951 Senior Vice President, Treasurer PepsiCo, Inc.
Trustee (1993-1997), President, Pizza Hut International
(1991-1993) and Senior Vice President,
Strategic Planning and New Business Development
(1987-1990) of PepsiCo, Inc. (1987-1997).
------------------------------------------------------------------------------------------------------------------------------------
Derek Medina+ Since 2003 SeniorVice President, Business Affairs at ABC 3 Director ofYoung
Year of birth: 1966 News (2008-present). Vice President, Business Scholar's
Trustee Affairs and News Planning at ABC News Institute.
(2003-2008). Formerly, Executive Director,
Office of the President at ABC News (2000-2003).
Former Associate at Cleary Gottlieb Steen &
Hamilton (law firm) (1995-1998). Former
associate in Corporate Finance at J.P.
Morgan/Morgan Guaranty (1988-1990).
------------------------------------------------------------------------------------------------------------------------------------
Ronald A. Nyberg++ Since 2003 Partner of Nyberg & Cassioppi, LLC., a law firm 47 None.
Year of birth: 1953 specializing in corporate law, estate planning
Trustee and business transactions (2000-present).
Formerly, Executive Vice President, General Counsel
and Corporate Secretary of Van Kampen
Investments (1982-1999).
------------------------------------------------------------------------------------------------------------------------------------
Gerald L. Seizert, CFP+ Since 2003 Chief Executive Officer of Seizert Capital 3 Former Director of
Year of birth: 1952 Partners, LLC, where he directs the equity Loomis, Sayles and
Trustee disciplines of the firm and serves as a co-manager Co., L.P.
of the firm's hedge fund, Proper Associates, LLC
(2000-present). Formerly, Co-Chief Executive
(1998-1999) and a Managing Partner and Chief
Investment Officer-Equities of Munder Capital
Management, LLC (1995-1999). FormerVice President
and Portfolio Manager of Loomis, Sayles & Co.,
L.P. (asset manager) (1984-1995). Former Vice
President and Portfolio Manager at First of
America Bank (1978-1984).
------------------------------------------------------------------------------------------------------------------------------------
Michael A. Smart+ Since 2003 Managing Partner, Cordova, Smart & Williams, LLC, 3 Director, Country
Year of birth: 1960 Advisor First Atlantic Capital Ltd., (2001-present). Pure Foods. Chairman,
Trustee Formerly, a Managing Director in Investment Board of Directors,
and a Vice President in Investment Banking-Corporate Berkshire Blanket,
Finance (1992-1995) at Merrill Lynch & Co. Inc. President and
Founding Partner of The Carpediem Group, Chairman, Board of
(1991-1992). Associate at Dillon, Read and Co. Directors, Sqwincher
Banking-The Private Equity Group (1995-2001) Holdings. Director,
(investment bank) (1988-1990). Sprint Industrial
Holdings. Co-
chairman, Board of
Directors, H2O Plus.
------------------------------------------------------------------------------------------------------------------------------------
28 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | SUPPLEMENTAL
INFORMATION (unaudited) continued
NAME, ADDRESS, YEAR OF TERM OF OFFICE* PRINCIPAL OCCUPATIONS DURING NUMBER OF FUNDS
BIRTH AND POSITION(S) AND LENGTH OF THE PAST FIVE YEARS AND IN FUND COMPLEX** OTHER DIRECTORSHIPS
HELD WITH REGISTRANT TIME SERVED OTHER AFFILIATIONS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
================================================================================================================================
INTERESTED TRUSTEES:
================================================================================================================================
Tracy V. Maitland+Y Since 2003 President of Advent Capital Management, 3 None.
Year of birth: 1960 LLC, which he founded in 1995. Prior to
Trustee, President and Chief June, 2001, President of Advent Capital
Executive Officer Management, a division of Utendahl Capital.
--------------------------------------------------------------------------------------------------------------------------------
+ Address for all Trustees noted: 1065 Avenue of the Americas, 31st Floor,
New York, NY 10018.
++ Address for all Trustees noted: 2455 Corporate West Drive, Lisle, IL 60532.
