Income Securities, bonds, convertibles, preferreds and hybrids

CONVERTIBLES PREFERRED STOCKS - There are two families of convertible preferred stocks, Mandatory and Optional. Convertible preferreds can be classed as equity - paying dividends or debt - paying interest.

Mandatory

- This "Family" of convertible preferreds will automatically convert to com m on stock on a specific date. They typically have short maturity dates, ranging from one to four years. Most issues have a variable conversion rate based on the price of the com m on stock they relate to. Most convertibles in this family are not callable before the mandatory conversion date and are not convertible by the holder into com m on stock before their maturity date. Convertible securities are very individual creatures and at times, members of either family can have features of the other.

Optional

- This "Family" of convertible preferreds are normally convertible at any time by the holder at fixed conversion rates and typically are perpetual or with a long maturity. They are usually callable after five years and are convertible at the option of the holder into a common stock at any time. Convertible securities are very individual creatures and at times members of either family can have features of the other.