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 811-22022
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Advent/Claymore Global Convertible Securities & Income Fund
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(Exact name of registrant as specified in charter)
1065 Avenue of the Americas, New York, NY 10018
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(Address of principal executive offices) (Zip code)
Robert White, Treasurer
1065 Avenue of the Americas, New York, NY 10018
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(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 479-0675
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Date of fiscal year end: October 31
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Date of reporting period: October 31, 2009
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The registrant's annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), is as follows:
ANNUAL ADVENT/CLAYMORE |
REPORT GLOBAL CONVERTIBLE | AGC
October 31, 2009 SECURITIES & INCOME FUND |
Picture of a bridge
LOGO | ADVENT LOGO CLAYMORE(R)
CAPITAL MANAGEMENT
www.claymore.com/agc
... YOUR BRIDGE TO THE LATEST,
MOST UP-TO-DATE INFORMATION ABOUT THE
ADVENT/CLAYMORE GLOBAL CONVERTIBLE SECURITIES & INCOME FUND
AGC | Advent/Claymore
LISTED | Global Convertible
NYSE(R) | Securities & Income Fund
LOGO| ADVENT LOGO CLAYMORE(R)
CAPITAL MANAGEMENT
There can be no assurance that the Fund will achieve its investment
objective. The value of the Fund will fluctiate with the value of the
underlying securities. Historically, closed-end funds often trade at a
discount to their net asset value.
NOT FDIC-INSURED NOT BANK-GUARANTEED MAY LOSE VALUE
The shareholder report you are reading right now is just the beginning of the
story. Online at WWW.CLAYMORE.COM/AGC, you will find:
o Daily, weekly and monthly data on share prices, net asset values,
distributions, and more
o Portfolio overviews and performance analyses
o Announcements, press releases and special notices
o Fund and adviser contact information
Advent Capital Management and Claymore are continually updating and expanding
shareholder information services on the Fund's website, in an ongoing effort to
provide you with the most current information about how your Fund's assets are
managed, and the results of our efforts. It is just one more small way we are
working to keep you better informed about your investment in the Fund.
2 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Dear SHAREHOLDER |
Picture of Tracy V. Maitland
TRACY V. MAITLAND
President and Chief Executive Officer
We thank you for your investment in the Advent/Claymore Global Convertible
Securities & Income Fund (the "Fund"). This report covers the Fund's performance
for the fiscal year ended October 31, 2009.
The Fund's investment objective is to provide total return through a combination
of capital appreciation and current income. Under normal market conditions, the
Fund will invest at least 50% of its managed assets in convertible securities;
the Fund may invest up to 40% of its managed assets in lower-grade
non-convertible income securities, and the Fund will invest at least 50% of its
managed assets in foreign securities. As of the fiscal year ended October 31,
2009, foreign securities (defined as securities of companies that are
headquartered outside the U.S. or derive the majority of their income outside
the U.S.) represented 55.7% of long-term investments and convertible securities
represented 87.5% of the portfolio.
All Fund returns cited--whether based on net asset value ("NAV") or market
price--assume the reinvestment of all distributions. For the fiscal year ending
October 31, 2009, the Fund generated a total return based on market price of
39.85% and a return of 38.26% based on NAV. As of October 31, 2009, the Fund's
market price of $7.33 represented a discount of 12.43% to NAV of $8.37. As of
October 31, 2008, the Fund's market price of $5.99 represented a discount of
12.04% to NAV of $6.81.
The Fund currently implements its leverage strategy through the issuance of
Auction Market Preferred Shares ("AMPSSM"). The Fund has two seven day series of
AMPS, Series T7, which auctions each Tuesday, and Series W7, which auctions each
Wednesday. The broad auction-rate preferred securities market remains illiquid,
essentially frozen since February 2008. The auctions for nearly all auction-rate
preferred shares, including those issued by the Fund, continue to fail.
Investors need to be aware that a failed auction is not a default, nor does it
require the redemption of a fund's auction-rate preferred shares. Provisions in
the offering documents of the Fund's AMPS provide a mechanism to set a maximum
rate in the event of a failed auction, and, thus, investors will continue to be
entitled to receive payment for holding these AMPS. This maximum rate is
determined based upon a multiple of or a spread to LIBOR, whichever is greater.
During the 12-month period ended October 31, 2009, established maximum rates
were based on a spread of 125 basis points over the applicable LIBOR rates, with
the maximum rates ranging from 1.47% to 3.34% . The return on the Fund's
investments was significantly higher than the cost of leverage; accordingly,
leverage made an important contribution to the Fund's performance. We will
continue to evaluate the benefits and impacts of leverage on the Fund as well as
explore other methods of utilizing leverage.
The Fund paid a monthly dividend of $0.0950 per share in November 2008 and
monthly dividends of $0.0664 per share in each month from December 2008 through
October 2009. Given the weakness in the international equity markets and in
credit markets early in the fiscal year, the Fund's dividend was reduced in an
effort to better achieve its investment objective of providing total return,
through a combination of capital appreciation and current income along with
seeking to enhance the Fund's earning power over time. We believe that
maintaining and potentially growing the Fund's net asset value will benefit the
Fund's shareholders over time. There is no guarantee of any future distributions
or that the current returns and distribution rate will be achieved in the
future.
We encourage shareholders to consider the opportunity to reinvest their
distributions from the Fund through the Dividend Reinvestment Plan ("DRIP"),
which is described in detail on page 30 of the Fund's annual report. When shares
trade at a discount to NAV, the DRIP takes advantage of the discount by
reinvesting the monthly dividend distribution in common shares of the Fund
purchased in the market at a price less than NAV. Conversely, when the market
price of
Annual Report | October 31, 2009 | 3
AGC | Advent/Claymore Global Convertible Securities & Income Fund | DEAR
SHAREHOLDER continued
the Fund's common shares is at a premium above NAV, the DRIP reinvests
participants' dividends in newly-issued common shares at NAV, subject to an IRS
limitation that the purchase price cannot be more than 5% below the market
price per share. The DRIP provides a cost-effective means to accumulate
additional shares and enjoy the benefits of compounding returns over time.
On July 17, 2009, Claymore Group Inc., the parent of Claymore Advisors, LLC
(the "Adviser"), entered into an Agreement and Plan of Merger between and among
Claymore Group Inc., Claymore Holdings, LLC and GuggClay Acquisition, Inc.
(with the latter two entities being wholly-owned, indirect subsidiaries of
Guggenheim Partners, LLC ("Guggenheim")), whereby GuggClay Acquisition, Inc.
would merge into Claymore Group Inc., which would be the surviving entity. This
transaction was completed on October 14, 2009 (the "Effective Date") and
resulted in a change-of-control whereby Claymore Group Inc. and its
subsidiaries, including the Adviser, became indirect, wholly-owned subsidiaries
of Guggenheim. The transaction is not expected to affect the daily operations
of the Fund or the investment management activities of the Adviser.
Under the Investment Company Act of 1940, as amended (the "1940 Act"), the
consummation of this transaction resulted in the automatic termination of the
Fund's advisory agreement. Accordingly, on September 29, 2009, the Board of
Trustees approved an interim investment advisory agreement between the Fund and
the Adviser (the "Interim Advisory Agreement"). The Interim Advisory Agreement
took effect as of the Effective Date and will terminate upon the earlier of:
(a) 150 calendar days after the Effective Date or (b) the approval of a new
investment advisory agreement by the shareholders of the Fund. In addition, the
advisory fees earned by the Adviser pursuant to the Interim Advisory Agreement
are held in an interest-bearing escrow account with the Fund's custodian during
the term of the Interim Advisory Agreement. Other than the effective date and
the provisions set forth above regarding the advisory fees placement into an
escrow account, the terms and conditions of the Interim Advisory Agreement is
substantively identical to those of the original advisory agreement.
The Fund is managed by a team of experienced and seasoned professionals led by
myself in my capacity as Chief Investment Officer (as well as President and
Founder) of Advent Capital Management, LLC. We encourage you to read the
following Questions & Answers section, which provides more information about
the factors that impacted the Fund's performance.
We thank you for your investment in the Fund and we are honored that you have
chosen the Advent/Claymore Global Convertible Securities & 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/agc.
Sincerely,
/s/ Tracy V. Maitland
Tracy V. Maitland
President and Chief Executive Officer of the Advent/Claymore Global Convertible
Securities & Income Fund
December 2, 2009
4 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund
QUESTIONS & ANSWERS |
Advent/Claymore Global Convertible Securities & 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 global
convertible securities and high-yield markets and the performance of the Fund
during the Fund's fiscal year ended October 31, 2009.
================================================================================
WILL YOU REMIND US OF THIS FUND'S OBJECTIVES AND THE WAY IT IS MANAGED?
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-producing securities, each of U.S. and non-U.S. issuers. Within this
general investment policy, the Fund will follow, under normal market
conditions, the following investment parameters:
o The Fund will invest at least 50% of its managed assets in convertible
securities;
o The Fund may invest up to 40% of its managed assets in non-convertible
income-producing securities; and
o The Fund will invest at least 50% of its managed assets in foreign
securities.
The portion of the Fund's managed assets invested in convertible securities,
non-convertible income-producing securities and foreign securities will vary
from time to time consistent with the Fund's investment objective, changes in
equity prices and interest rates and other economic and market factors. The
Fund may invest in securities of any credit quality, including securities that
are of below investment grade quality. Investing in below investment grade
securities may increase the level of risk in the portfolio, as these securities
are issued by companies that are considered less financially strong than
issuers of investment-grade securities. This risk is addressed through rigorous
credit research: Each issuer's financial statements are carefully scrutinized
and every effort is made to avoid securities of weaker companies that may be
likely to default.
In furtherance of the Fund's investment objective, the Fund intends to engage
in an option strategy of writing (selling) covered call options on up to 25% of
the securities held in the Fund's portfolio in an effort to generate current
gains from option premiums as a means to enhance distributions payable to the
holders of common shares.
The Fund currently uses financial leverage through the issuance of Auction
Market Preferred Shares ("AMPSSM"). It may also use financial leverage through
borrowing or the issuance of commercial paper or other forms of debt, through
reverse repurchase agreements, dollar rolls or similar transactions or through a
combination of the foregoing.
Although the use of financial leverage by the Fund may create an opportunity
for increased return for the common shares, it also results in additional risks
and can magnify the effect of any losses. If the income and gains earned on
securities purchased with the financial leverage proceeds are greater than the
cost of the financial leverage, the common shares' return will be greater than
if financial leverage had not been used. Conversely, if the income or gains
from the securities purchased with the proceeds of financial leverage are less
than the cost of the financial leverage, the common shares' return will be less
than if financial leverage had not been used. There is no assurance that a
financial leveraging strategy will be successful.
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PLEASE TELL US ABOUT THE ECONOMIC AND MARKET ENVIRONMENT OVER THE LAST 12
MONTHS.
The Fund's annual report for the 2008 fiscal year discussed a financial crisis
that originated with the end of a housing boom fueled by excessively easy
credit. After the September 2008 failure of Lehman Brothers Holdings Inc., the
credit markets became so intolerant of risk that they were essentially frozen.
As fearful investors sought the protection of U.S. Treasury securities,
interest rate spreads between Treasury securities and corporate bonds widened
dramatically, and there were pronounced declines in the market values of
convertibles, high-yield bonds and other asset classes that carried any degree
of credit risk.
The market for convertible securities, which in the past was much less volatile
than equities, was already in the red prior to the Lehman failure. Then the
convertible market, as measured by the Merrill Lynch All U.S. Convertibles
Index, lost 14.59% and 17.99%, respectively, in September and October 2008--an
unprecedented setback. A major reason for the severe decline was selling by
hedge funds, which had made leveraged investments in convertibles while
shorting the underlying common stocks. Having lost their prime brokerage
accounts and other sources of credit, hedge funds were forced to sell their
convertible securities at any price, regardless of fundamentals, causing prices
to drop precipitously. The return of the Merrill Lynch All U.S. Convertibles
Index, which measures performance for the domestic convertible market as a
whole, was -35.73% for calendar year 2008, the worst performance for a year in
the 50-plus years for which historical records are available.
The dramatic sell-off that occurred in the last few months of 2008 attracted
unusual interest in convertible securities, whereas historically, many
investors have overlooked convertibles as an asset class. In early 2009, there
was considerable buying by managers of equity and bond accounts, many of whom
are permitted to invest in convertibles, since convertibles are fixed-income
securities that convert into equities. These "cross-over"
Annual Report | October 31, 2009 | 5
AGC | Advent/Claymore Global Convertible Securities & Income Fund | QUESTIONS &
ANSWERS continued
investors had been less prevalent in recent years when hedge funds were more
dominant in the convertible market.
Both equity and corporate bond markets have been in a strong recovery since
March 2009 and convertibles have enjoyed an especially strong rebound during
the Fund's fiscal year ended October 31, 2009. Return of the Merrill Lynch All
U.S. Convertibles Index for the 12-month period was 37.27% . The Standard &
Poor's 500 Index, which is generally regarded as a good indicator of the broad
stock market, returned 9.80% for the 12 months ended October 31, 2009, despite
a negative return of -8.53% in the six-month period from October 31, 2008,
through April 30, 2009. The Barclays Capital US Aggregate Bond Index (formerly
known as the "Lehman Aggregate")--which measures the return of the high-quality
U.S. bond market as a whole--returned 13.79% for the same 12-month period.
After a period of extreme weakness in late 2008, the high yield bond market
experienced a dramatic recovery as investors once again tolerated credit risk.
The return of the Merrill Lynch High Yield Master II Index, which measures
performance of the high-yield bond market, was 48.79% for the 12 months ended
October 31, 2009--a rare example of high-yield securities significantly
outperforming convertibles in a strong market. High yield lagged lower rated
convertible securities; however, the Merrill Lynch All Speculative Quality
Convertibles Index returned 56.8% during the Fund's fiscal year.
The pattern was similar in global markets, with high yield bonds leading the
market. The Merrill Lynch Global High Yield Index returned 51.48% for the 12
months ended October 31, 2009, substantially higher than the AA Merrill Lynch
Global Broad Market Index which had a return of 10.71% for the same period.
Both of these indices are in local currency, so they may serve as a proxy only
for an unhedged portfolio.
================================================================================
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 fiscal year ended
October 31, 2009, the Fund generated a total return based on market price of
39.85% and a return of 38.26% based on NAV. As of October 31, 2009, the Fund's
market price of $7.33 represented a discount of 12.43% to NAV of $8.37. As of
October 31, 2008, the Fund's market price of $5.99 represented a discount of
12.04% to NAV of $6.81.
The market price and NAV of the Fund's shares fluctuates from time to time, and
the Fund's market value may be higher or lower than its NAV. The Fund's current
market price discount to NAV provides an opportunity for investors to purchase
shares of the Fund below the market value of the securities in the underlying
portfolio. The Adviser believes that, over the long term, the progress of the
NAV will be reflected in the market price return to shareholders.
================================================================================
HOW WAS THE FUND ALLOCATED AMONG ASSET CLASSES DURING THE OCTOBER 2009 FISCAL
YEAR?
At the beginning of the Fund's fiscal year October 31, 2008, convertible bonds
represented 38.4% of the portfolio and convertible preferred stocks represented
24.0%, for a total of 62.4% in convertible securities. Short-term investments
represented 27.1%, leaving very small percentages in common stocks and straight
bonds.
The extreme weakness in the convertible bond market in the fall of 2008
discussed above, provided some unusual opportunities for the Fund to invest in
convertible bonds of quality companies at very attractive prices. Perceiving an
opportunity to simultaneously increase income and improve the portfolio's
credit quality, while also achieving participation in an improving equity
market, the Fund shifted a substantial portion of its assets into convertible
bonds. As of October 31, 2009, the Fund has no positions in straight equities
that had been used in the past. Instead, 87.5% is invested in convertible
securities, with 68.5% in convertible bonds and 19.0% in convertible
preferreds. The remainder of the portfolio is invested in high-yield bonds
(10.9%) and short-term investments (1.6%).