* After a Trustee's initial term, each Trustee is expected to serve a
three-year term concurrent with the class of Trustees for which he serves:
-Messrs. Seizert, Medina and Barnes, as Class I Trustees, are expected to
stand for re-election at the Fund's 2010 annual meeting of shareholders.
-Messrs. Smart and Black, as Class II Trustees, are expected to stand for
re-election at the Fund's 2011 annual meeting of shareholders.
-Messrs. Maitland and Nyberg as Class III Trustees, are expected to stand
for re-election at the Fund's 2012 annual meeting of shareholders.
Nicholas Dalmaso served as a Trustee of the Fund. Mr. Dalmaso did not stand
for re-election at the Fund's annual meeting of shareholders on September 29,
2009 (the "Annual Meeting"). Based on a recommendation from the Nominating and
Governance Committee of the Board and pursuant to authority granted to it under
the Fund's Agreement and Declaration of Trust, the Board decided to reduce its
size from eight to seven Trustees upon the expiration of Mr. Dalmaso's term at
the Annual Meeting.
** The Claymore Fund Complex consists of U. S. registered investment companies
advised or serviced by Claymore Advisors, LLC or Claymore Securities, Inc.
The Claymore Fund Complex is overseen by multiple Boards of Trustees.
Y Mr. Maitland is an "interested person" (as defined in section 2(a)(19) of
the 1940 Act) of the Fund because of his position as an officer of Advent
Capital Management, LLC, the Fund's Advisor.
OFFICERS
The Officers of the Advent Claymore Convertible Securities and Income Fund and
their principal occupations during the past five years:
NAME, ADDRESS*, YEAR OF BIRTH AND TERM OF OFFICE** AND PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
POSITION(S) HELD WITH REGISTRANT LENGTH OF TIME SERVED AND OTHER AFFILIATIONS
====================================================================================================================================
OFFICERS:
====================================================================================================================================
F. Barry Nelson Since 2003 Co-Portfolio Manager at Advent Capital Management, LLC (June 2001-
Year of birth: 1943 present). Prior to June 2001, Mr. Nelson held the same position at
Vice President and Assistant Secretary Advent Capital Management, a division of Utendahl Capital.
------------------------------------------------------------------------------------------------------------------------------------
Robert White Since 2005 Chief Financial Officer, Advent Capital Management, LLC (July 2005-
Year of birth: 1965 present). Previously, Vice President, Client Service Manager, Goldman
Treasurer and Sachs Prime Brokerage (1997-2005).
Chief Financial Officer
------------------------------------------------------------------------------------------------------------------------------------
Rodd Baxter Since 2003 General Counsel, Advent Capital Management, LLC (2002-present).
Year of birth: 1950
Secretary and
Chief Compliance Officer
------------------------------------------------------------------------------------------------------------------------------------
* Address for all Officers: 1065 Avenue of the Americas, 31st Floor, New
York, NY 10018
** Officers serve at the pleasure of the Board ofTrustees and until his or her
successor is appointed and qualified or until his or her earlier
resignation or removal.
Annual Report | October 31, 2009 | 29
AVK | Advent Claymore Convertible Securities and Income Fund
Dividend Reinvestment PLAN |(unaudited)
Unless the registered owner of common shares elects to receive cash by
contacting the Plan Administrator, all dividends declared on common shares of
the Fund will be automatically reinvested by The Bank of New York Mellon (the
"Plan Administrator"), Administrator for shareholders in the Fund's Dividend
Reinvestment Plan (the "Plan"), in additional common shares of the Fund.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time without penalty by notice if received and processed by the
Plan Administrator prior to the dividend record date; otherwise such
termination or resumption will be effective with respect to any subsequently
declared dividend or other distribution. Some brokers may automatically elect
to receive cash on your behalf and may re-invest that cash in additional common
shares of the Fund for you. If you wish for all dividends declared on your
common shares of the Fund to be automatically reinvested pursuant to the Plan,
please contact your broker.
