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: April 30, 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. ss. 3507.
Item 1. Reports to Stockholders.
The registrant's semi-annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 is as follows:
SEMIANNUAL
REPORT
April 30, 2009
(Unaudited)
Advent Claymore Convertible | AVK
Securities and Income Fund
Logo: ADVENT CAPITAL MANAGEMENT
Logo: Claymore(SM)
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 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Photo of: Tracy V. Maitland
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
semiannual period ended April 30, 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. Due to recent market volatility, the Fund may not be invested at
these levels at all times. Convertible securities represented 79.7% of the
portfolio as of April 30, 2009.
All Fund returns cited--whether based on net asset value ("NAV") or market
price--assume the reinvestment of all distributions. For the six-month period
ended April 30, 2009, the Fund generated a total return based on market price of
-7.60% and a return of 8.75% based on NAV. As of April 30, 2009, the Fund's
market price of $11.40 represented a discount of 11.56% to NAV of $12.89.
The Fund currently implements its leverage strategy through the issuance of
Auction Market Preferred Shares ("AMPS"). 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.
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 essentially 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,
AMPS holders will continue to be entitled to receive dividends on the AMPS they
hold. This maximum rate is determined based upon a multiple of or a spread to
LIBOR, whichever is greater. During the six-month period ended April 30, 2009,
established maximum rates were based on a spread of 125 basis points over the
applicable LIBOR rates, with the maximum rates ranging from 1.48% to 5.76%. We
will continue to evaluate the benefits and effects of leverage on the Fund, as
well as exploring other methods of utilizing leverage.
In each month from December 2008 through May 2009, the Fund declared monthly
distributions of $0.0939 per common share. This monthly distribution rate
reflects a reduction of $0.0779 per share from the previous monthly distribution
rate of $0.1718 per common share, which was maintained through November 2008.
The Fund's management believes that reducing the distribution is a necessary
step to enhance our ability to maintain and potentially grow the Fund's net
asset value--which should benefit the Fund's shareholders over time. The
Semiannual Report | April 30, 2009 | 3
AVK | Advent Claymore Convertible Securities and Income Fund | DEAR SHAREHOLDER
continued
current distribution represents an annualized distribution rate of 9.88% based
upon the closing market price of $11.40 on April 30, 2009. There is no guarantee
of any future distributions or that the current returns and distribution rate
will be maintained.
We encourage common 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 28 of this report. When shares trade at a
discount to NAV, the DRIP takes advantage of the discount by reinvesting the
monthly 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' distributions
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.
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,
/s/ Tracy V. Maitland
Tracy V. Maitland
President and Chief Executive Officer of the Advent Claymore Convertible
Securities and Income Fund
June 2, 2009
4 | Semiannual Report | April 30, 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
six-month period ended April 30, 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. Due to recent market
volatility, the Fund may not be invested at these levels at all times.
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 or convertible preferred
stocks 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. By
offering convertible preferreds, companies can 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 SIX
MONTHS.
In the last annual report for this Fund, published six months ago, we described
a financial crisis that originated with the end of a housing boom fueled by
excessively easy credit. In early December 2008, the National Bureau of Economic
Research (NBER) officially declared that the U.S. economy had fallen into a
recession that began in December 2007. The U.S. economy continued to contract in
subsequent months, with drops in real Gross Domestic Product, a broad measure of
economic activity, at annual rates of more than 6% in the fourth quarter of 2008
and the first quarter of 2009.
After the September 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 spreads
between Treasury securities and bonds with any degree of credit risk widened
dramatically, and there were pronounced declines in the market values of asset
classes that carried any degree of risk.
The market for convertible securities, which in the past have been less volatile
than equities, was truly disastrous for several months. In September 2008, the
return of the Merrill Lynch All U.S. Convertibles Index was -14.59%, and in
October the return was -17.99%. These negative monthly returns rival the biggest
annual losses for convertibles in recorded history, which extends back to 1953.
To provide context for the pronounced decline last fall, the worst year ever for
convertibles was 1969, with a loss of about 15%. A major reason for the recent
poor performance of convertibles was selling by hedge funds, which had made
leveraged investments in convertibles while shorting the underlying common
stocks. Due to scarce available credit, the result was that convertible
securities were dumped on the market regardless of fundamentals, and prices
dropped precipitously.
Sometime in November, this forced selling came to an end. It appeared that
holders of convertible securities that had to sell had finished selling, and
other buyers noticed the unusual opportunity presented by very low prices of
convertibles. There was considerable buying by managers of equity and bond
accounts, many of which can use convertibles, since convertibles are debt
instruments that convert into equities. From mid-November through
Semiannual Report | April 30, 2009 | 5
AVK | Advent Claymore Convertible Securities and Income Fund | QUESTIONS &
ANSWERS continued
the end of this reporting period, there was a significant rebound in
convertibles. Positive returns were recorded by the Merrill Lynch All U.S.
Convertibles Index in four of the five months from December through April;
return of the index for the six-month period from October 31, 2008, through
April 30, 2009, was 11.50%.
Equity and bond markets began to recover at about the same time, though markets
have remained quite volatile, and returns for many indices were negative for the
six months ended April 30, 2009. The Standard & Poor's 500 Index, which is
generally regarded as a good indicator of the broad stock market, returned
-8.53% for the six-month period ended April 30, 2009. In contrast to prior
periods, bonds with more credit risk generally performed better than less risky
bonds. The Barclays Capital US Aggregate Bond Index (formerly the Lehman
Aggregate), which measures the return of the high-quality U.S. bond market as a
whole, returned 7.74%, but the return of the Merrill Lynch High Yield Master II
Index, which measures performance of the high-yield bond market, was 15.20%.
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HOW DID THE FUND PERFORM IN THIS ENVIRONMENT?
All Fund returns cited--whether based on net asset value ("NAV") or market
price--assume the reinvestment of all distributions. For the six-month period
ended April 30, 2009, the Fund generated a total return based on market price of
-7.60% and a return of 8.75% based on NAV. As of April 30, 2009, the Fund's
market price of $11.40 represented a discount of 11.56% to NAV of $12.89. As of
October 31, 2008, the Fund's market price of $13.11 represented a premium of
4.71% to NAV of $12.52. The market value of the Fund's shares fluctuates from
time to time, and it may be higher or lower than the Fund's NAV. During the six
months from October 31, 2008, through April 30, 2009, the swing from a premium
over NAV to a discount from NAV inhibited the share price performance.
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WHAT WERE THE MAJOR INVESTMENT DECISIONS THAT AFFECTED THE FUND'S PERFORMANCE?
Of course we are pleased to report a positive return at NAV for this period,
after a massive setback in the disastrous market of the Fund's prior fiscal
year. In retrospect, it is clear that our cautiousness in managing the Fund was
the main reason its return was less than the rebound of the Merrill Lynch All
U.S. Convertibles Index for the six months ended April 2009. As markets once
again began to embrace risk, following the credit panic of 2008, securities with
lower credit quality and those in industries considered to be more risky
generally performed best. Over this period, the weighted average credit rating
of the securities in the Fund's portfolio was BB+, which is the highest rating
for below- investment-grade bonds, and just a small step below investment-grade.
In light of the very difficult market conditions in the early portion of the
period, we felt that this emphasis on more conservative, higher quality
securities was appropriate, even though the Fund has the ability to be invested
entirely in below-investment-grade securities. However, the lowest rated and
riskiest securities, which had fallen to extremely low levels in the autumn of
2008, moved up sharply during this period. The Fund's portfolio, with an
emphasis on higher quality within the realm of below- investment-grade
securities, did not recover as strongly as riskier securities did.
Our cautiousness, which we consider appropriate for a time of extreme market
turmoil, took several forms. For much of the period, the Fund had a higher than
usual cash position in order to minimize volatility and also to keep favorable
AAA credit ratings on the Fund's auction market preferred shares. In addition,
we maintained a weighted average credit rating of approximately BB+. This
quality profile detracted, as lower-rated securities performed better. The
Fund's leverage contributed to performance, but the positive effect of the
leverage was insufficient to overcome our lower level of credit risk in this
unusually sharp market rebound.
Negative for performance was the Fund's considerable weight in health care,
which represented 20.7% of the portfolio as of April 30, 2009. Health care is an
industry that is relatively insensitive to economic conditions, and health care
investments held up well during the recession, contributing to performance in
prior periods. Most of the Fund's health care positions are in strong companies
such as Teva Pharmaceutical Finance LLC (3.1% of long-term investments), the
world's largest generic drug company, and medical device manufacturer Medtronic,
Inc. (2.8% of long-term investments). These companies have enjoyed increasing
cash flow and have not needed additional funding, but during the recent rebound,
performance of health care issues lagged. On one hand, few health care companies
will benefit from economic recovery. On the other hand, there is some concern
about how changes in health care policy implemented by the new Democratic
administration might affect the profitability of health care companies. We are
comfortable with our health care investments, especially considering that past
experience indicates that industries that have price controls generally have
wider profit margins and stronger credit ratings than companies that are exposed
to freer competition.
