As filed with the Securities and Exchange Commission on _____ __, 1996
Securities Act registration no. 33-19228
Investment Company Act file no. 811-5443
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 13 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 16 [X]
- ------------------------------------------------------------------------------
CFS INVESTMENT TRUST
(Registrant)
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Telephone number: 708/245-7200
- ------------------------------------------------------------------------------
John P. Calamos Cameron S. Avery
Calamos Asset Management, Inc. Bell, Boyd & Lloyd
1111 East Warrenville Road 70 West Madison Street, Suite 3300
Naperville, Illinois 60563-1493 Chicago, Illinois 60602-4207
(Agents for service)
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It is proposed that this filing will become effective:
______ immediately upon filing pursuant to paragraph (b) of rule 485 on
________________ pursuant to paragraph (b) of rule 485 60 days
______ after filing pursuant to paragraph (a)(1) of rule 485 on
________________ pursuant to paragraph (a)(1) of rule 485
__X___ 75 days after filing pursuant to paragraph (a)(2) of rule 485 on
_____________ pursuant to paragraph (a)(2) of rule 485 this
______ post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Registrant has previously elected pursuant to Rule 24f-2 to register under the
Securities Act of 1933 an indefinite number of shares of beneficial
interest, without par value, of the series designated Calamos Strategic
Income Fund, Calamos Convertible Fund, Calamos Growth and Income
Fund and Calamos Growth Fund. By this amendment Registrant is
registering an indefinite number of shares of beneficial interest,
without par value, of its series designated Calamos Global Growth and
Income Fund. Registrant's Rule 24f-2 Notice for the fiscal period ended
March 31, 1995 was filed on or about May 30, 1995.
- -------------------------------------------------------------------------------
Amending Parts A, B and C and filing exhibits.
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<PAGE>
CFS INVESTMENT TRUST
Cross-reference sheet pursuant to rule 495(a) of Regulation C
Item Location or caption*
Part A (prospectus)
1(a) & (b) Front cover
2(a) Expenses
(b) & (c) Key Features
3(a) Financial Highlights
(b) Not applicable
(c) Performance Information
(d) Financial Highlights
4(a)(i) The Trust and Its Shares
(a)(ii)&(b) Investment Objectives and Policies; Common Investment Practices;
Investment Restrictions
(c) Common Investment Practices; Risk of Investment
5(a) Management of the Funds -- The Trustees
(b) Management of the Funds -- The Adviser; rear cover
(c) Management of the Funds -- The Adviser
(d) Not applicable
(e) Rear cover
(f) Expenses; Management of the Funds -- The Adviser
(g) Portfolio Transactions
5A The information called for is contained in the registrant's
annual report to shareholders
6(a) The Trust and Its Shares -- Shares
(b) The Trust and Its Shares -- Certain Shareholders
(c) & (d) Not applicable
(e) The Trust and Its Shares -- Shareholder Inquiries
(f) Dividends and Distributions
(g) Taxes
- --------------------------
*References are to captions within the part of the registration statement to
which the particular item relates except as otherwise indicated.
<PAGE>
Location or caption
Part A (prospectus) continued
7 How to Purchase Shares
(a) How to Purchase Shares; Management of the Funds -- The Adviser;
Rear Cover
(b) How to Purchase Shares
(c) How to Purchase Shares; Shareholder Services
(d) How to Purchase Shares
(e) & (f) Management of the Funds -- Distribution Plan
8(a)-(d) How to Redeem Shares
9 Not applicable
Part B (Statement of Additional Information)
10(a) & (b) Front cover
11 Table of Contents
12 General Information
13(a)-(c) Investment Practices; Investment Restrictions
(d) Portfolio Transactions
14(a) & (b) Management
(c) Not applicable
15(a)-(c) Certain Shareholders
16(a) Management
(b) Management; Investment Advisory Services; Part A -
Management of the Funds -- The Adviser
(c) Distribution Plan
(d) & (e) Not applicable
(f) Distribution Plan
(g) Custodian
(h) Custodian; Independent Auditors
(i) Transfer Agent
17(a)-(c) Portfolio Transactions
(d) & (e) Not applicable
18 Not applicable
19(a) Purchasing and Redeeming Shares
(b) Purchasing and Redeeming Shares; Financial Statements
(c) Purchasing and Redeeming Shares
20 Taxation
21(a)-(c) Distributor
<PAGE>
22(a) Not applicable
(b) Performance Information
23 Financial Statements
Part C (Other Information)
24 Financial statements and exhibits
25 Persons controlled by or under common control with
registrant
26 Number of holders of securities
27 Indemnification
28 Business and other connections of investment adviser
29 Principal underwriters
30 Location of accounts and records
31 Management services
32 Undertakings
<PAGE>
<TABLE>
<CAPTION>
Prospectus June __, 1996
Calamos Funds
- ------------------------------------------------ ------------------------------
<S> <C>
Strategic Income Fund
Seeks high current income
consistent with stability of
principal, primarily through
investment in convertible
securities and employing
short selling to enhance
income and hedge against
market risk.
