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, 2008
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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 is as follows:
ANNUAL
REPORT
October 31, 2008
Advent/Claymore
Global Convertible | AGC
Securities & Income Fund
photo: bridge
graphic: Advent Capital Management
graphic: Claymore(sm)
www.claymore/agc.com
... YOUR BRIDGE TO THE LATEST,
MOST UP-TO-DATE INFORMATION ABOUT THE
ADVENT/CLAYMORE GLOBAL CONVERTIBLE SECURITIES & INCOME FUND
GRAPHIC: AGC LISTED NYSE (R)
GRAPHIC: ADVENT/CLAYMORE GLOBAL CONVERTIBLE SECURITIES & INCOME FUND
photo: bridge
graphic: Advent Capital Management
graphic: Claymore(sm)
There can be no assurance that the Fund will achieve its investment objective.
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.
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, 2008
AGC | Advent/Claymore Global Convertible Securities & Income Fund
photo:
Tracy V. Maitland
President and Chief Executive Officer
Dear SHAREHOLDER
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, 2008.
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 October 31, 2008, securities of
issuers headquartered or "domiciled" outside the U.S. represented 55.5% of
long-term investments, and convertible securities represented 85.6% 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 12-month period
ending October 31, 2008, the Fund provided a total return based on market price
of -58.94% and a return of -60.31% based on NAV. As of October 31, 2008, the
Fund's market price of $5.99 represented a discount of 12.04% to NAV of $6.81. A
year earlier, at October 31, 2007, the Fund's closing market price was $16.75
and NAV was $19.37.
The Fund currently implements its leverage strategy primarily through the
issuance of Auction Market Preferred Shares ("AMPS") and additionally through
total return swaps on bank loans. The broad auction-rate preferred securities
market has experienced considerable disruption in the past several months and
your Fund was not immune to this disruption. Since mid-February 2008, the
auctions for nearly all auction-rate preferred shares, including AMPS such as
those issued by the Fund, have failed. We believe that this increase in failed
auctions is simply a liquidity issue. 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; 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. The Fund has two seven-day series of
AMPS, Series T7, which auctions each Tuesday, and Series W7, which auctions each
Wednesday. The established maximum rates during this period were based on a
spread of 125 basis points over the applicable LIBOR rates, with the maximum
rates ranging from 3.27% to 5.77%. From mid-October and into November, LIBOR
declined dramatically. As a result, recent maximum rates have been below 2.50%.
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 monthly dividends of $0.1458 per share for the first 11 months of
the fiscal year and a monthly dividend of $0.095 in October 2008. In December
2008, the Fund announced a further reduction in the dividend level to $0.0664.
Given the weakness in the international equity markets and in the credit
markets, 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
Annual Report | October 31, 2008 | 3
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
Dear Shareholder continued
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 28 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 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.
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, 2008
4 | Annual Report | October 31, 2008
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, 2008.
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1. 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 changes in 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. A change to one of the
Fund's non-fundamental investment policies effective October 7, 2008 allows the
Fund to invest without limit in convertible securities of any credit quality.
Previously, the Fund was required to maintain a minimum weighted average
portfolio rating of investment grade with respect to the portion of the Fund's
managed assets invested in convertible securities. This modification was
designed to expand the portfolio management flexibility of the Fund and may
provide an opportunity to enhance shareholder returns through the investment
manager's expanded investment capabilities and reduce risks during certain
market environments. However, increased investment in lower-rated securities
also increases 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. We address this risk through rigorous credit
research, carefully scrutinizing each issuer's financial statements and
attempting 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, to seek to generate current gains from
option premiums.
The Fund currently uses financial leverage through the issuance of preferred
shares. 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.
Additional leverage was in place through bank loan swaps, discussed in Question
6.
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 common shares 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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2. PLEASE TELL US ABOUT THE ECONOMIC AND MARKET ENVIRONMENT OVER THE LAST 12
MONTHS.
In the mid-year report for this Fund, we described the six-month period ended
April 30, 2008, as a time of economic uncertainty and turmoil in capital
markets. Since that time, there has been pronounced deterioration in the economy
and in equity and debt markets throughout the world.
The U.S. economy, as measured by real gross domestic product, contracted in the
third quarter of 2008, and many economists are now predicting several quarters
of negative real growth. Unemployment has risen sharply; consumer spending has
dropped; and business investment has weakened as even firms in healthy financial
condition have become reluctant to expand in an environment of heightened
uncertainty and tighter credit.
The present crisis originated with the end of a housing boom fueled by
excessively easy credit. As the prices of houses fell below mortgage balances,
losses on mortgage-based securities mounted, eroding the capital of financial
institutions and initiating a vicious cycle of de-leveraging. The process began
in late 2007 as a correction in the sub-prime mortgage market, but it has
intensified markedly, with profound implications for the entire U.S. economy and
related effects on global markets and economies. In fact, many foreign
economies, especially those that depend on exports for growth, have weakened
more than the U.S. economy.
Annual Report | October 31, 2008 | 5
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
QUESTIONS & ANSWERS continued
Credit markets have become so intolerant of risk that they are essentially
frozen. In an attempt to alleviate the financial crisis, the U.S. government has
taken unprecedented actions, including instituting temporary insurance on money
market funds, expanding access by financial institutions to the Federal Reserve,
and investing directly in some financial institutions. Some large financial
firms have been allowed to fail, while others were rescued, and takeovers of
troubled financial firms have been arranged. Other central banks have also taken
robust action to support banking systems and stimulate economic growth.
Among markets in developed economies, Japan was particularly weak; the Nikkei
225 Index(1), the major index used for measuring performance of stocks on the
Tokyo Stock Exchange, had a negative return of -47.91% for the 12-month period
ended October 31, 2008. For the same time period, European markets were also
quite weak; return of the FTSE EuroTop 100(2) returned -37.34%.
In this very tough environment, markets have been extremely volatile, and
essentially all asset classes had negative returns. The Standard & Poor's 500
Index(3), which is generally regarded as a good indicator of the broad stock
market, returned -36.10% for the 12-month period ended October 31, 2008. World
equity markets performed even worse during that time period: the MSCI World
Index(4), which measures performance of world equity markets, returned -41.51%
for the same period.
Convertible securities, which in the past have been less volatile than straight
equities, performed almost as poorly: return of the Merrill Lynch All U.S.
Convertibles Index(5) was -35.42% for the same time period. A major reason for
the negative performance was selling by hedge funds, which had invested in
convertible securities while shorting the underlying common stocks. Unable to
get the financing they had used in the past, hedge funds had to unwind their
positions by selling convertibles into a market with little demand, and prices
dropped precipitously.
In the bond market, we have seen unprecedented spreads between yields of
corporate bonds and U.S. Treasury securities, which are considered not to carry
credit risk. In this disastrous market, the only bonds with positive returns
were those with little or no credit risk: the Lehman 10-20 Year U.S. Treasury
Index(6) returned 4.13% for the 12-month period ended October 31, 2008. The
Lehman Brothers Aggregate Bond Index(7), which measures return of the U.S. bond
market as a whole, returned 0.30%, but the return of the Merrill Lynch High
Yield Master II Index(8), which measures performance of the high-yield bond
market, was -25.40% for the same time period.
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3. 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 12-month period
ending October 31, 2008, the Fund provided a total return based on market price
of -58.94% and a return of -60.31% based on NAV. As of October 31, 2008, the
Fund's market price of $5.99 represented a discount of 12.04% to NAV of $6.81. A
year earlier, at October 31, 2007, the Fund's closing market price was $16.75
and NAV was $19.37.
The market value of the Fund's shares fluctuates from time to time, and it may
be higher or lower than the Fund's NAV. The current discount to NAV may provide
an opportunity for suitable investors to purchase shares of the Fund below the
market value of the securities in the underlying portfolio. We believe that,
over the long term, the progress of the NAV will be reflected in the market
price return to shareholders.
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4. HOW DID YOU ALLOCATE THE FUND AMONG ASSET CLASSES OVER THE LAST YEAR?
This extraordinarily challenging market has prompted us to make some significant
adjustments in the portfolio's allocation among asset classes. These changes
have produced immediate increases in income, and we believe they will contribute
importantly to future returns. We have seen an unprecedented deleveraging in
securities markets, as hedge funds, private equity funds and other types of
investors have been forced to sell securities to meet margin calls
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1 The Nikkei 225 Index is a stock market index for the Tokyo Stock Exchange
(TSE). It has been calculated daily by the Nihon Keizai Shimbun (Nikkei)
newspaper since 1971. It is a price-weighted average (the unit is Japanese
yen), and the components are reviewed once a year. Currently, the Nikkei is
used as the major indicator for the Japanese economy, similar to the Dow
Jones Industrial Average.
2 FTSE EuroTop 100 is a modified capitalization-weighted index of the most
actively traded and highly capitalized stocks in the pan-European markets.
The components are determined by those stocks with the highest market
capitalization in each country. It has a base date of December 29, 1989 with
a base value of 1000.
3 Standard and Poor's 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.
4 MSCI World Index is a free float-adjusted market capitalization index that
measures global developed market equity performance of the developed market
country indices of Europe, Australasia, the Far East, the U.S. and Canada.
5 The Merrill Lynch All U.S. Convertibles Index (VXA0) is comprised of
approximately 500 issues of convertible bonds and preferred stock of all
qualities.
6 The Lehman 10-20 Year U.S. Treasury Index is comprised of securities in the
Treasury Index (i.e., public obligations of the U.S. Treasury) with a
maturity from 10 up to (but not including) 20 years.
7 The Lehman Brothers 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.
8 The Merrill Lynch High Yield Master II Index is a commonly used benchmark
index for high yield corporate bonds. It is a measure of the broad high yield
market.
These indices are unmanaged and it is not possible to invest directly in any
index.
6 | Annual Report | October 31, 2008
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
QUESTIONS & ANSWERS continued
or redemptions. Forced selling by other types of investors has presented us
opportunities to buy some high-quality securities at what we believe are very
attractive prices. This illustrates one of the advantages of a closed-end fund;
we are not faced with the need to sell securities for redemptions.
Convertible securities represented 61.0% of the portfolio as of October 31,
2007, and 64.1% as of April 30, 2008. As of October 31, 2008, convertible
securities represented 62.4% of the portfolio, and the majority of this
position, approximately 38.4%, is in convertible bonds. Ordinarily, we would
expect convertibles to hold up better than straight equities in a down market.
But with both the credit and equity components of the convertible market under
extreme pressure, convertibles weakened in line with the equity markets.
At mid-year, approximately half of our convertible allocation was in convertible
preferred stocks, some of which were synthetic convertibles created to gain
desired exposure to global companies we feel are attractive but do not offer
existing convertibles with the yield or credit rating appropriate for the Fund.
The recent change in the Fund's policy to eliminate the requirement for the
convertible portion of the portfolio to have a weighted average rating of
investment grade gives us greater flexibility to select other securities with
more attractive profiles than the synthetic convertibles we formerly used.
The very weak markets have created opportunities to simultaneously increase
income and improve the portfolio's credit quality. We no longer need to hold a
significant position in convertible preferreds, which we formerly used as a
major source of income. Now it is possible with the convertible bonds of
companies with sound financials, to obtain a yield near 20% with a conversion
feature to equity should markets rebound, and the right of putting the security
back to the issuer within two years. In this market, convertible bonds are more
desirable compared to convertible preferred stock because bonds are more senior
in the company's capital structure. They have a true bond floor, and thus less
downside should the common equity continue to fall, but still offer upside
participation if the equity market improves. We are finding some high-quality
convertible bonds with very modest premiums for the conversion feature. If the
market fails to rebound, many of the bonds we have purchased recently should
provide a total return of 10% to 15%. If the underlying stock moves higher the
conversion feature provides upside participation. If the market moves even
lower, the put feature provides protection allowing us to sell the security back
to the issuer at a specified price in the future.