6 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | QUESTIONS &
ANSWERS continued
During the first half of the fiscal period, one of the largest single positions
was a convertible preferred of Mylan, Inc. (2.0% of long-term investments),
which also provided the highest return to the portfolio, as the company's
earnings proved surprisingly strong thanks to synergies realized from an
acquisition. The next biggest contribution was also in health care. Our position
in Schering-Plough Corporation (1.3% of long-term investments) convertible
preferred shares surged when the company became the object of an acquisition by
joint-venture partner, Merck & Co., Inc. (not held in the portfolio at period
end). The third largest contribution was from Johnson Controls, Inc. (0.8% of
long-term investments), a provider of products that optimize energy usage in
buildings and vehicles. The company issued a new convertible bond that promptly
surged in price as economic prospects improved and many cyclical stocks like
Johnson Controls--with notable exposure to the global auto industry--enjoyed a
sharp recovery. The biggest detractor from performance was Avery Dennison (not
held in portfolio at period end), followed by two financials, KeyCorp (0.6% of
long-term investments) and SLM Corp. (0.7% of long-term investments). KeyCorp
shares suffered on continued worries about bad loans and capital adequacy, while
SLM was hit by proposed legislation that might effectively nationalize the
student loan business and thereby bypass much of SLM's business. Avery Dennison
Corporation's formerly stable office supplies business weakened sharply
following a major acquisition and an increase in financial leverage just in time
for the recession. A tender offer by Avery Dennison induced us to convert to
common on favorable terms, but the stock tumbled, and we sold at a loss.
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HOW HAS THE FUND'S LEVERAGE STRATEGY AFFECTED PERFORMANCE?
The Fund utilizes leverage (borrowing) 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 a portfolio that is not leveraged. The Fund currently implements
its leverage strategy through the issuance of Auction Market Preferred Shares
("AMPS").
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.
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 essentially 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,
AMPSholders will continue to be entitled to receive dividends on the AMPS they
hold. This maximum rate is determined based upon a multiple of or a spread to
LIBOR, whichever is greater. During the six-month period ended April 30, 2009,
established maximum rates were based on a spread of 125 basis points over the
applicable LIBOR rates, with the maximum rates ranging from 1.48% to 5.76%.
We will continue to evaluate the benefits and effects of leverage on the Fund,
as well as explore other types of leverage. Given the very low interest rates
that have been established for the Fund's AMPS over the last six months, the
leverage has been helpful 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.
There is no guarantee that the Fund's leverage strategy will be successful, and
the Fund's use of leverage may cause the Fund's NAV and market price of common
shares to be more volatile. Leverage adds value only when the total return on
securities purchased exceeds the cost of leverage.
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WHAT IS YOUR CURRENT OUTLOOK FOR THE MARKETS AND THE FUND?
Six months ago, we said that market conditions for equities, bonds and
convertible securities were so bad that some improvement seemed almost
inevitable, and, in fact, we have seen considerable recovery since then. There
are early signs of improvement in some broad economic statistics, and credit
markets have definitely improved in the last few months. After several months of
frozen markets, in early 2009 a few investment grade companies floated new
issues of straight bonds. Then it became possible for a few speculative bond
issuers to float new bonds. Next, the market for convertible bonds re-opened,
initially with companies rated BBB and BB; more recently, some lower-rated
companies have been able to issue convertibles.
Semiannual Report | April 30, 2009 | 7
AVK | Advent Claymore Convertible Securities and Income Fund | QUESTIONS &
ANSWERS continued
Our outlook for the convertible market is very positive for the months ahead.
Rising prices of debt instruments such as high yield bonds and bank loans are
positive, since fixed-income values are the underpinning of convertible
securities. Experience from past recessions indicates that the economy and the
stock market recover after credit markets begin to improve. An improving economy
will mean more new issues of bonds and convertibles, as companies seek to fund
their growth and to strengthen their balance sheets.
Over time, convertible securities have historically provided equity-like returns
at lower risk by capturing much of the appreciation of common stocks, while
yielding more than equities and experiencing less price deterioration during
market corrections. So we find convertibles very attractive at current prices;
in fact, approximately 80% of the Fund's portfolio is invested in convertibles,
well above the 60% requirement. The Fund's return has lagged returns of some
other convertible funds over the last few months, in part because some other
funds have invested more heavily in high-yield straight bonds, which have
recently performed very well. But we believe that convertibles, with their
equity-like returns and lower risk, will provide superior returns over the long
term.
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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.
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INDEX DEFINITIONS:
Indices are unmanaged and it is not possible to invest directly in any index.
The Merrill Lynch All U.S. Convertibles Index (VXA0) is comprised of
approximately 500 issues of convertible bonds and preferred stock 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 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.
8 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | QUESTIONS &
ANSWERS continued
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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 security's 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 non-convertible 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.
Semiannual Report | April 30, 2009 | 9
AVK | Advent Claymore Convertible Securities and Income Fund
Fund SUMMARY | AS OF APRIL 30, 2009 (unaudited)
FUND STATISTICS
-------------------------------------------------------
Share Price $11.40
Common Share Net Asset Value $12.89
Premium/Discount to NAV -11.56%
Net Assets Applicable to Common Shares ($000) $304,075
-------------------------------------------------------
TOTAL RETURNS
-------------------------------------------------------
(INCEPTION 4/30/03) MARKET NAV
-------------------------------------------------------
Six Month -7.60% 8.75%
One Year -45.26% -42.08%
Three Year - average annual -14.41% -13.68%
Five Year - average annual -4.47% -4.78%
Since Inception -average annual -3.19% -0.93%
-------------------------------------------------------
% OF LONG-TERM
TOP TEN INDUSTRIES INVESTMENTS
-------------------------------------------------------
Pharmaceuticals 11.1%
Healthcare Products & Healthcare Services 9.6%
Real Estate Investment Trusts 9.3%
Telecommunications 8.9%
Banks 7.0%
Oil & Gas and Oil & Gas Services 5.7%
Biotechnology 5.6%
Mining 4.5%
Semiconductors 4.5%
Diversified Financial Services 4.1%
-------------------------------------------------------
% OF LONG-TERM
TOP TEN ISSUERS INVESTMENTS
-------------------------------------------------------
Transocean, Inc. 3.2%
Teva Pharmaceutical Finance LLC 3.1%
Medtronic, Inc. 2.8%
Newell Rubbermaid, Inc. 2.3%
Bank of America Corp. 2.2%
Vale Capital Ltd. 2.1%
Mylan, Inc. 2.0%
Carnival Corp. 1.7%
Freeport-McMoRan Copper & Gold, Inc. 1.7%
Intel Corp. 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.
