Form 424B3 - Prospectus [Rule 424(b)(3)]
October 02 2023 - 10:44AM
Edgar (US Regulatory)
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Filed pursuant to Rule 424(b)(3) |
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File No. 333-255673 |
Calamos
Strategic Total Return Fund (the "Fund")
Supplement
dated October 2, 2023 to the Fund’s Statement of Additional Information (“SAI”) dated April 30, 2021, and as supplemented
from time to time
Effective
immediately, the following disclosure is added to the “INVESTMENT OBJECTIVE AND POLICIES” section of the Fund’s SAI:
Contingent
Capital Securities
The
Fund may invest in contingent capital securities, a form of hybrid debt security issued by banking institutions that are intended to
convert into equity or have their principal written down upon the occurrence of certain “trigger events.” Trigger events
vary by individual security and are defined by the documents governing the contingent capital security.
Certain
types of contingent capital securities have only one type of trigger event; namely, the determination
by the issuer’s regulatory authority (typically, a banking regulator that oversees the issuer’s applicable capital requirements)
that the issuer has ceased, or is about to cease, to be viable. In some cases, this would include, for example, an event wherein a government
authority publicly announces that such issuer has accepted or agreed to accept a capital injection, or equivalent support, from such
authority (or agent or agency thereof) without which the issuer would have been determined to be non-viable. Such contingent capital
securities are typically issued as either subordinated debt instruments or preferred shares and are convertible either into common shares
of the issuer or subject to principal write-down, upon the occurrence of a trigger event.
Other
types of contingent capital securities (often referred to as contingent convertible capital securities, or “CoCos”) are subject
to either a mandatory conversion into equity or an automatic write-down of principal upon the occurrence of certain “trigger events.”
The trigger events are generally linked to regulatory capital thresholds or regulatory actions calling into question the issuing
banking institution’s continued viability as a going-concern. CoCos’ unique equity conversion or principal write-down
features are tailored to the issuing banking institution and its regulatory requirements. CoCos can be written down to zero if and when
certain pre-specified distressed conditions occur.
Some
additional risks of investing in contingent capital securities include:
| · | Market
Value Fluctuations – The value of contingent
capital securities is unpredictable and will be influenced by many factors including, without
limitation: (i) the creditworthiness and financial condition of the issuer and/or fluctuations
in such issuer’s applicable capital ratios; (ii) supply and demand for the securities;
(iii) general market conditions and available liquidity; and (iv) economic, financial and
political events that affect the underlying issuer, its particular market or the financial
markets in general. |
| · | Subordination
of Debt, Loss of Income and/or Conversion to Equity. If
the securities are converted into the issuer’s underlying equity securities following
a conversion event (i.e., a “trigger”), each holder will be subordinated
to the underlying issuer’s other preferred security classes due to its conversion
from being the holder of a debt instrument to being the holder of an equity instrument. As
a result, the Fund could experience loss of interest or dividends resulting in a reduced
income rate, potentially to zero, as a result of the issuer’s common stock being converted.
In addition, the value of the issuer’s common stock following such conversion may have
declined, perhaps substantially, and may continue to decline, which may adversely affect
the Fund’s net asset value. |
| · | Risk
of Loss of Principal – Contingent convertible securities that are subject to a
write down of principal can be written down to zero under certain conditions. The Fund could
lose all of its investment in such contingent capital securities, which may adversely affect
the Fund’s net asset value. |
| · | Additional
Risks of CoCos – Most CoCos are considered to be high yield or “junk”
securities and are therefore subject to the risks of investing in below investment grade
securities. |
Please retain
this supplement for future reference.
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