- ------------------------------------------------ ------------------------------
Convertible Fund
Seeks current income. Growth
is a secondary objective
that the Fund also considers
when consistent with its
objective of current income.
- ------------------------------------------------ ------------------------------
Growth and Income Fund
Seeks high long-term total
return through capital
appreciation and current
income derived from a
diversified portfolio of
convertible, equity and
fixed-income securities.
- ------------------------------------------------ ------------------------------
Global Growth and Income Fund
Seeks high long-term total
return through capital
appreciation and current
income derived from a
globally diversified
portfolio of convertible,
equity and fixed-income
securities.
- ------------------------------------------------ ------------------------------
Growth Fund
Seeks long-term capital
growth.
- ------------------------------------------------ ------------------------------
</TABLE>
Minimum initial investment: $500
Subsequent investment: $50
Individual retirement account (IRA) plan available
-----------------------
Although each Fund is permitted to invest without limit in debt securities
rated below investment grade, commonly known as "junk bonds," only Strategic
Income Fund intends to invest as much as 35% or more of its net assets in such
securities. Those securities entail greater risks, including default risks,
than those found in higher rated securities. Investors should carefully
consider those risks before investing. See "Debt Securities."
This prospectus contains information you should know before investing in the
funds. Please read it carefully and retain it for future reference. A
statement of additional information dated the date of this prospectus and
containing more detailed information about the funds has been filed with the
Securities and Exchange Commission and (together with any supplements thereto)
is incorporated herein by reference. The statement of additional information
and the most recent financial statements are available without charge at the
address and telephone numbers set forth above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
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- ------------------------------------------------------------------------------
Key Features
INVESTMENT OBJECTIVES
Calamos Strategic Income Fund seeks high current income consistent with
stability of principal, primarily through investment in convertible securities
and employing short selling to enhance income and hedge against market risk.
Calamos Convertible Fund seeks current income. Growth is a secondary objective
that the Fund also considers when consistent with its objective of current
income.
Calamos Growth and Income Fund seeks high long-term total return through
capital appreciation and current income derived from a diversified portfolio
of convertible, equity and fixed-income securities.
Calamos Global Growth and Income Fund seeks high long-term total return
through capital appreciation and current income derived from a globally
diversified portfolio of convertible, equity and fixed-income securities.
Calamos Growth Fund seeks long-term capital growth.
There can be no assurance that a Fund will achieve its investment objective.
INVESTMENT RISKS
The Funds are designed for long-term investors who can accept the fluctuations
in portfolio value and other risks associated with seeking high current income
or long-term capital appreciation through investments in securities.
The Funds' investments in debt securities rated below investment grade,
foreign securities and options and futures, and use of short sales also
present risks. The Funds may have high portfolio turnover. See "Common
Investment Practices" and "Risk of Investment" for a more complete description
of the risks of investing in each of the Funds.
DIVIDENDS AND CAPITAL GAINS
Growth Fund pays income dividends annually. Each other Fund pays income
dividends quarterly. Capital gains, if any, are distributed by each Fund at
least annually. Distributions are automatically reinvested in additional
shares at net asset value unless payment in cash is requested. See "Dividends
and Distributions."
PURCHASES AND REDEMPTIONS
Class A shares of each Fund are offered with a front-end sales charge, and
Class C shares of each Fund are offered without a sales charge, as described
below:
Class A shares Offered at net asset value plus a maximum sales charge of 4.75%
of the offering price, with reduced sales charges on investments of $50,000 or
more and no sales charge on purchases of $1 million or more or on reinvestment
of dividends. Class A shares are subject to an annual .25% service fee and a
.25% distribution fee.
Class C shares Offered at net asset value without an initial or contingent
deferred sales charge, but subject to an annual .25% service fee and a .75%
distribution fee.
