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Strategic Total Return Fund (CSQ)
Objective
Fund Objective
The Fund seeks total return through a combination of capital appreciation and current income by investing in a diversified portfolio of equities, convertible securities and below-investment-grade (high-yield) fixed-income securities.
Investor Profile
The Fund offers investors a defensive approach to equity participation and an attractive monthly distribution. By combining equities, convertible bonds and higher-yielding corporate securities, the Fund has the capacity to generate capital gains as well as income, taking advantage of its flexibility to manage risk and reward over the full course of a market cycle. In effect, the Fund seeks to participate in long-term upward trends of the equity markets but with the added benefit—and potential downside protection—of a stable monthly distribution.
Fund Highlights As Of 6/30/08
- Closed-end fund portfolio with a mix of equities, convertible bonds and high-yield bonds
- Attractive current annualized distribution rate of 10.87%1
- Steady distribution since inception
- Strong historical performance
- Positioned as defensive equity with stable monthly distributions
- Complements the equity portion of an investor's asset allocation
- Dividend Reinvestment Plan available
- Managed by an experienced team with a proven track record
Approaching the Investment Process as a Team
At Calamos Investments, we've established ourselves as leaders in the asset management industry by investing according to John Calamos' vision: positioning our portfolios for risk management and staying fully invested through all stages of the market cycle. If you look behind the scenes, you'll see an entire team of experienced investment professionals implementing that vision.
Our "one team, one process" management philosophy means the same group of managers uses the same proprietary methodology to analyze companies and securities for every one of our portfolios. Although predicting the future is impossible, our research helps us hone in on indicators that a company may be undervalued or positioned for exceptional growth. Only after closely examining a company's balance sheet, credit quality, growth prospects, most probable range of price movement and fit within the portfolio do we determine whether its security is likely to benefit our strategy.
We've shown our skill at growing wealth for our clients during our nearly 30 years in the business. As active money managers, our ultimate goal—no matter what the market is doing—is to achieve the optimal risk/reward balance.
Data and Distributions as of 6/30/08
Fund Data  View All Holdings |
| Total assets (including leverage) |
$3,025,694,550 |
| Total common share assets |
$1,945,694,550 |
| Shares outstanding |
154,514,000 |
| Average daily volume (mo.) |
270,227 |
| Total Percent Leveraged5 |
35.69% |
| Debt Coverage Ratio |
3.44 |
| Equity Coverage Ratio |
2.80 |
| Leverage assets |
$1,080,000,000 |
| Debt Leverage |
$880,000,000 |
| Equity Leverage |
$200,000,000 |
| Shares outstanding |
8,000 |
| Rolling 90-day average rate |
3.82 |
| Portfolio turnover |
50.53% |
| Expense ratio (based upon common share assets) |
1.94 |
| Weighted Average Credit Quality4 |
BBB |
| Distribution History (Latest 12 months) as of 7/01/08 |
| July |
$0.10250 |
| June |
$0.10250 |
| May |
$0.10250 |
| April |
$0.10250 |
|
| March |
$0.10250 |
| February |
$0.10250 |
| January |
$0.14230* |
| December |
$0.10250 |
| November |
$0.09750 |
| October |
$0.09750 |
| September |
$0.09750 |
| August |
$0.09750 |
 View the Fund's distribution history
* Includes $0.03980 in net realized long-term capital gains.
| Fees and Expenses |
| |
Common |
Total Fund |
| Management fees |
1.48% |
1.00% |
| Debt Leverage Expense6 |
0.28% |
0.19% |
| Other Expenses |
0.18% |
0.12% |
| Total |
1.94% |
1.31% |
Using a Level Distribution Policy to Promote Total Return
We understand the importance that investors place on the stability of dividends along with long-term total return. In April 2005, CSQ announced the adoption of a level rate distribution policy. Under this policy, the Fund, subject to market conditions at the time of declaration, will pay monthly distributions on each common share at a rate of $0.10250 per share.
The goal is to provide investors with significant long-term total return based on our belief that closed-end fund investors consider consistent, dependable distributions to be an important component of total return.
As a reminder, shareholders can accumulate more shares via the dividend reinvestment plan whether the Fund trades at a premium or discount. If the Fund is trading at a premium, the dividend is reinvested at NAV or at 95% of the market price, whichever is greater. If the Fund is trading at a discount, the dividend is reinvested at the market price.