Before the beginning of the fiscal year, the position in foreign securities was
reduced because of the belief that they posed greater risk than securities of
U.S. companies, based on weakening world economies. In particular, exposure to
Japan has been kept to a minimum due to low yields available in that market and
the strong yen, which has been creating a headwind for an economy heavily
dependent on exports. The global market for convertible securities is
approximately $400 billion, of which a little more than half is in the U.S.,
about 25% in Europe, 10% in Japan and 10% in non-Japan Asia. In recent months,
as the new issue market has become more active, Europe has been particularly
strong, accounting for approximately 40% of new issues. The Fund's
international representation has been increased, with additions in Europe and
non-Japan Asia; as of October 31, 2009, international investments represent
55.7% of the portfolio. Under normal market conditions, the Fund invests at
least 50% of its assets in foreign securities, with foreign securities defined
as securities of companies that are headquartered outside the U.S. or derive
the majority of their income outside the U.S.
In terms of industry representation, health care represents the greatest
percentage of the portfolio, 20.1% as of October 31, 2009, followed by
financial services at 18.3%.
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WHAT WERE THE MAJOR INVESTMENT DECISIONS THAT AFFECTED THE FUND'S PERFORMANCE?
As discussed above, the decision to increase the Fund's emphasis on convertible
bonds, which experienced a dramatic recovery after extreme weakness early in
the fiscal year, was a major factor in the Fund's strong performance. The
Fund's high yield bonds
6 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund | QUESTIONS &
ANSWERS continued
also performed well, reflecting strength in this segment of the market. Besides
contributing to total return, both of these asset classes provided attractive
levels of income.
In terms of individual holdings, one of the big winners was Golden Eagle Retail
Group Limited (not held in portfolio at period end), a retailer headquartered
in Hong Kong with operations in mainland China. The company differentiates
itself by focusing their sales efforts to the underserved second tier cities
and targeting the faster growing middle class demographic. Unlike many of its
competitors, Golden Eagle owns over 60% of their retail stores, which gives a
debt investor more comfort in knowing their obligations are backed with hard
assets. Golden Eagle's convertible bonds were added to the Fund's portfolio
when they were selling at a distressed price, offering a yield to maturity of
12%, with less than two years to maturity. As the Chinese economy and the
company's operations improved, the stock moved up sharply and the conversion
feature of the bonds became valuable, so that the investment provided a total
return--including both a high yield and appreciation--of more than 100%.
Also positive was a preferred stock holding of Lucent Technologies Capital
Trust I (1.6% of long-term investments), now part of Alcatel-Lucent, an
international provider of voice, data and video communication equipment and
services. As a junior security, the preferred stock fell early in the fiscal
year as the company struggled to achieve profitability, raising liquidity
concerns, especially after a competitor, Nortel Networks, filed for bankruptcy.
More recently, however, the company's operations have begun to recover as
restructuring took effect, and the preferred stock moved up from a very
depressed price.
Another significant contributor was an investment-grade credit, Shire PLC (1.5%
of long-term investments), a U.K. pharmaceutical company that is the market
leader in drugs for attention deficit disorder. The company's ability to
maintain profitable market share exceeded investor expectations, leading to
stock appreciation.
One of the most disappointing investments was a preferred issue of SLM Corp.
(0.6% of long-term investments), which had been considered reasonably secure
because the majority of its revenue was generated in originating
government-guaranteed student loans. Then legislation was proposed to
effectively nationalize the student loan business, thereby bypassing much of
SLM's business, and the preferred stock lost much of its value. Proposed
legislation has changed multiple times, creating further uncertainty. However,
it now seems likely that SLM will retain at least the servicing portion of the
business, if not the loan origination business.
Another negative was Bayer AG (not held in the portfolio at period end), a
diversified German company that is in health care as well as cyclical businesses
such as chemicals and materials. This materials science business declined on
macroeconomic pressures, hurting the equity-sensitive mandatory convertible
preferred stock owned by the Fund. The stock later moved up as the economy began
to improve and synergies that were anticipated from the acquisition were
realized, but, unfortunately, the termination date of the preferred issue came
too early for the Fund to benefit.
Most of the other negatives were in the financial sector, particularly a
preferred issue of Citigroup (not held in portfolio at period end), which lost
ground as the banking company suffered a series of write-downs and had to raise
additional capital.
================================================================================
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. Of course, leverage results in
greater NAV volatility and entails more downside risk than an unleveraged
portfolio. Leverage adds to performance only when the cost of leverage is less
than the total return generated by investments. During the fiscal year ended
October 31, 2009, the cost of leverage was much less than the return of the
Fund's investments; accordingly, leverage made a significant contribution to
the Fund's total return.
The Fund has two seven-day series of AMPS, Series T7, which auctions each
Tuesday, and Series W7, which auctions each Wednesday. The broad auction-rate
preferred securities market remains frozen, as it has been since February 2008.
The auctions for nearly all auction-rate preferred shares, including those
issued by the Fund, continue to fail. Investors need to be aware that a failed
auction is not a default, nor does it require the redemption of a fund's
auction-rate preferred shares. Provisions in the offering documents of the
Fund's AMPS provide a mechanism to set a maximum rate in the event of a failed
auction, and, thus, investors will continue to be entitled to receive payment
for holding these AMPS. This maximum rate is determined based upon a multiple
of or a spread to LIBOR, whichever is greater. During the 12-month period ended
October 31, 2009, established maximum rates were based on a spread of 125 basis
points over the applicable LIBOR rates, with the maximum rates ranging from
1.47% to 3.34% . The return on the Fund's investments was significantly higher
than the cost of leverage; accordingly, leverage made an important contribution
to the Fund's performance.
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 return on
securities purchased exceeds the cost of leverage.
Annual Report | October 31, 2009 | 7
AGC | Advent/Claymore Global Convertible Securities & Income Fund | QUESTIONS &
ANSWERS continued
================================================================================
WHAT IS THE CURRENT OUTLOOK FOR THE MARKETS AND THE FUND?
Advent is cautiously optimistic about the market for convertible securities and
high-yield bonds, in large part because credit spreads are still wider than the
historical norms. Upside to these historical averages would boost market values
of the Fund's high-yield securities and would also help the market values of
convertible securities. Recent research published by Bank of America Merrill
Lynch indicates that convertible securities remain somewhat undervalued, which
suggests that the Fund's large allocation to convertibles may provide
rewarding.
A key question is whether and to what degree the incipient economic recovery
will continue, a judgment that is very difficult to make. Historically periods
of tightening credit spreads have been followed by periods of stronger economic
activity and stronger equity markets. Since credit spreads have tightened in
recent months, history would suggest further strength in the prices of equities
and convertible securities. An improving economy, both in the U.S. and
internationally, should also result in more new issues of bonds and
convertibles, as companies seek to fund their growth and to strengthen their
balance sheets.
A major advantage of this Fund is its ability to invest in multiple asset
classes, taking advantage of different opportunities and anomalies in various
markets. During 2009, an emphasis on convertible securities has proved to be
beneficial. As the equity market rises, as it has in recent months, the equity
sensitivity of a portfolio of convertible securities increases. When the equity
market is weak, convertibles' declining equity sensitivity, combined with a
yield advantage, mitigates the downside. When the equity market rises and
spreads narrow simultaneously, as they have during 2009, convertible securities
benefit from both trends.
Advent believes that, over the long term, careful security selection and asset
allocation will help the Fund's performance by providing favorable returns in
rising markets and a level of income that can help provide some protection for
overall return against down markets.
================================================================================
INDEX DEFINITIONS
Indices are unmanaged and it is not possible to invest directly in any index.
The Merrill Lynch All U.S. Convertibles Index is comprised of approximately 500
issues of convertible bonds and 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 All Speculative Quality Convertibles Index is an unmanaged index
of high-yield U.S. convertible securities.
Merrill Lynch Global High Yield Index tracks the performance of below
investment grade bonds of corporate issuers domiciled in countries having an
investment grade foreign currency long term debt rating (based on a composite
of Moody's and S&P). Additional sub-indices are available that segment the
Index by currency, rating and sector.
Merrill Lynch Global Broad Market Index tracks the performance of investment
grade public debt issued in the major domestic and eurobonds market.
8 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund | QUESTIONS &
ANSWERS continued
================================================================================
AGC RISKS AND OTHER CONSIDERATIONS
The views expressed in this report reflect those of the Portfolio Managers and
Claymore only through the report period as stated on the cover. These views are
subject to change at any time, based on market and other conditions and should
not be construed as a recommendation of any kind. The material may also contain
forward-looking statements that involve risk and uncertainty, and there is no
guarantee they will come to pass. There can be no assurance that the Fund will
achieve its investment objectives. The value of the Fund will fluctuate with
the value of the underlying securities. Historically, closed-end funds often
trade at a discount to their net asset value. The Fund is subject to investment
risk, including the possible loss of the entire amount that you invest. Past
performance does not guarantee future results.
CONVERTIBLE SECURITIES.The Fund is not limited in the percentage of its assets
that may be invested in convertible securities. Convertible securities
generally offer lower interest or dividend yields than non-convertible
securities of similar quality. The market values of convertible securities tend
to decline as interest rates increase and, conversely, to increase as interest
rates decline. However, the convertible securities market value tends to
reflect the market price of the common stock of the issuing company when that
stock price is greater than the convertible's "conversion price," which is the
predetermined price at which the convertible security could be exchanged for
the associated stock.
STRUCTURED AND SYNTHETIC CONVERTIBLE SECURITIES RISK.The value of structured
convertible securities can be affected by interest rate changes and credit
risks of the issuer. Such securities may be structured in ways that limit their
potential for capital appreciation and the entire value of the security may be
at a risk of loss depending on the performance of the underlying equity
security. Structured convertible securities may be less liquid than other
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.
INTEREST RATE RISK. Convertible securities and non-convertible income producing
securities are subject to certain risks, including (i) if interest rates go up,
the value of convertible securities and non-convertible income-producing
securities in the Fund's portfolio generally will decline; (ii) 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 (call or prepayment risk); and (iii) during periods
of rising interest rates, the average life of certain types of securities may
be extended because of slower than expected principal payments (extension
risk).
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. The Fund's investments in convertible and non-convertible debt
securities involve credit risk. However, in general, lower rated securities
carry a greater degree of risk that the issuer will lose its ability to make
interest and principal payments, which could have a negative impact on the
Fund's net asset value or dividends.
LOWER GRADE SECURITIES RISKS. 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.
PREFERRED SECURITIES RISKS.There are special risks associated with investing in
preferred securities, including risks related to deferral, noncumulative
dividends, subordination, liquidity, limited voting rights and special
redemption rights.
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 and (3)
certain national policies which may restrict the Fund's investment
opportunities.
SMALLER COMPANY RISK.The general risks associated with corporate
income-producing and equity securities are particularly pronounced for
securities issued by companies with smaller market capitalizations. These
companies may have limited product lines, markets or financial resources, or
they may depend on a few key employees. As a result, they may be subject to
greater levels of credit, market and issuer risk. Securities of smaller
companies may trade less frequently and in lesser volume than more widely held
securities and their values may fluctuate more sharply than other securities.
Companies with medium-sized market capitalizations may have risks similar to
those of smaller companies.
RISK ASSOCIATED WITH THE FUND'S COVERED CALL OPTION WRITING STRATEGY.
The ability of the Fund to achieve its investment objective of providing total
return through a combination of current income and capital appreciation is
partially dependent on the successful implementation of its covered call option
strategy. There are significant differences between the securities and options
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. A decision as to
whether, when and how to use options involves the exercise of skill and
judgment, and even a well conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events. 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.
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.
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: Foreign Currency Risk,
Derivatives Risk, Equity Securities Risk, Counterparty Risk, Liquidity Risk,
REIT, Mortgage-Related and Asset-Backed Securities Risks, Income Trust and
Master Limited Partnership Risks, Dividend Capture Trading Risk, Reinvestment
Risk, Management Risk, Market Disruption Risk, and Anti-Takeover Provisions.
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/agc for a more detailed discussion about Fund risks and
considerations.