Rigorous credit research is especially important in the selection of high-yield
bonds for this Fund, and Advent's proprietary credit research emphasizes
improving cash flow and strong balance sheets. We focus on the higher-quality
segment of the high-yield bond market, avoiding issuers with deteriorating
credit metrics.
As described above, the Fund's mandate is to invest at least 50% of its assets
in foreign securities. We have kept the position in foreign securities close to
the minimum in recent months because we believe that there is greater risk in
foreign securities than in the U.S. We continue to keep most of the foreign
exposure in established markets such as Europe and Japan, gaining exposure to
emerging markets mainly by owning securities of companies in developed markets
that also do business in emerging markets where there is the potential for rapid
growth.
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5. WHICH INVESTMENT DECISIONS CONTRIBUTED TO THE FUND'S PERFORMANCE?
In terms of industry groups, defensive groups such as pharmaceuticals and health
care held up better than some other areas. Securities of several pharmaceutical
companies including Teva Pharmaceutical Industries Ltd. (3.7% of long-term
investments), Mylan, Inc. (2.7% of long-term investments), Shire PLC (2.0% of
long-term investments), and Bayer Capital Corp. BV (2.5% of long-term
investments) performed reasonably well.
Some of the Fund's convertible bonds held up reasonably well. These were bonds
purchased at a discount to par, for their attractive yields and structurally
superior characteristics. We purchased convertible debt of Cap Gemini SA (1.6%
of long-term investments), a France-based provider of technology outsourcing
services, at 91% of par yielding 9% to a three-year maturity while at the same
time retaining the option to participate should the stock price recover.
During the past fiscal year, we increased the Fund's currency hedge because we
believe that foreign currencies were overvalued relative to the U.S. dollar.
That hedge contributed to performance by helping to protect the portfolio
against the currency depreciation of foreign currency denominated holdings
against the dollar.
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6. WHICH DECISIONS HURT PERFORMANCE?
Industry sectors that performed especially poorly include financials, materials
and energy. In the financials sector, convertible preferreds of AMG Capital
Trust II (0.3% of long-term investments), Citigroup, Inc. (1.4% of long-term
investments) and SLM Corp. (2.4% of long-term investments), were significant
detractors. Other negatives were a convertible bond of Chesapeake Energy Corp.
(0.8% of long-term investments), a natural gas producer, and the convertible
preferred of Freeport-McMoRan Copper & Gold, Inc. (1.0% of long-term
investments).
Early in the Fund's fiscal year, the Fund had exposure to bank loans through
total return swap positions. We initially invested in bank loans soon after the
Fund was established in May 2007 because we believed these loans represented a
reliable source of income to help support the Fund's distribution. In these
total
Annual Report | October 31, 2008 | 7
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
QUESTIONS & ANSWERS continued
return swaps, the Fund puts up a portion of the underlying value of the loan and
in exchange receives the total return of the underlying asset. Because they
require a small capital outlay these swaps create leverage, increasing the
volatility of a portfolio, both the upside and the downside. Bank loans have
traditionally been a low-volatility asset class, but under recent market
conditions bank loans have been highly volatile. We believe the extreme weakness
in bank loans was mainly a matter of market dislocation with supply vastly
exceeding demand. The Fund's position in these bank loans was one cause of the
deterioration in the Fund's NAV over this period.
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7. HOW HAS THE FUND'S LEVERAGE STRATEGY AFFECTED PERFORMANCE?
The Fund utilizes leverage (borrowing) as part of its investment strategy. The
purpose of leverage is 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. In addition to the swaps on bank loans discussed above, the Fund
currently implements its leverage strategy through the issuance of Auction
Market Preferred Shares ("AMPS").
The broad auction-rate preferred securities market has experienced considerable
disruption in the past several months, and your Fund was not immune to this
disruption. Since mid-February 2008, the auctions for nearly all auction-rate
preferred shares, including AMPS such as those issued by the Fund, have failed.
We believe that this increase in failed auctions is simply a liquidity issue.
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.
The Fund has two seven-day series of AMPS, Series T7, which auctions each
Tuesday, and Series W7, which auctions each Wednesday. The established maximum
rates during this period were based on a spread of 125 basis points over the
applicable LIBOR rates, with the maximum rates ranging from 3.27% to 5.77%. From
mid-October and into November, LIBOR declined dramatically. As a result, recent
maximum rates have been below 2.50%. We will continue to evaluate the benefits
and impacts of leverage on the Fund as well as explore other methods of
utilizing leverage.
There is no guarantee that the Fund's leverage strategy will be successful, and
the Fund's use of leverage may cause the Fund's NAV and market price of common
shares to be more volatile. Leverage adds value only when the return on
securities purchased exceeds the cost of leverage. Since the portfolio's total
return was negative during this period, the effect of leverage was negative.
Also, as discussed above, the use of total return swaps on bank loans creates
another form of leverage, and this also detracted from performance.
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8. WHAT IS YOUR CURRENT OUTLOOK FOR THE MARKETS AND THE FUND?
As difficult as the market has been over the last year, we believe that current
market conditions provide some extraordinarily attractive opportunities for this
Fund, which has the ability to invest at a time when many other investors are
forced to sell holdings regardless of value. As discussed above, we have been
able to take advantage of dislocations in credit markets, buying quality debt
securities at very attractive prices. A recent example is a series of
convertible bonds issued by Transocean, Inc. (2.9% of long-term investments as
of 10/31/08) an international provider of offshore contract drilling services
for oil and gas wells; we initially had a small position in these bonds and have
recently added to it. One Transocean bond issue is selling at a substantial
discount to par with a yield of approximately 8.6 % to the first put. This is a
large, liquid issue with investment grade credit ratings. With Transocean's
straight debt trading at a lower yield, this convertible bond offers a very
attractive income opportunity plus a call option on the stock. This is a company
with good growth prospects, ample free cash flow and a substantial order
backlog, with the stock selling at what we consider to be a very attractive
price relative to the intrinsic value.
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. As financial markets continue to experience turmoil, we see many
opportunities in the convertible market. We believe that, over the long term,
our 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.
8 | Annual Report | October 31, 2008
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
QUESTIONS & ANSWERS continued
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AGC RISKS AND OTHER CONSIDERATIONS
The views expressed in this report reflect those of the Portfolio Managers only
through the report period as stated on the cover. These views are subject to
change at any time, based on market and other conditions and should not be
construed as a recommendation of any kind. The material may also contain
forward-looking statements that involve risk and uncertainty, and there is no
guarantee they will come to pass. There can be no assurance that the Fund will
achieve its investment objectives. The value of the Fund will fluctuate with the
value of the underlying securities. Historically, closed-end funds often trade
at a discount to their net asset value. The Fund is subject to investment risk,
including the possible loss of the entire amount that you invest. Past
performance does not guarantee future results.
CONVERTIBLE SECURITIES. The Fund is not limited in the percentage of its assets
that may be invested in convertible securities. Convertible securities generally
offer lower interest or dividend yields than non-convertible securities of
similar quality. The market values of convertible securities tend to decline as
interest rates increase and, conversely, to increase as interest rates decline.
However, the convertible security's market value tends to reflect the market
price of the common stock of the issuing company when that stock price is
greater than the convertible's "conversion price," which is the predetermined
price at which the convertible security could be exchanged for the associated
stock.
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 (3) certain
national policies which may restrict the Fund's investment opportunities.
DERIVATIVE RISK. The Fund may utilize derivative instruments (which derive their
value by reference to another instrument, security or index) for investment
purposes, such as obtaining investment exposure to either of the Fund's
principal investment categories; risk management purposes, such as hedging
against fluctuations in securities prices or interest rates; diversification
purposes; or to manage the duration of the Fund. The derivative instruments in
which the Fund may invest, include, but are not limited to, futures contracts on
securities, indices, other financial instruments or currencies, options on
futures contracts and exchange traded and over-the-counter options on
securities, indices or currencies; interest rate swaps; total return swaps;
credit default swaps; forward currency contracts and options thereon; structured
notes and foreign exchange hedging instruments.
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, 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. Please
see www.claymore.com/agc for a more detailed discussion about Fund risks and
considerations.
Annual Report | October 31, 2008 | 9
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Fund SUMMARY |AS OF OCTOBER 31, 2008 (unaudited)
FUND STATISTICS
--------------------------------------------------------------------------------
Share Price $5.99
Common Share Net Asset Value $6.81
Premium/Discount to NAV -12.04%
Net Assets ($000) $216,892
--------------------------------------------------------------------------------
TOTAL RETURNS
--------------------------------------------------------------------------------
(INCEPTION 5/29/07) MARKET NAV
--------------------------------------------------------------------------------
One Year -58.94% -60.31%
Since Inception - annualized -51.88% -46.33%
--------------------------------------------------------------------------------
% OF LONG-TERM
TOP TEN INDUSTRIES INVESTMENTS
--------------------------------------------------------------------------------
Banks 13.6%
Pharmaceuticals 11.3%
Diversified Financial Services 9.8%
Oil & Gas 8.3%
Mining 5.6%
Oil & Gas Services 5.4%
Telecommunications 5.1%
Chemicals 4.7%
Computers 3.1%
Holding Companies-Diversified 2.9%
--------------------------------------------------------------------------------
% OF LONG-TERM
TOP TEN ISSUERS INVESTMENTS
--------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd. 3.7%
BES Finance Ltd. Ser. Emtn 3.2%
Transocean, Inc. 2.9%
Wachovia Bank NA, Ser. Bank of NY Mellon 2.8%
Mylan, Inc. 2.7%
Bayer Capital Corp. BV 2.5%
SLM Corp., Ser. C 2.4%
Allegro Investment Corp. SA, Ser. SABMiller Plc 2.1%
Cia Vale Do Rio Doce 2.0%
Shire PLC 2.0%
--------------------------------------------------------------------------------
% OF LONG-TERM
PORTFOLIO BREAKDOWN BY COUNTRY INVESTMENTS
--------------------------------------------------------------------------------
United States 44.5%
Cayman Islands 9.9%
France 5.0%
Canada 5.0%
Netherlands 4.2%
Netherlands Antilles 4.0%
Germany 3.9%
United Kingdom 3.3%
Japan 3.1%
Jersey 2.9%
Belgium 2.7%
Bermuda 2.2%
Brazil 2.0%
Luxembourg 1.6%
Singapore 1.6%
Panama 1.5%
Switzerland 1.3
China 1.3%
--------------------------------------------------------------------------------
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.