The Plan Administrator will open an account for each common shareholder under
the Plan in the same name in which such common shareholder's common shares are
registered. Whenever the Fund declares a dividend or other distribution
(together, a "Dividend") payable in cash, non-participants in the Plan will
receive cash and participants in the Plan will receive the equivalent in common
shares. The common shares will be acquired by the Plan Administrator for the
participants' accounts, depending upon the circumstances described below,
either (i) through receipt of additional unissued but authorized common shares
from the Fund ("Newly Issued Common Shares") or (ii) by purchase of outstanding
common shares on the open market ("Open-Market Purchases") on the New York
Stock Exchange or elsewhere. If, on the payment date for any Dividend, the
closing market price plus estimated brokerage commission per common share is
equal to or greater than the net asset value per common share, the Plan
Administrator will invest the Dividend amount in Newly Issued Common Shares on
behalf of the participants. The number of Newly Issued Common Shares to be
credited to each participant's account will be determined by dividing the
dollar amount of the Dividend by the net asset value per common share on the
payment date; provided that, if the net asset value is less than or equal to
95% of the closing market value on the payment date, the dollar amount of the
Dividend will be divided by 95% of the closing market price per common share on
the payment date. If, on the payment date for any Dividend, the net asset value
per common share is greater than the closing market value plus estimated
brokerage commission, the Plan Administrator will invest the Dividend amount in
common shares acquired on behalf of the participants in Open-Market Purchases.
If, before the Plan Administrator has completed its Open-Market Purchases, the
market price per common share exceeds the net asset value per common share, the
average per common share purchase price paid by the Plan Administrator may
exceed the net asset value of the common shares, resulting in the acquisition
of fewer common shares than if the Dividend had been paid in Newly Issued
Common Shares on the Dividend payment date. Because of the foregoing difficulty
with respect to Open-Market Purchases, the Plan provides that if the Plan
Administrator is unable to invest the full Dividend amount in Open-Market
Purchases during the purchase period or if the market discount shifts to a
market premium during the purchase period, the Plan Administrator may cease
making Open-Market Purchases and may invest the uninvested portion of the
Dividend amount in Newly Issued Common Shares at net asset value per common
share at the close of business on the Last Purchase Date provided that, if the
net asset value is less than or equal to 95% of the then current market price
per common share; the dollar amount of the Dividend will be divided by 95% of
the market price on the payment date.
The Plan Administrator maintains all shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the accounts, including
information needed by shareholders for tax records. Common shares in the
account of each Plan participant will be held by the Plan Administrator on
behalf of the Plan participant, and each shareholder proxy will include those
shares purchased or received pursuant to the Plan. The Plan Administrator will
forward all proxy solicitation materials to participants and vote proxies for
shares held under the Plan in accordance with the instruction of the
participants.
There will be no brokerage charges with respect to common shares issued
directly by the Fund. However, each participant will pay a pro rata share of
brokerage commission incurred in connection with Open-Market Purchases. The
automatic reinvestment of Dividends will not relieve participants of any
Federal, state or local income tax that may be payable (or required to be
withheld) on such Dividends.
The Fund reserves the right to amend or terminate the Plan. There is no direct
service charge to participants with regard to purchases in the Plan; however,
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants.
All correspondence or questions concerning the Plan should be directed to the
Plan Administrator, BNY Mellon Shareowner Services, PO Box 358015, Pittsburgh,
PA 15252-8015, Phone Number: (866) 488-3559.
30 | Annual Report | October 31, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Fund INFORMATION |
BOARD OF TRUSTEES OFFICERS INVESTMENT ADVISER
Randall C. Barnes Tracy V. Maitland Advent Capital Management, LLC
President and Chief Executive Officer New York, New York
Daniel Black
F. Barry Nelson SERVICING AGENT
Tracy V. Maitland* Vice President and Assistant Secretary Claymore Securities, Inc.
Chairman Lisle, Illinois
Robert White
Derek Medina Treasurer and Chief Financial Officer
CUSTODIAN AND TRANSFER AGENT
Ronald A. Nyberg Rodd Baxter The Bank of New York Mellon
Secretary and Chief Compliance Officer New York, New York
Gerald L. Seizert
ADMINISTRATOR
Michael A. Smart Claymore Advisors, LLC
Lisle, Illinois
* Trustee is an "interested person" of the Fund as defined in
the Investment Company Act of 1940, as amended, because PREFERRED STOCK-
of his position as an officer of the Advisor.