Annual Report | October 31, 2009 | 9
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Fund SUMMARY | AS OF OCTOBER 31, 2009 (unaudited)
FUND STATISTICS
----------------------------------------------------------
Share Price $7.33
Common Share Net Asset Value $8.37
Premium/Discount to NAV -12.43%
Net Assets ($000) $266,589
----------------------------------------------------------
TOTAL RETURNS
----------------------------------------------------------
(INCEPTION 5/29/07) MARKET NAV
----------------------------------------------------------
One Year 39.85% 38.26%
Since Inception - annualized -25.28% -20.71%
----------------------------------------------------------
% OF LONG-TERM
TOP TEN INDUSTRIES INVESTMENTS
----------------------------------------------------------
Oil & Gas 11.3%
Pharmaceuticals 11.1%
Mining 6.4%
Insurance 6.4%
Telecommunications 6.3%
Health Care Services 4.6%
Banks 4.4%
Electrical Components & Equipment 3.0%
Real Estate Investment Trusts 2.7%
Computers 2.5%
----------------------------------------------------------
% OF LONG-TERM
TOP TEN ISSUERS INVESTMENTS
----------------------------------------------------------
Teva Pharmaceutical Finance LLC 3.4%
Transocean, Inc. 3.3%
Amgen, Inc. 2.4%
International Power Jersey Ltd. 2.0%
Toshiba Corp. 1.9%
Mylan, Inc. 1.8%
Vale Capital Ltd. 1.8%
Lucent Technologies Capital Trust I 1.6%
Dana Gas Sukuk Ltd. 1.5%
Actelion Finance SCA 1.5%
----------------------------------------------------------
Past performance does not guarantee future results. All portfolio data is
subject to change daily. For more current information, please visit
www.claymore.com/agc. 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
10/31/08 5.99 6.81
5.98 6.91
6.35 7.28
6.17 7.15
6.1 6.88
6.17 7
6.18 7
5.92 6.86
5.79 6.6
5.65 6.74
5.4 6.65
5.2 6.51
5.13 6.45
4.63 6.13
4.55 5.77
4.5 5.83
4.49 6.04
4.45 6.16
4.72 6.27
4.92 6.28
4.65 6.02
4.86 6.08
4.8 6.06
4.73 5.96
4.7 5.92
4.71 6.06
4.52 6.04
4.65 6.14
4.48 6.02
4.47 6.05
4.36 6.07
4.51 6.25
4.66 6.36
4.9 6.37
5.11 6.34
5.29 6.28
5.19 6.28
5.19 6.31
5.4 6.32
5.41 6.38
5.64 6.46
5.84 6.5
6.24 6.59
6.32 6.63
6.26 6.79
6.09 6.79
6.04 6.82
5.95 6.77
5.92 6.69
5.88 6.64
5.74 6.5
5.65 6.43
5.76 6.45
5.51 6.21
5.67 6.32
5.6 6.28
5.66 6.28
5.7 6.39
5.85 6.41
6.18 6.58
5.98 6.49
6 6.38
6.06 6.29
6.12 6.36
5.88 6.37
5.85 6.44
6.09 6.51
6 6.56
5.96 6.43
5.93 6.38
5.89 6.38
5.75 6.38
5.6 6.15
5.61 6.2
5.45 6.18
5.36 6.14
4.95 6.1
5.17 6.17
5.31 6.16
5.25 6.08
5.25 6.01
4.93 5.84
4.65 5.83
4.84 5.87
4.64 5.78
4.52 5.75
4.2 5.73
4.58 5.87
4.57 5.81
4.76 5.89
4.81 5.92
4.86 5.92
4.84 5.93
4.79 6.02
4.75 6.08
4.67 6.06
4.95 6.26
5.04 6.21
5.14 6.18
5.21 6.25
5.04 6.21
4.83 6.04
4.93 6.15
5.02 6.19
5.29 6.38
5.3 6.4
5.21 6.39
5.07 6.32
5.14 6.37
5.41 6.58
5.5 6.53
5.25 6.48
5.45 6.51
5.53 6.6
5.63 6.56
5.43 6.34
5.5 6.43
5.39 6.43
5.49 6.48
5.55 6.63
5.51 6.55
5.64 6.51
5.63 6.63
5.75 6.64
5/1/09 5.91 6.68
6.09 6.87
6.05 6.89
6.3 6.96
6.32 6.94
6.51 7.07
6.24 7.02
6.2 6.99
5.85 6.76
5.86 6.81
5.86 6.78
5.89 6.87
5.97 6.93
6.08 6.98
6.09 6.93
6.15 6.96
6.24 7.06
6.22 7.05
6.3 7.1
6.43 7.26
6.7 7.3
6.71 7.37
6.58 7.28
6.72 7.37
6.76 7.32
6.78 7.29
6.78 7.37
6.72 7.38
6.75 7.41
6.76 7.38
6.6 7.24
6.33 7.16
6.35 7.1
6.42 7.11
6.42 7.17
6.18 6.99
6.21 6.99
6.28 7.07
6.36 7.15
6.36 7.19
6.48 7.23
6.55 7.19
6.56 7.23
6.54 7.13
6.53 7.09
6.4 7.05
6.44 6.99
6.45 7.06
6.53 7.05
6.65 7.06
6.83 7.12
6.83 7.29
6.77 7.39
6.74 7.41
6.78 7.53
6.85 7.57
6.91 7.59
7.02 7.71
7 7.77
7.05 7.79
7.1 7.78
7.02 7.76
7.17 7.83
7.07 7.9
7.26 8.04
7.38 8.08
7.46 8.08
7.51 8.07
7.59 8.09
7.62 8.08
7.53 8.02
7.53 8
7.46 8.07
7.25 8.02
6.99 7.88
7.08 7.94
7.06 7.96
7.1 8.01
7.3 8.1
7.39 8.12
7.39 8.14
7.32 8.11
7.29 8.15
7.25 8.19
7.2 8.14
7.2 8.02
7.14 8.03
7.25 8.09
7.34 8.15
7.46 8.29
7.58 8.35
7.73 8.43
7.69 8.38
7.89 8.42
8 8.46
7.97 8.56
7.97 8.54
7.82 8.54
7.68 8.51
7.72 8.58
7.84 8.55
7.66 8.48
7.62 8.47
7.8 8.52
7.72 8.52
7.77 8.53
7.77 8.37
7.7 8.33
7.79 8.42
7.76 8.52
7.83 8.55
7.96 8.65
8 8.66
7.97 8.69
7.85 8.62
8.1 8.74
8 8.75
7.98 8.69
8.23 8.77
8.24 8.71
8.13 8.75
8.18 8.76
8.07 8.69
8.02 8.61
7.89 8.54
7.53 8.37
7.71 8.47
10/31/09 7.33 8.37
Bar Chart:
MONTHLY DIVIDENDS PER SHARE
Nov 08 0.0950
Dec 0.0664
Jan 09 0.0664
Feb 0.0664
Mar 0.0664
Apr 0.0664
May 0.0664
Jun 0.0664
July 0.0664
Aug 0.0664
Sep 0.0664
Oct 09 0.0664
Pie Chart:
PORTFOLIO COMPOSITION (% of Total Investments)
ASSET CLASS
-------------------------------------
Convertible Bonds Convertible 68.5%
Preferred Stocks 19.0%
Corporate Bonds 10.9%
Short Term Investments 1.6%
10 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Portfolio of INVESTMENTS | OCTOBER 31, 2009
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS -- 153.9%
CONVERTIBLE BONDS -- 107.1%
AEROSPACE & DEFENSE -- 1.3%
$ 3,475,000 Alliant Techsystems, Inc., BB-
2.75%, 9/15/11 $ 3,570,562
----------------------------------------------------------------------------------------------------
AGRICULTURE -- 1.9%
CNY 40,000,000 China Green Holdings Ltd., Ser. CGHL, NR
0.00%, 10/29/10 (Bermuda) (a) 5,155,600
----------------------------------------------------------------------------------------------------
AUTO MANUFACTURERS -- 1.3%
JPY 315,000,000 Suzuki Motor Corp., Ser. 4, NR
0.00%, 3/29/13 (Japan) 3,574,404
----------------------------------------------------------------------------------------------------
BANKS -- 2.2%
EURO 3,500,000 Kreditanstalt fuer Wiederaufbau, Ser. DPW, AAA
1.50%, 7/30/14 (Germany) 5,769,328
----------------------------------------------------------------------------------------------------
BEVERAGES -- 1.2%
$ 4,000,000 Central European Distribution Corp., B-
3.00%, 3/15/13 3,300,000
----------------------------------------------------------------------------------------------------
BIOTECHNOLOGY -- 3.7%
$ 10,000,000 Amgen, Inc., A+
0.375%, 2/1/13 (b) 9,887,500
----------------------------------------------------------------------------------------------------
CHEMICALS -- 2.0%
$ 2,325,000 ShengdaTech, Inc., NR
6.00%, 6/1/18 (China) (c) 2,165,156
HK$ 19,750,000 Sinofert Holdings Ltd., NR
0.00%, 8/7/11 (Bermuda) 3,229,976
----------------------------------------------------------------------------------------------------
5,395,132
----------------------------------------------------------------------------------------------------
COMPUTERS -- 3.9%
EURO 8,000,000 Cap Gemini SA, BBB-
3.50%, 1/1/14 (France) 5,098,922
$ 5,100,000 Maxtor Corp., B
2.375%, 8/15/12 (Cayman Islands) 5,246,625
----------------------------------------------------------------------------------------------------
10,345,547
----------------------------------------------------------------------------------------------------
CONSUMER DURABLES AND APPAREL -- 1.3%
CHF 3,160,000 Swatch Group Finance SA, NR
2.625%, 10/15/10 (Luxembourg) 3,328,142
----------------------------------------------------------------------------------------------------
ELECTRICAL COMPONENTS & EQUIPMENT -- 4.5%
CNY 29,600,000 China High Speed Transmission Equipment Group Co. Ltd., Ser. CHIS, NR
0.00%, 5/14/11 (Cayman Islands) (a) 4,844,810
$ 5,250,000 Suntech Power Holdings Co. Ltd., NR
0.25%, 2/15/12 (Cayman Islands) 5,158,125
$ 2,000,000 Yingli Green Energy Holding Co. Ltd., NR
0.00%, 12/15/12 (Cayman Islands) 2,112,500
----------------------------------------------------------------------------------------------------
12,115,435
----------------------------------------------------------------------------------------------------
ELECTRONICS -- 2.9%
JPY 610,000,000 Toshiba Corp., BBB
0.00%, 7/21/11 (Japan) 7,732,141
----------------------------------------------------------------------------------------------------
ENGINEERING & CONSTRUCTION -- 1.2%
$ 2,725,000 Jaiprakash Associates Ltd., NR
0.00%, 9/12/12 (India) 3,215,500
----------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------------------------------
ENTERTAINMENT -- 0.7%
$ 1,500,000 International Game Technology, BBB
3.25%, 5/1/14 (b) (c) $ 1,773,750
----------------------------------------------------------------------------------------------------
FOOD -- 0.9%
CNY 18,500,000 Pine Agritech Ltd., NR
0.00%, 7/27/12 (Bermuda) (a) 2,391,045
----------------------------------------------------------------------------------------------------
HEALTH CARE PRODUCTS -- 3.1%
$ 2,200,000 Beckman Coulter, Inc., BBB
2.50%, 12/15/36 2,499,750
$ 7,167,000 Hologic, Inc., BB-
2.00%, 12/15/37 (d) 5,850,064
----------------------------------------------------------------------------------------------------
8,349,814
----------------------------------------------------------------------------------------------------
HEALTH CARE SERVICES -- 1.9%
$ 5,625,000 LifePoint Hospitals, Inc., B
3.50%, 5/15/14 5,062,500
----------------------------------------------------------------------------------------------------
HOLDING COMPANIES -- DIVERSIFIED -- 1.7%
EURO 3,000,000 Sagerpar, NR
2.95%, 4/27/12 (Belgium) 4,521,718
----------------------------------------------------------------------------------------------------
INSURANCE -- 1.3%
$ 3,000,000 Old Republic International Corp., BBB+
8.00%, 5/15/12 3,401,250
----------------------------------------------------------------------------------------------------
INTERNET -- 3.8%
EURO 2,750,000 Iliad SA, NR
2.20%, 1/1/12 (France) 3,758,051
$ 3,800,000 Symantec Corp., NR
1.00%, 6/15/13 (b) 4,251,250
$ 2,500,000 VeriSign, Inc., NR
3.25%, 8/15/37 2,134,375
----------------------------------------------------------------------------------------------------
10,143,676
----------------------------------------------------------------------------------------------------
IRON/STEEL -- 3.3%
$ 3,650,000 ArcelorMittal, BBB
5.00%, 5/15/14 (Luxembourg) (b) 4,982,250
$ 3,667,000 Steel Dynamics, Inc., BB+
5.125%, 6/15/14 3,983,279
----------------------------------------------------------------------------------------------------
8,965,529
----------------------------------------------------------------------------------------------------
LEISURE TIME -- 1.2%
$ 3,000,000 Carnival Corp., BBB+
2.00%, 4/15/21 (Panama) 3,135,000
----------------------------------------------------------------------------------------------------
MEDIA -- 1.5%
POUND 2,000,000 WPP PLC, Ser. WPP, BBB
5.75%, 5/9/14 (Jersey) 4,016,668
----------------------------------------------------------------------------------------------------
MINING -- 7.1%
$ 4,050,000 AngloGold Ashanti Holdings Finance PLC, NR
3.50%, 5/22/14 (Isle of Man) (b) (c) 4,434,750
$ 3,000,000 Goldcorp, Inc., BBB+
2.00%, 8/1/14 (Canada) (c) 3,255,000
$ 4,100,000 Kinross Gold Corp., NR
1.75%, 3/15/28 (Canada) 4,197,375
$ 2,250,000 Newmont Mining Corp., BBB+
1.625%, 7/15/17 (b) 2,660,625
See notes to financial statements.
Annual Report | October 31, 2009 | 11
AGC | Advent/Claymore Global Convertible Securities & Income Fund | PORTFOLIO
OF INVESTMENTS continued
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------------------------------
MINING (CONTINUED)
$ 3,900,000 Xstrata Capital Corp. AVV, Ser. XTA, BBB
4.00%, 8/14/17 (Aruba) $ 4,489,290
----------------------------------------------------------------------------------------------------
19,037,040
----------------------------------------------------------------------------------------------------
MISCELLANEOUS MANUFACTURING -- 1.8%
$ 2,750,000 Danaher Corp., A+
0.00%, 1/22/21 2,777,500
$ 2,625,000 Trinity Industries, Inc., BB-
3.875%, 6/1/36 (b) 1,939,219
----------------------------------------------------------------------------------------------------
4,716,719
----------------------------------------------------------------------------------------------------
OIL & GAS -- 16.1%
$ 3,000,000 Carrizo Oil & Gas, Inc., NR
4.375%, 6/1/28 2,501,250
$ 3,325,000 Chesapeake Energy Corp., BB
2.25%, 12/15/38 (b) 2,502,063
HK$ 40,000,000 China Petroleum & Chemical Corp., Ser. SINO, NR
0.00%, 4/24/14 (China) 5,638,528
$ 6,600,000 Dana Gas Sukuk Ltd., Ser. DANA, NR
7.50%, 10/31/12 (Jersey) 6,282,098
$ 1,750,000 Goodrich Petroleum Corp., NR
3.25%, 12/1/26 1,607,813
HK$ 27,400,000 Power Regal Group Ltd., NR
2.25%, 6/2/14 (British Virgin Islands) 4,577,491
$ 6,500,000 Seadrill Ltd., NR
3.625%, 11/8/12 (Bermuda) 6,143,501
$ 14,203,000 Transocean, Inc., Ser. C, BBB+
1.50%, 12/15/37 (Cayman Islands) 13,705,895
----------------------------------------------------------------------------------------------------
42,958,639
----------------------------------------------------------------------------------------------------
OIL & GAS SERVICES -- 3.0%
$ 3,850,000 Core Laboratories LP, NR
0.25%, 10/31/11 (Netherlands) 4,634,438
$ 3,500,000 Subsea 7, Inc., Ser. SUB, NR
2.80%, 6/6/11 (Cayman Islands) 3,320,625
----------------------------------------------------------------------------------------------------
7,955,063
----------------------------------------------------------------------------------------------------
PHARMACEUTICALS -- 12.9%
CHF 5,710,000 Actelion Finance SCA, NR
0.00%, 11/22/11 (Luxembourg) 6,248,359
$ 3,150,000 Biovail Corp., NR
5.375%, 8/1/14 (Canada) (c) 3,618,563
$ 5,100,000 King Pharmaceuticals, Inc., BB
1.25%, 4/1/26 4,386,000
$ 6,500,000 Shire PLC, Ser. REGs, NR
2.75%, 5/9/14 (Jersey) 6,099,002
$ 7,500,000 Teva Pharmaceutical Finance Co. BV, Ser. D, BBB+
1.75%, 2/1/26 (Israel) (b) 8,784,375
$ 4,550,000 Teva Pharmaceutical Finance LLC, Ser. C, BBB+
0.25%, 2/1/26 (Israel) 5,181,312
----------------------------------------------------------------------------------------------------
34,317,611
----------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------------------------------
REAL ESTATE -- 3.0%
EURO 2,000,000 Conwert Immobilien Invest SE, Ser. CWI, NR
1.50%, 11/12/14 (Austria) $ 2,525,995
CNY 30,000,000 Country Garden Holdings Co., BB-
2.50%, 2/22/13 (Cayman Islands) (a) 4,288,847
$ 1,530,000 Forest City Enterprises, Inc., NR
3.625%, 10/15/14 1,290,555
----------------------------------------------------------------------------------------------------
8,105,397
----------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 3.2%
$ 3,100,000 China Overseas Finance Investment Cayman Ltd., Ser. COLI, NR
0.00%, 5/14/14 (Cayman Islands) 3,944,273
$ 3,599,000 Digital Realty Trust LP, NR
5.50%, 4/15/29 (c) 4,440,266
----------------------------------------------------------------------------------------------------
8,384,539
----------------------------------------------------------------------------------------------------
SEMICONDUCTORS -- 3.5%
$ 5,000,000 Intel Corp., NR
3.25%, 8/1/39 (c) 5,412,500
$ 4,000,000 Linear Technology Corp., Ser. A, NR
3.00%, 5/1/27 3,850,000
----------------------------------------------------------------------------------------------------
9,262,500
----------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 5.9%
$ 3,950,000 Ciena Corp., B+
0.25%, 5/1/13 3,036,562
$ 2,800,000 Inmarsat PLC, Ser. ISAT, NR
1.75%, 11/16/17 (United Kingdom) 3,099,376
$ 2,000,000 NII Holdings, Inc., B+
3.125%, 6/15/12 1,782,500
JPY 372,000,000 Softbank Corp., BB
1.75%, 3/31/14 (Japan) 5,079,571
$ 2,500,000 Virgin Media, Inc., B-
6.50%, 11/15/16 (c) 2,656,250
----------------------------------------------------------------------------------------------------
15,654,259
----------------------------------------------------------------------------------------------------
TRANSPORTATION -- 0.7%
$ 1,800,000 Thoresen Thai Agencies Public Company Ltd., NR
2.50%, 9/24/12 (Thailand) 1,777,307
----------------------------------------------------------------------------------------------------
UTILITY -- 3.1%
EURO 6,000,000 International Power Jersey Ltd., BB-
3.25%, 7/20/13 (Jersey) 8,210,883
----------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS -- 107.1%
(Cost $260,871,649) 285,530,198
----------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
----------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 29.8%
AGRICULTURE -- 1.2%
74,050 Archer-Daniels-Midland Co., 6.25%, 2011 (b) 3,165,637
----------------------------------------------------------------------------------------------------
BANKS -- 4.6%
49,350 Fifth Third Bancorp, Ser. G, 8.50%, 2049 5,601,225
44,805 KeyCorp, Ser. A, 7.75%, 2049 3,633,686
3,282 Wells Fargo & Co., Ser. L, 7.50%, 2049 2,937,390
----------------------------------------------------------------------------------------------------
12,172,301
----------------------------------------------------------------------------------------------------
See notes to financial statements.
