Company: CPZ
Filing Date: 2025-12-29
Form Type: N-CSR
Source: 0001104659-25-124691
Chunk: 91

Company: Calamos Long/Short Equity & Dynamic Income Trust
Filing Date: 2025-12-29
Form: N-CSR
Chunk 91
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 position the portfolio defensively ahead of spring's disruption. How is the Fund positioned? We are reducing concentration risk in AI infrastructure while capturing opportunities in cyclicals benefiting from the administration's reflationary policies, including deregulation, tax incentives, increased defense spending, and the planned overhaul of bank capital rules. Industrials remain the Fund's largest net long exposure, supported by our thesis that recession calls remain premature. The sector benefits from dollar weakness and capex incentives, and technology diffusion combined with reshoring represents multi-year tailwinds. The Fund has selectively added exposure to rate-sensitive areas, including housing, as the Fed's easing cycle progresses. Within information technology, the Fund maintains core positions in cloud infrastructure providers while adopting a more tactical approach to direct AI beneficiaries. We recognize the power of the AI narrative and the fundamental advantages of dominant technology leaders, yet we believe the moment calls for a more risk-adjusted approach given crowded positioning and valuations at the top end of historical ranges. The financial sector positioning remains selective, with core long positions in Wells Fargo and Morgan Stanley positioned to benefit from reduced regulation, a steeper yield curve, and the removal of legacy constraints. Despite the underweight relative to benchmarks, these holdings have demonstrated strong execution and favorable risk-reward characteristics. Please discuss how the Fund uses leverage. Given the favorable absolute returns achieved during the annual period, our use of leverage was accretive to performance. The Fund maintained leverage of $120 million during the period, representing approximately 27% of NAV. CALAMOS CLOSED-END FAMILY OF FUNDS ANNUAL REPORT
68 Calamos Long/Short Equity & Dynamic Income Trust (Unaudited) Increased income earned on bond and preferred investments, as well as rebates earned on long/short hedging activity, helped offset higher leverage costs as rates remained elevated early in the period. Leverage can offer positive reinvestment dynamics over time and has historically been beneficial to the returns of our closed-end funds. The Fed's easing cycle should create a more favorable environment for leverage costs in the period ahead. What are your closing thoughts for Fund shareholders? Looking ahead, the signals for a reordering of the investment landscape are unmistakable. US equities entered 2025 from a position of vulnerability related to "over-ownership" and "over-valuation" concentrated in growth equity assets. The correction witnessed in spring was unsurprising in this context, though the political catalyst and its intensity caught many off guard. Two fundamental narratives now compete for investor attention. The first concerns rising risks to the