DIVIDEND PAYING AGENT
The Bank of New York Mellon
New York, New York
LEGAL COUNSEL
Skadden, Arps, Slate,
Meagher & Flom LLP
New York, New York
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
New York, New York
PRIVACY PRINCIPLES OF THE FUND
The Fund is committed to maintaining the privacy of its shareholders and to
safeguarding their non-public personal information. The following information
is provided to help you understand what personal information the Fund collects,
how the Fund protects that information and why, in certain cases, the Fund may
share information with select other parties.
Generally, the Fund does not receive any non-public personal information
relating to its shareholders, although certain non-public personal information
of its shareholders may become available to the Fund. The Fund does not
disclose any non-public personal information about its shareholders or former
shareholders to anyone, except as permitted by law or as is necessary in order
to service shareholder accounts (for example, to a transfer agent or third
party administrator).
The Fund restricts access to non-public personal information about its
shareholders to employees of the Fund's investment advisor, its affiliates and
the Fund's Administrator with a legitimate business need for the information.
The Fund maintains physical, electronic and procedural safeguards designed to
protect the non-public personal information of its shareholders.
QUESTIONS CONCERNING YOUR SHARES OF ADVENT CLAYMORE CONVERTIBLE SECURITIES AND
INCOME FUND?
o If your shares are held in a Brokerage Account, contact your Broker.
o If you have physical possession of your shares in certificate form, contact
the Fund's Custodian and Transfer Agent:
The Bank of New York Mellon, 101 Barclay 11E, New York, NY 10286; (866)
488-3559.
This report is sent to shareholders of Advent Claymore Convertible Securities
and Income Fund for their information. It is not a Prospectus, circular or
representation intended for use in the purchase or sale of shares of the Fund
or of any securities mentioned in this report.
A description of the Fund's proxy voting policies and procedures related to
portfolio securities is available without charge, upon request, by calling the
Fund at (866) 274-2227. Information regarding how the Fund voted proxies for
portfolio securities, if applicable, during the most recent 12-month period
ended June 30, is also available, without charge and upon request by calling
the Fund at (866) 274-2227, by visiting Claymore's website at
www.claymore.com/avk or by accessing the Fund's Form N-PX on the U.S.
Securities & Exchange Commission's ("SEC") website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q
is available on the SEC website at www.sec.gov or by visiting Claymore's
website at www.claymore.com/avk. The Fund's Form N-Q may also be viewed and
copied at the SEC's Public Reference Room in Washington, DC; information on the
operation of the Public Reference Room may be obtained by calling (800)
SEC-0330.
In November 2009, the Fund submitted a CEO annual certification to the New York
Stock Exchange ("NYSE") in which the Fund's principal executive officer
certified that he was not aware, as of the date of the certification, of any
violation by the Fund of the NYSE's Corporate Governance listing standards. In
addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and
related SEC rules, the Fund's principal executive and principal financial
officers have made quarterly certifications, included in filings with the SEC
on Forms N-CSR and N-Q, relating to, among other things, the Fund's disclosure
controls and procedures and internal control over financial reporting.
NOTICE TO SHAREHOLDERS
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund from time to time may purchase
shares of its common and preferred stock in the open market or in private
transactions.
Annual Report | October 31, 2009 | 31
AVK | Advent Claymore Convertible Securities and Income Fund
ADVENT CAPITAL MANAGEMENT, LLC
Advent Capital Management, LLC ("Advent") is a registered investment adviser,
based in New York, which specializes in convertible and high-yield securities
for institutional and individual investors. The firm was established by Tracy
V. Maitland, a former Director in the Convertible Securities sales and trading
division of Merrill Lynch. Advent's investment discipline emphasizes capital
structure research, encompassing equity fundamentals as well as credit
research, with a focus on cash flow and asset values while seeking to maximize
total return.
INVESTMENT PHILOSOPHY
Advent believes that superior returns can be achieved while reducing risk by
investing in a diversified portfolio of global equity, convertible and
high-yield securities. The Fund Manager seeks securities with attractive
risk/reward characteristics. Advent employs a bottom-up security selection
process across all of the strategies it manages. Securities are chosen from
those that the Fund Manager believes have stable-to-improving fundamentals and
attractive valuations.