graphic:chart
SHARE PRICE & NAV PERFORMANCE
Share
Price NAV
($) ($)
11/1/07 16.72 19.13
16.63 19.11
16.55 18.99
16.42 19.1
16.09 18.96
15.99 18.87
15.73 18.58
15.7 18.31
15.66 18.16
15.64 18.3
15.49 18.09
15.45 17.95
15.11 17.49
14.8 17.56
14.68 17.26
14.98 17.42
14.51 17.39
14.51 17.25
14.89 17.5
14.8 17.66
15.45 17.84
15.37 17.73
15.44 17.61
15.58 17.69
15.64 17.81
15.71 17.88
15.74 17.97
15.65 17.8
15.43 17.69
15.39 17.47
15.15 17.39
14.75 17.06
14.58 16.99
14.56 16.99
14.58 16.93
14.62 17.22
14.79 17.31
14.9 17.4
14.8 17.44
15.1 17.54
15.3 17.51
15.44 17.53
15.96 17.45
15.82 17.1
15.64 16.94
15.13 16.85
15.33 16.74
15.6 16.69
15.28 16.53
15.35 16.69
15.36 16.36
15.38 15.9
14.9 15.68
14.58 15.53
14.2 14.99
14.3 14.99
14.34 15.28
14.26 15.34
14.64 15.23
14.81 15.4
14.69 15.41
14.73 15.53
14.8 15.98
14.9 16.01
14.91 15.54
14.9 15.37
15.06 15.15
14.87 15.09
14.57 15.01
14.67 15.08
14.12 14.94
13.52 15
13.48 15.03
13.5 15.19
13.58 15.08
13.52 15.27
13.63 15.3
13.94 15.54
14 15.74
14.24 15.87
14.39 15.84
14.23 15.6
14.39 15.38
14.08 15.23
13.96 15.36
13.79 15.22
13.51 15.02
13.47 14.74
14.05 14.93
13.72 14.85
13.57 14.74
13.24 14.63
12.87 14.15
13 14.44
12.68 14.23
12.7 14.16
12.68 14.32
12.89 14.62
13.06 14.72
13.11 14.8
13.21 14.82
13.48 14.74
13.56 14.92
13.55 15.09
13.73 15.16
13.65 15.18
13.73 15.39
13.77 15.3
13.72 15.23
13.66 15.2
13.3 15.06
13.27 14.99
13.39 15.02
13.63 15.33
13.65 15.35
13.89 15.48
13.79 15.61
13.9 15.55
13.95 15.62
14.21 15.68
14.26 15.84
14.38 15.92
14.32 15.88
14.4 15.92
14.72 15.95
14.74 16.17
14.79 16.18
14.77 16.24
14.76 16.16
14.99 16.22
14.91 16.1
14.91 16.09
14.65 16.04
14.67 16.16
14.81 16.28
14.86 16.44
15.08 16.5
15.16 16.46
15.02 16.31
14.88 16.29
14.91 16.18
14.98 16.12
15.08 16.15
15.36 16.18
15.41 16.29
15.51 16.27
15.52 16.19
15.51 16.18
15.66 16.32
15.49 16.37
15.11 16.27
15.16 16.06
14.72 15.8
14.58 15.5
14.74 15.57
14.64 15.67
14.47 15.74
14.4 15.78
14.46 15.56
14.25 15.35
13.9 15.44
13.89 15.26
14 15.28
13.8 15.13
13.73 15.05
13.85 15.04
13.74 14.85
13.6 14.64
13.48 14.45
13.27 14.38
13.2 14.32
13.28 14.29
13.1 14.26
12.65 14.05
12.22 14.06
11.71 13.86
12.03 13.86
12.35 13.89
12.23 13.94
12.33 14.05
12.4 14.05
12.51 14.06
12.3 13.83
12.18 13.82
11.99 13.73
12.22 13.78
12.3 13.96
12.29 13.87
12.39 13.7
12.21 13.51
12.19 13.49
12.13 13.62
12.17 13.54
12.18 13.53
12.23 13.58
12.13 13.42
11.85 13.24
11.81 13.3
11.65 13.29
11.58 13.22
11.49 13.09
11.36 13.18
11.34 13.2
11.46 13.24
11.33 13.14
11.36 13.16
11.38 13.3
11.68 13.44
11.74 13.48
11.85 13.39
11.82 13.22
11.59 12.96
11.55 12.89
11.71 13.04
11.52 12.58
11.49 12.58
10.7 12.33
10.45 12.54
10 12.07
9.39 11.94
8.19 11.51
8.81 11.52
9.69 12.02
9.7 11.84
9.33 11.64
9.19 11.51
9.45 11.53
9.15 11.27
7.55 10.47
8.24 10.61
8.09 10.41
7.78 9.8
7.67 9.7
6.45 8.96
6.18 8.59
5.54 8.23
4.5 7.79
4.17 7.29
5.39 7.65
5.86 7.9
5.41 7.22
5.65 7.08
5.8 7.1
6.17 7.21
6.15 7.07
5.76 6.68
5.52 6.53
5.32 6.32
5.09 6.06
5.38 6.29
5.54 6.52
5.68 6.68
10/31/08 5.99 6.81
graphic:bar chart
MONTHLY DIVIDENDS PER SHARE
Nov 07 0.1458
Dec 0.1458
Jan 08 0.1458
Feb 0.1458
Mar 0.1458
Apr 0.1458
May 0.1458
Jun 0.1458
Jul 0.1458
Aug 0.1458
Sep 0.1458
Oct 0.095
Nov 0.095
Dec 08 0.0664
graphic:pie chart
PORTFOLIO COMPOSITION (% of Total Investments)
Asset Class
Convertible Bonds 38.4%
Short Term Investments 27.1%
Convertible
Preferred Stocks 24.0%
Corporate Bonds 7.4%
Common Stocks 2.3%
Exchange Traded Funds 0.8%
10 | Annual Report | October 31, 2008
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Portfolio of INVESTMENTS | OCTOBER 31, 2008
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
LONG-TERM INVESTMENTS - 151.5%
CONVERTIBLE BONDS - 79.8%
AGRICULTURE - 2.1%
HKD
35,500,000 Chaoda Modern Agriculture Holdings Ltd., Ser.
CHAO, BB 0.00%, 5/8/11 (Cayman Islands) $ 4,494,012
----------------------------------------------------------------------------
AUTO MANUFACTURERS - 1.5%
$ 5,000,000 General Motors Corp. Ser. D, B-
1.50%, 6/1/09 (a) 3,300,000
----------------------------------------------------------------------------
BANKS - 8.8%
$13,000,000 BES Finance Ltd., Ser. emtn, A
1.25%, 2/26/11 (Cayman Islands) 10,501,400
$ 2,000,000 Boston Private Financial Holdings , Inc., NR
3.00%, 7/15/27 1,747,500
EUR
4,500,000 Kreditanstalt fuer Wiederaufbau, Ser. DTE, AAA
3.25%, 6/27/13 (Germany) 5,634,900
$ 1,500,000 National City Corp., A-
4.00%, 2/1/11 1,258,125
----------------------------------------------------------------------------
19,141,925
----------------------------------------------------------------------------
BUILDING MATERIALS - 1.2%
JPY
260,000,000 Asahi Glass Co Ltd., Ser. 5, A
1.90%, 12/26/08 (Japan) 2,643,234
----------------------------------------------------------------------------
CHEMICALS - 7.1%
EUR
5,500,000 Bayer Capital Corp. BV, BBB
6.625%, 6/1/09 (Netherlands) 8,155,303
$ 8,000,000 Deutsche Bank AG, Ser. Sinofert Holdings, NR
8.00%, 12/23/08 (Germany)(b)(c) 5,099,200
EUR
2,650,000 SGL Carbon AG, BB
0.75%, 5/16/13 (Germany) 2,222,095
----------------------------------------------------------------------------
15,476,598
----------------------------------------------------------------------------
COAL - 0.5%
$ 2,000,000 Massey Energy Co., BB-
3.25%, 8/1/15 (a) 1,110,000
----------------------------------------------------------------------------
COMMERCIAL SERVICES - 1.8%
GBP
2,500,000 Rank Group PLC, B
3.875%, 1/20/09 (Great Britain) 3,955,390
----------------------------------------------------------------------------
COMPUTERS - 3.9%
EUR
11,500,000 Cap Gemini SA, Ser. CAP, BBB-
1.00%, 1/1/12 (France) 5,106,704
$ 3,500,000 EMC Corp., A-
1.75% ,12/1/11 3,351,250
----------------------------------------------------------------------------
8,457,954
----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 7.2%
EUR
2,000,000 International Power Ltd., NR
3.25%, 7/20/13 (Jersey) 1,512,784
$ 1,375,000 Merrill Lynch & Co., Inc., NR
0.00%, 3/13/32 (a) 1,411,163
EUR
2,100,000 MTU Aero Engines Finance BV, Ser. MTU, BB+
2.75%, 2/1/12 (Netherlands) 2,127,937
$ 4,500,000 Nasdaq OMX Group (The), BB+
2.50%, 8/15/13(a)(c) 3,375,000
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
$ 2,000,000 National Financial Partners Corp., NR
0.75%, 2/1/12 $ 992,500
$ 2,500,000 SOCO Finance Jersey Ltd., Ser. SIA, NR
4.50%, 5/16/13 (Jersey) 1,637,500
CHF
5,750,000 Swatch Group Finance SA, NR
2.625%, 10/15/10 (Luxembourg) 4,664,291
----------------------------------------------------------------------------
15,721,175
----------------------------------------------------------------------------
ELECTRICAL COMPONENTS & EQUIPMENT - 3.0%
$ 4,000,000 General Cable Corp., B+
1.00%, 10/15/12 (a) 2,030,000
EUR
4,449,000 Nexans SA, BB+
1.50%, 1/1/13 (France) 3,432,013
$ 1,800,000 Suntech Power Holdings Co. Ltd., NR
0.25%, 2/15/12 (Cayman Islands) (a) 1,136,250
----------------------------------------------------------------------------
6,598,263
----------------------------------------------------------------------------
ELECTRONICS - 2.4%
$ 6,500,000 Flextronics International Ltd., BB-
1.00%, 8/1/10 (Singapore) 5,297,500
----------------------------------------------------------------------------
FOOD - 1.8%
EUR
3,000,000 Delhaize Group, NR
2.75%, 4/30/09 (Belgium) 3,780,403
----------------------------------------------------------------------------
HEALTHCARE-PRODUCTS - 1.2%
$ 4,967,000 Hologic, Inc., B+
2.00%, 12/15/37 (a)(d) 2,595,257
----------------------------------------------------------------------------
HOLDING COMPANIES-DIVERSIFIED - 2.4%
EUR
4,500,000 Sagerpar, NR
2.95%, 4/27/12 (Belgium) 5,118,960
----------------------------------------------------------------------------
LEISURE TIME - 2.2%
$ 5,000,000 Carnival Corp., A-
2.00%, 4/15/21 (Panama) (a) 4,206,250
$ 1,000,000 Carnival Corp., A-
0.50%, 4/29/33 (Panama) (d) 608,750
----------------------------------------------------------------------------
4,815,000
----------------------------------------------------------------------------
MACHINERY - DIVERSIFIED - 2.8%
$12,500,000 Allegro Investment Corp. SA, Ser. Nabtesco, NR
9.00%, 7/16/09 (Japan)(b) 6,095,000
----------------------------------------------------------------------------
METAL FABRICATE/HARDWARE - 2.4%
EUR
7,500,000 Figaro Finance Ltd., Ser. Vallourec, NR
3.875%, 9/18/09 (France) 5,212,278
----------------------------------------------------------------------------
MINING - 1.2%
$ 4,360,000 Kinross Gold Corp., NR
1.75%, 3/15/28 (Canada)(c) 2,610,550
----------------------------------------------------------------------------
OIL & GAS - 10.3%
$ 3,500,000 Carrizo Oil & Gas, Inc., NR
4.375%, 6/1/28 1,881,250
Chesapeake Energy Corp., BB
$ 2,800,000 2.25%, 12/15/38 (a) 1,403,500
$ 1,600,000 2.75%, 11/15/35 (a) 1,114,000
HKD
40,000,000 China Petroleum & Chemical Corp., Ser. SINO, NR
0.00%, 4/24/14 (China) 4,380,019
Annual Report | October 31, 2008 | 11
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
PORTFOLIO OF INVESTMENTS (continued)
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
OIL & GAS (CONTINUED)
EUR 100,000 Etablissements Maurel et Prom, NR
3.50%, 1/1/10 (France) $ 2,705,931
CAD
3,000,000 Harvest Energy Trust, NR
7.25%, 9/30/13 (Canada)
Transocean, Inc., BBB+ 1,394,086
$ 7,500,000 1.625%, Ser. A, 12/15/37 (Cayman Islands) (a) 6,637,500
$ 3,500,000 1.50%, Ser. B, 12/15/37 (Cayman Islands) 2,817,500
----------------------------------------------------------------------------
22,333,786
----------------------------------------------------------------------------
OIL & GAS SERVICES - 2.5%
$ 4,500,000 Core Laboratories LP, NR
0.25%, 10/31/11 3,965,625
$ 2,500,000 Subsea 7, Inc., Ser. SUB, NR
2.80%, 6/6/11 (Cayman Islands) 1,365,625
----------------------------------------------------------------------------
5,331,250
----------------------------------------------------------------------------
PHARMACEUTICALS - 8.6%
$10,000,000 Shire PLC, Ser. REGs, NR
2.75%, 5/9/14 (Jersey) 6,449,790
$ 7,500,000 Teva Pharmaceutical Finance Co. BV, Ser. D, BBB+
1.75%, 2/1/26 (Netherlands Antillies) 7,865,625
$ 4,500,000 Teva Pharmaceutical Finance LLC, Ser. C, BBB+
0.25%, 2/1/26 4,235,625
----------------------------------------------------------------------------
18,551,040
----------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 3.1%
$ 5,000,000 Hospitality Properties Trust, BBB
3.80%, 3/15/27 2,850,000
$ 6,000,000 Host Hotels & Resorts LP, BBB-
2.625%, 4/15/27(c) 3,757,500
----------------------------------------------------------------------------
6,607,500
----------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.2%
$ 3,500,000 Qwest Communications International, Inc., B+
3.50%, 11/15/25 2,677,500
----------------------------------------------------------------------------
TRANSPORTATION - 0.6%
$ 2,100,000 YRC Worldwide, Inc., B+
5.00%, 8/8/23 1,197,000
----------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS - 79.8%
(Cost $234,162,159) 173,121,575
----------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
----------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS - 49.8%
Advertising - 2.1%
419,750 Elf Special Financing Ltd., B+
3.16875%, 6/15/09
(Cayman Islands)(c)(e) $ 4,535,500
----------------------------------------------------------------------------
BANKS - 11.8%
8,100 Bank of America Corp., Ser. L, 7.25%, NR (a) 5,670,000
146,200 Citigroup, Inc., Ser. T, 6.50%, NR (a) 4,709,102
59,250 KeyCorp, Ser. A, 7.75%, NR 5,804,722
295,350 Wachovia Bank NA, Ser. Bank of NY Mellon,
10.00%, 2009 (a) (b) (c) 9,359,642
----------------------------------------------------------------------------
25,543,466
NUMBER
OF SHARES VALUE
----------------------------------------------------------------------------
BEVERAGES - 3.2%
----------------------------------------------------------------------------
529,287 Allegro Investment Corp. SA, Ser.