Line Chart:
SHARE PRICE &NAV PERFORMANCE
Share price NAV
5/1/08 23.4 24.93
23.59 25.13
23.5 25.11
23.53 25.2
23.29 24.96
23.52 25.04
23.53 24.95
23.68 25.02
23.5 24.91
23.7 24.97
23.85 25.24
23.87 25.42
23.9 25.46
23.89 25.31
23.75 25.06
23.89 25.02
23.85 24.77
23.77 24.83
23.58 24.89
23.88 24.92
23.89 25.04
24.05 24.9
24.17 24.84
23.94 24.76
24.08 25.11
23.57 24.73
23.52 24.69
23.25 24.68
22.59 24.26
22.44 24.24
22.61 24.48
22.84 24.59
22.83 24.56
22.84 24.48
22.73 24.51
22.72 24.17
22.48 24.12
22.43 23.93
22.57 24.05
22.42 23.61
22.29 23.6
22.24 23.52
22.14 23.43
21.99 23.17
21.52 22.95
21.15 22.69
21.29 22.91
21.04 22.74
20.88 22.65
20.47 22.33
20.01 22.2
19.25 21.96
20.03 22.11
20.47 22.24
20.14 22.3
20.22 22.43
20.19 22.5
20.39 22.48
20.19 21.98
19.99 22.08
19.85 21.83
20.17 22.11
20.15 22.33
19.99 22.19
20.2 22.04
20.04 21.75
20.01 21.93
19.95 22.03
19.79 21.82
19.96 22.02
19.92 22.09
19.76 21.9
19.54 21.74
19.5 21.9
19.39 21.9
19.28 21.69
18.99 21.54
18.93 21.65
18.91 21.69
19.09 21.84
18.7 21.54
18.76 21.66
19.07 21.87
19.52 22.1
19.58 21.99
19.51 21.79
19.38 21.72
18.89 21.27
18.78 21.36
18.89 21.53
18.56 20.75
18.28 20.84
17.92 20.73
18.34 20.94
17.96 20.1
17.42 20.14
16.77 19.24
16.47 19.75
17.77 20.27
17.59 19.87
17.25 19.56
16.66 19.38
17.3 19.34
17.5 18.87
16.65 17.59
15.97 18.01
15.8 17.78
15.39 16.79
15.19 16.72
13.57 15.76
13.23 15.05
11.85 14.51
10.35 13.61
8.91 12.72
10.72 13.66
11.56 14.15
10.66 13
10.86 12.93
11.7 12.9
11.94 13.16
11.46 12.96
10.47 12.33
10.8 11.86
10.22 11.58
10.88 11.17
11.2 11.52
11.43 11.91
12.39 12.23
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
Bar Chart:
MONTHLY DIVIDENDS PER SHARE
May 08 0.1718
June 0.1718
July 0.1718
Aug 0.1718
Sep 0.1718
Oct 0.1718
Nov 0.1718
Dec 0.0939
Jan 09 0.0939
Feb 0.0939
Mar 0.0939
Apr 0.0939
Pie Chart:
PORTFOLIO COMPOSITION (% of Total Investments)
ASSET CLASS
Convertible Securities 79.7%
High Yield Securities 13.2%
Short-Term Investments 7.1%
10 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Portfolio of INVESTMENTS | APRIL 30, 2009 (unaudited)
NUMBER
OF SHARES VALUE
----------------------------------------------------------------------------
LONG-TERM INVESTMENTS - 167.0%
CONVERTIBLE PREFERRED STOCKS - 37.3%
ADVERTISING - 1.4%
360,985 Interpublic Group Cos., Elf Special Financing Ltd.,
1.67%, 2009 (Cayman Islands) (a)(b) $ 4,240,230
----------------------------------------------------------------------------
AGRICULTURE - 2.5%
108,000 Archer-Daniels-Midland Co., 6.25%, 2011 (c) 3,620,160
6,725 Bunge Ltd., 5.125%, 2010 (Bermuda) 3,177,562
10,300 Bunge Ltd., 4.875%, 2049 (Bermuda) 709,413
----------------------------------------------------------------------------
7,507,135
----------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 2.9%
130,650 Autoliv, Inc., 8.00%, 2012 4,699,481
42,500 Johnson Controls, Inc., 11.50%, 2012 4,044,300
----------------------------------------------------------------------------
8,743,781
----------------------------------------------------------------------------
BANKS - 6.8%
11,303 Bank of America Corp., Ser. L, 7.25%, 2049 6,521,831
177,065 Citigroup, Inc., Ser. T, 6.50%, 2015 5,595,254
44,000 Keycorp, Ser. A, 7.75%, 2049 2,882,000
9,158 Wells Fargo & Co., Ser. L, 7.50%, 2049 5,659,644
----------------------------------------------------------------------------
20,658,729
----------------------------------------------------------------------------
CHEMICALS - 1.7%
187,100 Celanese Corp., 4.25%, 2049 5,343,576
----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 1.2%
12,379 SLM Corp., Ser. C, 7.25%, 2010 3,657,994
----------------------------------------------------------------------------
HEALTHCARE SERVICES - 0.6%
4,500 HealthSouth Corp., Ser. A, 6.50%, 2049 1,930,500
----------------------------------------------------------------------------
INSURANCE - 1.0%
70,000 Reinsurance Group of America, Equity
Security Unit, 5.75%, 2051 2,926,875
----------------------------------------------------------------------------
MINING - 5.5%
1,500 Freeport-McMoRan Copper & Gold, Inc.,
Ser. B, 5.50%, 2049 1,483,500
70,000 Freeport-McMoRan Copper & Gold, Inc.,
6.75%, 2010 4,707,500
300,000 Vale Capital Ltd., Ser. RIO, 5.50%,
2010 (Brazil) (c) 10,503,000
----------------------------------------------------------------------------
16,694,000
----------------------------------------------------------------------------
PHARMACEUTICALS - 5.5%
11,900 Mylan, Inc., 6.50%, 2010 (c) 10,138,800
32,000 Schering-Plough Corp., 6.00%, 2010 6,759,680
----------------------------------------------------------------------------
16,898,480
----------------------------------------------------------------------------
PIPELINES - 0.9%
4,400 El Paso Corp., 4.99%, 2049 2,745,600
----------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 1.6%
106,000 Simon Property Group, Inc., Ser. I, 6.00%, 2049 4,834,660
----------------------------------------------------------------------------
SAVINGS & LOANS - 2.1%
192,788 New York Community Capital Trust V, 6.00%, 2051 6,265,610
----------------------------------------------------------------------------
TELECOMMUNICATIONS - 2.5%
128,095 Crown Castle International Corp., 6.25%, 2012 5,861,627
4,143 Lucent Technologies Capital Trust I, 7.75%, 2017 1,682,058
----------------------------------------------------------------------------
7,543,685
----------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
----------------------------------------------------------------------------
----------------------------------------------------------------------------
TRANSPORTATION - 1.1%
54,800 Bristow Group, Inc., 5.50%, 2009 $ 1,807,852
2,550 Kansas City Southern, 5.125%, 2049 1,609,473
----------------------------------------------------------------------------
3,417,325
----------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS - 37.3%
(Cost $127,225,207) 113,408,180
----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
CONVERTIBLE BONDS - 106.0%
AEROSPACE/DEFENSE - 1.8%
$5,275,000 Alliant Techsystems, Inc., BB-, 2.75%, 9/15/11 $ 5,400,281
----------------------------------------------------------------------------
AGRICULTURE - 0.8%
2,500,000 Archer-Daniels-Midland Co., A, 0.875%, 2/15/14 (c) 2,303,125
----------------------------------------------------------------------------
AIRLINES -0.6%
2,000,000 Continental Airlines, Inc., B-, 5.00%, 6/15/23 1,780,000
----------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT -1.6%
4,250,000 BorgWarner, Inc., BBB, 3.50%, 4/15/12 4,930,000
----------------------------------------------------------------------------
BANKS - 3.2%
5,496,000 National City Corp., A, 4.00%, 2/01/11 5,145,630
2,500,000 SVB Financial Group, NR, 3.875%, 4/15/11 (a) 1,990,625
3,000,000 US Bancorp, AA, 0.0%, 12/11/35 (b) 2,767,500
----------------------------------------------------------------------------
9,903,755
----------------------------------------------------------------------------
BEVERAGES - 0.5%
1,400,000 Molson Coors Brewing Co., BBB, 2.50%, 7/30/13 1,492,750
----------------------------------------------------------------------------
BIOTECHNOLOGY - 9.4%
8,500,000 Amgen, Inc., A+, 0.125%, 2/01/11 (c) 7,958,125
1,000,000 Amylin Pharmaceuticals, Inc., NR, 3.00%, 6/15/14 605,000
5,000,000 Gilead Sciences, Inc., NR, 0.50%, 5/01/11 6,337,500
6,000,000 Life Technologies Corp., BB+, 3.25%, 6/15/25 6,052,500
3,500,000 Millipore Corp., BB-, 3.75%, 6/01/26 3,355,625
930,000 OSI Pharmaceuticals, Inc., NR, 3.00%, 1/15/38 795,150
3,500,000 United Therapeutics Corp., NR, 0.50%, 10/15/11 3,578,750
----------------------------------------------------------------------------
28,682,650
----------------------------------------------------------------------------
COAL - 0.9%
4,500,000 Massey Energy Co., BB-, 3.25%, 8/01/15 2,784,375
----------------------------------------------------------------------------
COMMERCIAL SERVICES - 1.7%
4,600,000 Quanta Services, Inc., NR, 3.75%, 4/30/26 (c) 5,267,000
----------------------------------------------------------------------------
COMPUTERS - 4.3%
4,150,000 DST Systems, Inc., NR, 4.125%, 8/15/23 (d) 4,098,125
5,000,000 EMC Corp., A-, 1.75%, 12/01/11 (c) 5,243,750
2,000,000 EMC Corp., A-, 1.75%, 12/01/13 (c) 2,065,000
2,150,000 Maxtor Corp., B, 2.375%, 8/15/12 1,679,688
----------------------------------------------------------------------------
13,086,563
----------------------------------------------------------------------------
DISTRIBUTION/WHOLESALE - 0.6%
2,250,000 WESCO International, Inc., B, 1.75%, 11/15/26 1,777,500
----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 3.7%
5,000,000 Affiliated Managers Group, Inc., BBB-,
3.95%, 8/15/38 (a) 4,006,250
9,000,000 Nasdaq OMX Group, BB+, 2.50%, 8/15/13 7,211,250
----------------------------------------------------------------------------
11,217,500
----------------------------------------------------------------------------
See notes to financial statements.