Performance as of 6/30/08
Performance
| Performance-Calendar Year Total Return |
| |
2008 (Year-To-Date) |
2007 |
2006 |
2005 |
2004 (Since Inception) |
| Market Price |
-15.76 |
-2.75% |
25.45% |
3.92% |
-2.42% |
| NAV |
-14.99 |
3.73% |
20.28% |
2.42% |
11.74% |
Composition as of 6/30/08
Portfolio Asset Allocation* View All Holdings |
| Common Stock |
45.1% |
| Convertible Securities |
29.7% |
| Corporate Bonds |
22.6% |
| Sovereign Bonds |
0.8% |
| Other Assets/Liabilities |
1.8% |
| Sector Weightings* |
| Financials |
15.8% |
| Health Care |
15.4% |
| Energy |
12.2% |
| Industrials |
12.0% |
| Information Technology |
11.7% |
| Consumer Discretionary |
11.1% |
| Telecommunication Services |
8.2% |
| Consumer Staples |
6.9% |
| Materials |
4.0% |
| Treasurys |
0.8% |
| Utilities |
0.5% |
| Representative Holdings^ |
| Description |
Asset Type |
|
| Johnson & Johnson |
Common Stock |
3.5% |
| AT & T Inc. |
Common Stock |
3.5% |
| Chevron Corp. |
Common Stock |
2.9% |
| ConocoPhillips |
Common Stock |
2.5% |
| General Electric Company |
Common Stock |
2.3% |
| Merck & Company, Inc. |
Common Stock |
2.2% |
| Pfizer, Inc. |
Common Stock |
1.9% |
| Coca-Cola Company |
Common Stock |
1.9% |
| Freeport McMoRan Cooper & Gold Inc. |
Convertible Preferred Stock |
1.8% |
| BP PLC-ADR |
Common Stock |
1.6% |
| Quality Allocation^4 |
| AAA |
1.0% |
| AA |
0.8% |
| A |
14.5% |
| BBB |
13.1% |
| BB |
30.5% |
| B |
18.4% |
| CCC or below |
2.6% |
| Not Rated |
19.1% |
The portfolio is actively managed. Holdings and weightings are subject to change at any time without notice.
* Sector and portfolio asset allocation are based on total assets.
^ Data is based on portfolio holdings.
* The goal of the level-rate distribution policy is to provide investors a predictable, though not assured, level of cash flow. Monthly distributions paid may include net investment income, net realized short-term capital gains and, if necessary, return of capital. Maintenance of this policy may increase transaction and tax costs associated with the Fund.
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Fund Snapshot
| NYSE Ticker |
CSQ |
| NAV Ticker |
XCSQX |
Daily Prices and Rate
as of 7/23/08 |
Current Annualized
Distribution Rate1 |
11.01% |
| Market Price |
$11.17 |
| Market Price Change |
$0.12 |
| NAV |
$12.47 |
| NAV Change |
$0.07 |
| Premium/(Discount) |
-10.43% |
| Team Managed |
Led by Co-Chief Investment Officers:
- John P. Calamos, Sr.
- Chairman, Chief Executive Officer and Chief Investment Officer
- Nick P. Calamos
- Senior Executive Vice President, Head of Investments and Chief Investment Officer
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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.
Important Fund Information
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.
Investments by the Fund 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.
Fixed-income securities are subject to interest rate risk; as interest rates go up, the value of debt securities in the Fund's portfolio generally will decline.
Footnotes
1Current 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.
2Total return measures net investment income and capital gain or loss from portfolio investments, assuming reinvestment of income and capital gain distributions.
3Average 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.
4Credit quality shown reflects the higher of the ratings of Standard & Poor's Corporation or Moody's Investors Service, Inc. Ratings are relative, subjective and not absolute standards of quality. Excludes equity securities and cash.
5Leverage creates risks that 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 preferred shares. To attempt to limit the effects of rate increases on the cost of leverage, the Fund has entered into interest-rate swap agreements. The final agreement matures in 2009 at a cost of 4.34%.
6Interest expense on payments made to the Fund's outstanding credit facility.
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