<PAGE>
Each class of shares of a Fund represents interests in the same portfolio of
investments of the Fund. The minimum initial investment in a Fund is $500 and
investments in the fund thereafter must be at least $50. Shares are redeemable
at net asset value, which may be more or less than original cost; however, if
Class C shares, or Class A shares for which the initial purchase price was $1
million or more, on which no sales charge was imposed, are redeemed within one
year, a deferred sales charge of 1% will be imposed. See "How to Purchase
Shares" and "How to Redeem Shares."
EXPENSES OF THE FUNDS
Each Fund pays a management fee to the investment adviser. Each Fund also
compensates the Distributor for shareholder servicing and for services in
distributing Fund shares. See "Management of the Funds."
INVESTMENT ADVISER
Calamos Asset Management, Inc. ("CAM" or the "Adviser")
DISTRIBUTOR
Calamos Financial Services, Inc. ("CFS" or the "Distributor")
<PAGE>
<TABLE>
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Expenses
- -------------------------------------------------------------------------------------------------------------------
The following tables show all fees paid by shareholders or charged against the
assets of each Fund:
<CAPTION>
Class A Shares
Global
Strategic Growth and Growth and
Income Convertible Income Income Growth
Fund Fund Fund Fund Fund
-------- ---------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales charge on purchases
(as a percentage of offering price) (b)...... 4.75% 4.75% 4.75% 4.75% 4.75%
Maximum sales charge on reinvested
dividends.................................... None None None None None
Deferred sales charge (c)....................... None None None None None
Exchange fee..................................... None None None None None
Redemption fees (d).............................. None None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fees.................................. .75% .75% .75% 1.00% 1.00%
12b-1 fees (e)................................... .50 .50 .50 .50 .50
Other expenses (after expense reimbursement)..... 1.15 (a) .35 .75 (a) .50 (a) .50 (a)
------ ------ ------ ------ ------
Total Fund operating expenses.................... 2.40% (b) 1.60% 2.00% 2.00% 2.00%
<CAPTION>
Class C Shares
Global
Strategic Growth and Growth and
Income Convertible Income Income Growth
Fund Fund Fund Fund Fund
-------- ---------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales charge on purchases
(as a percentage of offering price) (b)...... None None None None None
Maximum sales charge on reinvested
dividends.................................... None None None None None
Deferred sales charge (c)....................... None None None None None
Exchange fee..................................... None None None None None
Redemption fees (d).............................. None None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fees.................................. .75% .75% .75% 1.00% 1.00%
12b-1 fees (e)................................... 1.00 1.00 1.00 1.00 1.00
Other expenses (after expense reimbursement)..... .65 (a) .25 (a) .25 (a) .50 (a) .25 (a)
------ ------ ------ ------ ------
Total Fund operating expenses.................... 2.40% (b) 2.00% 2.00% 2.50% 2.25%
<FN>
(a) Because Global Growth and Income Fund is newly organized, its "Other
expenses" reflect an estimate. The Adviser has voluntarily undertaken to
limit the annual ordinary operating expenses of each class of shares,
as a percentage of the average net assets of the class, to 2.25% for
Class C shares of Growth Fund, 2.50% for Class C shares of Global
Growth and Income Fund and 2% for each other class through August 31,
1997, and the percentages shown for "Other expenses" take into account
expected expense reimbursements. Absent that limitation, the "Other
expenses" and "Total Fund operating expenses," respectively, for Class A
shares of the Funds other than of Convertible Fund would be 2.25%
and 3.50% for Strategic Income Fund; .95% and 2.20% for Growth and
Income Fund; 2.80% and 4.30% for Global Growth and Income Fund; and
2.10% and 3.60% for Growth Fund.In the case of Class C shares,
absent the expense limitation, the "Other expenses" would have
been the same as for the Class A shares, and "Total Fund operating
expenses" would have been 4.00% for Strategic Income Fund; 2.10% for
Convertible Fund; 2.70% for Growth and Income Fund; 4.35% for Global
Growth and Income Fund; and 4.10% for Growth Fund. See "Management of
the Funds - The Adviser." Each Fund may incur expenses for dividends
paid on short positions that are not subject to the Adviser's expense
limitation and that are not included in "Other expenses." Only Strategic
Income Fund had such expenses, which amounted to .40% of average
net assets.
(b) Reduced sales charges apply to purchases of Class A shares of $50,000 or
more. See "How to Purchase Shares--Offering Price."