SABMiller Plc, 0.00%, 2008
(United Kingdom) (b) $ 6,837,284
----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 6.1%
60,000 AMG Capital Trust II, 5.15%, 2037 (a) 915,000
5,400,000 Givaudan Nederland Finance BV, 5.375%,
2010 (Netherlands) 3,419,394
53,385 Legg Mason, Inc., 7.00%, 2011 1,222,516
15,085 SLM Corp., Ser. C, 7.25%, 2010 7,761,233
----------------------------------------------------------------------------
13,318,143
----------------------------------------------------------------------------
ELECTRIC - 3.9%
115,000 Entergy Corp., 7.625%, 2009 (a) 5,409,600
15,000 NRG Energy, Inc., 5.75%, 2009 (a) 3,125,625
----------------------------------------------------------------------------
8,535,225
----------------------------------------------------------------------------
HOUSEHOLD PRODUCTS/WARES - 2.1%
137,000 Avery Dennison Corp., 7.875%, 2020 (a) 4,662,110
----------------------------------------------------------------------------
INSURANCE - 1.2%
40,000 Aspen Insurance Holdings Ltd., Ser. AHL,
5.625%, NR (Bermuda) 1,570,000
67,475 XL Capital Ltd., 10.75%, 2011(Cayman
Islands) 1,016,174
----------------------------------------------------------------------------
2,586,174
----------------------------------------------------------------------------
MINING - 7.2%
223,250 Credit Suisse, Ser. Barrick Gold Corp.,
9.00%, 2009 (Canada) (a) (b) 5,226,283
342,720 Deutsche Bank AG, Ser. Cia Vale Do Rio Doce,
10.00%, 2009 (Brazil) (a) (b) (c) 5,092,819
Freeport-McMoRan Copper & Gold, Inc.
40,000 6.75%, 2010 (a) 1,951,200
2,050 5.50%, NR 1,376,575
23,789 Hecla Mining Co., 6.50%, 2011 616,135
50,000 Vale Capital Ltd., Ser. RIO, 5.50%, 2010
(Brazil) (f) 1,412,500
----------------------------------------------------------------------------
15,675,512
----------------------------------------------------------------------------
OIL & GAS SERVICES - 4.0%
101,444 Citigroup Funding, Inc., Ser. Schlumberger
Ltd., 9.00%, 2009 (Netherlands Antilles)
(a) (b) 5,397,714
149,250 Merrill Lynch & Co. Inc., Ser. Halliburton,
8.00%, 2009 (a) (b) (c) 3,201,413
----------------------------------------------------------------------------
8,599,127
----------------------------------------------------------------------------
PHARMACEUTICALS - 6.6%
15,500 Mylan, Inc., 6.50%, 2010 (a) 8,829,730
40,000 Schering-Plough Corp., 6.00%, 2010 (a) 5,391,200
----------------------------------------------------------------------------
14,220,930
----------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.6%
11,673 Lucent Technologies Capital Trust I, 7.75%,
2017 (f) 3,501,900
----------------------------------------------------------------------------
Total Convertible Preferred Stocks - 49.8%
(Cost $182,918,864) 108,015,371
----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
CORPORATE BONDS - 15.4%
AGRICULTURE - 0.7%
$ 2,000,000 Vector Group Ltd., NR
11.00%, 8/15/15 $1,570,000
12 | Annual Report | October 31, 2008
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
PORTFOLIO OF INVESTMENTS (continued)
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.4%
$ 1,000,000 Tenneco, Inc., Ser. B, BB
10.25%, 7/15/13 $ 855,000
----------------------------------------------------------------------------
COMPUTERS - 0.8%
2,500,000 Sungard Data Systems, Inc., B-
10.25%, 8/15/15 1,762,500
----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 1.5%
3,325,000 Axcan Intermediate Holdings, Inc., B-
12.75%, 3/1/16 (c) 2,743,125
85,000 GMAC LLC, B-
4.054%, 5/15/09 (e) 74,079
250,000 GMAC LLC, B-
7.75%, 1/19/10 187,296
250,000 GMAC LLC, B-
5.625%, 5/15/09 212,025
----------------------------------------------------------------------------
3,216,525
----------------------------------------------------------------------------
HEALTHCARE-SERVICES - 1.3%
3,000,000 HCA , Inc., B-
8.36%, 4/15/24 1,974,789
1,000,000 HCA , Inc., BB-
9.25%, 11/15/16 852,500
----------------------------------------------------------------------------
2,827,289
----------------------------------------------------------------------------
HOLDING COMPANIES-DIVERSIFIED - 2.1%
5,000,000 Leucadia National Corp., BB+
8.125%, 9/15/15 4,450,000
----------------------------------------------------------------------------
MEDIA - 0.8%
2,500,000 Nielsen Finance LLC / Nielsen Finance Co.,
B- 10.00%, 8/1/14 1,825,000
----------------------------------------------------------------------------
OIL & GAS SERVICES- 1.7%
3,000,000 CCS, Inc., B-
11.00%, 11/15/2015 (Canada) (c) 2,325,000
2,000,000 Forbes Energy Services Ltd., B
11.00%, 2/15/2015 (Bermuda) 1,400,000
----------------------------------------------------------------------------
3,725,000
----------------------------------------------------------------------------
SEMICONDUCTORS - 1.2%
4,400,000 Amkor Technology, Inc., B+
9.25%, 6/1/16 2,640,000
----------------------------------------------------------------------------
TELECOMMUNICATIONS - 4.9%
1,500,000 Broadview Networks Holdings, Inc., CCC+
11.375%, 9/1/12 1,087,500
2,000,000 Centennial Communications Corp., CCC+
10.00%, 1/1/13 1,780,000
1,000,000 Fairpoint Communications, Inc., B+
13.125%, 4/1/18 (c) 710,000
4,500,000 Intelsat Jackson Holdings Ltd., CCC+
11.25%, 6/15/16 (Bermuda) 3,870,000
750,000 Intelsat Ltd., CCC+
6.50%, 11/1/13 (Bermuda) 378,750
1,500,000 Orascom Telecom Finance SCA, B-
7.875%, 2/8/14 (Luxembourg) (c) 682,500
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
$ 2,500,000 Sprint Capital Corp., BB
8.375%, 3/15/12 $ 2,013,875
----------------------------------------------------------------------------
10,522,625
----------------------------------------------------------------------------
TOTAL CORPORATE BONDS - 15.4%
(Cost $43,400,988) 33,393,939
----------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
----------------------------------------------------------------------------
COMMON STOCKS - 4.8%
AUTO MANUFACTURERS - 0.6%
89,400 Suzuki Motor Corp. (Japan) $ 1,276,234
----------------------------------------------------------------------------
OIL & GAS - 2.2%
180,000 Enerplus Resources Fund (Canada) 4,804,047
----------------------------------------------------------------------------
PHARMACEUTICALS - 2.0%
29,000 Roche Holding AG (Switzerland) 4,389,538
----------------------------------------------------------------------------
TOTAL COMMON STOCKS - 4.8%
(Cost $16,125,508) 10,469,819
----------------------------------------------------------------------------
EXCHANGE-TRADED FUNDS - 1.7%
80,000 iShares MSCI EAFE Index Fund (a)
(Cost $3,560,208) 3,569,600
----------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS - 151.5%
(Cost $480,167,727) 328,570,304
----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 56.4%
U.S. GOVERNMENT SECURITIES - 37.2%
$60,820,000 United States Treasury Bill, yielding
2.03%, 1/2/09 (f) $ 60,777,608
20,000,000 United States Treasury Bill yielding 0.10%,
1/29/09 (f) 19,979,460
----------------------------------------------------------------------------
(Cost $80,601,375) 80,757,068
----------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
----------------------------------------------------------------------------
MONEY MARKET FUNDS - 19.2%
41,512,487 Goldman Sachs Financial Prime Obligations
(Cost $41,512,487) $ 41,512,487
----------------------------------------------------------------------------
CONTRACTS
(100 SHARES
PER EXPIRATION EXERCISE
CONTRACT) PUT OPTIONS PURCHASED DATE PRICE VALUE
----------------------------------------------------------------------------
PUT OPTIONS PURCHASED - 0.0%
250 BBD (a) Dec-08 7.50 $ 17,500
----------------------------------------------------------------------------
(Cost $42,300)
TOTAL SHORT-TERM INVESTMENTS - 56.4%
(Cost $122,156,162) 122,287,055
----------------------------------------------------------------------------
TOTAL INVESTMENTS - 207.9%
(Cost $602,323,889) 450,857,359
Total Options Written - (0.5%) (1,072,660)
Other liabilities in excess of assets - (29.0%) (62,892,209)
Preferred Stock, at redemption value - (-78.4% of
Net Assets Applicable to Common Shareholders or
-37.7% of Total Investments) (170,000,000)
----------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON
SHAREHOLDERS-100.0% $216,892,490
----------------------------------------------------------------------------
Annual Report | October 31, 2008 | 13
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
Portfolio of INVESTMENTS continued
AG - Stock Corporation
Ltd. - Limited
LLC - Limited Liability Corp.
SA - Corporation
(a) All or a portion of this security position represents cover (directly or
through conversion rights) for outstanding options written.
(b) Synthetic Convertible - A synthetic convertible security is either a bond
or preferred security structured by an investment bank that provides
exposure to a specific company's common stock.
(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,
2008, these securities amounted to 19.3% of net assets.
(d) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(e) Floating rate security. The rate shown is as of October 31, 2008.
(f) All or a portion of these securities have been physically segregated in
connection with swap agreements.
