A Strong First Half. On the heels of a strong fourth quarter 2006, the IPO market in closed-end funds continued to gain momentum. In all, 28 deals were priced in the first half of 2007 totaling approximately $24.3 billion in new assets raised.1 Included in this total number was the largest deal (to date) in closed-end fund history, which raised $5.5 billion in February. Issuance was aided by strength in equities around the world and the high demand for income-producing products in the United States.
| New Assets Raised in Closed-End Funds: 2006 vs. 2007 Monthly Comparison |
 |
| Source: SEC Edgar Filings, Company Press Releases |
Along with a strong IPO market, the secondary market finished the first half of the year with strong results. Of the 39 sectors tracked by Lipper, Inc., 26 posted positive returns for the first half, with Global/International Equity issues leading the charge. It is no mere coincidence that nearly 73% of the assets raised through IPOs (17 of 28 funds) in the first half of 2007 fell within the Global/International space.
On the flip side, sectors related to municipals and real estate declined over the first six months of the year. For the municipal sectors, low long-term interest rates, high short-term interest rates and bond calls forced many funds to continue adjusting distributions lower. In the second quarter alone, 66 municipal funds adjusted their distributions lower.
Looking Ahead. As we head into the second half of 2007, continued strength in issuance could lead to a record number of assets being raised in 2007. The previous high water mark is 2003, when $28.7 billion was raised in 50 offerings. In that year, only seven deals topped the $1 billion mark, while thus far in 2007, six deals have hit this bogey. As the IPO market for closed-end funds continues to chug along, it is worth keeping an eye on the secondary market as the flow of new issuance has the potential to lead to secondary market "cannibalization," a situation in which investors sell existing funds in order to participate in new offerings. Should this happen, investors may find generous investable opportunities in the secondary market.
Year-to-Date 2007 Calamos Closed-End Funds Recap
Our Latest Offering. In June, Calamos launched its fifth closed-end fund, Calamos Global Dynamic Income Fund (CHW). The fund is positioned as a global enhanced fixed-income offering with an investment objective of high current income with the potential for capital appreciation. This was the first closed-end fund IPO by Calamos since October 2005 and the firm's first offering in the global fixed-income space. The Fund has maximum flexibility to dynamically allocate among fixed-income securities, alternative investments and equities around the world. The Fund's option overlay component and its unique utilization of alternative strategies provides investors access to a complement of tools normally reserved for institutional investors. On June 26, the Fund priced 56 million shares at $15 per share and began trading June 27 on the New York Stock Exchange. Learn more about CHW.
All four pre-existing Calamos closed-end funds posted positive NAV returns for the first half of 2007:
Calamos Convertible Opportunities and Income Fund (CHI)
On June 26, 2007, Calamos Convertible Opportunities and Income Fund (CHI) celebrated its five-year anniversary. Since its inception, CHI has provided shareholders with an annualized return on both share price (17.91%) and net asset value (14.99%). For the first half of 2007, CHI posted a return on NAV of 3.54% though the share price finished the first half off 0.82%. For the same six-month period, the CS High Yield Index2 returned 3.69% and the Merrill Lynch All U.S. Convertibles Index3 returned 6.96%. At the end of the second quarter, the Fund traded at an 18.73% premium to net asset value. In addition, the Fund has maintained a stable distribution of at least $0.1500 since June 2003. As of June 30, 2007, this equated to a current annualized distribution rate4 of 9.28% based on market price.
Calamos Convertible and High Income Fund (CHY)
The net asset value of the Calamos Convertible and High Income Fund (CHY) posted a first half return of 4.13% (NAV). Similar to CHI, however, CHY's return on share price finished the first half lower, off by 2.44%. The Fund has maintained a stable distribution of at least $0.1219 since August 2003. As of June 30, 2007, this equated to a current annualized distribution rate of 9.00% based on market price.
Calamos Strategic Total Return Fund (CSQ)
For the first half of 2007, the Calamos Strategic Total Return Fund returned 5.83% (NAV) while declining 0.16% (market price). During the same period, the S&P 500 Index5 returned 6.96%. The Fund delivered a monthly distribution of $0.0975 per share as part of its level distribution policy. This equated to a current annualized distribution rate of 7.73% based on the Fund's market price as of June 30, 2007.