Semiannual Report | April 30, 2009 | 11
AVK | Advent Claymore Convertible Securities and Income Fund | PORTFOLIO OF
INVESTMENTS (unaudited) continued
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
ELECTRICAL COMPONENTS & EQUIPMENT - 1.3%
$4,250,000 Suntech Power Holdings Co. Ltd., NR,
0.25%, 2/15/12 (Cayman Islands) $3,830,312
----------------------------------------------------------------------------
HEALTHCARE PRODUCTS - 10.5%
3,300,000 Beckman Coulter, Inc., BBB, 2.50%, 12/15/36 (c) 3,345,375
3,000,000 Fisher Scientific International, Inc., BBB+,
3.25%, 3/01/24 3,528,750
10,069,000 Hologic, Inc., B+, 2.00%, 12/15/37 (d) 7,174,162
2,500,000 Integra LifeSciences Holdings Corp., NR,
2.75%, 6/01/10 (a) 2,334,375
15,600,000 Medtronic, Inc., AA-, 1.625%, 4/15/13 14,137,500
1,250,000 NuVasive, Inc., NR, 2.25%, 3/15/13 (a) 1,279,688
----------------------------------------------------------------------------
31,799,850
----------------------------------------------------------------------------
HEALTHCARE SERVICES - 1.8%
6,050,000 Laboratory Corp. of America Holdings, BBB-,
0.00%, 9/11/21 (c) (e) 5,392,062
----------------------------------------------------------------------------
HOUSEWARES - 2.2%
4,588,000 Newell Rubbermaid, Inc., BBB-, 5.50%, 3/15/14 (c) 6,738,625
----------------------------------------------------------------------------
INSURANCE - 2.2%
6,760,000 Old Republic International Corp., NR, 8.00%, 5/15/12 6,709,300
----------------------------------------------------------------------------
IRON/STEEL - 3.0%
3,600,000 ArcelorMittal, BBB+, 5.00%, 5/15/14 (Luxembourg) 3,734,532
4,950,000 United States Steel Corp., BB, 4.00%, 5/15/14 5,296,500
----------------------------------------------------------------------------
9,031,032
----------------------------------------------------------------------------
LEISURE TIME - 2.9%
9,000,000 Carnival Corp., BBB+, 2.00%, 4/15/21 (Panama) (c) 8,797,500
----------------------------------------------------------------------------
MINING - 1.2%
3,250,000 Newmont Mining Corp., BBB+, 1.625%, 7/15/17 (c) 3,550,625
----------------------------------------------------------------------------
MISCELLANEOUS MANUFACTURING - 2.4%
4,250,000 Danaher Corp., A+, 0.00%, 1/22/21 (e) 3,835,625
2,700,000 Textron, Inc., Ser. TXT, BBB-, 4.50%, 5/01/13 2,915,406
1,000,000 Trinity Industries, Inc., BB-, 3.875%, 6/01/36 561,250
----------------------------------------------------------------------------
7,312,281
----------------------------------------------------------------------------
OIL & GAS - 8.1%
1,000,000 Chesapeake Energy Corp., BB, 2.75%, 11/15/35 856,250
5,000,000 Petroplus Finance Ltd., Ser. PPHN, BB-,
3.375%, 3/26/13 (Switzerland) 4,039,715
3,500,000 SOCO Finance Jersey Ltd., Ser. SIA, NR,
4.50%, 5/16/13 (United Kingdom) 3,280,550
12,500,000 Transocean, Inc., Ser. A, BBB+,
1.625%, 12/15/37 (Cayman Islands) (c) (f) 11,703,125
5,400,000 Transocean, Inc., Ser. B, BBB+,
1.50%, 12/15/37 (Cayman Islands) (c) 4,799,250
----------------------------------------------------------------------------
24,678,890
----------------------------------------------------------------------------
OIL & GAS SERVICES - 0.7%
2,500,000 SESI LLC, BB+, 1.50%, 12/15/26 (d) 2,053,125
----------------------------------------------------------------------------
PHARMACEUTICALS - 11.4%
2,500,000 Allergan, Inc., NR, 1.50%, 4/01/26 2,565,625
6,200,000 King Pharmaceuticals, Inc., BB, 1.25%, 4/01/26 4,681,000
4,000,000 Medicis Pharmaceutical Corp., NR, 2.50%, 6/04/32 3,430,000
3,000,000 Omnicare, Inc., Ser. OCR, B+, 3.25%, 12/15/35 2,070,000
7,400,000 Shire PLC, Ser. REGs, NR, 2.75%, 5/09/14
(Channel Islands) 6,155,823
15,150,000 Teva Pharmaceutical Finance LLC, Ser. C, BBB+,
0.25%, 2/01/26 (Israel) (f) 15,888,563
----------------------------------------------------------------------------
34,791,011
----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 14.0%
$3,000,000 Boston Properties LP, A-, 2.875%, 2/15/37 $ 2,546,250
2,170,000 Boston Properties LP, A-, 3.625%, 2/15/14 (a) 1,730,575
4,200,000 BRE Properties, Inc., BBB, 4.125%, 8/15/26 (c) 3,585,750
5,100,000 Digital Realty Trust LP, NR, 5.50%, 4/15/29 (a) 5,010,750
2,700,000 Home Properties, Inc., NR, 4.125%, 11/01/26 (a) 2,387,070
5,308,000 Hospitality Properties Trust, BBB, 3.80%, 3/15/27 4,140,240
7,005,000 Host Hotels & Resorts LP, BB+, 2.625%, 4/15/27 (a) 5,665,294
1,750,000 Host Hotels & Resorts LP, BB+, 3.25%, 4/15/24 (a) 1,690,938
2,700,000 Macerich Co., NR, 3.25%, 3/15/12 (a) 1,913,625
8,530,000 Reckson Operating Partnership LP, BB+,
4.00%, 6/15/25 (c) 7,847,600
3,198,000 UDR, Inc., BBB, 4.00%, 12/15/35 2,910,180
3,421,000 Vornado Realty Trust, BBB, 3.625%, 11/15/26 (c) 3,070,347
----------------------------------------------------------------------------
42,498,619
----------------------------------------------------------------------------
SEMICONDUCTORS - 7.4%
10,000,000 Intel Corp., A-, 2.95%, 12/15/35 8,625,000
7,840,000 Linear Technology Corp., Ser. A, NR, 3.00%, 5/01/27 6,536,600
5,700,000 ON Semiconductor Corp., Ser. B, B+,
0.00%, 4/15/24 (e) 5,322,375
2,000,000 Skyworks Solutions, Inc., NR, 1.25%, 3/01/10 2,185,000
----------------------------------------------------------------------------
22,668,975
----------------------------------------------------------------------------
SOFTWARE - 1.1%
3,369,000 Novell, Inc., NR, 0.50%, 7/15/24 3,360,578
----------------------------------------------------------------------------
TELECOMMUNICATIONS - 6.7%
5,330,000 Alcatel-Lucent USA, Inc., Ser. A, B+,
2.875%, 6/15/23 4,923,587
8,600,000 NII Holdings, Inc., NR, 3.125%, 6/15/12 6,321,000
6,000,000 Qwest Communications International, Inc., B+,
3.50%, 11/15/25 5,902,500
4,500,000 Virgin Media, Inc., B-, 6.50%, 11/15/16 (a) 3,301,875
----------------------------------------------------------------------------
20,448,962
----------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS - 106.0%
(Cost $316,518,612) 322,287,246
----------------------------------------------------------------------------
CORPORATE BONDS - 23.7%
BANKS - 1.6%
6,000,000 Bank of America Corp., A, 5.65%, 5/01/18 4,892,550
----------------------------------------------------------------------------
COMMUNICATIONS, MEDIA & ENTERTAINMENT - 1.0%
3,000,000 Rainbow National Services LLC, BB, 8.75%, 9/01/12 (a) 3,075,000
----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 2.0%
6,250,000 American Express Co., BBB+, 7.00%, 3/19/18 5,937,425
----------------------------------------------------------------------------
HEALTHCARE PRODUCTS - 1.4%
4,100,000 Hanger Orthopedic Group, Inc., CCC+, 10.25%, 6/01/14 4,223,000
----------------------------------------------------------------------------
HEALTHCARE SERVICES - 1.8%
3,000,000 HCA, Inc., BB-, 9.25%, 11/15/16 2,977,500
2,500,000 HCA, Inc., BB, 8.50%, 4/15/19 (a) 2,528,125
----------------------------------------------------------------------------
5,505,625
----------------------------------------------------------------------------
HOLDING COMPANIES - DIVERSIFIED - 1.7%
6,000,000 Leucadia National Corp., BB+, 8.125%, 9/15/15 5,070,000
----------------------------------------------------------------------------
HOUSEWARES - 1.6%
4,505,000 Newell Rubbermaid, Inc., BBB-, 10.60%, 4/15/19 4,926,470
----------------------------------------------------------------------------
MINING - 0.8%
2,600,000 Freeport-McMoRan Copper & Gold, Inc., BBB-,
8.375%, 4/01/17 2,551,614
----------------------------------------------------------------------------
See notes to financial statements.