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
PER EXPIRATION EXERCISE MARKET
CONTRACT) CALL OPTIONS WRITTEN(G) DATE PRICE VALUE
---------------------------------------------------------------------------------------------
100 AMG Capital Trust II, 5.15%, 2037 November 2008 $ 65.00 $ 1,500
75 AMG Capital Trust II, 5.15%, 2037 November 2008 70.00 750
100 AMG Capital Trust II, 5.15%, 2037 November 2008 80.00 1,000
50 AMG Capital Trust II, 5.15%, 2037 December 2008 55.00 9,125
100 Avery Dennison Corp., 7.875%, 2020 November 2008 35.00 23,000
7 Avery Dennison Corp., 7.875%, 2020 November 2008 50.00 105
100 Avery Dennison Corp., 7.875%, 2020 December 2008 40.00 12,000
300 BBD December 2008 10.00 87,750
250 BBD December 2008 12.50 44,375
90 Bank of America Corp., Ser. L,
7.25%, NR December 2008 25.00 14,220
200 Bayer Capital Corp. BV November 2008 49.00 31,194
125 Carnival Corp., A-, 2.00%, 4/15/21 January 2009 30.00 16,875
150 Chesapeake Energy Corp., 2.25% November 2008 30.00 1,500
75 Chesapeake Energy Corp., BB,
2.25%, 12/15/38 November 2008 27.50 2,025
50 Chesapeake Energy Corp., BB,
2.75%, 11/15/35 December 2008 25.00 9,750
100 Chesapeake Energy Corp., BB,
2.75%, 11/15/35 December 2008 27.50 12,500
150 Citigroup Funding, Inc., Ser.
Schlumberger Ltd., 9.00%, 2009 November 2008 65.00 6,000
100 Citigroup, Inc., Ser. T, 6.50%, NR December 2008 15.00 11,600
100 Credit Suisse, Ser. Barrick Gold
Corp., 9.00%, 2009 November 2008 25.00 17,900
250 Deutsche Bank AG, Ser. Cia Vale Do
Rio Doce, 10.00%, 2009 November 2008 13.00 35,000
100 Deutsche Bank AG, Ser. Cia Vale Do
Rio Doce, 10.00%, 2009 November 2008 14.00 9,000
100 Deutsche Bank AG, Ser. Cia Vale Do
Rio Doce, 10.00%, 2009 November 2008 16.00 3,600
CONTRACTS
(100 SHARES
PER EXPIRATION EXERCISE MARKET
CONTRACT) CALL OPTIONS WRITTEN(G) DATE PRICE VALUE
---------------------------------------------------------------------------------------------
125 Entergy Corp., 7.625%, 2009 November 2008 $ 95.00 $ 4,375
75 Entergy Corp., 7.625%, 2009 November 2008 100.00 2,625
50 Entergy Corp., 7.625%, 2009 December 2008 85.00 16,000
75 Entergy Corp., 7.625%, 2009 December 2008 90.00 13,688
100 Freeport-McMoRan Copper & Gold,
Inc., 6.75%, 2010 December 2008 35.00 25,400
100 Freeport-McMoRan Copper & Gold, Inc.,
6.75%, 2010 December 2008 40.00 14,400
100 General Cable Corp., B+, 1.00%,
10/15/12 December 2008 22.50 11,500
50 General Motors Corp.,.Ser. D, B- ,
1.50%, 6/1/09 November 2008 9.00 800
150 General Motors Corp.,.Ser. D, B- , 1.50%,
6/1/09 December 2008 9.00 8,100
75 Hologic, Inc., B+, 2.00%, 12/15/37 November 2008 22.50 750
100 iShares MSCI EAFE Index Fund December 2008 50.00 12,500
100 Massey Energy Co., BB-, 3.25%,
8/1/15 November 2008 35.00 1,500
50 Massey Energy Co., BB-, 3.25%,
8/1/15 November 2008 22.50 14,500
200 Merrill Lynch & Co., Inc., Ser.
Halliburton, 8.00%, 2009 November 2008 25.00 3,800
150 Merrill Lynch & Co., Inc., Ser.
Halliburton, 8.00%, 2009 December 2008 22.50 17,100
100 Merrill Lynch & Co., Inc., NR, 0.00%,
3/13/32 December 2008 20.00 16,100
100 Mylan, Inc., 6.50%, 2010 November 2008 12.50 500
50 Nasdaq OMX Group (The), BB+, 2.5%,
8/15/13 November 2008 35.00 6,750
75 Nasdaq OMX Group (The), BB+, 2.5%,
8/15/13 November 2008 37.50 4,500
50 Nasdaq OMX Group (The), BB+, 2.5%,
8/15/13 November 2008 32.50 14,000
200 NRG Energy, Inc., 5.75%, 2009 November 2008 27.50 10,000
100 Roche Holding AG November 2008 150.00 250,503
50 Schering-Plough Corp., 6.00%, 2010 December 2008 17.50 1,750
50 Suntech Power Holdings Co. Ltd., NR,
0.25%, 2/15/12 November 2008 35.00 500
200 Transocean, Inc., Ser. A, BBB+,
1.625%, 12/15/37 November 2008 80.00 160,000
150 Transocean, Inc., Ser. A, BBB+,
1.625%, 12/15/37 November 2008 95.00 30,750
225 Wachovia Bank NA, Ser. Bank of
NY Mellon, 10.00%, 2009 November 2008 37.50 13,500
100 Wachovia Bank NA, Ser. Bank of
NY Mellon, 10.00%, 2009 December 2008 35.00 27,500
100 Wachovia Bank NA, Ser. Bank of
NY Mellon, 10.00%, 2009 December 2008 32.50 38,500
---------------------------------------------------------------------------------------------
TOTAL CALL OPTIONS WRITTEN
(Premiums received $778,779) $1,072,660
---------------------------------------------------------------------------------------------
(g) Non-income producing security.
14 | Annual Report | October 31, 2008
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Statement of ASSETS AND LIABILITIES | OCTOBER 31, 2008
ASSETS
Investments in securities, at value (cost $602,323,889) $450,857,359
Receivable for securities sold 11,301,940
Restricted Cash 8,462,452
Cash 4,147,892
Unrealized appreciation on forward currency exchange contracts 5,032,854
Dividends and interest receivable 3,395,863
Receivable from swap counterparty 925,841
Other assets 82,737
----------------------------------------------------------------------------------------------------------------
Total assets 484,206,938
----------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for securities purchased 39,798,191
Payable to swap counterparty 32,088,751
Net unrealized depreciation on swaps 22,476,951
Unrealized depreciation on forward currency exchange contracts 1,154,905
Options written, at value (premiums received of $778,779) 1,072,660
Accrued expenses and other liabilities 236,033
Investment management fee payable 211,814
Investment advisory fee payable 141,209
Offering costs payable 86,553
Dividends payable - preferred shares 39,088
Administration fee payable 8,293
----------------------------------------------------------------------------------------------------------------
Total liabilities 97,314,448
----------------------------------------------------------------------------------------------------------------
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 $216,892,490
----------------------------------------------------------------------------------------------------------------
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 591,419,380
Net unrealized depreciation on investments, options,swaps and foreign currency translation (170,247,894)
Accumulated net realized loss on investments, options, swaps and foreign currency transactions (195,732,784)
Distributions in excess of net investment loss (8,578,080)
----------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $216,892,490
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE APPLICABLE TO COMMON SHAREHOLDERS
(based on 31,867,616 common shares outstanding) $ 6.81
----------------------------------------------------------------------------------------------------------------
See notes to financial statements.
Annual Report | October 31, 2008 | 15
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Statement of OPERATIONS | FOR THE YEAR ENDED OCTOBER 31, 2008
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $635,181) $ 21,938,196
Interest 21,000,582
--------------------------------------------------------------------------------------------------------------
Total income $42,938,778
--------------------------------------------------------------------------------------------------------------
EXPENSES
Investment management fee 3,837,057
Investment advisory fee 2,558,038
Auction agent fee - preferred shares 443,916
Professional fees 211,443
Fund accounting 192,708
Trustees' fees and expenses 149,006
Administration fee 143,032
Printing 118,062
Custodian 96,066
Insurance 52,481
NYSE listing fee 24,305
Transfer agent 21,061
Rating agency fee 14,998
Miscellaneous 16,846
--------------------------------------------------------------------------------------------------------------
Total expenses 7,879,019
--------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 35,059,759
--------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS,SWAPS AND FOREIGN
CURRENCY TRANSACTIONS Net realized gain (loss) on:
Investments (158,318,216)
Options 1,667,011
Swaps (37,968,553)
Foreign currency transactions 3,223,094
Net change in unrealized appreciation (depreciation) on:
Investments (169,112,534)
Options (329,812)
Swaps (16,812,989)
Foreign currency translation 4,054,717
---------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS, OPTIONS SWAPS AND FOREIGN CURRENCY
TRANSACTIONS (373,597,282)
---------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS FROM NET INVESTMENT INCOME (7,559,340)
---------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS $ (346,096,863)
---------------------------------------------------------------------------------------------------------------
See notes to financial statements.
16 | Annual Report | October 31, 2008
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Statement of CHANGES IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS |
FOR THE PERIOD
FOR THE MAY 29, 2007*
YEAR ENDED THROUGH
OCTOBER 31, 2008 OCTOBER 31, 2007
-----------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS:
Net investment income $ 35,059,759 $13,040,647
Net realized gain/(loss) on investments, options, swaps and foreign
currency transactions (191,396,664) 2,130,479
Net change in unrealized appreciation (depreciation) on investments,
options, swaps and foreign currency translation (182,200,618) 11,952,724
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS FROM:
Net investment income (7,559,340) (1,285,034)
-----------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets applicable to Common Shareholders
resulting from operations (346,096,863) 25,838,816
-----------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS:
From and in excess of net investment income (40,370,050) (13,930,661)
Return of capital (13,766,656) --
-----------------------------------------------------------------------------------------------------------------
Total dividends and distributions to common shareholders (54,136,706) (13,930,661)
-----------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from the issuance of common shares -- 607,492,690
Reinvestment in dividends -- 997,366
Common share offering costs charged to paid-in capital -- (3,372,236)
-----------------------------------------------------------------------------------------------------------------
Net increase from capital share transactions -- 605,117,820
-----------------------------------------------------------------------------------------------------------------
Total increase/(decrease) in net assets (400,233,569) 617,025,975
-----------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
Beginning of period 617,126,059 100,084
-----------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of net investment
income $8,578,080 and $2,024,279, respectively) $216,892,490 $617,126,059
-----------------------------------------------------------------------------------------------------------------
* Commencement of investment operations.
See notes to financial statements.