INVESTMENT PROCESS
Advent manages securities by using a strict four-step process:
1 Screen the convertible and high-yield markets for securities with
attractive risk/reward characteristics and favorable cash flows;
2 Analyze the quality of issues to help manage downside risk;
3 Analyze fundamentals to identify catalysts for favorable performance; and
4 Continually monitor the portfolio for improving or deteriorating trends in
the financials of each investment.
ADVENT CAPITAL MANAGEMENT, LLC
1065 Avenue of the Americas
New York, New York 10018
AVK
LISTED
NYSE(R)
AVK-AR-1009
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions (the "Code of Ethics").
(b) No information need be disclosed pursuant to this paragraph.
(c) The registrant has not amended its Code of Ethics during the period
covered by the report presented in Item 1 hereto.
(d) The registrant has not granted a waiver or an implicit waiver to its
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions from a provision of its Code of Ethics during the period
covered by this report.
(e) Not applicable.
(f) (1) The registrant's Code of Ethics is attached hereto as an exhibit.
(2) Not applicable.
(3) Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Trustees has determined that it has six audit
committee financial experts serving on its audit committee (the "Audit
Committee"), each of whom is an "independent" Trustee, as defined in Item 3 of
Form N-CSR: Randall C. Barnes, Daniel Black, Derek Medina, Ronald A. Nyberg,
Gerald L. Seizert and Michael A. Smart.
Mr. Barnes qualifies as an audit committee financial expert by virtue of his
experience obtained as a former Senior Vice President, Treasurer of PepsiCo,
Inc.
Mr. Black qualifies as an audit committee financial expert by virtue of his
experience obtained as a partner of a private equity firm, which includes review
and analysis of audited and unaudited financial statements using GAAP to show
accounting estimates, accruals and reserves.
Mr. Medina qualifies as an audit committee financial expert by virtue of his
experience obtained as a Senior Vice President, Business Affairs of ABC News and
as a former associate in Corporate Finance at J.P. Morgan/Morgan Guaranty, which
includes review and analysis of audited and unaudited financial statements using
GAAP to show accounting estimates, accruals and reserves.
Mr. Nyberg qualifies as an audit committee financial expert by virtue of his
experience obtained as an Executive Vice President, General Counsel and
Secretary of Van Kampen Investments, which included review and analysis of
offering documents and audited and unaudited financial statements using GAAP to
show accounting estimates, accruals and reserves.
Mr. Seizert qualifies as an audit committee financial expert by virtue of his
experience obtained as the chief executive officer and portfolio manager of an
asset management company, which includes review and analysis of audited and
unaudited financial statements using GAAP to show accounting estimates, accruals
and reserves.
Mr. Smart qualifies as an audit committee financial expert by virtue of his
experience obtained as a managing partner of a private equity firm and a former
Vice President at Merrill Lynch & Co, which includes review and analysis of
audited and unaudited financial statements using GAAP to show accounting
estimates, accruals and reserves.
(Under applicable securities laws, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for the purposes of Section 11 of the Securities
Act of 1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an audit
committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and
liabilities imposed on such person as a member of the Audit Committee and Board
of Trustees in the absence of such designation or identification. The
designation or identification of a person as an audit committee financial expert
pursuant to this Item does not affect the duties, obligations, or liability of
any other member of the Audit Committee or Board of Trustees.)
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees: the aggregate fees billed for professional services
rendered by the principal accountant for the audit of the registrant's
annual financial statements or services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements were $88,500 and $93,800 for the fiscal years ended
October 31, 2009, and October 31, 2008, respectively.
(b) Audit-Related Fees: the aggregate fees billed for assurance and
related services by the principal accountant that are reasonably
related to the performance of the audit of the registrant's financial
statements, and are not reported under paragraph 4(a), were $16,700
and $16,700 for the fiscal years ended October 31, 2009, and October
31, 2008, respectively. These services were performed for agreed upon
procedures associated with the registrant's Auction Market Preferred
Shares.
The registrant's principal accountant did not bill fees for non-audit
services that required approval by the Audit Committee pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the
Registrant's last two fiscal years.