12 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | PORTFOLIO OF
INVESTMENTS (unaudited) continued
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
MISCELLANEOUS MANUFACTURING - 2.0%
$5,720,000 Ingersoll-Rand Global Holding Co. Ltd., BBB+,
9.50%, 4/15/14 (Bermuda) $ 5,989,097
----------------------------------------------------------------------------
OFFICE/BUSINESS EQUIPMENT - 0.8%
3,500,000 Xerox Capital Trust I, BB+, 8.00%, 2/01/27 2,451,575
----------------------------------------------------------------------------
OIL & GAS SERVICES - 0.8%
4,500,000 CCS, Inc., B-, 11.00%, 11/15/15 (Canada) (a) 2,452,500
----------------------------------------------------------------------------
PHARMACEUTICALS - 1.5%
4,760,000 Axcan Intermediate Holdings, Inc., B,
12.75%, 3/01/16 4,688,600
----------------------------------------------------------------------------
PIPELINES - 1.0%
3,000,000 Williams Cos., Inc., BB+, 8.125%, 3/15/12 3,075,000
----------------------------------------------------------------------------
TELECOMMUNICATIONS - 5.7%
5,150,000 CC Holdings GS V LLC, BB, 7.75%, 5/01/17 (a) 5,227,250
6,173,000 Centennial Cellular Co., B, 10.125%, 6/15/13 6,435,353
5,500,000 Intelsat Jackson Holdings Ltd., CCC+,
11.25%, 6/15/16 (Bermuda) 5,651,250
----------------------------------------------------------------------------
17,313,853
----------------------------------------------------------------------------
TOTAL CORPORATE BONDS - 23.7%
(Cost $74,156,409) 72,152,309
----------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS - 167.0%
(Cost $517,900,228) 507,847,735
----------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
----------------------------------------------------------------------------
MONEY MARKET FUNDS - 12.7%
21,416,481 Dreyfus Treasury & Agency Cash Management -
Investor Shares $ 21,416,481
17,186,431 Goldman Sachs Financial Prime Obligations 17,186,431
----------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $38,602,912) 38,602,912
----------------------------------------------------------------------------
TOTAL INVESTMENTS - 179.7%
(Cost $556,503,140) 546,450,647
TOTAL VALUE OF OPTIONS WRITTEN
(Premiums received $168,571) - (0.1%) (217,750)
Other assets in excess of liabilities - 6.5% 19,842,021
Preferred Stock, at redemption value -
(-86.1% of Net Assets Applicable to
Common Shareholders or -47.9% of
Total Investments) (262,000,000)
----------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS - 100.0% $304,074,918
============================================================================
CONTRACTS
(100 SHARES EXPIRATION EXERCISE MARKET
PER CONTRACT) OPTIONS WRITTEN (G) DATE PRICE VALUE
-------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN
100 Amgen, Inc. May 2009 50.00 $ 7,600
100 Archer-Daniels-Midland Co. May 2009 27.00 2,600
100 BRE Properties, Inc. May 2009 25.00 21,500
100 Beckman Coulter, Inc. May 2009 55.00 4,500
25 Beckman Coulter, Inc. August 2009 55.00 7,750
75 Beckman Coulter, Inc. August 2009 60.00 10,500
75 Carnival Corp. May 2009 27.50 7,500
150 EMC Corp. May 2009 13.00 4,350
100 Laboratory Corp. of America Holdings May 2009 65.00 11,000
125 Mylan. Inc. May 2009 15.00 1,875
200 Newell Rubbermaid, Inc. May 2009 7.50 58,000
100 Newmont Mining Corp. June 2009 46.00 8,750
50 Quanta Services, Inc. May 2009 25.00 2,750
75 SL Green Realty Corp. May 2009 17.50 16,875
125 Transocean Ltd May 2009 75.00 5,000
100 Vale Capital Ltd. May 2009 17.00 5,400
275 Vale Capital Ltd. May 2009 16.00 28,050
100 Vornado Realty Trust June 2009 60.00 13,750
-------------------------------------------------------------------------------------------
TOTAL OPTIONS WRITTEN
(Premiums received $168,571) $ 217,750
===========================================================================================
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 April 30,
2009, these securities amounted to 16.1% of net assets.
(b) Floating rate security. The rate shown is as of April 30, 2009.
(c) All or a portion of this security position represents cover (directly or
through conversion rights) for outstanding options written.
(d) Security is a "step down" bond where the coupon decreases or steps down at
a predetermined date.
(e) Zero-coupon bond.
(f) All or a portion of these securities have been physically segregated in
connection with swap agreements.
(g) Non-income producing security.
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.
Semiannual Report | April 30, 2009 | 13
AVK | Advent Claymore Convertible Securities and Income Fund
Statement of ASSETS AND LIABILITIES | APRIL 30, 2009 (unaudited)
ASSETS
Investments in securities, at value (cost $556,503,140) $546,450,647
Cash 1,946,653
Restricted cash 4,077,141
Receivable for securities sold 21,903,480
Interest receivable 3,932,838
Dividends receivable 779,160
Other assets 10,525
---------------------------------------------------------------------------------------------------------------
Total assets 579,100,444
---------------------------------------------------------------------------------------------------------------
LIABILITIES
Custodian bank 274,516
Payable for securities purchased 11,734,399
Net unrealized depreciation on swaps 227,791
Options written, at value (premiums received of $168,571) 217,750
Advisory fee payable 216,153
Dividends payable - preferred shares 97,720
Servicing fee payable 65,984
Administration fee payable 9,973
Accrued expenses and other liabilities 181,240
---------------------------------------------------------------------------------------------------------------
Total liabilities 13,025,526
---------------------------------------------------------------------------------------------------------------
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
---------------------------------------------------------------------------------------------------------------
$304,074,918
===============================================================================================================
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
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 558,103,419
Net unrealized depreciation on investments, swaps, options and foreign
currency translation (10,349,100)
Accumulated net realized gain (loss) on investments, swaps, options and
foreign currency transactions (235,209,136)
Distributions in excess of net investment income (8,493,846)
---------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $304,074,918
===============================================================================================================
NET ASSET VALUE APPLICABLE TO COMMON SHAREHOLDERS
(based on 23,580,877 common shares outstanding) $ 12.89
===============================================================================================================
See notes to financial statements.
14 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Statement of OPERATIONS | FOR THE SIX MONTHS ENDED APRIL 30, 2009 (unaudited)
INVESTMENT INCOME
Dividends $ 6,061,595
Interest (net of foreign withholding tax credits of $2,082) 8,304,606
---------------------------------------------------------------------------------------------------------------
Total income $ 14,366,201
---------------------------------------------------------------------------------------------------------------
EXPENSES
Advisory fee 1,447,631
Servicing agent fee 562,967
Preferred share maintenance 352,423
Professional fees 125,831
Trustees' fees and expenses 76,920
Printing 66,263
Fund accounting 65,371
Administration fee 60,047
Custodian 42,059
Insurance 37,165
ICI dues 16,739
NYSE listing fee 10,829
Transfer agent 10,572
Rating agency fee 9,495
Miscellaneous 8,242
---------------------------------------------------------------------------------------------------------------
Total expenses 2,892,554
Advisory and Servicing agent fees waived (348,504)
---------------------------------------------------------------------------------------------------------------
Net expenses 2,544,050
---------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 11,822,151
---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
SWAPS, OPTIONS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Investments (123,963,422)
Swaps (7,920,717)
Options 110,453
Foreign currency transactions (105,658)
Net change in unrealized appreciation (depreciation) on:
Investments 140,503,277
Swaps 6,260,085
Options (49,179)
Foreign currency translation (64,919)
---------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS, SWAPS, OPTIONS AND
FOREIGN CURRENCY TRANSACTIONS 14,769,920
---------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS FROM NET INVESTMENT INCOME (2,717,680)
---------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS $ 23,874,391
===============================================================================================================
See notes to financial statements.
Semiannual Report | April 30, 2009 | 15
AVK | Advent Claymore Convertible Securities and Income Fund
Statement of CHANGES IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS |
FOR THE SIX MONTHS FOR THE
ENDED APRIL 30, 2009 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2008
-----------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS:
Net investment income $ 11,822,151 $ 39,162,979
Net realized gain (loss) on investments, swaps, options and
foreign currency transactions (131,879,344) (90,749,975)
Net change in unrealized appreciation (depreciation) on investments,
swaps, options and foreign currency translation 146,649,264 (254,292,055)
-----------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
From net investment income (2,717,680) (11,491,856)
From net realized gains -- (716,084)
-----------------------------------------------------------------------------------------------------------------
(2,717,680) (12,207,940)
-----------------------------------------------------------------------------------------------------------------
Net increase/decrease in net assets applicable to Common Shareholders
resulting from operations 23,874,391 (318,086,991
-----------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS:
From and in excess of net investment income (15,115,936) (48,148,533)
From net realized gains -- (3,000,244)
Return of capital -- (363,640)
-----------------------------------------------------------------------------------------------------------------
Total dividends and distributions to common shareholders (15,115,936) (51,512,417)
-----------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Reinvestment of dividends 214,968 395,146
-----------------------------------------------------------------------------------------------------------------
Total increase/decrease in net assets 8,973,423 (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
$8,493,846 and $2,482,381, respectively) $304,074,918 $ 295,101,495
=================================================================================================================
See notes to financial statements.