12 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund | PORTFOLIO
OF INVESTMENTS continued
NUMBER OF
SHARES VALUE
----------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 0.8%
4,150 SLM Corp., Ser. C, 7.25%, 2010 $ 2,306,362
----------------------------------------------------------------------------------------------------
ELECTRIC -- 2.6%
60,057 FPL Group, Inc., 8.375%, 2012 (b) 2,927,779
66,250 Great Plains Energy, Inc., 12.00%, 2042 4,094,250
----------------------------------------------------------------------------------------------------
7,022,029
----------------------------------------------------------------------------------------------------
FOOD PRODUCTS -- 1.9%
421,200 Dole Food 2009 Automatic Common Exchange Security Trust,
7.00%, 2012 (c) 4,936,464
----------------------------------------------------------------------------------------------------
HEALTH CARE SERVICES -- 2.5%
2,500 Healthsouth Corp., Ser. A, 6.50%, 2049 1,747,500
154,000 Omnicare Capital Trust II, Ser. B, 4.00%, 2033 5,286,820
----------------------------------------------------------------------------------------------------
7,034,320
----------------------------------------------------------------------------------------------------
INSURANCE -- 3.0%
26,500 Assured Guaranty Ltd., 8.50%, 2014 (Bermuda) (b) 1,908,000
233,850 XL Capital Ltd., 10.75%, 2011 (Cayman Islands) 5,998,253
----------------------------------------------------------------------------------------------------
7,906,253
----------------------------------------------------------------------------------------------------
OIL & GAS -- 1.3%
22,300 Whiting Petroleum Corp., 6.25%, 2049 (b) 3,395,621
----------------------------------------------------------------------------------------------------
MINING -- 2.8%
150,000 Vale Capital Ltd., Ser. RIO, 5.50%, 2010 (Brazil) (b) 7,357,500
----------------------------------------------------------------------------------------------------
PHARMACEUTICALS -- 2.8%
7,155 Mylan, Inc., 6.50%, 2010 (b) 7,369,650
----------------------------------------------------------------------------------------------------
PIPELINES -- 1.5%
4,450 El Paso Corp., 4.99%, 2049 3,889,300
----------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 1.0%
45,000 Simon Property Group, Inc., Ser. I, 6.00%, 2049 2,655,000
----------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 2.5%
8,954 Lucent Technologies Capital Trust I, 7.75%, 2017 (France) (e) 6,581,190
----------------------------------------------------------------------------------------------------
TRANSPORTATION -- 1.3%
3,700 Kansas City Southern, 5.125%, 2049 3,514,793
----------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS -- 29.8%
(Cost $72,162,566) 79,306,420
----------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------------------------------
CORPORATE BONDS -- 17.0%
DIVERSIFIED FINANCIAL SERVICES -- 1.6%
$ 3,750,000 Capital One Capital V, BB
10.25%, 8/15/39 $ 4,290,581
----------------------------------------------------------------------------------------------------
HEALTH CARE SERVICES -- 2.5%
2,500,000 Apria Healthcare Group, Inc., BB+
11.25%, 11/1/14 (c) 2,718,750
HCA, Inc.
1,000,000 9.25%, 11/15/16, BB- 1,047,500
2,750,000 8.50%, 4/15/19, BB (c) 2,928,750
----------------------------------------------------------------------------------------------------
6,695,000
----------------------------------------------------------------------------------------------------
HOLDING COMPANIES -- DIVERSIFIED -- 1.9%
5,000,000 Leucadia National Corp., BB+
8.125%, 9/15/15 (e) 5,087,500
----------------------------------------------------------------------------------------------------
HOME BUILDERS -- 0.6%
1,625,000 K Hovnanian Enterprises, Inc., CCC+
10.625%, 10/15/16 (c) 1,625,000
----------------------------------------------------------------------------------------------------
INSURANCE -- 5.6%
6,500,000 AXA SA, BBB+
6.38%, 12/14/36 (France) (c) (f) 5,606,250
4,850,000 Liberty Mutual Group, Inc., BB
10.75%, 6/15/58 (c) (f) 5,141,000
3,500,000 MetLife, Inc., BBB
10.75%, 8/1/39 4,252,080
----------------------------------------------------------------------------------------------------
14,999,330
----------------------------------------------------------------------------------------------------
MACHINERY -- DIVERSIFIED -- 0.9%
2,500,000 Case New Holland, Inc., BB+
7.75%, 9/1/13 (Netherlands) (c) 2,493,750
----------------------------------------------------------------------------------------------------
MEDIA -- 1.1%
1,500,000 Univision Communications, Inc., B-
12.00%, 7/1/14 (c) 1,629,375
1,100,000 UPC Holding BV, B-
9.875%, 4/15/18 (Netherlands) (c) 1,168,750
----------------------------------------------------------------------------------------------------
2,798,125
----------------------------------------------------------------------------------------------------
PHARMACEUTICALS -- 1.4%
3,325,000 Axcan Intermediate Holdings, Inc., B
12.75%, 3/1/16 3,657,500
----------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 1.4%
3,500,000 CC Holdings GS V LLC/Crown Castle GS III Corp., BB
7.75%, 5/1/17 (c) 3,692,500
----------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS -- 17.0%
(Cost $40,713,672) 45,339,286
----------------------------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS -- 153.9%
(Cost $373,747,887) 410,175,904
----------------------------------------------------------------------------------------------------
See notes to financial statements.
Annual Report | October 31, 2009 | 13
AGC | Advent/Claymore Global Convertible Securities & Income Fund | PORTFOLIO
OF INVESTMENTS continued
NUMBER OF
SHARES VALUE
----------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS -- 2.5%
6,683,557 Goldman Sachs Financial Prime Obligations
(Cost $6,683,557) $ 6,683,557
----------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 156.4%
(Cost $380,431,444) 416,859,461
----------------------------------------------------------------------------------------------------
Total Value of Options Written
(Premiums Received $167,187) -- (0.0%*) (50,675)
Other Assets in excess of Liabilities -- 7.4% 19,780,043
Preferred Stock, at redemption value -- (-63.8% of Net Assets
Applicable to Common Shareholders or -40.8% of Total Investments) (170,000,000)
----------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS -- 100.0% $ 266,588,829
====================================================================================================
* Less than 0.1%
AVV - Aruba Exempt Company
BV - Limited Liability Company
LLC - Limited Liability Company
LP - Limited Partnership
PLC - Public Limited Company
SA - Corporation
SCA - Limited Partnership
SE - Stock Corporation
(a) The reference entity is denominated in Chinese Yuan, but traded in U.S.
dollars.
(b) All or a portion of this security position represents cover (directly or
through conversion rights) for outstanding options written.
(c) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
2009, these securities amounted to 22.4% of net assets.
(d) Security is a"step-up"bond where the coupon increases or steps up at a
predetermined date.
(e) All or a portion of these securities have been physically segregated in
connection with swap agreements.
(f) Floating rate security. The rate shown is as of October 31, 2009.
Ratings shown are per Standard & Poor's. Securities classified as NR are not
rated by Standard & Poor's.
All percentages shown in the Portfolio of Investments are based on Net Assets
Applicable to Common Shareholders unless otherwise noted.
CONTRACTS
(100 SHARES EXPIRATION EXERCISE MARKET
PER CONTRACT) CALL OPTIONS WRITTEN(g) DATE PRICE VALUE
-------------------------------------------------------------------------------------
150 Amgen, Inc. November 2009 $ 65.00 $ 900
150 AngloGold Ashanti Holdings
Finance PLC November 2009 $ 50.00 750
125 ArcelorMittal November 2009 $ 44.00 1,250
200 Archer-Daniels-Midland Co. November 2009 $ 31.00 12,000
200 Assured Guaranty Ltd. November 2009 $ 22.50 2,000
75 Chesapeake Energy Corp. November 2009 $ 32.00 750
150 FPL Group, Inc. November 2009 $ 60.00 750
300 International Game Technology November 2009 $ 25.00 1,500
225 Mylan, Inc. November 2009 $ 18.00 2,250
150 Newmont Mining Corp. December 2009 $ 55.00 3,750
150 Symantec Corp. November 2009 $ 17.00 14,250
200 Teva Pharmaceutical Finance Co. BV November 2009 $ 55.00 2,200
30 Trinity Industries, Inc. November 2009 $ 20.00 300
225 Vale Capital Ltd. November 2009 $ 29.00 7,200
75 Whiting Petroleum Corp. November 2009 $ 70.00 825
-------------------------------------------------------------------------------------
TOTAL CALL OPTIONS WRITTEN
(Premiums received $167,187) $ 50,675
-------------------------------------------------------------------------------------
(g) Non-income producing security.
See notes to financial statements.
14 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Statement of ASSETS AND LIABILITIES | OCTOBER 31, 2009
ASSETS
Investments in securities, at value (cost $380,431,444) $ 416,859,461
Receivable for securities sold 22,983,589
Dividends and interest receivable 3,781,787
Cash 1,582,422
Restricted Cash 1,135,528
Foreign currency, at value (cost $763,442) 775,463
Tax claim receivable 81,211
Unrealized appreciation on forward currency exchange contracts 3,737
Other assets 158,548
-----------------------------------------------------------------------------------------------------------------------------
Total assets 447,361,746
-----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for securities purchased 9,819,585
Investment management fee payable 226,340
Investment advisory fee payable 150,893
Unrealized depreciation on swaps 97,273
Unrealized depreciation on forward currency exchange contracts 85,906
Options written, at value (premiums received of $167,187) 50,675
Dividends payable - preferred shares 24,367
Administration fee payable 8,781
Accrued expenses and other liabilities 309,097
-----------------------------------------------------------------------------------------------------------------------------
Total liabilities 10,772,917
-----------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK, AT REDEMPTION VALUE
Auction Market Preferred Shares
$0.001 par value per share; 6,800 authorized, issued and outstanding at $25,000 per share
liquidation preference 170,000,000
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $ 266,588,829
=============================================================================================================================
COMPOSITION OF NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
Common Stock, $0.001 par value per share; unlimited number of shares authorized, 31,867,616
shares issued and outstanding $ 31,868
Additional paid-in capital 582,387,292
Net unrealized appreciation on investments, options, swaps and foreign currency translation 36,393,766
Accumulated net realized loss on investments, options, swaps and foreign currency transactions (351,162,314)
Distributions in excess of net investment income (1,061,783)
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $ 266,588,829
=============================================================================================================================
NET ASSET VALUE APPLICABLE TO COMMON SHAREHOLDERS
(based on 31,867,616 common shares outstanding) $ 8.37
=============================================================================================================================
See notes to financial statements.
Annual Report | October 31, 2009 | 15
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Statement of OPERATIONS | FOR THE YEAR ENDED OCTOBER 31, 2009
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $2,544) $ 16,523,333
Dividends (net of foreign withholding taxes of $36,905) 7,340,037
----------------------------------------------------------------------------------------------------------------------------------
Total income $ 23,863,370
----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment management fee 2,367,754
Investment advisory fee 1,578,503
Auction agent fee - preferred shares 418,194
Professional fees 226,634
Trustees'fees and expenses 155,074
Fund accounting 105,122
Printing 104,868
Administration fee 93,925
Custodian 63,875
Insurance 59,966
NYSE listing fee 24,996
Transfer agent 18,852
Rating agency fee 14,965
Miscellaneous 15,152
----------------------------------------------------------------------------------------------------------------------------------
Total expenses 5,247,880
----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 18,615,490
----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS, SWAPS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investments (115,161,050)
Options 831,208
Swaps (32,678,958)
Foreign currency transactions 605,295
Change in net unrealized appreciation (depreciation) on:
Investments 187,848,029
Options 435,193
Swaps 22,379,678
Foreign currency translation (4,021,240)
----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS, OPTIONS SWAPS AND FOREIGN CURRENCY TRANSACTIONS 60,238,155
----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS FROM NET INVESTMENT INCOME (2,853,776)
----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS $ 75,999,869
==================================================================================================================================
See notes to financial statements.
16 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Statement of CHANGES IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS |
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, 2009 OCTOBER 31, 2008
==============================================================================================================================
INCREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS:
Net investment income $ 18,615,490 $ 35,059,759
Net realized gain(loss) on investments, options, swaps and foreign currency transactions (146,403,505) (191,396,664)
Net change in unrealized appreciation (depreciation) on investments,
options, swaps and foreign currency translation 206,641,660 (182,200,618)
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS FROM
Net investment income (2,853,776) (7,559,340)
------------------------------------------------------------------------------------------------------------------------------
Net increase(decrease) in net assets applicable to Common
Shareholders resulting from operations 75,999,869 (346,096,863)
------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS:
From and in excess of net investment income (17,348,741) (40,370,050)
Return of capital (8,954,789) (13,766,656)
------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to common shareholders (26,303,530) (54,136,706)
------------------------------------------------------------------------------------------------------------------------------
Total increase(decrease) in net assets 49,696,339 (400,233,569)
------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
Beginning of period 216,892,490 617,126,059
------------------------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of net investment
income of $1,061,783 and $8,578,080, respectively) $ 266,588,829 $ 216,892,490
==============================================================================================================================
See notes to financial statements.
Annual Report | October 31, 2009 | 17
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Financial HIGHLIGHTS |
FOR THE PERIOD
FOR THE FOR THE MAY 29, 2007(a)
PER SHARE OPERATING PERFORMANCE YEAR ENDED YEAR ENDED THROUGH
FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT THE PERIOD OCTOBER 31, 2009 OCTOBER 31, 2008 OCTOBER 31, 2007
----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 6.81 $ 19.37 $ 19.10(b)
----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (c) 0.58 1.10 0.42
Net realized and unrealized gain(loss) on investments, options, swaps and
foreign currency transactions 1.90 (11.72) 0.44
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS FROM NET INVESTMENT INCOME
(COMMON SHARE EQUIVALENT BASIS) (0.09) (0.24) (0.04)
----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.39 (10.86) 0.82
----------------------------------------------------------------------------------------------------------------------------------
Common and preferred shares'offering expenses charged to paid-in-capital -- -- (0.11)
----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From and in excess of net investment income (0.54) (1.27) (0.44)
Return of capital (0.29) (0.43) --
----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to Common Shareholders (0.83) (1.70) (0.44)
----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 8.37 $ 6.81 $ 19.37
==================================================================================================================================
MARKET VALUE, END OF PERIOD $ 7.33 $ 5.99 $ 16.75
==================================================================================================================================
TOTAL INVESTMENT RETURN (d)
Net asset value 38.26% -60.31% 3.82%
Market value 39.85% -58.94% -14.11%
RATIOS AND SUPPLEMENTAL DATA
Net assets, applicable to Common Shareholders, end of period (thousands) $ 266,589 $ 216,892 $ 617,126
Preferred shares, at redemption value ($25,000 per share liquidation
preference) (thousands) $ 170,000 $ 170,000 $ 170,000
Preferred shares asset coverage per share $ 64,204 $ 56,955 $ 115,700
RATIOS TO AVERAGE NET ASSETS APPLICABLE TO COMMON SHARES:
Net Expenses, after balance credits 2.34% 1.68% 1.33%(e)
Net Expenses, before balance credits 2.34% 1.68% 1.35%(e)
Net Investment Income, after balance credits, prior to effect of
dividends to preferred shares 8.29% 7.47% 5.22%(e)
Net Investment Income, before balance credits, prior to effect of
dividends to preferred shares 8.29% 7.47% 5.20%(e)
Net Investment Income, after balance credits, after effect of
dividends to preferred shares 7.02% 5.86% 4.70%(e)
Net Investment Income, before balance credits, after effect of
dividends to preferred shares 7.02% 5.86% 4.68%(e)
Portfolio turnover rate 166% 118% 35%
(a) Commencement of investment 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.