Annual Report | October 31, 2008 | 17
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Financial HIGHLIGHTS |
FOR THE PERIOD
FOR THE MAY 29, 2007(A)
PER SHARE OPERATING PERFORMANCE YEAR ENDED THROUGH
FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT THE PERIOD OCTOBER 31, 2008 OCTOBER 31, 2007
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 19.37 $ 19.10 (b)
-----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (c) 1.10 0.42
Net realized and unrealized gain/(loss) on investments, options, swaps and
foreign currency transactions (11.72) 0.44
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS FROM NET INVESTMENT INCOME
(COMMON SHARE EQUIVALENT BASIS) (0.24) (0.04)
-----------------------------------------------------------------------------------------------------------------
Total from investment operations (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 (1.27) (0.44)
Return of capital (0.43) --
-----------------------------------------------------------------------------------------------------------------
Total dividends and distributions to Common Shareholders (1.70) (0.44)
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 6.81 $ 19.37
-----------------------------------------------------------------------------------------------------------------
MARKET VALUE, END OF PERIOD $ 5.99 $ 16.75
-----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN (d)
Net asset value -60.31% 3.82%
Market value -58.94% -14.11%
RATIOS AND SUPPLEMENTAL DATA
Net assets, applicable to Common Shareholders, end of period (thousands) $ 216,892 $ 617,126
Preferred shares, at redemption value ($25,000 per share liquidation preference)
(thousands) $ 170,000 $ 170,000
Preferred shares asset coverage per share $ 56,955 $ 115,700
RATIOS TO AVERAGE NET ASSETS APPLICABLE TO COMMON SHARES:
Net Expenses, after balance credits 1.68% 1.33%(e)
Net Expenses, before balance credits 1.68% 1.35%(e)
Net Investment Income, after balance credits, prior to effect of dividends to
preferred shares 7.47% 5.22%(e)
Net Investment Income, before balance credits, prior to effect of dividends
to preferred shares 7.47% 5.20%(e)
Net Investment Income, after balance credits, after effect of dividends to
preferred shares 5.86% 4.70%(e)
Net Investment Income, before balance credits, after effect of dividends to
preferred shares 5.86% 4.68%(e)
RATIOS TO AVERAGE MANAGED ASSETS: (f)
Net Expenses, after balance credits 1.23% 1.22%(e)
Net Expenses, before balance credits 1.23% 1.24%(e)
Net Investment Income, after balance credits, prior to effect of dividends to
preferred shares 5.48% 4.79%(e)
Net Investment Income, before balance credits, prior to effect of dividends to
preferred shares 5.48% 4.77%(e)
Portfolio turnover rate 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.
(f) Managed assets is equal to net assets applicable to common shareholders
plus outstanding leverage such as the liquidation value of preferred
shares.
See notes to financial statements.
18 | Annual Report | October 31, 2008
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Notes to FINANCIAL STATEMENTS | OCTOBER 31, 2008
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 requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from these estimates.
The following is a summary of significant accounting policies followed by the
Fund.
(A) VALUATION OF INVESTMENTS
Equity securities listed on an exchange are valued at the last reported sale
price on the primary exchange on which they are traded. Equity securities traded
on an exchange for which there are no transactions on a given day are valued at
the mean of the closing bid and asked prices. Securities traded on NASDAQ are
valued at the NASDAQ Official Closing Price. Equity securities not listed on a
securities exchange or NASDAQ are valued at the mean of the closing bid and
asked prices. Debt securities are valued by independent pricing services or
dealers using the mean of the closing bid and asked prices for such securities
or, if such prices are not available, at prices for securities of comparable
maturity, quality and type. 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. For those securities where quotations
or prices are not available, valuations are determined in accordance with
procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost, which approximates market value.
The Fund values synthetic convertible securities based on quotations obtained
from unaffiliated brokers who are the principal market-makers in such
securities. Such valuations are derived by the brokers from proprietary models
which are generally based on readily available market information including
valuations of the common stock underlying the synthetic security, and the
volatility observed in the market on such common stocks. Because of the inherent
uncertainty in the valuation process, it is reasonably possible that the
estimated values may differ from the values that would have been used had a more
active market for the investments existed, and such differences could be
material. As of October 31, 2008, approximately $46,309,355, representing 10.3%
of total fund investments, are invested in these synthetic convertible
securities.
(B) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized gains and
losses on investments are determined on the identified cost basis. Dividend
income is recorded on the ex-dividend date and interest income is recorded on an
accrual basis. Discounts or premiums on debt securities purchased are accreted
or amortized to interest income over the lives of the respective securities
using the effective interest method.
(C) CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the mean of the bid and asked price of respective exchange rates
on the last day of the period. Purchases and sales of investments denominated in
foreign currencies are translated at the exchange rate on the date of the
transaction.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
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 a Fund's accounting records on the date of
receipt is shown as net realized gains or losses on foreign currency
transactions in the Fund's Statement of Operations.
Foreign exchange unrealized gain or loss on assets and liabilities, other than
investments, is shown as unrealized appreciation (depreciation) on foreign
currency translation in the Fund's Statement of Operations.
(D) COVERED CALL OPTIONS
The Fund 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.
Annual Report | October 31, 2008 | 19
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
NOTES TO FINANCIAL STATEMENTS continued
An option on a security is a contract that gives the holder of the option, in
return for a premium, the right to buy from (in the case of a call) or sell to
(in the case of a put) the writer of the option the security underlying the
option at a specified exercise or "strike" price. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price (in the case of a call)
or to pay the exercise price upon delivery of the underlying security (in the
case of a put).
There are several risks associated with transactions in options on securities.
As the writer of a covered call option, the Fund forgoes, during the option's
life, the opportunity to profit from increases in the market value of the
security covering the call option above the sum of the premium and the strike
price of the call, but has retained the risk of loss should the price of the
underlying security decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as writer of the option.
Once an option writer has received an exercise notice, it cannot effect a
closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying security at the exercise price.
When an option is written, the premium received is recorded as an asset with an
equal liability and is subsequently marked to market to reflect the current
market value of the option written. These liabilities are reflected as options
written in the Statement of Assets and Liabilities. Premiums received from
writing options which expire unexercised are recorded on the expiration date as
a realized gain. The difference between the premium received and the amount paid
on effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium is less than the amount paid
for the closing purchase transactions, as a realized loss. If a call option is
exercised; the premium is added to the proceeds from the sale of the underlying
security in determining whether there has been a realized gain or loss.
(E) FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund may enter into forward exchange currency contracts in order to hedge
its exposure to change 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. 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.
Fluctuations in the value of open forward exchange currency contracts are
recorded for financial reporting purposes as unrealized appreciation and
depreciation by the Fund.
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. 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. 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. The swaps are valued daily at current market value and any
unrealized gain or loss is included in the Statement of Assets and Liabilities.
Gain or loss is realized on the termination date of the swap and is equal to the
difference between the Fund's basis in the swap and the proceeds of the closing
transaction, including any fees. During the period that the swap agreement is
open, the Fund may be subject to risk from the potential inability of the
counterparty to meet the terms of the agreement. The swaps involve elements of
both market and credit risk in excess of the amounts reflected on the Statement
of Assets and Liabilities. Upon termination of a swap agreement, a payable to or
receivable from swap counterparty is established on the Statement of Assets and
Liabilities to reflect the net gain/loss, including interest income/expense, on
terminated swap positions. This line item is removed upon settlement according
to the terms of the swap agreement.
Realized gain (loss) upon termination of swap contracts is recorded on the
Statement of Operations. Fluctuations in the value of swap contracts are
recorded as a component of net change in unrealized appreciation (depreciation)
of swap contracts. Net periodic payments received by the Fund are included as
part of realized gains (losses) and, in the case of accruals for periodic
payments, are included as part of unrealized appreciation (depreciation) on the
Statement of Operations.
(G) DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and pays monthly dividends to common shareholders. These
dividends consist of investment company taxable income, which generally includes
qualified dividend income, ordinary income and short-term capital gains. Any net
realized long-term gains are distributed annually to common shareholders.
Distributions to shareholders are recorded on the ex-dividend date. The amount
and timing of distributions are determined in accordance with federal income tax
regulations, which may differ from U.S. generally accepted accounting
principles.
Note 3 - INVESTMENT MANAGEMENT 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
20 | Annual Report | October 31, 2008
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
NOTES TO FINANCIAL STATEMENTS continued
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 of 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.
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.
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.
Prior to May 1, 2008, BNY provided Fund Administration services to the Fund.
Effective May 1, 2008, Claymore Advisors, LLC began providing 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 continue to comply with the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies. Accordingly, no provision for U.S. federal income taxes is
required. In addition, by distributing substantially all of its ordinary income
and long-term capital gains, if any, during each calendar year, the Fund 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, 2008, certain adjustments were to decrease accumulated net realized gain on
investments by $3,516,040 and increase undistributed net investment income by
$3,516,040 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. In addition, a permanent book and tax difference
relating to a distribution of capital gains for tax purposes in the amount of
$2,799,790 was reclassified from accumulated undistributed net investment income
to accumulated net realized gain.
At October 31, 2008 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 DEPRECIATION 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)
-----------------------------------------------------------------------------------------------------------------
$602,827,685 $1,096,724 $(153,067,050) $(151,970,326) $(27,057,074) $0 $(195,492,270)
The differences between book basis and tax basis unrealized
appreciation/(depreciation) is attributable to the tax deferral of losses on
wash sales and the difference in the treatment for book and tax purposes of
certain convertible securities and Canadian income trusts.
At October 31, 2008, for federal income tax purposes, the Fund had a capital
loss carryforward of $195,492,270 available to offset possible future capital
gains. The capital loss carryforward is set to expire on October 31, 2016.
For the year ended October 31, 2008 and the period ended October 31, 2007, the
tax character of distributions paid, as reflected in the Statement of Changes in
Net Assets of $47,929,390 and $15,215,695 was ordinary income and $13,766,656
and $0 was return of capital, respectively. The final determination of the
source of the 2008 distributions for tax purposes will be made after the end of
the Fund's fiscal year and will be reported to shareholders in January 2009 on
Form 1099-DIV.
Annual Report | October 31, 2008 | 21
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
NOTES TO FINANCIAL STATEMENTS continued
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. Management
has evaluated the implication of FIN 48 and has determined it does not have any
impact on the financial statements as of October 31, 2008. There is no tax
liability resulting from unrecognized tax benefits relating to uncertain income
tax positions taken or expected to be taken on the tax return for the fiscal
year-end October 31, 2008. The Fund is also not aware of any tax positions for
which it is reasonably possible that the total amounts of unrecognized tax
benefits will significantly change in the next twelve months.
FIN 48 requires the Fund to analyze all open tax years. Open tax years are those
years that are open for examination by the relevant income taxing authority. As
of October 31, 2008, open Federal and state income tax years include the tax
years ended October 31, 2007 and 2008. The Fund has no examination in progress.
Note 5 - INVESTMENTS IN SECURITIES:
For the year ended October 31, 2008, purchases and sales of investments, other
than short-term securities, were $699,930,537and $732,347,923 respectively.
The Fund entered into total return swap agreements during the year ended October
31, 2008 to potentially enhance return. Details of the swap agreements
outstanding as of October 31, 2008 are as follows:
NOTIONAL UNREALIZED
TERMINATION AMOUNT PAYING APPRECIATION
COUNTERPARTY UNDERLYING TERM LOAN DATE (000) FLOATING RATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
JPMorgan Chase & Co. Bausch & Lomb, US LIBOR + 3.25%, due 04/26/15 5/1/2009 $ 3,588 2.07% $(798,250)
JPMorgan Chase & Co. CCS Corp., US LIBOR + 3.00%, due 11/14/14 5/1/2009 8,961 2.07% (2,988,683)
JPMorgan Chase & Co. Celanese Holdings LLC, US LIBOR + 1.75%, due
03/30/14 5/1/2009 3,808 2.07% (804,780)
JPMorgan Chase & Co. Community Health Systems, Inc., US LIBOR + 2.25%,
due 07/25/14 5/1/2009 10,833 2.07% (2,733,593)
JPMorgan Chase & Co. FairPoint Communications Inc., US LIBOR + 2.75%,
due 03/08/15 5/1/2009 4,518 2.07% (1,214,227)
JPMorgan Chase & Co. Ford Motor Co., US LIBOR + 3.00%, due 12/15/13 5/1/2009 5,963 2.07% (3,661,665)
JPMorgan Chase & Co. HCA, Inc., US LIBOR + 2.75%, due 11/16/13 5/1/2009 12,064 2.07% (2,069,210)
JPMorgan Chase & Co. Las Vegas Sands LLC, US LIBOR + 1.75%, due
05/23/14 5/1/2009 1,563 2.07% (963,612)
JPMorgan Chase & Co. Level 3 Communications, Inc., LIBOR + 2.25%, due
03/13/14 5/1/2009 1,560 2.07% (84,990)
JPMorgan Chase & Co. Lyondell Chemical Co., US LIBOR + 3.25%, due
12/20/14 5/1/2009 6,443 2.07% (3,326,419)
JPMorgan Chase & Co. Mac Gen LLC, US LIBOR + 2.25%, due 02/22/12 5/1/2009 5,192 2.07% (223,689)
JPMorgan Chase & Co. NRG Energy, Inc., US LIBOR, due 02/01/13 5/1/2009 6,790 2.07% (943,982)
JPMorgan Chase & Co. NRG Holdings, Inc., US LIBOR + 2.50%, due 12/28/07 5/1/2009 1,292 2.07% (148,211)
JPMorgan Chase & Co. Tenneco Automotive, Inc., US LIBOR + 1.75%,
due 03/16/14 5/1/2009 1,500 2.07% (481,668)
JPMorgan Chase & Co. Texas Comp Elec Hold LLC, US LIBOR + 3.50%, due
10/10/14 5/1/2009 2,242 2.07% (568,773)
JPMorgan Chase & Co. Texas Comp Elec Hold LLC, US LIBOR + 3.50%, due
10/10/14 5/1/2009 1,680 2.07% (404,214)
JPMorgan Chase & Co. Virgin Media Investment Holding, GB LIBOR + 2.125%,
due 10/04/13 5/1/2009 2,303 5.57% (1,060,985)
------------------------------------------------------------------------------------------------------------------------------------
$80,300 $(22,476,951)
------------------------------------------------------------------------------------------------------------------------------------
For each swap noted, the Fund pays a floating rate and receives the total return
of the underlying asset, which includes receiving a floating interest rate
component. The market value of the swaps outstanding reflects the current
receivable and payable for the underlying asset, including the total return and
the interest rate component, which may have different payment dates.