(c) Tax Fees: the aggregate fees billed for professional services rendered
by the principal accountant for tax compliance, tax advice and tax
planning, including federal, state and local income tax return
preparation and related advice and determination of taxable income and
miscellaneous tax advice were $14,500 and $14,500 for the fiscal years
ended October 31, 2009, and October 31, 2008, respectively.
The registrant's principal accountant did not bill fees for non-audit
services that required approval by the Audit Committee pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the
Registrant's last two fiscal years.
(d) All Other Fees: the aggregate fees billed for products and services provided
by the principal accountant, other than the services reported in paragraphs 4(a)
and 4(c) were $0 and $31,300 for the fiscal years ended October 31, 2009, and
October 31, 2008, respectively. The fees for the fiscal year ended October 31,
2008 were performed for the Fund's change of accounting policy related to
amortization.
The registrant's principal accountant did not bill fees for non-audit services
that required approval by the Audit Committee pursuant to paragraph (c)(7)(ii)
of Rule 2-01 of Regulation S-X during the Registrant's last two fiscal years.
(e) Audit Committee Pre-Approval Policies and Procedures.
(1) In accordance with Rule 2-01(c)(7), the Audit Committee pre-approves
all of the Audit and Tax Fees of the registrant. All of the services
described in paragraphs 4(b) through 4(d) above were approved by the
Audit Committee in accordance with paragraph (c)(7) of Rule 2-01 of
Regulation S-X.
The Audit Committee has adopted written policies relating to the
pre-approval of the audit and non-audit services performed by the
registrant's independent auditors. Unless a type of service to be
provided by the independent auditors has received general
pre-approval, it requires specific pre-approval by the Audit
Committee. Under the policies, on an annual basis, the Audit Committee
reviews and pre-approves the services to be provided by the
independent auditors without having to obtain specific pre-approval
from the Audit Committee. The Audit Committee has delegated
pre-approval authority to the Audit Committee Chairperson. In
addition, the Audit Committee pre-approves any permitted non-audit
services to be provided by the independent auditors to the
registrant's investment adviser or any entity controlling, controlled
by, or under common control with the adviser if such services relate
directly to the operations and financial reporting of the registrant.
AUDIT COMMITTEE PRE-APPROVAL POLICY OF
ADVENT CLAYMORE CONVERTIBLE SECURITIES AND INCOME FUND
STATEMENT OF PRINCIPLES
The Audit Committee (the "Audit Committee") of the Board of Trustees (the
"Board") of Advent Claymore Convertible Securities and Income Fund (the
OTrust,O) is required to pre-approve all Covered Services (as defined in the
Audit Committee Charter) in order to assure that the provision of the Covered
Services does not impair the auditors' independence. Unless a type of service to
be provided by the Independent Auditor (as defined in the Audit Committee
Charter) is pre-approved in accordance with the terms of this Audit Committee
Pre-Approval Policy (the "Policy"), it will require specific pre-approval by the
Audit Committee or by any member of the Audit Committee to which pre-approval
authority has been delegated.
This Policy and the appendices to this Policy describe the Audit,
Audit-Related, Tax and All Other services that are Covered Services and that
have been pre-approved under this Policy. The appendices hereto sometimes are
referred to herein as the "Service Pre-Approval Documents". The term of any such
pre-approval is 12 months from the date of pre-approval, unless the Audit
Committee specifically provides for a different period. At its June meeting of
each calendar year, the Audit Committee will review and re-approve this Policy
and approve or re-approve the Service Pre-Approval Documents for that year,
together with any changes deemed necessary or desirable by the Audit Committee.
The Audit Committee may, from time to time, modify the nature of the services
pre-approved, the aggregate level of fees pre-approved or both. The Audit
Committee hereby directs that each version of this Policy and the Service
Pre-Approval Documents approved, re-approved or amended from time to time be
maintained with the books and records of the Trust.
DELEGATION
In the intervals between the scheduled meetings of the Audit Committee, the
Audit Committee delegates pre-approval authority under this Policy to the
Chairman of the Audit Committee (the "Chairman"). The Chairman shall report any
pre-approval decisions under this Policy to the Audit Committee at its next
scheduled meeting. At each scheduled meeting, the Audit Committee will review
with the Independent Auditor the Covered Services pre-approved by the Chairman
pursuant to delegated authority, if any, and the fees related thereto. Based on
these reviews, the Audit Committee can modify, at its discretion, the
pre-approval originally granted by the Chairman pursuant to delegated authority.