(c) With respect to Class C shares, or Class A shares for which the initial
purchase price was $1 million or more, on which no initial sales charge
was imposed, if any of such shares are redeemed within one year after
purchase (other than by reinvestment of dividends or distributions),
determined on a first-in, first-out basis, a contingent deferred sales
charge of 1% of the purchase price will be imposed.
(d) A service charge of $15 is deducted from proceeds of redemption paid by
wire.
(e) The Trust's Distribution Plan, as permitted under Rule 12b-1, provides
for payment by each Fund of a service fee of .25%, and a distribution
fee of .25% in the case of Class A shares and .75% in the case of Class
C shares, of the average daily net assets of the respective class.
Consequently, long-term shareholders eventually may pay more than the
economic equivalent of the maximum initial charges permitted by the
National Association of Securities Dealers.
</FN>
</TABLE>
<PAGE>
Examples
You would pay the following expenses on a $1,000 investment, assuming (1) a 5%
annual return as required by the Securities and Exchange Commission for
purposes of this example and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
Class A Shares
One Three Five Ten
Year Years Years Years
<S> <C> <C> <C> <C>
Strategic Income Fund $71 $119 $169 $308
Convertible Fund 63 96 130 228
Growth and Income Fund 67 107 150 269
Global Growth and Income Fund 67 107 N/A N/A
Growth Fund 67 107 150 269
<CAPTION>
Class C Shares
One Three Five Ten
Year Years Years Years
<S> <C> <C> <C> <C>
Strategic Income Fund $71 $119 $169 $308
Convertible Fund 67 107 150 269
Growth and Income Fund 67 107 150 269
Global Growth and Income Fund 72 122 N/A N/A
Growth Fund 69 114 162 294
</TABLE>
The purpose of these tables and the examples is to assist you in understanding
the various costs and expenses that an investor in a Fund bears, directly or
indirectly. The examples assume that the percentage amounts listed under
Annual Fund Operating Expenses remain the same through each of the periods,
all income dividends and capital gains distributions are reinvested in
additional shares of the Funds, and each Fund's net assets remain constant.
The examples should not be considered a representation of past or future
expenses; the actual expenses of the Funds and the annual rates of return may
be greater or less than those shown. Although information such as that shown
in the example is useful in reviewing the expenses of the Funds and in
providing a basis for comparison of those expenses with the expenses of other
mutual funds, it should not be used for comparison with other investments
using different assumptions or time periods.
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------
Financial Highlights
- -----------------------------------------------------------------------------
The tables below reflect the results of the operations of Class A shares of
each Fund other than Global Growth and Income Fund on a per-share basis.
Because Class C shares of the Funds have not previously been issued, similar
information does not exist for them. Information in the tables for the fiscal
years ended on or after April 30, 1988 was audited by Ernst & Young LLP,
independent auditors. Information for Convertible Fund for prior periods was
audited by other auditors. These tables should be read in conjunction with
each Fund's financial statements and notes thereto. The Funds' annual report,
which may be obtained from the Trust upon request at no charge, contains
additional performance information.
<CAPTION>
Strategic Income Fund
Eleven
Year Months 9/4/90
Ended Ended Year ended April 30, to
3/31/96 3/31/95 1994 1993 1992 4/30/91
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $___ $ 10.71 $ 10.96 $ 10.58 $ 10.60 $ 10.00
Income from investment operations:
Net investment income ____ .40 .36 .39 .59 .40
Net realized and unrealized
gain (loss) on investments ____ (.43) .11 .79 .46 .61
---- ------- ------- ------- ------- -------
Total from investment operations (.03) .47 1.18 1.05 1.01
---- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ____ (.36) (.41) (.41) (.51) (.40)
Dividends from net realized capital gains ____ (.19) (.31) (.39) (.56) (.01)
---- ------- ------- ------- ------- -------
Total distributions ____ (.55) (.72) (.80) (1.07) (.41)
---- ------- ------- ------- ------- -------
Net asset value, end of period $___ $ 10.13 $ 10.71 $ 10.96 $ 10.58 $ 10.60
==== ======= ======= ======= ======= =======
Total return (c) ____ (0.2%) 4.2% 11.5% 10.5% 10.2%
Ratios and supplemental data:
Net assets, end of period (000) $___ $ 2,211 $ 3,004 $ 2,522 $ 1,410 $ 595
Ratio of expenses to average
net assets (a)(b) ____ 2.4%* 2.2% 2.3% 2.5% 2.6%*
Ratio of net investment income to average
net assets ____ 4.0%* 3.2% 3.9% 5.3% 6.6%*
Portfolio turnover rate ____ 59.9% 79.4% 73.8% 97.0% 108.9%*
Average brokerage commission paid per share
<FN>
- ---------------
(a) After the reimbursement and waiver of expenses by the Adviser equivalent
to ___%, 1.1%*, 1.0%, 0.7%, 1.25% and 4.8%* of average net assets,
respectively.