See notes to financial statements.
18 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Notes to FINANCIAL STATEMENTS | OCTOBER 31, 2009
Note 1 -- ORGANIZATION:
Advent/Claymore Global Convertible Securities & Income Fund (the "Fund") was
organized as a Delaware statutory trust on February 26, 2007. The Fund is
registered as a diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended.
The Fund's primary investment objective is to provide total return, through a
combination of capital appreciation and current income. The Fund will pursue
its investment objective by investing 80% of its assets in a diversified
portfolio of convertible securities and non-convertible income-producing
securities, each of U.S. and non-U.S. issuers.
Note 2 -- ACCOUNTING POLICIES:
The preparation of the financial statements in accordance with U.S. generally
accepted accounting principles ("GAAP") requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates.
In June 2009, the Financial Accounting Standards Board ("FASB") established the
FASB Accounting Standards CodificationTM ("ASC") as the single source of
authoritative accounting principles reorganized by the FASB in preparation of
financial statements in conformity with GAAP. The ASC superseded existing
non-grandfathered, non-U.S. Securities and Exchange Commission ("SEC")
accounting and reporting standards. The ASC did not change GAAP but rather
organized it into a hierarchy where all guidance with the ASC carried an equal
level of authority. The ASC became effective for financial statements issued
for interim and annual periods ending after September 15, 2009. The
implementation of the ASC did not have a material effect on the Fund's
financial statements.
The following is a summary of significant accounting policies followed by the
Fund.
(a) VALUATION OF INVESTMENTS
Equity securities listed on an exchange are valued at the last reported sale
price on the primary exchange on which they are traded. Equity securities
traded on an exchange for which there are no transactions on a given day are
valued at the mean of the closing bid and asked prices. Securities traded on
NASDAQ are valued at the NASDAQ Official Closing Price. Equity securities not
listed on a securities exchange or NASDAQ are valued at the mean of the closing
bid and asked prices. Debt securities are valued by independent pricing
services or dealers using the mean of the closing bid and asked prices for such
securities or, if such prices are not available, at prices for securities of
comparable maturity, quality and type. Futures contracts are valued using the
settlement price established each day on the exchange on which they are traded.
Exchange-traded options are valued at the closing price, if traded that day. If
not traded, they are valued at the mean of the bid and asked prices on the
primary exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
For those securities where quotations or prices are not available, the
valuations are determined in accordance with procedures established in good
faith by the Board of Trustees. Valuations in accordance with these procedures
are intended to reflect each security's (or asset's) "fair value". Such "fair
value" is the amount that the Fund might reasonably expect to receive for the
security (or asset) upon its current sale. Each such determination should be
based on a consideration of all relevant factors, which are likely to vary from
one pricing context to another. Examples of such factors may include, but are
not limited to: (i) the type of security, (ii) the initial cost of the
security, (iii) the existence of any contractual restrictions on the security's
disposition, (iv) the price and extent of public trading in similar securities
of the issuer or of comparable companies, (v) quotations or evaluated prices
from broker-dealers and/or pricing services, (vi) information obtained from the
issuer, analysts, and/or the appropriate stock exchange (for exchange traded
securities), (vii) an analysis of the company's financial statements, and
(viii) an evaluation of the forces that influence the issuer and the market(s)
in which the security is purchased and sold (e.g. the existence of pending
merger activity, public offerings or tender offers that might affect the value
of the security). There are no securities fair valued in accordance with such
procedures established by the Board of Trustees at October 31, 2009.
GAAP requires disclosure of fair valuation measurements as of each measurement
date. In compliance with GAAP, the Fund follows a fair value hierarchy that
distinguishes between market data obtained from independent sources (observable
inputs) and the Fund's own market assumptions (unobservable inputs). These
inputs are used in determining the value of the Fund's investments and
summarized in the following fair value hierarchy:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- quoted prices in inactive markets or other significant observable
inputs (e.g. quoted prices for similar securities; interest rates; prepayment
speed; credit risk; yield curves)
Level 3 -- significant unobservable inputs (e.g. discounted cash flow analysis;
non-market based methods used to determine fair value)
Observable inputs are those based upon market data obtained from independent
sources, and unobservable inputs reflect the Fund's own assumptions based on
the best information available. The various input levels are not an indication
of the risk associated with investing in those securities.
Annual Report | October 31, 2009 | 19
AGC | Advent/Claymore Global Convertible Securities & Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
The following table represents the Fund's investments carried on the Statement
of Assets and Liabilities by caption and by level within the fair value
hierarchy as of October 31, 2009:
QUOTED PRICES IN SIGNIFICANT
ACTIVE MARKETS FOR SIGNIFICANT OTHER UNOBSERVABLE
IDENTICAL ASSETS OBSERVABLE INPUTS INPUTS
(VALUE IN $000s) (LEVEL 1) (LEVEL 2) (LEVEL 3) TOTAL
===================================================================================================================
Description
Assets:
Convertible Bonds $ -- $285,530 $ -- $285,530
Convertible Preferred Stocks
Agriculture 3,166 -- -- 3,166
Banks 12,172 -- -- 12,172
Diversified Financial Services -- 2,306 -- 2,306
Electric 4,094 2,928 -- 7,022
Food Products -- 4,936 -- 4,936
Health Care Services 5,287 1,747 -- 7,034
Insurance 5,998 1,908 -- 7,906
Oil & Gas 3,396 -- -- 3,396
Mining 7,358 -- -- 7,358
Pharmaceuticals 7,370 -- -- 7,370
Pipelines -- 3,889 -- 3,889
Real Estate Investment Trusts 2,655 -- -- 2,655
Telecommunications -- 6,581 -- 6,581
Transportation -- 3,515 -- 3,515
Corporate Bonds -- 45,339 -- 45,339
Money Market Fund 6,684 -- -- 6,684
Forward Exchange Currency Contracts -- 4 -- 4
-------------------------------------------------------------------------------------------------------------------
Total $58,180 $358,683 $ -- $416,863
===================================================================================================================
Liabilities:
Options Written $ 51 $ -- $ -- $ 51
Credit Default Swaps -- 97 -- 97
Forward Exchange Currency Contracts -- 86 -- 86
-------------------------------------------------------------------------------------------------------------------
Total $ 51 $ 183 $ -- $234
===================================================================================================================
(b) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized gains and
losses on investments are determined on the identified cost basis. Dividend
income is recorded on the ex-dividend date and interest income is recorded on
an accrual basis. Discounts or premiums on debt securities purchased are
accreted or amortized to interest income over the lives of the respective
securities using the effective interest method.
(c) CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the mean of the bid and asked price of respective exchange
rates on the last day of the period. Purchases and sales of investments and
income and expenses denominated in foreign currencies are translated at the
exchange rate on the date of the transaction.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Foreign exchange realized gain or loss resulting from holding of a foreign
currency, expiration of a currency exchange contract, difference in exchange
rates between the trade date and settlement date of an investment purchased or
sold, and the difference between dividends or interest actually received
compared to the amount shown in the Fund's accounting records on the date of
receipt is shown as net realized gains or losses on foreign currency
transactions in the Fund's Statement of Operations.
20 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
Foreign exchange unrealized gain or loss on assets and liabilities, other than
investments, is shown as unrealized appreciation (depreciation) on foreign
currency translation in the Fund's Statement of Operations.
(d) COVERED CALL OPTIONS
The Fund will pursue its primary objective by employing an option strategy of
writing (selling) covered call options on up to 25% of the securities held in
the portfolio of the Fund. The Fund seeks to generate current gains from option
premiums as a means to enhance distributions payable to shareholders.
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) FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund may enter into forward exchange currency contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings, to hedge certain firm purchases and sales commitments
denominated in foreign currencies and for investment purposes. Fluctuations in
the value of open forward exchange currency contracts are recorded for
financial reporting purposes as unrealized appreciation and depreciation by the
Fund.
Forward exchange currency contracts involve elements of both market and credit
risk in excess of the amounts reflected on the Statement of Assets and
Liabilities.
(f) 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 as well
as to attempt to enhance return. The swaps are valued daily at current market
value and any unrealized gain or loss is included in the Statement of Assets
and Liabilities. Gain or loss is realized upon periodic payments and ultimately
upon the termination of the swap and is equal to the difference between the
Fund's basis in the swap and the proceeds of the closing transaction, including
any fees. During the period that the swap agreement is open, the Fund may be
subject to risk from the potential inability of the counterparty to meet the
terms of the agreement. The swaps involve elements of both market and credit
risk in excess of the amounts reflected on the Statement of Assets and
Liabilities. Upon termination of a swap agreement, a payable to or receivable
from swap counterparty is established on the Statement of Assets and
Liabilities to reflect the net gain/loss, including interest income/expense, on
terminated swap positions, of such amounts with the counterparty upon
settlement according to the terms of the swap agreement.
Realized gain (loss) upon termination of swap contracts is recorded on the
Statement of Operations. Fluctuations in the value of swap contracts are
recorded as a component of net change in unrealized appreciation (depreciation)
of swap contracts. Net periodic payments received by the Fund are included as
part of realized gain (loss) and, in the case of accruals for periodic
payments, are included as part of unrealized appreciation (depreciation) on the
Statement of Operations.
(g) CONCENTRATION OF RISK
It is the Fund's policy to invest a significant portion of its assets in
convertible securities. Although convertible securities do derive part of their
value from that of the securities into which they are convertible, they are not
considered derivative financial instruments. However, certain of the Fund's
investments include features which render them more sensitive to price changes
in their underlying securities. Consequently, this exposes the Fund to greater
downside risk than traditional convertible securities, but still less than that
of the underlying common stock.
(h) DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and pays monthly dividends to common shareholders. These
dividends consist of investment company taxable income, which generally
includes qualified dividend income, ordinary income and short-term capital
gains. Any net realized long-term gains are distributed annually to common
shareholders. Dividends and distributions to preferred shareholders are accrued
and determined as described in Note 7.
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 AND ADVISORY AGREEMENTS AND OTHER AGREEMENTS:
Pursuant to an Investment Advisory Agreement (the "Agreement") between Claymore
Advisors, LLC (the "Adviser") and the Fund, the Adviser furnishes offices,
necessary facilities and equipment, provides administrative services to the
Fund, oversees the activities of Advent Capital Management, LLC (the
"Investment Manager"), provides personnel and pays the compensation of all
Trustees and Officers of the Fund who are its affiliates. As compensation for
these services, the Fund pays the Adviser an annual fee, payable monthly in
arrears, at an annual rate equal to 0.40% of the average Managed Assets during
such month. Managed Assets means the total assets of the Fund (including any
assets attributable to any preferred shares or otherwise attributable to the
use of financial leverage, if any) less the sum of accrued liabilities.
Annual Report | October 31, 2009 | 21
AGC | Advent/Claymore Global Convertible Securities & Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
Pursuant to an Investment Management Agreement between the Investment Manager
and the Fund, the Fund has agreed to pay the Investment Manager an annual fee,
payable monthly in arrears, at an annual rate equal to 0.60% of the average
Managed Assets during such month for the services and facilities provided by
the Investment Manager to the Fund. These services include the day-to-day
management of the Fund's portfolio of securities, which includes buying and
selling securities for the Fund and investment research. The Investment Manager
also provides personnel to the Fund and pays the compensation of all Trustees
and Officers of the Fund who are its affiliates.
On July 17, 2009, Claymore Group Inc., the parent of the Adviser, entered into
an Agreement and Plan of Merger between and among Claymore Group Inc., Claymore
Holdings, LLC and GuggClay Acquisition, Inc. (with the latter two entities
being wholly-owned, indirect subsidiaries of Guggenheim Partners, LLC
("Guggenheim")), whereby GuggClay Acquisition, Inc. will merge into Claymore
Group Inc., which will be the surviving entity. This transaction was completed
on October 14, 2009 (the "Effective Date") and resulted in a change-of-control
whereby Claymore Group Inc. and its subsidiaries, including the Adviser, became
indirect, wholly-owned subsidiaries of Guggenheim. The transaction is not
expected to affect the daily operations of the Fund or the investment
management activities of the Adviser.
Under the 1940 Act, the consummation of this transaction resulted in the
automatic termination of the Advisory Agreement. Accordingly, on September 29,
2009, the Board of Trustees approved an interim investment advisory agreement
between the Fund and the Adviser (the "Interim Advisory Agreement"). The
Interim Advisory Agreement took effect as of the Effective Date and will
terminate upon the earlier of: (a) 150 calendar days after the Effective Date
or (b) the approval of a new investment advisory agreement by the shareholders
of the Fund. In addition, the advisory fees earned by the Adviser pursuant to
the Interim Advisory Agreement will be held in an interest-bearing escrow
account with the Fund's custodian during the term of the Interim Advisory
Agreement. If the Fund's shareholders approve a new advisory agreement with the
Adviser prior to the expiration of the term of the Interim Advisory Agreement,
the amount in the escrow account (including any interest earned) with respect
to the Fund shall be paid to the Adviser. If the Fund's shareholders do not
approve a new advisory agreement with the Adviser prior to the expiration of
the term of the Interim Advisory Agreement, the Adviser shall be paid, out of
the escrow account with respect to the Fund, the lesser of (i) the Adviser's
costs incurred in providing the services under the Interim Advisory Agreement
(including any interest earned on that amount while in escrow) with respect to
the Fund; or (ii) the total amount in the escrow account (including any
interest earned) with respect to the Fund. Other than the effective dates and
the provisions set forth above regarding the advisory fees' placement into an
escrow account, the terms and conditions of the Interim Advisory Agreement are
substantively identical to those of the Advisory Agreement.
On September 29, 2009, the Board of Trustees approved a new investment advisory
agreement between the Fund and the Adviser (the "New Advisory Agreement") and
recommended that the New Advisory Agreement be submitted to the shareholders of
the Fund for their approval. The New Advisory Agreement will take effect with
respect to the Fund upon its approval by the shareholders of the Fund and will
have an initial term of one year. Thereafter, the New Advisory Agreement will
continue in effect only if its continuance is approved by the Board of
Trustees. Other than effective dates, there are no material differences between
the terms of the New Advisory Agreement and those of the Advisory Agreement.
The Bank of New York Mellon ("BNY") acts as the Fund's custodian, accounting
agent, auction agent and transfer agent. As custodian, BNY is responsible for
the custody of the Fund's assets. As accounting agent, BNY is responsible for
maintaining the books and records of the Fund's securities and cash. As auction
agent, BNY is responsible for conducting the auction of the preferred shares.
As transfer agent, BNY is responsible for performing transfer agency services
for the Fund.
Claymore Advisors, LLC provides fund administration services to the Fund. As
compensation for its services performed under the Administration Agreement,
Claymore Advisors, LLC receives an administration fee payable monthly at the
annual rate set forth below as a percentage of the average daily managed assets
of the Fund:
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 Adviser or Investment Manager. 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 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 intends
not to be subject to U.S. federal excise tax.
In order to present paid-in-capital in excess of par, undistributed net
investment income and accumulated realized gains or losses on the Statement of
Assets and Liabilities that more closely represent their tax character, certain
adjustments have been made to undistributed net investment income and
accumulated realized gains or losses on investments. For the year ended October
31, 2009, the adjustments were to decrease accumulated net realized gain on
investments by
22 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
$9,026,025, decrease paid-in capital by $77,299 and increase distributions in
excess of net investment income by $9,103,324 due to the difference in the
treatment for book and tax purposes of convertible bonds, trust preferred
securities, real estate investment trusts, swaps and foreign currency.
