Gabelli Convertible & Income Securities Fund Reaffirms Its 8% Distribution Policy & Declares Fourth Quarter Distribution of $...
November 18 2016 - 10:41AM
Business Wire
The Board of Directors of The Gabelli Convertible and Income
Securities Fund Inc. (NYSE:GCV) (the “Fund”) reaffirmed its 8%
distribution policy and declared a $0.05 per share cash
distribution payable on December 16, 2016 to common stock
shareholders of record on December 9, 2016. With this fourth
quarter distribution, the total distributions from the Fund would
equate to $0.41 per share for 2016.
The Fund may declare an incremental distribution before year end
in order to satisfy the minimum distribution requirements of the
Internal Revenue Code. The Board considered the prospects for tax
reduction and believes that retention of capital would be
advantageous to shareholders.
The Fund intends to pay a quarterly distribution of an amount
determined each quarter by the Board of Directors. Under the Fund’s
current distribution policy, the Fund intends to pay a minimum
annual distribution of 8% of the average net asset value of the
Fund within a calendar year or an amount sufficient to satisfy the
minimum distribution requirements of the Internal Revenue Code for
regulated investment companies. The average net asset value of the
Fund is based on the average net asset values as of the last day of
the four preceding calendar quarters during the year. We note that
8% of the average net asset value of the Fund would be $0.41 based
on the ending net asset values per share as of December 31, 2015,
March 31, 2016, June 30, 2016, and September 30, 2016 of $5.30,
$5.08, $5.12, and $5.18, respectively. The net asset value per
share fluctuates daily.
Each quarter, the Board of Directors reviews the amount of any
potential distribution from the income, realized capital gain, or
capital available. The Board of Directors will continue to monitor
the Fund’s distribution level, taking into consideration the Fund’s
net asset value and the financial market environment. The Fund’s
distribution policy is subject to modification by the Board of
Directors at any time, and there can be no guarantee that the
policy will continue. The distribution rate should not be
considered the dividend yield or total return on an investment in
the Fund.
All or part of the distribution may be treated as long-term
capital gain or qualified dividend income (or a combination of
both) for individuals, each subject to the maximum federal income
tax rate, which is currently 20% in taxable accounts for
individuals (or zero depending on an individual’s tax bracket). In
addition, certain U.S. shareholders who are individuals, estates or
trusts and whose income exceeds certain thresholds will be required
to pay a 3.8% Medicare surcharge on their "net investment income",
which includes dividends received from the Fund and capital gains
from the sale or other disposition of shares of the Fund.
If the Fund does not generate sufficient earnings (dividends and
interest income and realized net capital gain) equal to or in
excess of the aggregate distributions paid by the Fund in a given
year, then the amount distributed in excess of the Fund’s earnings
would be deemed a return of capital. Since this would be considered
a return of a portion of a shareholder’s original investment, it is
generally not taxable and is treated as a reduction in the
shareholder’s cost basis.
Long-term capital gains, qualified dividend income, ordinary
income, and return of capital, if any, will be allocated on a
pro-rata basis to all distributions to common shareholders for the
year. Based on the accounting records of the Fund currently
available, each of the distributions paid to common shareholders in
2016 would include approximately 19% from net investment income and
81% from net capital gains on a book basis. This does not currently
represent information for tax reporting purposes. The estimated
components of each distribution are updated and provided to
shareholders of record in a notice accompanying the distribution
and are available on our website (www.gabelli.com). The final
determination of the sources of all distributions in 2016 will be
made after year end and can vary from the quarterly estimates.
Shareholders should not draw any conclusions about the Fund’s
investment performance from the amount of the current distribution.
All shareholders with taxable accounts will receive written
notification regarding the components and tax treatment for all
2016 distributions in early 2017 via Form 1099-DIV.
Investors should carefully consider the investment objectives,
risks, charges, and expenses of the Fund before investing. More
information regarding the Fund’s distribution policy and other
information about the Fund is available by calling 800-GABELLI
(800-422-3554) or visiting www.gabelli.com.
The Gabelli Convertible and Income Securities Fund Inc. is a
diversified, closed-end management investment company with $97
million in total net assets whose primary investment objective is
to seek a high level of total return on its assets through a
combination of current income and capital appreciation. The Fund is
managed by Gabelli Funds, LLC, a subsidiary of GAMCO Investors,
Inc. (NYSE:GBL).
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The Gabelli Convertible and Income Securities Fund Inc.Laurissa
Martire, 914-921-5070
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