16 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Financial HIGHLIGHTS |
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE
PER SHARE OPERATING PERFORMANCE APRIL 30, 2009 YEAR ENDED YEAR ENDED YEAR ENDED
FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED) OCTOBER 31, 2008 OCTOBER 31, 2007 OCTOBER 31, 2006
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.52 $ 28.23 $ 26.82 $ 25.69
------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (c) 0.50 1.66 1.94 1.99
Net realized and unrealized gain/loss on investments,
swaps, options and foreign currency transactions 0.63 (14.66) 2.68 2.28
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
From net investment income (common share equivalent basis) (0.12) (0.49) (0.52) (0.56)
From net realized gains (common share equivalent basis) -- (0.03) (0.11) --
------------------------------------------------------------------------------------------------------------------------------------
Total preferred distributions (common share equivalent basis) (0.12) (0.52) (0.63) (0.56)
------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.01 (13.52) 3.99 3.71
------------------------------------------------------------------------------------------------------------------------------------
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 (0.64) (2.05) (2.08) (2.58)
From net realized gain -- (0.13) (0.50) --
Return of capital -- (0.01) -- --
------------------------------------------------------------------------------------------------------------------------------------
Total distributions to Common Shareholders (0.64) (2.19) (2.58) (2.58)
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.89 $ 12.52 $ 28.23 $ 26.82
====================================================================================================================================
MARKET VALUE, END OF PERIOD $ 11.40 $ 13.11 $ 25.15 $ 27.03
====================================================================================================================================
TOTAL INVESTMENT RETURN (d)
Net asset value 8.75% -51.06% 15.63% 15.15%
Market value -7.60% -41.96% 2.48% 26.86%
RATIOS AND SUPPLEMENTAL DATA
Net assets, applicable to Common Shareholders,
end of period (thousands) $ 304,075 $ 295,101 $ 664,306 $ 627,383
Preferred shares, at redemption value ($25,000 per share
liquidation preference) (thousands) $ 262,000 $ 275,000 $ 275,000 $ 275,000
Preferred shares asset coverage per share $ 54,015 $ 51,827 $ 85,391 $ 82,035
RATIOS TO AVERAGE NET ASSETS APPLICABLE TO COMMON SHARES:
Net Expenses, after fee waiver 1.86%(e) 1.22% 1.08% 1.12%
Net Expenses, before fee waiver 2.11%(e) 1.47% 1.37% 1.41%
Net Investment Income, after fee waiver, prior to effect
of dividends to preferred shares 8.62%(e) 7.14% 7.09% 7.62%
Net Investment Income, before fee waiver, prior to effect
of dividends to preferred shares 8.37%(e) 6.89% 6.80% 7.33%
Net Investment Income, after fee waiver, after effect
of dividends to preferred shares 6.64%(e) 4.92% 4.80% 5.49%
Net Investment Income, before fee waiver, after effect
of dividends to preferred shares 6.39%(e) 4.67% 4.51% 5.20%
RATIOS TO AVERAGE MANAGED ASSETS: (f)
Net Expenses, after fee waiver 0.95%(e) 0.81% 0.76% 0.77%
Net Expenses, before fee waiver 1.08%(e) 0.98% 0.96% 0.97%
Net Investment Income, after fee waiver, prior to effect
of dividends to preferred shares 4.41%(e) 4.76% 4.97% 5.26%
Net Investment Income, before fee waiver, prior to effect
of dividends to preferred shares 4.28%(e) 4.59% 4.77% 5.06%
Portfolio turnover rate 76% 87% 76% 81%
* Amount less than $0.01.
(a) Commencement of operations.
(b) Before reimbursement of offering expenses charged to capital during the
period.
(c) Based on average shares outstanding during the period.
(d) 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.
(e) Annualized.
(f) Managed assets are equal to net assets applicable to Common Shareholders
plus outstanding leverage such as the liquidation value of preferred
shares.
See notes to financial statements.
Semiannual Report | April 30, 2009 | 17
AVK | Advent Claymore Convertible Securities and Income Fund | FINANCIAL
HIGHLIGHTS continued
FOR THE PERIOD
FOR THE FOR THE APRIL 30, 2003 (a)
PER SHARE OPERATING PERFORMANCE YEAR ENDED YEAR ENDED THROUGH
FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD OCTOBER 31, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 26.10 $ 26.14(b) $ 23.88(b)
------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (c) 2.33 2.41 0.93
Net realized and unrealized gain/loss on investments,
swaps, options and foreign currency transactions 0.10 0.08 2.28
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
From net investment income (common share equivalent basis) (0.35) (0.15) (0.03)
From net realized gains (common share equivalent basis) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total preferred distributions (common share equivalent basis) (0.35) (0.15) (0.03)
------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.08 2.34 3.18
------------------------------------------------------------------------------------------------------------------------------------
COMMON AND PREFERRED SHARES' OFFERING EXPENSES CHARGED
TO PAID-IN-CAPITAL IN EXCESS OF PAR VALUE -- (0.05) (0.06)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
From and in excess of net investment income (2.49) (2.15) (0.86)
From net realized gain -- (0.18) --
Return of capital -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total distributions to Common Shareholders (2.49) (2.33) (0.86)
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 25.69 $ 26.10 $ 26.14
====================================================================================================================================
MARKET VALUE, END OF PERIOD $ 23.62 $ 25.41 $ 24.95
====================================================================================================================================
TOTAL INVESTMENT RETURN (d)
Net asset value 8.14% 8.93% 13.29%
Market value 2.52% 11.44% 3.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, applicable to Common Shareholders, end of period (thousands) $ 599,998 $ 609,455 $ 610,415
Preferred shares, at redemption value ($25,000 per share
liquidation preference) (thousands) $ 275,000 $ 275,000 $ 215,000
Preferred shares asset coverage per share $ 79,545 $ 80,405 $ 95,978
RATIOS TO AVERAGE NET ASSETS APPLICABLE TO COMMON SHARES:
Net Expenses, after fee waiver 1.12% 1.05% 0.88%(e)
Net Expenses, before fee waiver 1.41% 1.33% 1.12%(e)
Net Investment Income, after fee waiver, prior to effect of
dividends to preferred shares 8.90% 9.07% 7.51%(e)
Net Investment Income, before fee waiver, prior to effect of
dividends to preferred shares 8.61% 8.79% 7.27%(e)
Net Investment Income, after fee waiver, after effect of
dividends to preferred shares 7.56% 8.49% 7.28%(e)
Net Investment Income, before fee waiver, after effect of
dividends to preferred shares 7.27% 8.21% 7.04%(e)
RATIOS TO AVERAGE MANAGED ASSETS: (f)
Net Expenses, after fee waiver 0.77% 0.75% 0.73%(e)
Net Expenses, before fee waiver 0.97% 0.95% 0.93%(e)
Net Investment Income, after fee waiver, prior to effect of
dividends to preferred shares 6.14% 6.44% 6.27%(e)
Net Investment Income, before fee waiver, prior to effect of
dividends to preferred shares 5.94% 6.24% 6.07%(e)
Portfolio turnover rate 64% 112% 34%
* Amount less than $0.01.
(a) Commencement of operations.
(b) Before reimbursement of offering expenses charged to capital during the
period.
(c) Based on average shares outstanding during the period.
(d) 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.
(e) Annualized.
(f) Managed assets are equal to net assets applicable to Common Shareholders
plus outstanding leverage such as the liquidation value of preferred
shares.
18 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Notes to FINANCIAL STATEMENTS | APRIL 30, 2009 (unaudited)
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.
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. For those securities where quotations or prices are
not available, valuations are determined in accordance with procedures
established in good faith by the Board of Trustees. 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.
In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 157, "Fair Valuation
Measurements" ("FAS 157"). This standard clarifies the definition of fair value
for financial reporting, establishes a framework for measuring fair value and
requires additional disclosures about the use of fair value measurements. FAS
157 establishes three different categories for valuations. Level 1 valuations
are those based upon quoted prices in active markets. Level 2 valuations are
those based upon quoted prices in inactive markets or based upon significant
observable inputs (e.g. yield curves; benchmark interest rates; indices). Level
3 valuations are those based upon unobservable inputs (e.g. discounted cash flow
analysis; non-market based methods used to determine fair valuation). Details of
the valuations as of April 30, 2009 were as follows:
CATEGORY
(VALUE IN $000S) SECURITIES DERIVATIVES TOTAL
------------------------------------------------------------------
Assets:
Level 1 $ 152,011 $ -- $ 152,011
Level 2 394,440 -- 394,440
Level 3 -- -- --
------------------------------------------------------------------
Total $ 546,451 $ -- $ 546,451
------------------------------------------------------------------
Liabilities:
Level 1 $ -- $ 218 $ 218
Level 2 -- 228 228
Level 3 -- -- --
------------------------------------------------------------------
Total $ -- $ 446 $ 446
------------------------------------------------------------------
(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 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.
Semiannual Report | April 30, 2009 | 19
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS (unaudited) CONTINUED
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 a 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.
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.
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.
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. 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). 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 on
the termination date 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. This line item is removed 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.
20 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS (unaudited) CONTINUED
(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 April 30,
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.
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 six months ended April 30, 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
has 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. For the six months ended April 30, 2009, the Advisor waived advisory
fees of $174,252. Effective May 1, 2009, the Advisory Fee waiver was
reduced to 0.03% of the average value of Managed Assets for an additional
year.
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 has 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. For the six
months ended April 30, 2009, the Servicing Agent waived fees of $174,252.
Effective May 1, 2009, the Servicing Fee waiver was reduced to 0.04% of the
average value of Managed Assets for an additional year.
The fee waivers of the Advisor and the Servicing Agent are contractual
commitments of more than one year and are not subject to recoupment.
Semiannual Report | April 30, 2009 | 21
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS (unaudited) CONTINUED
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:
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.