Calamos Global Total Return Fund (CGO)
Given the performance of the underlying portfolio, the Board of Directors elected to raise the distribution on Calamos Global Total Return Fund (CGO) twice in the first half of 2007. Overall, the distribution was raised by 25.7% from $0.0875 to $0.1100 per share. For the six months ended June 30, 2007, the Fund returned 9.93% (NAV) and 8.94% (market price), on par with the MSCI World Index6 return of 9.48%. As of June 30, 2007, the fund traded at a discount of 1.42% and posted a current annualized distribution rate of 7.33% based on the Fund's market price.
Closed-End Funds Performance as of 6/30/07
| Fund Name |
Inception Date |
Annualized Total Return |
| 1-Year |
3-Year |
5-Year |
Since Inception |
| Enhanced Fixed Income |
|
|
6/26/02 |
12.12% |
12.31% |
17.91% |
17.91% |
| 12.64% |
10.13% |
15.03% |
14.99% |
|
|
5/28/03 |
11.60% |
12.17% |
-- |
11.78% |
| 13.84% |
11.99% |
-- |
11.91% |
| Global Enhanced Fixed Income |
|
|
6/27/07 |
-- |
-- |
-- |
-- ^ |
| -- |
-- |
-- |
-- ^ |
| Defensive Equity |
|
|
3/26/04 |
17.01% |
12.75% |
-- |
7.60% |
| 20.15% |
13.61% |
-- |
12.21% |
| Global Defensive Equity |
|
|
10/27/05 |
30.96% |
-- |
-- |
18.40% |
| 29.07% |
-- |
-- |
22.75% |
|
^ For the Global Dynamic Income Fund (CHW), the YTD and since inception returns are total returns. |
Performance is updated each month. For more current performance and calendar year returns, visit the Prices and Performance area or contact one of our Client Services representatives at 800-582-6959.
Past Performance
Performance data quoted represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted. You can purchase or sell common shares daily. Like any other stock, market price will fluctuate with the market. Upon sale, your shares may have a market price that is above or below net asset value and may be worth more or less than your original investment. Shares of closed-end funds frequently trade at a market price that is below their net asset value.
Total return measures net investment income and capital gain or loss from portfolio investments, assuming reinvestment of income and capital gain distributions.
Average annual return measures net investment income and capital gain or loss from portfolio investments as an annualized average, assuming reinvestment of income and capital gain distributions.
Important Fund Information
Global Total Return Fund and Global Dynamic Income Fund may invest up to 100% of their assets in foreign securities and invest in an array of security types and market-cap sizes, each of which has a unique risk profile. As a result of political or economic instability in foreign countries, there can be special risks associated with investing in foreign securities. These include fluctuations in currency exchange rates, increased price volatility, and difficulty obtaining information.
Investments by the Funds in lower-rated securities involve substantial risk of loss and present greater risks than investments in higher-rated securities, including less liquidity and increased price sensitivity to changing interest rates and to a deteriorating economic environment.
There are certain risks associated with an investment in a convertible bond such as default risk—that the company issuing a convertible security may be unable to repay principal and interest—and interest rate risk—that the convertible may decrease in value if interest rates increase.
Fixed-income securities are subject to interest rate risk; as interest rates go up, the value of the debt securities in the Funds' portfolio generally will decline.
Global Total Return Fund and Global Dynamic Income Fund may invest in derivative securities. The use of derivatives presents risks different from, and possibly greater than, the risks associated with investing directly in traditional securities. There is no assurance that any derivative strategy used by the Funds will succeed. One of the risks associated with purchasing an option is that the Funds pay a premium whether or not an option is exercised.
Shares of closed-end funds frequently trade at a market price that is below their net asset value. Leverage creates risks which may adversely affect return, including the likelihood of greater volatility of net asset value and market price of common shares; and fluctuations in dividend rates on any preferred shares.
Footnotes
1 Based upon original pricing of Fund and does not include underwriter over allotment or issuance of leverage.
2 The CS High Yield Index is an unmanaged index of high-yield debt securities.
3 The Merrill Lynch All U.S. Convertibles Index (VXA0) is comprised of approximately 500 issues of convertible bonds and preferred stocks of all qualities. Investors cannot invest directly in an index.
4 Current annualized distribution rate on market price is the rate at which the Fund distributes dividend, interest income, and gains earned on the Fund's portfolio, expressed as an annualized percentage of the Fund's current market price per share.
5 The S&P 500 Index is generally considered representative of the U.S. stock market.
6 The MSCI World Index is a market capitalization weighted index composed of companies representative of the market structure of developed market countries in North America, Europe, and Asia/Pacific region.
Investors cannot invest directly in an index.
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