The Securities and Exchange Commission has not approved or disapproved of these securities. The Securities and Exchange Commission has not determined whether this prospectus is accurate or complete. Anyone who tells you otherwise is committing a crime. The most common types of convertible securities are bonds and preferred stock that the holder can exchange for common stock of the same issuer.
Convertible securities offer both current income and growth potential.
For current income, we buy convertible debt instruments like bonds, notes and debentures that entitle the Fund to receive regular interest payments. Similarly, we buy preferred stock that entitles the Fund to receive regular dividend payments. These interest and dividend payments generally exceed the dividend payments that the issuers of our convertible securities make to holders of their common stock. Convertible securities have growth potential because, if the underlying common stock begins to increase in value, the holder of the convertible security can exchange it for common stock and enjoy the benefits of that growth. Many convertible debt securities are assigned ratings by agencies that evaluate the quality of publicly offered debt.