At October 31, 2009 the cost and related gross unrealized appreciation and
depreciation on investments for tax purposes, excluding written options and
foreign currency translations are as follows:
NET TAX NET TAX
UNREALIZED UNREALIZED UNDISTRIBUTED UNDISTRIBUTED
COST OF APPRECIATION APPRECIATION ORDINARY LONG-TERM
INVESTMENTS GROSS TAX GROSS TAX (DEPRECIATION) ON DERIVATIVES INCOME/ GAINS/
FOR TAX UNREALIZED UNREALIZED ON AND FOREIGN (ACCUMULATED (ACCUMULATED
PURPOSES APPRECIATION DEPRECIATION INVESTMENTS CURRENCY ORDINARY LOSS) CAPITAL LOSS)
==============================================================================================================
$381,677,952 $38,710,410 $(3,528,901) $35,181,509 $47,884 $ -- $(350,764,367)
--------------------------------------------------------------------------------------------------------------
The differences between book basis and tax basis unrealized
appreciation/(depreciation) is attributable to the tax deferral of losses on
wash sales, straddles and additional income accrued for tax purposes on certain
convertible securities and swaps.
At October 31, 2009, for federal income tax purposes, the Fund had a capital
loss carryforward of $350,764,367 available to offset possible future capital
gains. Of the capital loss carryforward, $195,421,389 is set to expire on
October 31, 2016, and $155,342,978 is set to expire on October 31, 2017.
For the year ended October 31, 2009, and October 31, 2008, the tax character of
distributions paid, as reflected in the Statement of Changes in Net Assets, of
$20,202,517 and $47,929,390 was ordinary income and $8,954,789 and $13,766,656
was return of capital, respectively. The final determination of the source of
the 2009 distributions for tax purposes will be made after the end of the
Fund's fiscal year and will be reported to shareholders in January 2010 on Form
1099-DIV.
Subsequent to the October 31, 2008, reporting period, it was determined that a
reclassification of $77,299 was required between ordinary income and capital
gains, resulting in a recharacterization between distributions paid from
ordinary income and distributions paid from return of capital. This
reclassification related to real estate investment trusts held by the Fund and
was the result of information becoming available on the investments after the
prior year-end.
For all open tax years and all major jurisdictions, management of the Fund has
concluded that there are no significant uncertain tax positions that would
require recognition in the financial statements. Open tax years are those that
are open for examination by taxing authorities (i.e. generally the last four
tax year ends and the interim tax period since then). Furthermore, management
of the Fund is also not aware of any tax positions for which it is reasonably
possible that the total amounts of unrecognized tax benefits will significantly
change in the next twelve months.
Note 5 -- INVESTMENTS IN SECURITIES:
For the period ended October 31, 2009, purchases and sales of investments,
other than short-term securities, were $590,538,575 and $584,792,865
respectively.
Note 6 -- DERIVATIVES:
(a) COVERED CALL OPTION
An option on a security is a contract that gives the holder of the option, in
return for a premium, the right to buy from (in the case of a call) or sell to
(in the case of a put) the writer of the option the security underlying the
option at a specified exercise or "strike" price. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price (in the case of a call)
or to pay the exercise price upon delivery of the underlying security (in the
case of a put).
There are several risks associated with transactions in options on securities.
As the writer of a covered call option, the Fund forgoes, during the option's
life, the opportunity to profit from increases in the market value of the
security covering the call option above the sum of the premium and the strike
price of the call, but has retained the risk of loss should the price of the
underlying security decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as writer of the option.
Once an option writer has received an exercise notice, it cannot effect a
closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying security at the exercise price.
The Fund entered into written option contracts during the period ended October
31, 2009.
Details of the transactions were as follows:
NUMBER OF CONTRACTS PREMIUMS RECEIVED
===============================================================================
Options outstanding, beginning of year 5,722 $ 778,779
Options written during the period 24,304 2,110,815
Options expired during the period (11,017) (1,042,897)
Options closed during the period (14,177) (1,319,583)
Options assigned during the period (2,427) (359,927)
-------------------------------------------------------------------------------
Options outstanding, end of period 2,405 $ 167,187
===============================================================================
Annual Report | October 31, 2009 | 23
AGC | Advent/Claymore Global Convertible Securities & Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
(b) FORWARD EXCHANGE CURRENCY CONTRACTS
A forward exchange currency contract is a commitment to purchase or sell a
foreign currency on a future date at a negotiated forward rate. The gain or
loss arising from the difference between the original contracts and the closing
of such contracts would be included in net realized gain or loss on foreign
currency transactions.
Risk may arise from the potential inability of a counterparty to meet the terms
of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, reflects the total exposure the Fund has in that particular currency
contract.
At October 31, 2009, the following forward exchange currency contracts were
outstanding:
UNREALIZED
APPRECIATION/
LONG CONTRACTS CURRENT VALUE (DEPRECIATION)
============================================================================================
Euro, 879,589 expiring 11/02/09 $ 1,297,790 $ (2,331)
Hong Kong Dollar, 8,185,500 expiring 11/02/09 1,056,159 (34)
--------------------------------------------------------------------------------------------
$ (2,365)
--------------------------------------------------------------------------------------------
UNREALIZED
APPRECIATION/
SHORT CONTRACTS CURRENT VALUE (DEPRECIATION)
============================================================================================
Euro, 1,410,500 expiring 11/02/09 $ 2,081,123 $ 3,737
Pound Sterling, 4,100,000 expiring 12/16/09 6,756,401 (11,901)
Japanese Yen, 1,030,000,000 expiring 12/16/09 11,381,622 (71,640)
--------------------------------------------------------------------------------------------
$ (79,804)
--------------------------------------------------------------------------------------------
Total unrealized appreciation (depreciation) on foreign
currency contracts $ (82,169)
--------------------------------------------------------------------------------------------
(c) SWAPS
Swap agreements are contracts between parties in which one party agrees to make
periodic payments to the other party (the "Counterparty") based on the change
in market value or level of a specified rate, index or asset. In return, the
Counterparty agrees to make periodic payments to the first party based on the
return of a different specified rate, index or asset. Swap agreements will
usually be done on a net basis, the Fund receiving or paying only the net
amount of the two payments. The net amount of the excess, if any, of each
Fund's obligations over its entitlements with respect to each swap is accrued
on a daily basis and an amount of cash or highly liquid securities having an
aggregate value at least equal to the accrued excess is maintained in an
account at the Fund's custodian bank.
Total return swap agreements are contracts in which one party agrees to make
payments of the total return from the underlying asset during a specified
period in return for receiving payments equal to a fixed or floating rate of
interest or the total return from another designated underlying asset.
Credit default swap transactions involve the Fund's agreement to exchange the
credit risk of an issuer. A buyer of a credit default swap is said to buy
protection by paying periodic fees in return for a contingent payment from the
seller if the issuer has a credit event such as bankruptcy, a failure to pay
outstanding obligations or deteriorating credit while the swap is outstanding.
A seller of a credit default swap is said to sell protection and thus collects
the periodic fees and profits if the credit of the issuer remains stable or
improves while the swap is outstanding but the seller in a credit default swap
contract would be required to pay an agreed-upon amount, which approximates the
notional amount of the swap, to the buyer in the event of an adverse credit
event of the issuer.
The Fund entered into credit default swap agreements during the year ended
October 31, 2009, to potentially enhance return. Details of the swap agreements
outstanding as of October 31, 2009, are as follows:
IMPLIED CREDIT
SPREAD AT NOTIONAL PAYING UNREALIZED
BUY/SELL TERMINATION OCTOBER 31, AMOUNT FIXED APPRECIATION/
COUNTERPARTY REFERENCE ENTITY PROTECTION DATE 2009 (1) (000) RATE (DEPRECIATION)
==================================================================================================================================
Citibank NA Home Depot, Inc. Buy 06/20/2014 59.50% $ 2,050 1.00% $ (97,273)
----------------------------------------------------------------------------------------------------------------------------------
(1) Implied credit spreads, represented in absolute terms, utilized in
determining the market value of credit default swap agreements on corporate
issues or sovereign issues of an emerging country as of period end serve as
an indicator of the current status of the payment/performance risk and
represent the likelihood or risk of default for the credit derivative.The
implied credit spread of a particular referenced entity reflects the cost
of buying/selling protection and may include upfront payments required to
be made to enter into the agreement. Wider credit spreads represent a
deterioration of the referenced entity's credit soundless and a greater
likelihood or risk of default or other credit event occurring as defined
under the terms of the agreement. A credit spread identified
as"Defaulted"indicates a credit event has occurred for the referenced
entity or obligation.
24 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
(d) ACCOUNTING PRONOUNCEMENT FOR DERIVATIVES:
The Fund is required by GAAP to disclose a) how and why a fund uses derivative
instruments, b) how derivatives instruments and related hedge fund items are
accounted for, and c) how derivative instruments and related hedge items affect
a fund's financial position, results of operations and cash flows.
Derivative Notional amounts and values as of October 31, 2009 are indicative of
the volume of the Fund's derivatives activities over the reporting period,
except for swaps.
The Fund decreased the volume of activity in swaps during the period ended
October 31, 2009, with an average notional balance of approximately $28,041,531
during the period ended October 31, 2009 and an ending notional balance of
$2,050,000.
The following table presents the types of derivatives in the Fund by location
as presented on the Statement of Assets and Liabilities as of October 31,
2009.
Statement of Assets and Liabilities Presentation of Fair Values of Derivative Instruments:
-----------------------------------------------------------------------------------------------------------------------------------
(amounts in thousands)
-----------------------------------------------------------------------------------------------------------------------------------
Asset Derivatives Liability Derivatives
-----------------------------------------------------------------------------------------------------------------------------------
Derivatives not accounted for as
hedging instruments Statement of Assets Statement of Assets
and Liabilities Location Fair Value and Liabilities Location Fair Value
-----------------------------------------------------------------------------------------------------------------------------------
Foreign currency exchange contract Unrealized appreciation on Unrealized depreciation on
currency contracts $ 4 currency contracts $ 86
-----------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on
Credit default contracts Unrealized appreciation on swaps -- credit default swaps 97
-----------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on
Total return contracts Unrealized appreciation on swaps -- total return swaps --
-----------------------------------------------------------------------------------------------------------------------------------
Equity contracts Investments in securities -- Options written 51
-----------------------------------------------------------------------------------------------------------------------------------
Total $ 4 $234
===================================================================================================================================
The following table presents the effect of Derivatives Instruments on the
Statement of Operations for the year ended October 31, 2009.
Effect of Derivative Instruments on the Statement of Operations:
----------------------------------------------------------------------------------------------------------------------------------
(amounts in thousands)
----------------------------------------------------------------------------------------------------------------------------------
Amount of Realized Gain/(Loss) on Derivatives
----------------------------------------------------------------------------------------------------------------------------------
Foreign Currency
Derivatives not accounted for as hedging instruments Swaps Futures Options Transactions Total
----------------------------------------------------------------------------------------------------------------------------------
Credit default contracts $(1,814) $-- $-- $ -- $ (1,814)
----------------------------------------------------------------------------------------------------------------------------------
Total return contracts (30,865) -- -- -- (30,865)
----------------------------------------------------------------------------------------------------------------------------------
Equity contracts -- -- 831 -- 831
----------------------------------------------------------------------------------------------------------------------------------
Foreign currency exchange contracts -- -- -- 605 605
----------------------------------------------------------------------------------------------------------------------------------
Total $(32,679) $-- $831 $605 $(31,243)
==================================================================================================================================
Change in Unrealized Depreciation/(Appreciation) on Derivatives
----------------------------------------------------------------------------------------------------------------------------------
Foreign Currency
Derivatives not accounted for as hedging instruments Swaps Futures Options Translations Total
----------------------------------------------------------------------------------------------------------------------------------
Total
----------------------------------------------------------------------------------------------------------------------------------
Credit default contracts $ (97) $-- $ -- $ -- $ (97)
----------------------------------------------------------------------------------------------------------------------------------
Total return contracts 22,477 -- -- -- 22,477
----------------------------------------------------------------------------------------------------------------------------------
Equity contracts -- -- 435 -- 435
----------------------------------------------------------------------------------------------------------------------------------
Foreign currency exchange contracts -- -- -- (4,021) (4,021)
----------------------------------------------------------------------------------------------------------------------------------
Total $22,380 $-- $435 $(4,021) $18,794
==================================================================================================================================
Note 7 -- CAPITAL:
COMMON SHARES
The Fund has an unlimited number of common shares, $0.001 par value, authorized
and 31,867,616 issued and outstanding. In connection with the Fund's
dividend reinvestment plan, the Fund did not issue shares during the period
ended October 31, 2009, or the year ended October 31, 2008.
PREFERRED SHARES
On June 12, 2007, the Fund's Board of Trustees authorized the issuance of
Preferred Shares, as part of the Fund's leverage strategy. Preferred Shares
issued by the Fund have seniority over the common shares.
On September 14, 2007, the Fund issued 3,400 shares of Preferred Shares Series
T7 and 3,400 shares of Preferred Shares Series W7, each with a liquidation value
of $25,000 per share plus accrued dividends.
Dividends are accumulated daily at a rate set through an auction process and are
paid monthly. Distributions of net realized capital gains, if any, are made
annually. The broad auction-rate preferred securities market, including the
Fund's AMPS, has experienced considerable disruption since mid-February 2008.
The result has
Annual Report | October 31, 2009 | 25
AGC | Advent/Claymore Global Convertible Securities & Income Fund | NOTES TO
FINANCIAL STATEMENTS continued
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 LIBOR Rate for a dividend
period of fewer than 365 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.
For the period ended October 31, 2009, the annualized dividend rates ranged
from:
HIGH LOW AT OCTOBER 31, 2009
===================================================================
Series T7 3.34% 1.48% 1.48%
Series W7 3.27% 1.47% 1.47%
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 on 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:
Subsequent to October 31, 2009, the Fund declared on November 2, 2009, a
monthly dividend to common shareholders of $0.0664 per common share. The
dividend is payable on November 30, 2009 to shareholders of record on November
13, 2009.
On December 1, 2009, the Fund declared a monthly dividend to common
shareholders of $0.0664 per common share. The dividend is payable on December
31, 2009, to shareholders of record on December 15, 2009.
The Fund has performed an evaluation of subsequent events through December 24,
2009, which is the date the financial statements were issued, and determined
that no additional events have occurred that require disclosure.
26 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Report of INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
To the Board of Trustees and Shareholders of
Advent/Claymore Global Convertible Securities & Income Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets applicable to common shareholders and the financial
highlights present fairly, in all material respects, the financial position of
the Advent/Claymore Global Convertible Securities & Income Fund (the "Fund") at
October 31, 2009, the results of its operations for the year then ended, the
changes in its net assets applicable to common shareholders for each of the two
years in the period then ended and the financial highlights for each of the
periods presented, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2009, by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
December 24, 2009
Annual Report | October 31, 2009 | 27
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Supplemental INFORMATION | (unaudited)
FEDERAL INCOME TAX INFORMATION
Qualified dividend income of as much as $3,807,332 was received by the Fund
through October 31, 2009. The Fund intends to designate the maximum amount of
dividends that qualify for the reduced tax rate pursuant to the Jobs and Growth
Tax Relief Reconciliation Act of 2003.
For corporate shareholders $3,681,484 of investment income (dividend income
plus short-term gains, if any) qualified for the dividends-received deduction.
In January 2010, you will be advised on IRS Form 1099 DIV or substitute 1099
DIV as to the federal tax status of the distributions received by you in the
calendar year 2009.
Results of Shareholder Votes
The Annual Meeting of Shareholders of the Fund was held on September 29, 2009.
At this meeting, shareholders voted on the election of Trustees.
With regard to the election of the following Class III Trustee by common and
preferred shareholders of the Fund:
# of Shares
----------------------------------------------------------------------------------------------------------------------------------
In Favor Against Withheld
----------------------------------------------------------------------------------------------------------------------------------
Tracy V. Maitland 28,552,132 722,563 403,915
With regard to the election of the following Trustee by preferred shareholders of the Fund:
# of Shares
----------------------------------------------------------------------------------------------------------------------------------
In Favor Against Withheld
----------------------------------------------------------------------------------------------------------------------------------
Ronald A. Nyberg 6,114 395 0
The other Trustees of the Fund whose terms did not expire in 2009 are Daniel L.