This modification can be to the nature of services pre-approved, the aggregate
level of fees approved, or both. The Audit Committee expects pre-approval of
Covered Services by the Chairman pursuant to this delegated authority to be the
exception rather than the rule and may modify or withdraw this delegated
authority at any time the Audit Committee determines that it is appropriate to
do so.
PRE-APPROVED FEE LEVELS
Fee levels for all Covered Services to be provided by the Independent Auditor
and pre-approved under this Policy will be established annually by the Audit
Committee and set forth in the Service Pre-Approval Documents. Any increase in
pre-approved fee levels will require specific pre-approval by the Audit
Committee (or the Chairman pursuant to delegated authority).
AUDIT SERVICES
The terms and fees of the annual Audit services engagement for the Trust are
subject to the specific pre-approval of the Audit Committee. The Audit Committee
will approve, if necessary, any changes in terms, conditions or fees resulting
from changes in audit scope, Trust structure or other matters.
In addition to the annual Audit services engagement specifically approved by
the Audit Committee, any other Audit services for the Trust not listed in the
Service Pre-Approval Document for the respective period must be specifically
pre-approved by the Audit Committee (or the Chairman pursuant to delegated
authority).
AUDIT-RELATED SERVICES
Audit-Related services are assurance and related services that are not
required for the audit, but are reasonably related to the performance of the
audit or review of the financial statements of the Trust and, to the extent they
are Covered Services, the other Covered Entities (as defined in the Audit
Committee Charter) or that are traditionally performed by the Independent
Auditor. Audit-Related services that are Covered Services and are not listed in
the Service Pre-Approval Document for the respective period must be specifically
pre-approved by the Audit Committee (or the Chairman pursuant to delegated
authority).
TAX SERVICES
The Audit Committee believes that the Independent Auditor can provide Tax
services to the Covered Entities such as tax compliance, tax planning and tax
advice without impairing the auditor's independence. However, the Audit
Committee will not permit the retention of the Independent Auditor in connection
with a transaction initially recommended by the Independent Auditor, the sole
business purpose of which may be tax avoidance and the tax treatment of which
may not be supported in the Internal Revenue Code and related regulations. Tax
services that are Covered Services and are not listed in the Service
Pre-Approval Document for the respective period must be specifically
pre-approved by the Audit Committee (or the Chairman pursuant to delegated
authority).
ALL OTHER SERVICES
All Other services that are Covered Services and are not listed in the
Service Pre-Approval Document for the respective period must be specifically
pre-approved by the Audit Committee (or the Chairman pursuant to delegated
authority).
PROCEDURES
Requests or applications to provide Covered Services that require approval by
the Audit Committee (or the Chairman pursuant to delegated authority) must be
submitted to the Audit Committee or the Chairman, as the case may be, by both
the Independent Auditor and the Chief Financial Officer of the respective
Covered Entity, and must include a joint statement as to whether, in their view,
(a) the request or application is consistent with the SEC's rules on auditor
independence and (b) the requested service is or is not a non-audit service
prohibited by the SEC. A request or application submitted to the Chairman
between scheduled meetings of the Audit Committee should include a discussion as
to why approval is being sought prior to the next regularly scheduled meeting of
the Audit Committee.
(2) None of the services described in each of Items 4 (b) through (d) were
approved by the Audit Committee pursuant to paragraph (c)(7)(C) of
Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, the registrant's investment adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted with or overseen by another investment adviser) and/or any entity
controlling, controlled by, or under common control with the adviser that
provides ongoing services to the registrant that directly related to the
operations and financial reporting of the registrant were $31,200 and $62,500
for the fiscal years ended October 31, 2009, and October 31, 2008, respectively.
