PBP

PBP writes covered calls on its portfolio of S&P 500 securities, an options strategy which increases the yield substantially but also limits potential upside. The fund writes the near-term options generally each month, and each option's exercise price is at or above the current price level of the S&P 500. By writing options on the securities held in the portfolio, PBP adds income from call premiums at the expense of upside, so returns have differed greatly from those of our benchmark. As a total return version, the underlying index reinvests all dividends paid on the S&P 500 components and the premiums from writing the option. The fund's exposure looks pretty market-like, with a very slight midcap tilt and minute sector bets versus our large-cap benchmark. While PBP tends to perform well in bear markets, its inability to capture upside has spelled bad news during the recovery from 2008. The index is rebalanced and reconstituted quarterly.