Black, Michael A. Smart, Gerald L. Seizert, Derek Medina and Randall C.
Barnes.
TRUSTEES
The Trustees of the Advent/Claymore Global Convertible Securities & 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 2007 Partner, the Wicks Group of Cos., LLC 3 Director of Penn Foster
Year of birth: 1960 (2003-present). Formerly, Managing Education Group, Inc.
Trustee Director and Co-head of the Merchant
Banking Group at BNY Capital Markets,
a division of The Bank of New York Co.,
Inc. (1998-2003).
-----------------------------------------------------------------------------------------------------------------------------------
Randall C. Barnes++ Since 2007 Private Investor (2001-present). 44 None.
Year of birth: 1951 Formerly, Senior Vice President,
Trustee Treasurer, PepsiCo, 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 2007 Senior Vice President, Business Affairs 3 Director of Young
Year of birth: 1966 at ABC News (2008-present), Vice President, Scholar's Institute.
Trustee Business Affairs and News Planning at
ABC News (2003-present). 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 2007 Partner of Nyberg & Cassioppi, LLC., a 47 None.
Year of birth: 1953 law firm specializing in corporate law,
Trustee estate 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 2007 Chief Executive Officer of Seizert 3 Former Director of
Year of birth: 1952 Capital Partners, LLC, where he directs Loomis, Sayles
Trustee the equity disciplines of the firm and and Co., L.P.
serves as a 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).
-----------------------------------------------------------------------------------------------------------------------------------
28 | Annual Report | October 31, 2009
AGC | Advent/Claymore Global Convertible Securities & Income Fund | SUPPLEMENTAL
INFORMATION (unaudited) continued
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
------------------------------------------------------------------------------------------------------------------------------------
Michael A. Smart+ Since 2007 Managing Partner, Cordova, Smart & 3 Director, Country Pure
Year of birth: 1960 Williams, LLC, Advisor First Atlantic Foods. Chairman, Board of
Trustee Capital Ltd.,(2001-present). Formerly, Directors, Berkshire
a Managing Director in Investment Blanket, Inc. President
Banking-The Private Equity Group and Chairman, Board of
(1995-2001) and a Vice President in Directors, Sqwincher
Investment Banking-Corporate Finance Holdings. Director,
(1992-1995) at Merrill Lynch & Co. Sprint Industrial
Founding Partner of The Carpediem Group, Holdings. Co-chairman,
(1991-1992). Associate at Dillon, Board of Directors, H2O
Read and Co. (investment bank) Plus.
(1988-1990).
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES:
------------------------------------------------------------------------------------------------------------------------------------
Tracy V. Maitland+# Since 2007 President of Advent Capital Management, 3 None.
Year of birth: 1960 LLC, which he founded in 1995. Prior
Trustee, President and to June, 2001, President of Advent
Chief Executive Officer Capital Management, a division of
Utendahl Capital.
------------------------------------------------------------------------------------------------------------------------------------
+ Address for all Trustees noted: 1065 Avenue of the Americas, 31st Floor,
New York, NY 10018.
++ Address for all Trustees noted: 2455 Corporate West Drive, Lisle, IL 60532
* After a Trustee's initial term, each Trustee is expected to serve a
three-year term concurrent with the class of Trustees for which he serves:
- Messrs. Seizert, Medina and Barnes, as Class I Trustees, are expected
to stand for re-election at the Fund's 2010 annual meeting of
shareholders.
- Messrs. Smart and Black, as Class II Trustees, are expected to stand
for re-election at the Fund's 2011 annual meeting of shareholders.
- Messrs. Maitland and Nyberg, as Class III Trustees, are expected to
stand for re-election at the Fund's 2012 annual meeting of
shareholders.
** 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.
# 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 Investment Manager.
Nicholas Dalmaso served as a Trustee of the Fund. Mr. Dalmaso did not stand for
re-election at the Fund's annual meeting of shareholders on September 29, 2009
(the "Annual Meeting"). Based on a recommendation from the Nominating and
Governance Committee of the Board and pursuant to authority granted to it under
the Fund's Agreement and Declaration of Trust, the Board decided to reduce its
size from eight to seven Trustees upon the expiration of Mr. Dalmaso's term at
the Annual Meeting.
OFFICERS
The Officers of the Advent/Claymore Global Convertible Securities & 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 2007 Co-Portfolio Manager at Advent Capital Management, LLC
Year of birth: 1943 (2001- present). Prior to June 2001, Mr. Nelson held the
Vice President and Assistant Secretary same position at Advent Capital Management, a division of
Utendahl Capital.
-----------------------------------------------------------------------------------------------------------------------------------
Robert White Since 2007 Chief Financial Officer, Advent Capital Management, LLC
Year of birth: 1965 (2005-present). Previously, Vice President, Client Service
Treasurer and Chief Financial Officer Manager, Goldman Sachs Prime Brokerage (1997-2005).
-----------------------------------------------------------------------------------------------------------------------------------
Rodd Baxter Since 2007 General Counsel, Advent Capital Management, LLC
Year of birth: 1950 (2002-present).
Secretary and
Chief Compliance Officer
-----------------------------------------------------------------------------------------------------------------------------------
* Address for all Officers: 1065 Avenue of the Americas, 31st Floor, New
York, NY 10018
** Officers serve at the pleasure of the Board of Trustees and until his or
her successor is appointed and qualified or until his or her earlier
resignation or removal.
Annual Report | October 31, 2009 | 29
AGC | Advent/Claymore Global Convertible Securities & 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, P.O. Box 358015,
Pittsburgh, PA 15252-8015, Phone Number: (866)488-3559.
30 l Annual Report l October 31, 2009
AGC l Advent/Claymore Global Convertible Securities & Income Fund
Advisory Agreement APPROVAL | (unaudited)
The Board, including the Independent Trustees, approved each of the Interim
Advisory Agreement and the New Advisory Agreement. The Board reviewed materials
received from Claymore, Guggenheim and independent legal counsel. The Board
members also had previously received, throughout the year, Board meeting
information regarding Claymore's services for the Fund. Earlier in 2009,
Claymore informed the Board that it was in discussions with Guggenheim
concerning a strategic transaction, including a potential sale of a controlling
interest in Claymore. Claymore provided periodic reports to representatives of
the Board as to the status and nature of such discussions with Guggenheim and
Claymore's operating and financial results. In the spring of 2009, Claymore
informed the Board that Guggenheim had arranged up to $20 million of
subordinated loans to Claymore as interim financing for working capital and for
inventory purchases in connection with its business of creating, distributing
and supervising unit investment trusts and other investment products. Following
the execution of the merger agreement that governs the Strategic Transaction
(the "Merger Agreement"), a telephonic meeting was held on July 28, 2009, and
attended by certain members of the Board, the chief executive officer of
Claymore and the chief executive officer of Guggenheim. Such executive officers
summarized the principal terms of the Merger Agreement, and described the
Strategic Transaction, the business plans for Claymore following the
consummation of the Strategic Transaction and answered such questions as were
raised at the meeting. Representatives of the Board requested additional
information regarding the Strategic Transaction, Guggenheim and the impact of
the Strategic Transaction on the shareholders of the Fund.
During the third quarter of 2009, the Board received reports on the progress of
the Strategic Transaction, including debt financing and additional equity
financing arranged by Guggenheim. As part of its review process, the
Independent Trustees of the Fund were represented by independent legal counsel.
The Board reviewed materials received from Claymore, Guggenheim and independent
legal counsel. Claymore and Guggenheim provided, among other information,
information regarding the terms of the Strategic Transaction and potential
benefits to Claymore from the Strategic Transaction. The information provided
regarding Guggenheim included (i) financial information, (ii) information
regarding senior executives of the firm, (iii) information regarding other
Guggenheim affiliated investment managers, (iv) information regarding
litigation and regulatory matters and (v) potential conflicts of interest.
Claymore and Guggenheim also provided information regarding Guggenheim's and
Claymore's intentions for the business, operations and personnel of Claymore
following the closing of the Strategic Transaction.
The Independent Trustees discussed the Strategic Transaction and the Interim
Investment Advisory Agreement between Claymore and the Fund and the New
Advisory Agreement between Claymore and the Fund at the meeting. Additional
supplemental information regarding the Strategic Transaction and Guggenheim was
provided by Claymore and Guggenheim and reviewed by the Board.
In connection with the Board's consideration of the Interim Advisory Agreement
and the New Advisory Agreement, the Trustees considered, among other
information, the following factors:
o within the last year, the Board had engaged in a thorough review of the
various factors, including fees and scope and quality of services, that are
part of the decision whether to continue the prior advisory agreement
between Claymore and the Fund (the "Prior Advisory Agreement");
o Board approval of New and Interim Advisory Agreements was a condition to
the closing of the Strategic Transaction;
o Claymore's statement to the Board that the manner in which the Fund's
assets are managed will not change as a result of the Strategic
Transaction;
o the aggregate advisory fee rate payable by the Fund will not change under
the Fund's Interim Advisory Agreement or New Advisory Agreement;
o there are no material differences between the terms of the Fund's Interim
Advisory Agreement and New Advisory Agreement and the terms of the Fund's
Prior Advisory Agreement, except for those provisions in the Interim
Advisory Agreement which are necessary to comply with Rule 15a-4 under the
1940 Act;
o the capabilities of Claymore's personnel who will provide management and
administrative services to the Fund are not expected to change, and the key
personnel who currently provide management and administrative services to
the Fund are expected to continue to do so after the Strategic Transaction;
o the assurance from Claymore and Guggenheim that following the Strategic
Transaction there will not be any diminution in the nature, quality and
extent of services provided to the Fund;
o Claymore's current financial condition;
o the impact of the Strategic Transaction on Claymore's day-to-day
operations;
o the reputation, capabilities, experience, organizational structure and
financial resources of Guggenheim;
o the long-term business goals of Guggenheim and Claymore with regard to the
business and operations of Claymore;
o that shareholders of the Fund will not bear any costs in connection with
the Strategic Transaction, inasmuch as Claymore will bear the costs, fees
and expenses incurred by the Fund in connection with proxy materials and
any other costs of the Fund associated with the Strategic Transaction; and
o that Claymore and two newly formed, wholly-owned subsidiaries of
Guggenheim, GuggClay Acquisition, Inc. and an intermediate holding company
have agreed to refrain from imposing or seeking to impose, for a period of
two years after the closing of the Strategic Transaction, any "unfair
burden" (within the meaning of Section 15(f) of 1940 Act) on the Fund.
Nature, Extent and Quality of Services Provided by Claymore. The Board noted
that key management personnel servicing the Fund are expected to remain with
Claymore following the Strategic Transaction and that the services provided to
the Fund by Claymore are not expected to change. The Board also considered
Claymore's and Guggenheim's representations to the Board that Guggenheim
intends for Claymore to continue to operate following the closing of the
Strategic Transaction in much the same manner as it operates today, and that
the impact of the Strategic Transaction on the day-to-day operations of
Claymore would be neutral or positive. The Board also considered Guggenheim's
statement that Claymore's compliance policies and procedures, disaster recovery
plans, information security controls and insurance program would not change
materially following consummation of the Strategic
Annual Report | October 31, 2009 | 31
AGC | Advent/Claymore Global Convertible Securities & Income Fund | ADVISORY
AGREEMENT APPROVAL (unaudited) continued
Transaction. Based on this review, the Board concluded that the range and
quality of services provided by Claymore to the Fund were expected to continue
under the Interim Advisory Agreement and the New Advisor Agreement at the same
or improved levels.
Advisory Fees. The Board also considered the fact that the fee rates payable to
Claymore would be the same under the Interim Advisory Agreement and New
Advisory Agreement as they are under the Fund's Prior Advisory Agreement, which
had within the last year been determined to be reasonable. The Board concluded
that these factors supported approval of the Interim Advisory Agreement and New
Advisory Agreement.
Performance. With respect to the performance of the Fund, the Board considered
that Claymore has delegated responsibility for the management of the Fund's
portfolios to Advent, which would continue to manage the portfolios following
the closing of the Strategic Transaction. The Board is aware that the Advent
portfolio management personnel currently responsible for the day-to-day
management of the portfolios would continue to manage the portfolios following
the closing of the Strategic Transaction. The Board concluded that these
factors supported approval of the Interim Advisory Agreement and New Advisory
Agreement.
Profitability. The Board noted that it was too early to predict how the
Strategic Transaction may affect Claymore's future profitability from its
relationship with the Fund, but concluded that this matter would be given
further consideration on an annual basis going forward. The Board also noted
that Claymore's fee rates under the Interim Advisory Agreement and New Advisory
Agreement are the same as those assessed under the Fund's Prior Advisory
Agreement.
Economies of Scale. The Board considered any potential economies of scale that
may result from the Strategic Transaction. The Board further noted Guggenheim's
statement that such economies of scale could not be predicted in advance of the
closing of the Strategic Transaction.
Other Benefits. The Board noted its prior determination that the fees under the
Prior Advisory Agreement was reasonable, taking into consideration other
benefits to Claymore. The Board also considered other benefits to Claymore,
Guggenheim and their affiliates expected to be derived from their relationships
with the Fund as a result of the Strategic Transaction and noted that no
additional benefits were reported by Claymore or Guggenheim as a result of the
Strategic Transaction. Therefore, the Board concluded that the fees payable to
Claymore continued to be reasonable, taking into consideration other benefits.
In reaching this conclusion for the Fund, no single factor was determinative in
the Board's analysis, but rather the Board considered a variety of factors,
including, but not limited to, the aforementioned factors.
32 | Annual Report | October 31,, 2009
This Page Intentionally Left Blank.
This Page Intentionally Left Blank.
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Fund INFORMATION |
BOARD OF TRUSTEES
Randall C. Barnes
Daniel Black
TracyV. 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.
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 MANAGER
Advent Capital Management, LLC
NewYork, NewYork
INVESTMENT ADVISER AND
ADMINISTRATOR
Claymore Advisors, LLC
Lisle, Illinois
CUSTODIAN AND TRANSFER AGENT
The Bank of New York Mellon
NewYork, NewYork
PREFERRED STOCK-
DIVIDEND PAYING AGENT
The Bank of New York Mellon
NewYork, NewYork
LEGAL COUNSEL
Skadden, Arps, Slate,
Meagher & Flom LLP
NewYork, NewYork
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
PricewaterhouseCoopers LLP
NewYork, NewYork
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 GLOBAL CONVERTIBLE
SECURITIES & 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 Administrator, 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 Global Convertible
Securities & 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/agc 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 www.claymore.com. 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 or at www.sec.gov.
In November 2009, the Fund submitted a CEO annual certification to the New York
Stock Exchange ("NYSE") in which the Fund's principal executive officer
certified that he was not aware, as of the date of the certification, of any
violation by the Fund of the NYSE's Corporate Governance listing standards. In
addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and
related SEC rules, the Fund's principal executive and principal financial
officers have made quarterly certifications, included in filings with the SEC on
Forms N-CSR and N-Q, relating to, among other things, the Fund's disclosure
controls and procedures and internal control over financial reporting.
NOTICE TO SHAREHOLDERS
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may purchase at market prices
from time to time shares of its common and preferred stock in the open market or
in private transactions.
Annual Report | October 31, 2009 | 35
AGC | Advent/Claymore Global Convertible Securities & 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 AGC
1065 Avenue of the Americas LISTED
New York, New York 10018 NYSE(R)
AGC-AR-1009
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions (the "Code of Ethics").
(b) No information need be disclosed pursuant to this paragraph.
(c) The registrant has not amended its Code of Ethics during the period covered
by the report presented in Item 1 hereto.
(d) The registrant has not granted a waiver or an implicit waiver to its
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions from a provision
of its Code of Ethics during the period covered by this report.
(e) Not applicable.
(f) (1) The registrant's Code of Ethics is attached hereto as an exhibit.
(2) Not applicable.