The Fund entered into written option contracts during the year ended October 31,
2008.
Details of the transactions were as follows:
NUMBER OF CONTRACTS PREMIUMS RECEIVED
--------------------------------------------------------------------------------------------------
Options outstanding, beginning of year 5,350 $ 1,004,631
Options written during the period 38,610 5,569,025
Options expired during the period (8,626) (1,261,960)
Options closed during the period (21,996) (3,155,457)
Options assigned during the period (7,616) (1,377,460)
--------------------------------------------------------------------------------------------------
Options outstanding, end of period 5,722 $ 778,779
--------------------------------------------------------------------------------------------------
22 | Annual Report | October 31, 2008
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
NOTES TO FINANCIAL STATEMENTS continued
Note 6 - DERIVATIVES:
At October 31, 2008, the following forward exchange currency contracts were
outstanding:
UNREALIZED
APPRECIATION/
LONG CONTRACTS CURRENT VALUE (DEPRECIATION)
-------------------------------------------------------------------------------------------------
Euro, 11,003,551 expiring 11/04/08 to 11/05/08 $13,953,060 $ (198,835)
Hong Kong Dollar, 33,612,500 expiring 11/04/08 to 11/05/08 4,336,845 (460)
Japanese Yen, 394,100,000 expiring 12/17/08 4,007,117 (305,642)
Swiss Franc, 7,252,813 expiring 11/03/08 to 12/17/08 6,209,334 (128,761)
-------------------------------------------------------------------------------------------------
(633,698)
-------------------------------------------------------------------------------------------------
SHORT CONTRACTS
-------------------------------------------------------------------------------------------------
Canadian Dollar, 6,850,000 expiring 12/17/08 $(5,633,875) $ 809,546
Euro, 15,400,000 expiring 12/17/08 (19,498,827) 2,302,953
Japanese Yen, 797,000,000 expiring 12/17/08 (8,121,093) (521,207)
Pound Sterling, 7,300,000 expiring 12/17/08 (11,762,360) 1,244,050
Swiss Franc, 16,500,000 expiring 12/17/08 (14,137,180) 676,305
-------------------------------------------------------------------------------------------------
$ 4,511,647
-------------------------------------------------------------------------------------------------
Note 7 - CAPITAL:
COMMON SHARES
In connection with its organization process on February 26, 2007, the Fund sold
5,240 shares of beneficial interest to Claymore Securities, Inc., an affiliate
of the Adviser, for consideration of $100,084 at a price of $19.10 per share.
The Fund has an unlimited amount of common shares, $0.001 par value, authorized
and 31,867,616 issued and outstanding. Of this amount, the Fund issued
28,750,000 shares of common stock in its initial public offering. On June 11,
2007, June 18, 2007 and July 11, 2007, the Fund issued an additional 1,750,000
shares, 750,000 shares and 555,900 shares, respectively, pursuant to an over
allotment option. These shares were issued at $19.10 per share after deducting
the sales load but before underwriters' expense reimbursement. In connection
with the Fund's dividend reinvestment plan, the Fund did not issue shares during
the year ended October 31, 2008 but issued 56,476 shares during the year ended
October 31, 2007.
Offering costs, estimated at $1,272,236 or $0.04 per share, in connection with
the issuance of common shares have been borne by the Fund and were charged to
paid-in capital. The Adviser and Investment Manager agreed to pay offering
expenses (other than sales load, but including reimbursement of expenses to the
underwriters) in excess of $0.04 per common share.
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.
Offering costs, including the 1% sales charge associated with the issuance of
preferred shares, estimated at $2,100,000 were borne by the common shareholders
as a direct reduction to paid-in-capital.
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 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.
Annual Report | October 31, 2008 | 23
AGC | Advent/Claymore Global Convertible Securities & Income Fund |
NOTES TO FINANCIAL STATEMENTS continued
For the year ended October 31, 2008, the annualized dividend rates ranged from:
HIGH LOW AT OCTOBER 31, 2008
----------------------------------------------------------------------------
Series T7 6.00% 3.34% 3.34%
Series W7 6.00% 3.27% 3.27%
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:
On October 31, 2008, the Fund declared a monthly dividend to common shareholders
of $0.095 per common share. The dividend is payable on November 28, 2008 to
shareholders of record on November 14, 2008.
On December 1, 2008, the Fund declared a monthly dividend to common shareholders
of $0.0664 per common share. The dividend is payable on December 31, 2008 to
shareholders of record on December 15, 2008.
Note 10 - ACCOUNTING PRONOUNCEMENTS:
In September 2006, the FASB released Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("FAS 157"). This standard clarifies the
definition of fair value for financial reporting, establishes a framework for
measuring fair value and requires additional disclosures about the use of fair
value measurements. FAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and interim periods within those
fiscal years. As of October 31, 2008, the Fund does not believe the adoption of
FAS 157 will impact the amounts reported in the financial statements, however,
additional disclosure will be required about the inputs used to develop
measurements of fair value and the effect of certain of the measurements
reported in the Statement of Operations for a fiscal period.
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities." This standard is intended to enhance
financial statement disclosures for derivative instruments and hedging
activities and enable investors to understand: a) how and why a fund uses
derivative instruments, b) how derivatives instruments and related hedge fund
items are accounted for, and c) how derivative instruments and related hedge
items affect a fund's financial position, results of operations and cash flows.
SFAS No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. In September 2008, the FASB
issued a Staff Position amending SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This amendment would require disclosures by
sellers of credit derivatives, including credit derivatives embedded in hybrid
instrument. This amendment is effective for financial statements issued for
fiscal years and interim periods ending after November 15, 2008. As of October
31, 2008, management does not believe the adoption of SFAS No. 161 nor amended
SFAS No. 133 will impact the financial statement amounts; however, additional
footnote disclosures may be required about the use of derivative instruments and
hedging items.
24 | Annual Report | October 31, 2008
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, 2008, the results of its operations for the year then ended, and the
changes in its net assets applicable to common shareholders 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, 2008 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
December 26, 2008
Annual Report | October 31, 2008 | 25
AGC | Advent/Claymore Global Convertible Securities & Income Fund
SUPPLEMENTAL INFORMATION | (unaudited)
FEDERAL INCOME TAX INFORMATION
Qualified dividend income of as much as $9,621,268 was received by the Fund
through October 31, 2008. 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 $4,496,568 of investment income (dividend income plus
short-term gains, if any) qualified for the dividends-received deduction.
In January 2009, 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 2008.
RESULTS OF SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Fund was held on September 23, 2008.
At this meeting, shareholders voted on the election of Trustees.
With regard to the election of the following Class II Trustees by common and
preferred shareholders of the Fund:
# OF SHARES
--------------------------------------------------------------------------------
IN FAVOR WITHHELD
--------------------------------------------------------------------------------
Daniel L. Black 28,393,096 655,222
With regard to the election of the following trustees by preferred shareholders
of the Fund:
# OF SHARES
--------------------------------------------------------------------------------
IN FAVOR WITHHELD
--------------------------------------------------------------------------------
Ronald A. Nyberg 4,456 782
Michael A. Smart 4,464 774
The other Trustees of the Fund whose terms did not expire in 2008 are Nicholas
Dalmaso, Tracy V. Maitland, 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 L. Black+ Since 2007 Partner, the Wicks Group of Cos., LLC (2003-present). 3 Director of Penn
Year of birth: 1960 Formerly, Managing Director and Co-head of the Merchant Foster Education
Trustee Banking Group at BNY Capital Markets, a division of Group, Inc.
The Bank of New York Co., Inc. (1998-2003).
------------------------------------------------------------------------------------------------------------------------------------
Randall C. Barnes++ Since 2007 Private Investor (2001-present). Formerly, 43 None.
Year of birth: 1951 Senior Vice President, Treasurer, PepsiCo, Inc.
Trustee (1993-1997), President, Pizza Hut International
(1991-1993) and Senior Vice President, Strategic
Planning and New Business Development (1987-1990)
of PepsiCo, Inc. (1987-1997).
------------------------------------------------------------------------------------------------------------------------------------
Derek Medina+ Since 2007 Senior Vice President, Business Affairs at ABC 3 Director of Young
Year of birth: 1966 News (2008-present), Vice President, Business Affairs Scholar's
Trustee and News Planning at ABC News (2003-present). Formerly, Institute.
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 law firm 46 None.
Year of birth: 1953 specializing in corporate law, estate planning
Trustee and business transactions (2000-present). Formerly,
Executive Vice President, General Counsel and
Corporate Secretary of Van Kampen Investments (1982-1999).
------------------------------------------------------------------------------------------------------------------------------------
Gerald L. Seizert, Since 2007 Chief Executive Officer of Seizert Capital 3 Former Director of
CFP+ Partners, LLC, where he directs the equity disciplines Loomis, Sayles and
Year of birth: 1952 of the firm and serves as a co-manager of the firm's Co., L.P.
Trustee hedge fund, Proper Associates, LLC (2000-present).
Formerly, Co-Chief Executive (1998-1999) and a Managing
Partner and Chief Investment Officer-Equities of Munder
Capital Management, LLC (1995-1999). Former Vice President
and Portfolio Manager of Loomis, Sayles & Co., L.P.
(asset manager) (1984-1995). Former Vice President and
Portfolio Manager at First of America Bank (1978-1984).
------------------------------------------------------------------------------------------------------------------------------------
Michael A. Smart+ Since 2007 Managing Partner, Cordova, Smart & Williams, LLC, 3 Director, Country
Year of birth: 1960 Advisor First Atlantic Capital Ltd., (2001-present). Pure Foods.
Trustee Formerly, a Managing Director in Investment Chairman, Board of
Banking-The Private Equity Group (1995-2001) and a Directors,
Vice President in Investment Banking-Corporate Finance Berkshire Blanket,
(1992-1995) at Merrill Lynch & Co. Founding Partner of Inc. President and
The Carpediem Group, (1991-1992). Associate at Dillon, Chairman, Board of
Read and Co. (investment bank) (1988-1990). Directors,
Sqwincher Holdings.
Director, Sprint
Industrial
Holdings.
Co-chairman, Board
of Directors, H2O
Plus.