At April 30, 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 DEPRECIATION ON ON DERIVATIVES AND
PURPOSES APPRECIATION DEPRECIATION INVESTMENTS FOREIGN CURRENCY
---------------------------------------------------------------------------------------------------------------
$564,511,393 $18,399,185 $(36,459,931) $(18,060,746) $(296,607)
---------------------------------------------------------------------------------------------------------------
As of October 31, 2008, 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)
------------------------------------------------
$0 $(96,787,165)
------------------------------------------------
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, 2008, for federal income tax purposes, the Fund had a capital
loss carryforward of $96,787,165 available to offset possible future capital
gains. The capital loss carryforward is set to expire on October 31, 2016.
For the years ended October 31, 2008 and October 31, 2007, the tax character of
distributions paid of $54,863,421 and $53,996,821 was ordinary income,
$8,493,296 and $21,390,145 was long-term capital gain, and $363,640 and $0 was
return of capital, respectively.
On July 13, 2006, the FASB released FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how
uncertain tax positions should be recognized, measured, presented and disclosed
in the financial statements. FIN 48 requires the evaluation of tax positions
taken or expected to be taken in the course of preparing the Fund's tax returns
to determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Tax positions not deemed to meet the
more-likely-than-not threshold would be recorded as a tax benefit or expense in
the current year. Management has evaluated the implication of FIN 48 and has
determined it does not have any impact on the financial statements as of April
30, 2009. There is no tax liability
22 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS (unaudited) CONTINUED
resulting from unrecognized tax benefits relating to uncertain income tax
positions taken or expected to be taken on the tax return for the fiscal
year-end October 31, 2008. 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 twelve months.
FIN 48 requires the Fund to analyze all open tax years. Open tax years are those
years that are open for examination by the relevant income taxing authority. As
of April 30, 2009, open Federal and state income tax years include the tax years
ended October 31, 2005, 2006, 2007 and 2008. The Fund has no examination in
progress.
Note 5 - INVESTMENTS IN SECURITIES AND DERIVATIVES:
For the six months ended April 30, 2009, purchases and sales of investments,
excluding options and short-term securities, were $344,259,217 and $336,049,653,
respectively.
The Fund entered into credit default swap agreements during the six months ended
April 30, 2009 to generate additional income. As of April 30, 2009, the Fund had
swaps with a total notional value of $8,800,000 outstanding. Details of the swap
agreements outstanding as of April 30, 2009 were as follows:
CREDIT DEFAULT SWAP AGREEMENTS:
BUY/ NOTIONAL PAYING UNREALIZED
SELL TERMINATION AMOUNT FIXED APPRECIATION/
COUNTERPARTY REFERENCE ENTITY PROTECTION DATE (000) RATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets Burlington Northern Santa Fe Corp. Buy 06/20/2014 $1,250 1.00% $ (17,062)
Citigroup Global Markets CSX Corp. Buy 06/20/2014 2,500 1.00% (79,635)
Citigroup Global Markets Home Depot, Inc. Buy 06/20/2014 2,050 1.00% (44,494)
JPMorgan Chase & Co. LVMH Moet Hennessy Louis Vuitton Buy 03/20/2014 3,000 1.45% (86,600)
------------------------------------------------------------------------------------------------------------------------------
$ (227,791)
==============================================================================================================================
For each 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.
The Fund entered into written option contracts during the period ended April 30,
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 8,028 645,115
Options expired during the period (2,473) (177,919)
Options closed during the period (3,480) (290,570)
Options assigned during the period (100) (8,055)
-------------------------------------------------------------------------------------------
Options outstanding, end of period 1,975 $ 168,571
===========================================================================================
Note 6 - 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 six months ended
April 30, 2009, and 31,536 shares during the year ended October 31, 2008. At
April 30, 2009, Advent Capital Management LLC, the Fund's investment adviser,
owned 7,357 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.
Semiannual Report | April 30, 2009 | 23
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS (unaudited) CONTINUED
During the six months ended April 30, 2008, 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 LIBORRate 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 six months ended April 30, 2009, the annualized dividend rates ranged
from:
HIGH LOW AT APRIL 30, 2009
--------------------------------------------------------------------------
Series M7 3.39% 1.49% 1.57%
Series T28 4.78 1.58 1.72
Series W7 3.27 1.48 1.58
Series W28 5.54 1.66 1.69
Series TH28 5.76 1.66 1.69
Series F7 3.41 1.49 1.57
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 May 1, 2009, the Fund declared a monthly dividend to common shareholders of
$0.0939 per common share. This dividend is payable on May 29, 2009 to
shareholders of record on May 15, 2009. On June 1, 2009, the Fund declared a
monthly dividend to common shareholders of $0.0939 per common share. This
dividend is payable on June 30, 2009 to shareholders of record on June 15, 2009.
24 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | NOTES TO
FINANCIAL STATEMENTS (unaudited) CONTINUED
Note 10 - ACCOUNTING PRONOUNCEMENTS:
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities." This standard is intended to enhance
financial statement disclosures for derivative instruments and hedging
activities and enable investors to 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.
SFAS No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. In September 2008, the FASB
issued a Staff Position amending SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This amendment would require disclosures by
sellers of credit derivatives, including credit derivatives embedded in a hybrid
instrument. This amendment is effective for financial statements issued for
fiscal years and interim periods ending after November 15, 2008. As of April 30,
2009, management does not believe the adoption of SFAS No. 161 nor amended SFAS
No. 133 will impact the financial statement amounts; however, additional
footnote disclosures may be required about the use of derivative instruments and
hedging items.
In April 2009, the FASB issued FSP FAS 157-4, "Determining Fair Value When
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly" (FSP 157-4). FSP
157-4 provides guidance on how to determine the fair value of assets and
liabilities when the volume and level of activity for the asset/liability has
significantly decreased. FSP 157-4 also provides guidance on identifying
circumstances that indicate a transaction is not orderly. In addition, FSP 157-4
requires disclosure in interim and annual periods of the inputs and valuation
techniques used to measure fair value and a discussion of changes in valuation
techniques. FSP 157-4 is effective for interim and annual reporting periods
ending after June 15, 2009. The adoption of FSP 157-4 is not expected to have a
significant impact on these financial statements.
Semiannual Report | April 30, 2009 | 25
AVK | Advent Claymore Convertible Securities and Income Fund
Supplemental INFORMATION | (unaudited)
FEDERAL INCOME TAX INFORMATION
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.
TRUSTEES
The Trustees of the Advent Claymore Convertible Securities and Income Fund and
their principal occupations during the past five years:
NUMBER OF
NAME, ADDRESS, YEAR OF TERM OF OFFICE* PRINCIPAL OCCUPATIONS DURING FUNDS IN
BIRTH AND POSITION(S) AND LENGTH OF THE PAST FIVE YEARS AND FUND COMPLEX** OTHER DIRECTORSHIPS
HELD WITH REGISTRANT TIME SERVED OTHER AFFILIATIONS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES:
------------------------------------------------------------------------------------------------------------------------------------
Daniel Black+ Since 2005 Partner, the Wicks Group of Cos., LLC 3 Director of Penn
Year of birth: 1960 (2003-present). Formerly, Managing Director Foster Education
Trustee and Co-head of the Merchant Banking Group at Group, Inc.
BNY 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,
Trustee Inc. (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 Senior Vice President, Business Affairs at 3 Director of Young
Year of birth: 1966 ABC News (2008-present). Vice President, Scholars' Institute.
Trustee Business Affairs and News Planning at ABC
News (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 47 None.
Year of birth: 1953 firm specializing in corporate law, estate
Trustee planning 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., L.P.
co-manager 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). Former Vice
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, 3 Director, Country
Year of birth: 1960 LLC, Advisor First Atlantic Capital Ltd., Pure Foods.
Trustee (2001-present). Formerly, a Managing Chairman, Board of
Director in Investment Banking-The Private Directors, Berkshire
Equity Group (1995-2001) and a Vice Blanket, Inc.
President in Investment Banking-Corporate President and
Finance (1992-1995) at Merrill Lynch & Co. Chairman, Board of
Founding Partner of The Carpediem Group, Directors,
(1991-1992). Associate at Dillon, Read and Sqwincher Holdings.
Co. (investment bank) (1988-1990). Director, Sprint
Industrial Holdings.
Co-chairman, Board
of Directors, H2O
Plus.
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES:
------------------------------------------------------------------------------------------------------------------------------------
Tracy V. Maitland+0 Since 2003 President of Advent Capital 3 None.
Year of birth: 1960 Management, LLC, which he founded
Trustee, President in 1995. Prior to June, 2001,
and Chief President of Advent Capital
Executive Officer Management, a division of Utendahl
Capital.
------------------------------------------------------------------------------------------------------------------------------------
Nicholas Dalmaso++00 Since 2003 Attorney. Formerly, Senior Managing 46 None.
Year of Birth: 1965 Director and Chief Administrative
Trustee Officer (2007-2008) and General
Counsel (2001-2007) of Claymore
Advisors, LLC and Claymore
Securities, Inc. Formerly,
Assistant General Counsel, John
Nuveen and Company Inc.
(1999-2000). Former Vice President
and Associate General Counsel of
Van Kampen Investments, Inc.
(1992-1999).
------------------------------------------------------------------------------------------------------------------------------------
+ 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. Maitland and Dalmaso, as a Class III Trustees, are expected to
stand for re-election at the Fund's 2009 annual meeting of shareholders.