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
a) The Audit Committee was established in accordance with Section 3(a)(58)(A)
of the Securities Exchange Act of 1934. The audit committee of the
registrant is comprised of: Randall C. Barnes, Daniel Black, Derek Medina,
Ronald A. Nyberg, Gerald L. Seizert and Michael A. Smart.
b) Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
The Schedule of Investments is included as part of Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant has delegated the voting of proxies relating to its voting
securities to its investment manager, Advent Capital Management, LLC (the
"Manager"). The Manager's Proxy Voting Policies and Procedures are included as
an exhibit hereto.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) (1) F. Barry Nelson (the "Portfolio Manager") is primarily responsible
for the day-to-day management of the registrant's portfolio. The following
provides information regarding the portfolio managers as of October 31, 2009:
------------------------------- ---------------- ----------------------------------------------------------------
Name Since Professional Experience
------------------------------- ---------------- ----------------------------------------------------------------
------------------------------- ---------------- ----------------------------------------------------------------
F. Barry Nelson 2003 Portfolio Manager at Advent Capital Management, LLC for more
(Inception) than seven years.
------------------------------- ---------------- ----------------------------------------------------------------
(a) (2) (i-iii) Other accounts managed. Mr. Nelson does not manage any
performance based fee accounts. The following summarizes information
regarding each of the other accounts managed by Mr. Nelson as of
October 31, 2009:
Registered Investment Other Pooled Investment
Companies Vehicles Other Accounts
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# of # of # of
Name Accounts Total Assets Accounts Total Assets Accounts Total Assets
F. Barry Nelson 1 $ 437 million 1 $ 15.0 million 48 $ 769 million
(a) (2) (iv) Conflicts of Interest. If another account of the Portfolio Manager
has investment objectives and policies that are similar to those of the
registrant, the Portfolio Manager will allocate orders pro-rata among the
registrant and such other accounts, or, if the Portfolio Manager deviates from
this policy, the Portfolio Manager will allocate orders such that all accounts
(including the registrant) receive fair and equitable treatment.
(a) (3) Compensation Structure. The salary of the Portfolio Manager is fixed at
an industry-appropriate amount and generally reviewed annually. In addition, a
100% discretionary bonus may be awarded to the Portfolio Manager, if
appropriate. Bonuses are generally considered on an annual basis and based upon
a variety of factors, including, but not limited to, the overall success of the
firm, an individual's responsibility and his/her performance versus
expectations. The bonus is determined by senior management at Advent Capital
Management, LLC. Compensation is based on the entire employment relationship and
not based on the performance of the registrant or any other single account or
type of account. In addition, all Advent Capital Management, LLC employees are
also eligible to participate in a 401(k) plan.
(a) (4) Securities ownership. The following table discloses the dollar range of
equity securities of the registrant beneficially owned by F. Barry Nelson as of
October 31, 2009:
DOLLAR RANGE OF EQUITY
NAME OF PORTFOLIO MANAGER SECURITIES IN FUND
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F. Barry Nelson $100,001-$500,000
(b) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has not made any material changes to the procedures by which
shareholders may recommend nominees to the registrant's Board of Trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act) as of a date within 90 days
of this filing and have concluded based on such evaluation, as required by Rule
30a-3(b) under the Investment Company Act, that the registrant's disclosure
controls and procedures were effective, as of that date, in ensuring that
information required to be disclosed by the registrant in this Form N-CSR was
recorded, processed, summarized, and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that
occurred during the registrant's second fiscal quarter of the period covered by
this report that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics for Chief Executive and Senior Financial Officers.
(a)(2) Certification of principal executive officer and principal financial
officer pursuant to Rule 30a-2(a) of the Investment Company Act.
(b) Certification of principal executive officer and principal financial officer
pursuant to Rule 30a-2(b) of the Investment Company Act and Section 906 of the
Sarbanes-Oxley Act of 2002.
(c) Proxy Voting Policies and Procedures.
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) Advent Claymore Convertible Securities and Income Fund
By: /s/ Tracy V. Maitland
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Name: Tracy V. Maitland
Title: President and Chief Executive Officer
Date: January 8, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Tracy V. Maitland
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Name: Tracy V. Maitland
Title: President and Chief Executive Officer
Date: January 8, 2010
By: /s/ Robert White
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Name: Robert White
Title: Treasurer and Chief Financial Officer
Date: January 8, 2010