------------------------------------------------------------------------------------------------------------------------------------
26 | Annual Report | October 31, 2008
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
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES:
------------------------------------------------------------------------------------------------------------------------------------
Tracy V. Maitland++ Since 2007 President of Advent Capital Management, LLC, 3 None.
Year of birth: 1960 which he founded in 1995. Prior to June,
Trustee, President and 2001, President of Advent Capital Management,
Chief Executive Officer a division of Utendahl Capital.
------------------------------------------------------------------------------------------------------------------------------------
Nicholas Dalmaso++++ Since 2007 Attorney. Formerly, Senior Managing Director 45 None.
Year of birth: 1965 and Chief Administrative Officer (2007-2008)
Trustee and General Counsel (2001-2007) of Claymore
Advisors, LLC and Claymore Securities, Inc.
Formerly, Assistant General Counsel, John Nuveen
and Co., Inc. (1999-2000). Former Vice
President and Associate General Counsel of Van
Kampen Investments, Inc. (1992-1999).
------------------------------------------------------------------------------------------------------------------------------------
+ Address for all Trustees noted: 1065 Avenue of the Americas, 31st Floor,
New York, NY 10018.
++ Address for all Trustees noted: 2455 Corporate West Drive, Lisle, IL 60532
* After a Trustee's initial term, each Trustee is expected to serve a
three-year term concurrent with the class of Trustees for which he serves:
- Messrs. Seizert, Medina and Barnes, as Class I Trustees, are expected to
stand for re-election at the Fund's 2010 annual meeting of shareholders.
- Messrs. Smart, Nyberg and Black, as Class II Trustees, are expected to
stand for re-election at the Fund's 20011 annual meeting of shareholders.
- Messrs. Maitland and Dalmaso, as Class III Trustees, are expected to
stand for re-election at the Fund's 2009 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.
++ Mr. Dalmaso is an "interested person" (as defined in section 2(a)(19) of
the 1940 Act) of the Fund as a result of his former position as an officer
of the Adviser and certain of its affiliated and his equity ownership of
the Adviser and certain of its affiliates.
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
Year of birth: 1943 Management, LLC (2001- present). Prior to June
Vice President and 2001, Mr. Nelson held the same position at
Assistant Secretary Advent Capital Management, a division of
Utendahl Capital.
------------------------------------------------------------------------------------------------------------------------------------
Robert White Since 2007 Chief Financial Officer, Advent Capital
Year of birth: 1965 Management, LLC (2005-present). Previously,
Treasurer and Vice President, Client Service Manager, Goldman
Chief Financial Officer Sachs Prime Brokerage (1997-2005).
------------------------------------------------------------------------------------------------------------------------------------
Rodd Baxter Since 2007 General Counsel, Advent Capital Management, LLC
Year of birth: 1950 (2002-present). Formerly, Director and Senior
Secretary and Counsel, SG Cowen Securities Corp. (1998-2002).
Chief Compliance Officer
------------------------------------------------------------------------------------------------------------------------------------
* Address for all Officers: 1065 Avenue of the Americas, 31st Floor, New
York, NY 10018
** Officers serve at the pleasure of the Board of Trustees and until his or
her successor is appointed and qualified or until his or her earlier
resignation or removal.
Annual Report | October 31, 2008 | 27
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, The Bank of New York Mellon, Attention: Stock Transfer
Department, 101 Barclay 11E, New York, NY 10286, Phone Number: (866) 488-3559.
28 | Annual Report | October 31, 2008
This Page Intentionally Left Blank
AGC | Advent/Claymore Global Convertible Securities & Income Fund
Fund INFORMATION |
BOARD OF TRUSTEES
Randall C. Barnes
Daniel Black
Nicholas Dalmaso*
Tracy V. Maitland**
Chairman
Derek Medina
Ronald A. Nyberg
Gerald L. Seizert
Michael A. Smart
* Trustee is an "interested person" of the Fund as defined in the Investment
Company Act of 1940 as a result of his former position as an officer of the
Adviser and certain of its affiliates and his equity ownership of the
Adviser and certain of its affiliates.
** 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
New York, New York
INVESTMENT ADVISER AND ADMINISTRATOR
Claymore Advisors, LLC
Lisle, Illinois
CUSTODIAN AND TRANSFER AGENT
The Bank of New York Mellon
New York, New York
PREFERRED STOCK-
DIVIDEND PAYING AGENT
The Bank of New York Mellon
New York, New York
LEGAL COUNSEL
Skadden, Arps, Slate,
Meagher & Flom LLP
New York, New York
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
New York, New York
--------------------------------------------------------------------------------
PRIVACY PRINCIPLES OF THE FUND
The Fund is committed to maintaining the privacy of its shareholders and to
safeguarding their non-public personal information. The following information is
provided to help you understand what personal information the Fund collects, how
the Fund protects that information and why, in certain cases, the Fund may share
information with select other parties.
Generally, the Fund does not receive any non-public personal information
relating to its shareholders, although certain non-public personal information
of its shareholders may become available to the Fund. The Fund does not disclose
any non-public personal information about its shareholders or former
shareholders to anyone, except as permitted by law or as is necessary in order
to service shareholder accounts (for example, to a transfer agent or third party
administrator).
The Fund restricts access to non-public personal information about its
shareholders to employees of the Fund's investment advisor and its affiliates
with a legitimate business need for the information. The Fund maintains
physical, electronic and procedural safeguards designed to protect the
non-public personal information of its shareholders.
QUESTIONS CONCERNING YOUR SHARES OF ADVENT/CLAYMORE 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
or by accessing the Fund's Form N-PX on the the U.S. Securities & Exchange
Commission's ("SEC") website at www.sec.gov or www.claymore.com.
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 October 2008, the Fund submitted a CEO annual certification to the New York
Stock Exchange ("NYSE") in which the Fund's principal executive officer
certified that he was not aware, as of the date of the certification, of any
violation by the Fund of the NYSE's Corporate Governance listing standards. In
addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and
related SEC rules, the Fund's principal executive and principal financial
officers have made quarterly certifications, included in filings with the SEC on
Forms N-CSR and N-Q, relating to, among other things, the Fund's disclosure
controls and procedures and internal control over financial reporting.
NOTICE TO SHAREHOLDERS
Notice is hereby given in accordance with Section 239(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 stock in the open market.
30 | Annual Report | October 31, 2008
ADVENT CAPITAL MANAGEMENT, LLC
1065 Avenue of the Americas
New York, New York 10018
GRAPHIC: AGC LISTED NYSE (R)
AGC-AR-1008
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics (the "Code of Ethics") that
applies to its principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions.
(b) Not applicable.
(c) The registrant has not amended its Code of Ethics during the period covered
by the shareholder report presented in Item 1 hereto.
(d) The registrant has not granted a waiver or an implicit waiver from a
provision of its Code of Ethics.
(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, each of whom is an
"independent" Trustee: Randall C. Barnes, Daniel Black, Derek Medina, Ronald
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 in each of the last two fiscal years
for professional services rendered by the principal accountant for the
audit of the registrants's annual financial statements are as follows:
2008: $85,275
2007: $77,000
(b) Audit-Related Fees: the aggregate fees billed in each of the last two
fiscal years 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 (a)
of this item are as follows:
2008: $15,030
2007: $14,310
(c) Tax Fees: the aggregate fees billed in each of the last two fiscal years
for professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are as follows:
2008: $16,500
2007: $8,500
(d) All Other Fees: the aggregate fees billed in each of the last two fiscal
years for products and services provided by the principal accountant, other
than the services reported in paragraphs (a) and (c) of this Item are as
follows:
2008: $0
2007: $0
(e) Audit Committee Pre-Approval Policies and Procedures:
(1) In accordance with Rule 2-01(c)(7)(A), the Audit Committee pre-approves all
of the Audit and Tax Fees of the registrant. All of the services described in
paragraphs (b) through (d) above were approved by the Audit Committee in
accordance with paragraph (c)(7) of Rule 2-01 of Regulation S-X.
The Trust's Audit Committee has adopted written policies relating to the
pre-approval of the audit and non-audit services performed by the Trust'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 Trust's Audit
Committee reviews and pre-approves the services to be provided by the
independent auditors without having obtained 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 Trust.
AUDIT COMMITTEE PRE-APPROVAL POLICY
OF
ADVENT CLAYMORE GLOBAL CONVERTIBLE SECURITIES AND INCOME FUND
STATEMENT OF PRINCIPLES
The Audit Committee (the "Audit Committee") of the Board of Trustees (the
"Board") of Advent Claymore Convertible Securities and Income Fund (the
"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 for the period May 30, 2008 to October
31, 2008 by the registrant's accountant for services rendered to the
registrant, the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the adviser that
provides ongoing services to the registrant (not including a sub-adviser
whose role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser) that directly related to the
operations and financial reporting of the registrant are as follows:
2008: $31,530
2007: $22,810
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The registrant has a separately designated standing audit committee
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 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 advisor, Advent Capital Management, LLC (the
"Advisor"). The Advisor'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 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, 2008:
------------------------------------------------------------------------------
NAME SINCE PROFESSIONAL EXPERIENCE
------------------------------------------------------------------------------
------------------------------------------------------------------------------
F. Barry Nelson 2008 Portfolio Manager at Advent Capital
(Inception) Management, LLC for more than six years.
------------------------------------------------------------------------------
Paul Latronica 2008 Portfolio Manager at Advent Capital
(Inception) Management, LLC. He has been associated with
Advent Capital Management for more than
six years.
------------------------------------------------------------------------------
Hart Woodson 2008 Portfolio Manager at Advent Capital
(Inception) Management, LLC since 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. Three of Mr. Woodson's
accounts have performance based fees with total assets of
$292 million. The following summarizes information regarding
each of the other accounts managed by the Advent Portfolio
Managers as of October 31, 2008:
REGISTERED INVESTMENT OTHER POOLED INVESTMENT
COMPANIES VEHICLES OTHER ACCOUNTS
# OF # OF # OF
NAME ACCOUNTS TOTAL ASSETS ACCOUNTS TOTAL ASSETS ACCOUNTS TOTAL ASSETS
F. Barry Nelson 1 $ 570 million 1 $ 13 million 24 $ 712 million
Paul Latronica 1 $ 149 million 0 $ 0 0 $ 0
Hart Woodson 0 $ 0 2 $ 96 million 1 $ 196 million
(a) (2) (iv) Conflicts of Interest. If another account of the Portfolio
Manager has investment objectives and policies that are
similar to those of the Registrant, the Portfolio Manager
will allocate orders pro-rata among the Registrant and such
other accounts, or, if the Portfolio Manager deviates from
this policy, the Portfolio Manager will allocate orders such
that all accounts (including the Registrant) receive fair
and equitable treatment.
(a) (3) Compensation Structure. The salary of the Portfolio Manager
is fixed. The bonus of the Portfolio Manager is 100%
discretionary. The bonus is determined by senior management
at Advent Capital Management, LLC.
(a) (4) Securities ownership. The following table discloses the
dollar range of equity securities of the Fund beneficially
owned by each of the Advent Capital Management, LLC
Portfolio Managers as of October 31, 2008:
NAME OF PORTFOLIO MANAGER DOLLAR RANGE OF EQUITY 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 of 1940) 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
of 1940, that the registrant's disclosure controls and procedures were
effective, as of that date, in ensuring that information required to be
disclosed by the registrant in this Form N-CSR was recorded, processed,
summarized, and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) 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 of
1940.
(b) Certification of principal executive officer and principal financial
officer pursuant to Rule 30a-2(b) of the Investment Company Act of 1940 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
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Name: Tracy V. Maitland
Title: President and Chief Executive Officer
Date: January 9, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Tracy V. Maitland
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Name: Tracy V. Maitland
Title: President and Chief Executive Officer
Date: January 9, 2009
By: /s/ Robert White
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Name: Robert White
Title: Treasurer and Chief Financial Officer
Date: January 9, 2009