- 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, Nyberg and Black, as Class II Trustees, are expected to
stand for re-election at the Fund's 2011 annual meeting of shareholders.
** 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.
0 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.
00 Mr. Dalmaso is an "interested person" (as defined in section 2(a)(19) of
the 1940 Act) of the Fund because of his former position as an officer of,
and his equity ownership in, the Fund's Servicing Agent and certain of its
affiliates.
26 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund | SUPPLEMENTAL
INFORMATION (unaudited) continued
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 Advent Capital Management, a division of Utendahl Capital.
Assistant Secretary
------------------------------------------------------------------------------------------------------------------------------------
Robert White Since 2005 Chief Financial Officer, Advent Capital Management, LLC (July
Year of birth: 1965 2005-present). Previously, Vice President, Client Service Manager,
Treasurer and Goldman Sachs Prime Brokerage (1997-2005).
Chief Financial Officer
------------------------------------------------------------------------------------------------------------------------------------
Rodd Baxter Since 2003 General Counsel, Advent Capital Management, LLC (2002-present).
Year of birth: 1950 Formerly, Director and Senior Counsel, SG Cowen Securities Corp.
Secretary and (1998-2002).
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 of Trustees and until his or
her successor is appointed and qualified or until his or her earlier
resignation or removal.
Semiannual Report | April 30, 2009 | 27
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.
28 | Semiannual Report | April 30, 2009
AVK | Advent Claymore Convertible Securities and Income Fund
Investment Management
AGREEMENT CONTRACT RE-APPROVAL | (unaudited)
INVESTMENT MANAGEMENT AGREEMENT RE-APPROVAL
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940 Act")
contemplates that the Board of Trustees (the "Board") of Advent Claymore
Convertible Securities and Income Fund (the "Fund"), including a majority of the
Trustees who have no direct or indirect interest in the investment management
agreement and are not "interested persons" of the Fund, as defined in the 1940
Act (the "Independent Trustees"), are required to annually review and re-approve
the terms of the Fund's existing investment advisory agreement and approve any
newly proposed terms therein. In this regard, the Board reviewed and
re-approved, during the most recent six month period covered by this report, the
investment management agreement (the "Management Agreement") with Advent Capital
Management, LLC ("Advent") for the Fund.
More specifically, at a meeting held on March 31, 2009, the Board, including the
Independent Trustees advised by their independent legal counsel, considered the
factors and reached the conclusions described below relating to the re-approval
of the Management Agreement.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various data and information regarding the
nature, extent and quality of services provided to the Fund by Advent under the
Management Agreement. The Board reviewed and analyzed the responses of Advent to
a detailed series of requests submitted by the Independent Trustees' independent
legal counsel on behalf of such Trustees which included, among other things,
information about the background and experience of the senior management and the
expertise of, and amount of attention devoted to the Fund by, personnel of
Advent. In this regard, the Board specifically reviewed the qualifications,
background and responsibilities of the officers primarily responsible for
day-to-day portfolio management services for the Fund.
The Board evaluated the ability of Advent, including their resources, reputation
and other attributes, to attract and retain highly qualified investment
professionals, including research, advisory and supervisory personnel. In this
connection, the Board considered information regarding the compensation
structures for the personnel of Advent involved in the management of the Fund.
Based on the above factors, together with those referenced below, the Board
concluded that it was satisfied with the nature, extent and quality of the
investment management services provided to the Fund by Advent.
FUND PERFORMANCE AND EXPENSES
The Board considered the performance results for the Fund on a market price and
net asset value basis over various time periods. They also considered these
results in comparison to the performance results of a group of other closed-end
funds that was determined to be the most similar to the Fund in terms of
investment strategy ("Peer Group").
The Board received and considered statistical information regarding the Fund's
total expense ratios (based on net assets applicable to common shares) and their
various components. They also considered comparisons of these expenses to the
expense information for the Fund's Peer Group.
Based on the above-referenced considerations and other factors, the Board
concluded that the overall performance results and expense comparison supported
the re-approval of the Investment Management Agreement.
INVESTMENT MANAGEMENT FEE RATES
The Board reviewed and considered the contractual investment management fee
rates for the Fund ("Management Agreement Rate") payable by the Fund to Advent
for investment management and advisory services. In addition, the Board reviewed
and considered all fee waiver arrangements applicable to the Management
Agreement Rate and considered the Management Agreement Rate after taking all
applicable waivers into account (the "Net Management Rate").
Additionally, the Board received and considered information comparing the
Management Agreement Rate (on a stand-alone basis exclusive of service
fee/administrative fee rates) with those of the other funds in the Peer Group.
The advisory fee paid on managed assets was below the median of the Peer Group
due to fee waivers in effect. The expense ratio on common assets for the Fund
(excluding interest expenses) was at the median on a gross basis and below the
median on a net basis. These comparisons were also affected by fee waivers by
peer funds and potentially by the extent of leverage. The Board also took note
of the fact that the expense ratios of the Peer Group funds may have increased
since the date as of which the information was presented, given the level of
market declines in the fourth quarter of 2008 and the first quarter of 2009. The
Board concluded that the fees were fair and equitable based on relevant factors,
including the Fund's performance results and total expenses ranking relative to
its Peer Group.
PROFITABILITY
The Board received and considered an estimated profitability analysis of Advent
based on the Net Management Rates. The Board concluded that, in light of the
costs of providing investment management services to the Fund, the profits and
other ancillary benefits that Advent received with regard to providing these
services to the Fund were not unreasonable.
ECONOMIES OF SCALE
The Board received and considered information regarding whether there have been
economies of scale with respect to the management of the Fund, whether the Fund
has appropriately benefited from any economies of scale, and whether there is
potential for realization of any further economies of scale. The Board concluded
that the opportunity to benefit from economies of scale were diminished in the
context of closed-end funds.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature, extent and
quality of services and fee rates offered by Advent to its other clients.
After considering the above-described factors and based on the deliberations and
their evaluation of the information provided to them, the Board concluded that
re-approval of the Management Agreement was in the best interest of the Fund and
its shareholders. Accordingly, the Board unanimously re-approved the Management
Agreement.
Semiannual Report | April 30, 2009 | 29
This Page Intentionally Left Blank.
AVK | Advent Claymore Convertible Securities and Income Fund
Fund INFORMATION |
BOARD OF TRUSTEES
Randall C. Barnes
Daniel Black
Nicholas Dalmaso*
Tracy V. Maitland**
Chairman
Derek Medina
Ronald A. Nyberg
Gerald L. Seizert
Michael A. Smart
*Trustee is an "interested person" of the Fund as defined in the Investment
Company Act of 1940, as amended, because of his former position as an officer
of, and his equity ownership in, the Servicing Agent and certain of its
affiliates.
** Trustee is an "interested person" of the Fund as defined in the Investment
Company Act of 1940, as amended, because of his position as an officer of the
Advisor.
OFFICERS
Tracy V. Maitland
President and Chief Executive Officer
F. Barry Nelson
Vice President and Assistant Secretary
Robert White
Treasurer and Chief Financial Officer
Rodd Baxter
Secretary and Chief Compliance Officer
INVESTMENT ADVISER
Advent Capital Management, LLC
New York, New York
SERVICING AGENT
Claymore Securities, Inc.
Lisle, Illinois
CUSTODIAN AND TRANSFER AGENT
The Bank of New York Mellon
New York, New York
ADMINISTRATOR
Claymore Advisors, LLC
Lisle, Illinois
PREFERRED STOCK-
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 and its affiliates
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 October 2008, 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.
Semiannual Report | April 30, 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
AVK-SAR-0409
Item 2. Code of Ethics.
Not applicable for a semi-annual reporting period.
Item 3. Audit Committee Financial Expert.
Not applicable for a semi-annual reporting period.
Item 4. Principal Accountant Fees and Services.
Not applicable for a semi-annual reporting period.
Item 5. Audit Committee of Listed Registrants.
Not applicable for a semi-annual reporting period.
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.
Not applicable for a semi-annual reporting period.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a) Not applicable for a semi-annual reporting period.
(b) There has been no change, as of the date of this filing, in the
Portfolio Manager identified in response to paragraph (a)(1) of this
Item in the registrant's most recent annual report on Form N-CSR.
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 of 1940) as of a date within 90 days of this filing and have
concluded based on such evaluation, 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 of 1940) 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) Not applicable.
(a)(2) Certification of principal executive officer and principal financial
officer pursuant to Rule 30a-2(a) of the Investment Company Act of
1940.
(a)(3) Not Applicable.
(b) Certification of principal executive officer and principal financial
officer pursuant to Rule 30a-2(b) of the Investment Company Act of
1940.
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
-----------------------------------------------------------------------
Name: Tracy V. Maitland
Title: President and Chief Executive Officer
Date: July 6, 2009
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
-----------------------------------------------------------------------
Name: Tracy V. Maitland
Title: President and Chief Executive Officer
Date: July 6, 2009
By: /s/ Robert White
-----------------------------------------------------------------------
Name: Robert White
Title: Treasurer and Chief Financial Officer
Date: July 6, 2009