(3) Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Trustees has determined that it has six audit
committee financial experts serving on its audit committee (the "Audit
Committee"), each of whom is an "independent" Trustee, as defined in Item 3 of
Form N-CSR: Randall C. Barnes, Daniel Black, Derek Medina, Ronald A. Nyberg,
Gerald L. Seizert and Michael A. Smart.
Mr. Barnes qualifies as an audit committee financial expert by virtue of his
experience obtained as a former Senior Vice President, Treasurer of PepsiCo,
Inc.
Mr. Black qualifies as an audit committee financial expert by virtue of his
experience obtained as a partner of a private equity firm, which includes review
and analysis of audited and unaudited financial statements using GAAP to show
accounting estimates, accruals and reserves.
Mr. Medina qualifies as an audit committee financial expert by virtue of his
experience obtained as a Senior Vice President, Business Affairs of ABC News and
as a former associate in Corporate Finance at J.P. Morgan/Morgan Guaranty, which
includes review and analysis of audited and unaudited financial statements using
GAAP to show accounting estimates, accruals and reserves.
Mr. Nyberg qualifies as an audit committee financial expert by virtue of his
experience obtained as an Executive Vice President, General Counsel and
Secretary of Van Kampen Investments, which included review and analysis of
offering documents and audited and unaudited financial statements using GAAP to
show accounting estimates, accruals and reserves.
Mr. Seizert qualifies as an audit committee financial expert by virtue of his
experience obtained as the chief executive officer and portfolio manager of an
asset management company, which includes review and analysis of audited and
unaudited financial statements using GAAP to show accounting estimates, accruals
and reserves.
Mr. Smart qualifies as an audit committee financial expert by virtue of his
experience obtained as a managing partner of a private equity firm and a former
Vice President at Merrill Lynch & Co, which includes review and analysis of
audited and unaudited financial statements using GAAP to show accounting
estimates, accruals and reserves.
(Under applicable securities laws, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for the purposes of Section 11 of the Securities
Act of 1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an audit
committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and
liabilities imposed on such person as a member of the Audit Committee and Board
of Trustees in the absence of such designation or identification. The
designation or identification of a person as an audit committee financial expert
pursuant to this Item does not affect the duties, obligations, or liability of
any other member of the Audit Committee or Board of Trustees.)
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees: the aggregate fees billed for professional services rendered by
the principal accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements were $93,750 and
$111,050 for the fiscal years ended October 31, 2009, and October 31, 2008,
respectively.
(b) Audit-Related Fees: the aggregate fees billed for assurance and related
services by the principal accountant that are reasonably related to the
performance of the audit of the registrant's financial statements, and are not
reported under paragraph 4(a), were $16,700 and $16,700 for the fiscal years
ended October 31, 2009 and October 31, 2008, respectively. These services were
performed for agreed upon procedures associated with the registrant's Auction
Market Preferred Shares.
The registrant's principal accountant did not bill fees for non-audit services
that required approval by the Audit Committee pursuant to paragraph (c)(7)(ii)
of Rule 2-01 of Regulation S-X during the Registrant's last two fiscal years.
(c) Tax Fees: the aggregate fees billed for professional services rendered by
the principal accountant for tax compliance, tax advice and tax planning,
including federal, state and local income tax return preparation and related
advice and determination of taxable income and miscellaneous tax advice were
$16,500 and $16,500 for the fiscal years ended October 31, 2009, and October 31,
2008, respectively.
The registrant's principal accountant did not bill fees for non-audit services
that required approval by the Audit Committee pursuant to paragraph (c)(7)(ii)
of Rule 2-01 of Regulation S-X during the Registrant's last two fiscal years.
(d) All Other Fees: the aggregate fees billed for products and services provided
by the principal accountant, other than the services reported in paragraphs 4(a)
and 4(c) were $0 and $0 for the fiscal years ended October 31, 2009 and October
31, 2008, respectively.
The registrant's principal accountant did not bill fees for non-audit services
that required approval by the Audit Committee pursuant to paragraph (c)(7)(ii)
of Rule 2-01 of Regulation S-X during the Registrant's last two fiscal years.
(e) Audit Committee Pre-Approval Policies and Procedures:
(1) In accordance with Rule 2-01(c)(7), the Audit Committee pre-approves all of
the Audit and Tax Fees of the registrant. All of the services described in
paragraphs 4(b) through 4(d) above were approved by the Audit Committee in
accordance with paragraph (c)(7) of Rule 2-01 of Regulation S-X.
The Audit Committee has adopted written policies relating to the pre-approval of
the audit and non-audit services performed by the registrant's independent
auditors. Unless a type of service to be provided by the independent auditors
has received general pre-approval, it requires specific pre-approval by the
Audit Committee. Under the policies, on an annual basis, the Audit Committee
reviews and pre-approves the services to be provided by the independent auditors
without having to obtain specific pre-approval from the Audit Committee. The
Audit Committee has delegated pre-approval authority to the Audit Committee
Chairperson. In addition, the Audit Committee pre-approves any permitted
non-audit services to be provided by the independent auditors to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser if such services relate directly to the
operations and financial reporting of the registrant.
AUDIT COMMITTEE PRE-APPROVAL POLICY
OF
ADVENT/CLAYMORE GLOBAL CONVERTIBLE SECURITIES & INCOME FUND
STATEMENT OF PRINCIPLES
The Audit Committee (the "Audit Committee") of the Board of Trustees (the
"Board") of Advent Claymore Convertible Securities and Income Fund (the
"Trust,") is required to pre-approve all Covered Services (as defined in the
Audit Committee Charter) in order to assure that the provision of the Covered
Services does not impair the auditors' independence. Unless a type of service to
be provided by the Independent Auditor (as defined in the Audit Committee
Charter) is pre-approved in accordance with the terms of this Audit Committee
Pre-Approval Policy (the "Policy"), it will require specific pre-approval by the
Audit Committee or by any member of the Audit Committee to which pre-approval
authority has been delegated.
This Policy and the appendices to this Policy describe the Audit,
Audit-Related, Tax and All Other services that are Covered Services and that
have been pre-approved under this Policy. The appendices hereto sometimes are
referred to herein as the "Service Pre-Approval Documents". The term of any such
pre-approval is 12 months from the date of pre-approval, unless the Audit
Committee specifically provides for a different period. At its June meeting of
each calendar year, the Audit Committee will review and re-approve this Policy
and approve or re-approve the Service Pre-Approval Documents for that year,
together with any changes deemed necessary or desirable by the Audit Committee.
The Audit Committee may, from time to time,
modify the nature of the services pre-approved, the aggregate level of fees
pre-approved or both. The Audit Committee hereby directs that each version of
this Policy and the Service Pre-Approval Documents approved, re-approved or
amended from time to time be maintained with the books and records of the Trust.
DELEGATION
In the intervals between the scheduled meetings of the Audit Committee, the
Audit Committee delegates pre-approval authority under this Policy to the
Chairman of the Audit Committee (the "Chairman"). The Chairman shall report any
pre-approval decisions under this Policy to the Audit Committee at its next
scheduled meeting. At each scheduled meeting, the Audit Committee will review
with the Independent Auditor the Covered Services pre-approved by the Chairman
pursuant to delegated authority, if any, and the fees related thereto. Based on
these reviews, the Audit Committee can modify, at its discretion, the
pre-approval originally granted by the Chairman pursuant to delegated authority.
This modification can be to the nature of services pre-approved, the aggregate
level of fees approved, or both. The Audit Committee expects pre-approval of
Covered Services by the Chairman pursuant to this delegated authority to be the
exception rather than the rule and may modify or withdraw this delegated
authority at any time the Audit Committee determines that it is appropriate to
do so.
PRE-APPROVED FEE LEVELS
Fee levels for all Covered Services to be provided by the Independent
Auditor and pre-approved under this Policy will be established annually by the
Audit Committee and set forth in the Service Pre-Approval Documents. Any
increase in pre-approved fee levels will require specific pre-approval by the
Audit Committee (or the Chairman pursuant to delegated authority).
AUDIT SERVICES
The terms and fees of the annual Audit services engagement for the Trust
are subject to the specific pre-approval of the Audit Committee. The Audit
Committee will approve, if necessary, any changes in terms, conditions or fees
resulting from changes in audit scope, Trust structure or other matters.
In addition to the annual Audit services engagement specifically approved
by the Audit Committee, any other Audit services for the Trust not listed in the
Service Pre-Approval Document for the respective period must be specifically
pre-approved by the Audit Committee (or the Chairman pursuant to delegated
authority).
AUDIT-RELATED SERVICES
Audit-Related services are assurance and related services that are not
required for the audit, but are reasonably related to the performance of the
audit or review of the financial statements of the Trust and, to the extent they
are Covered Services, the other Covered Entities (as defined in the Audit
Committee Charter) or that are traditionally performed by the Independent
Auditor. Audit-Related services that are Covered Services and are not listed in
the Service Pre-Approval Document for the respective period must be specifically
pre-approved by the Audit Committee (or the Chairman pursuant to delegated
authority).
TAX SERVICES
The Audit Committee believes that the Independent Auditor can provide Tax
services to the Covered Entities such as tax compliance, tax planning and tax
advice without impairing the auditor's independence. However, the Audit
Committee will not permit the retention of the Independent Auditor in connection
with a transaction initially recommended by the Independent Auditor, the sole
business purpose of which may be tax avoidance and the tax treatment of which
may not be supported in the Internal Revenue Code and related regulations. Tax
services that are Covered Services and are not listed in the Service
Pre-Approval Document for the respective period must be specifically
pre-approved by the Audit Committee (or the Chairman pursuant to delegated
authority).
ALL OTHER SERVICES
All Other services that are Covered Services and are not listed in the
Service Pre-Approval Document for the respective period must be specifically
pre-approved by the Audit Committee (or the Chairman pursuant to delegated
authority).
PROCEDURES
Requests or applications to provide Covered Services that require approval
by the Audit Committee (or the Chairman pursuant to delegated authority) must be
submitted to the Audit Committee or the Chairman, as the case may be, by both
the Independent Auditor and the Chief Financial Officer of the respective
Covered Entity, and must include a joint statement as to whether, in their view,
(a) the request or application is consistent with the SEC's rules on auditor
independence and (b) the requested service is or is not a non-audit service
prohibited by the SEC. A request or application submitted to the Chairman
between scheduled meetings of the Audit Committee should include a discussion as
to why approval is being sought prior to the next regularly scheduled meeting of
the Audit Committee.
(2) None of the services described in each of Items 4(b) through (d) were
approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, the registrant's investment adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted with or overseen by another investment adviser) and/or any entity
controlling, controlled by, or under common control with the adviser that
provides ongoing services to the registrant that directly related to the
operations and financial reporting of the registrant were $33,200 and $33,200
for the fiscal years ended October 31, 2009, and October 31, 2008, respectively.
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The Audit Committee was established in accordance with Section 3(a)(58)(A)
of the Securities Exchange Act of 1934. The audit committee of the registrant is
comprised of: Daniel Black, Randall C. Barnes, Derek Medina, Ronald A. Nyberg,
Gerald L. Seizert and Michael A. Smart.
(b) Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
The Schedule of Investments is included as part of Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant has delegated the voting of proxies relating to its voting
securities to its investment manager, Advent Capital Management, LLC (the
"Manager"). The Manager's Proxy Voting Policies and Procedures are included as
an exhibit hereto.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) (1) F. Barry Nelson, Paul Latronica and Hart Woodson (the "Portfolio
Managers") are primarily responsible for the day-to-day management of the
registrant's portfolio. The following provides information regarding the
portfolio managers as of October 31, 2009:
------------------------------- ---------------- ----------------------------------------------------------------
NAME SINCE PROFESSIONAL EXPERIENCE
------------------------------- ---------------- ----------------------------------------------------------------
F. Barry Nelson 2007 Portfolio Manager at Advent Capital Management, LLC for more
(Inception) than six years.
------------------------------- ---------------- ----------------------------------------------------------------
Paul Latronica 2007 Portfolio Manager at Advent Capital Management, LLC. He has
(Inception) been associated with Advent Capital Management for more than
six years.
-------------------------------- --------------- ----------------------------------------------------------------
Hart Woodson 2007 Portfolio Manager at Advent Capital Management, LLC since
(Inception) March 2007. He was previously a Senior Vice President at
GAMCO Investments, Inc. since 1994.
(a) (2) (i-iii) Other accounts managed. Only Mr. Woodson manages any performance
based fee accounts. Four of Mr. Woodson's accounts have performance based fees
with total assets of $541 million. The following summarizes information
regarding each of the other accounts managed by the Portfolio Managers as of
October 31, 2009:
REGISTERED INVESTMENT OTHER POOLED
COMPANIES INVESTMENT VEHICLES OTHER ACCOUNTS
------------------------- -------------------------- ---------------------------
# OF # OF # OF
NAME ACCOUNTS TOTAL ASSETS ACCOUNTS TOTAL ASSETS ACCOUNTS TOTAL ASSETS
------------------ -------- ------------ -------- ------------ -------- ------------
F. Barry Nelson 1 $646 million 1 $ 15 million 48 $769 million
Paul Latronica 1 $ 159 million 1 $ 15 million 48 $769 million
Hart Woodson 0 $ 0 4 $280 million 4 $500 million
(a) (2) (iv) Conflicts of Interest. If another account of the Portfolio Managers
has investment objectives and policies that are similar to those of the
registrant, the Portfolio Managers will allocate orders pro-rata among the
registrant and such other accounts, or, if the Portfolio Managers deviate from
this policy, the Portfolio Managers will allocate orders such that all accounts
(including the registrant) receive fair and equitable treatment.
(a) (3) Compensation Structure. The salaries of the Portfolio Managers are fixed
at an industry-appropriate amount and generally reviewed annually. In addition,
a 100% discretionary bonus may be awarded to the Portfolio Managers, if
appropriate. Bonuses are generally considered on an annual basis and based upon
a variety of factors, including, but not limited to, the overall success of the
firm, an individual's responsibility and his/her performance versus
expectations. The bonus is determined by senior management at Advent Capital
Management, LLC. Compensation is based on the entire employment relationship and
not based on the performance of the registrant or any other single account or
type of account. In addition, all Advent Capital Management, LLC employees are
also eligible to participate in a 401(k) plan.
(a) (4) Securities ownership. The following table discloses the dollar range of
equity securities of the registrant beneficially owned by each of the Portfolio
Managers as of October 31, 2009:
DOLLAR RANGE OF EQUITY
NAME OF PORTFOLIO MANAGER SECURITIES IN FUND
--------------------------------------------------- -----------------------
F. Barry Nelson $10,001-$50,000
Paul Latronica $1-$10,000
Hart Woodson $10,001-$50,000
(b) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has not made any material changes to the procedures by which
shareholders may recommend nominees to the registrant's Board of Trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act) as of a date within 90 days
of this filing and have concluded based on such evaluation, as required by Rule
30a-3(b) under the Investment Company Act, that the registrant's disclosure
controls and procedures were effective, as of that date, in ensuring that
information required to be disclosed by the registrant in this Form N-CSR was
recorded, processed, summarized, and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-e(d) under the Investment Company Act) that
occurred during the registrant's second fiscal quarter of the period covered by
this report that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics for Chief Executive and Senior Financial Officers.
(a)(2) Certification of principal executive officer and principal financial
officer pursuant to Rule 30a-2(a) of the Investment Company Act.
(b) Certification of principal executive officer and principal financial officer
pursuant to Rule 30a-2(b) of the Investment Company Act and Section 906 of the
Sarbanes-Oxley Act of 2002.
(c) Proxy Voting Policies and Procedures.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Advent/Claymore Global Convertible Securities & Income Fund
By: /s/ Tracy V. Maitland
--------------------------------------------
Name: Tracy V. Maitland
Title: President and Chief Executive Officer
Date: January 6, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Tracy V. Maitland
--------------------------------------------
Name: Tracy V. Maitland
Title: President and Chief Executive Officer
Date: January 6, 2010
By: /s/ Robert White
--------------------------------------------
Name: Robert White
Title: Treasurer and Chief Financial Officer
Date: January 6, 2010