(b) Includes ___%, 0.4%*, 0.2%, 0.3%, 0.5% and 0.6%,* respectively, related
to dividend expenses on short positions.
(c) Total return is not annualized for periods that are less than a full
year and does not reflect the effect of sales charges.
*Annualized.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Convertible Fund
Eleven
Year Months
Ended Ended Year Ended April 30,
3/31/96 3/31/95 1994 1993 1992 1991 1990 1989 1988(b) 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $__ $13.04 $13.96 $12.72 $11.39 $10.29 $10.73 $10.56 $11.94 $11.99
Income from investment
operations:
Net investment income ___ .38 .40 .42 .41 .49 .60 .59 .62 .52
Net realized and unrealized
gain (loss) on investments ___ (.01) .53 1.32 1.43 1.25 (.32) .14 (1.24) .50
--- ------- ------- ------- ------- ------ ------ ------- ------- -------
Total from investment
operations ___ .37 .93 1.74 1.84 1.74 .28 .73 (.62) 1.02
--- ------- ------- ------- ------- ------ ------ ------- ------- -------
Less distributions:
Dividends from net
investment income ___ (.32) (.39) (.40) (.45) (.52) (.63) (.56) (.66) (.54)
Dividends from net realized
capital gains ___ (.56) (1.46) (.10) - - - - (.10) (.53)
Dividends in excess of
net realized capital gains ___ (.12) - - - - - - - -
--- ------- ------- ------- ------- ------ ------ ------- ------- -------
Distributions from paid in
capital ___ - - - (.06) (.12) (.09) - - -
--- ------- ------- ------- ------- ------ ------ ------- ------- -------
Total distributions ___ (1.00) (1.85) (.50) (.51) (.64) (.72) (.56) (.76) (1.07)
=== ======= ======= ======= ======= ====== ====== ======= ======= =======
Net asset value, end of period $__ $12.41 $13.04 $13.96 $12.72 $11.39 $10.29 $10.73 $10.56 $11.94
Total return (a) __% 3.2% 6.5% 14.0% 16.5% 17.7% 2.4% 7.2% (5.1%) 9.5%
Ratios and supplemental data:
Net assets, end of period (000) $__ $16,646 $17,023 $17,213 $16,940 $13,953 $18,664 $21,270 $23,194 $23,632
Ratio of expenses to
average net assets __% 1.6%* 1.6% 1.7% 1.2% 1.2% 1.1% 1.1% 1.2% 1.3%
Ratio of net investment
income to average
net assets __% 3.3%* 2.8% 3.2% 3.4% 4.3% 5.5% 5.6% 5.6% 4.6%
Portfolio turnover rate __% 42.1% 73.1% 73.1% 83.8% 63.2% 93.4% 84.7% 55.5% 45.0%
Average brokerage
commission paid per share
<FN>
- ---------------
(a) Total return is not annualized for periods that are less than a full
year and does not reflect the effect of sales charges.
(b) Calamos Asset Management, Inc. became the Fund's investment adviser on September 1, 1987.
*Annualized.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Growth and Income Fund
Eleven
Year Months 9/22/88
Ended Ended Year Ended April 30, to
3/31/96 3/31/95 1994 1993 1992 1991 1990 4/30/89
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $__ $ 12.97 $ 13.90 $ 13.57 $ 11.54 $ 10.46 $ 10.49 $ 10.00
Net income from investment operations:
Net investment income ___ .35 .31 .35 .29 .31 .33 .38
Net realized and unrealized
gain (loss) on investments ___ (.02) .34 1.97 2.02 1.09 .09 .49
--- ------ ------- ------- ------ ------ ------ -----
Total from investment operations ___ 0.33 .65 2.32 2.31 1.40 .42 .87
--- ------ ------- ------- ------ ------ ------ -----
Less distributions:
Dividends from net investment
income ___ (.32) (.29) (.36) (.28) (.32) (.28) (.38)
Dividends from net realized
capital gains ___ (.30) (1.29) (1.63) - - (.17) -
--- ------ ------- ------- ------ ------ ------ -----
Total distributions ___ (.62) (1.58) (1.99) (.28) (.32) (.45) (.38)
--- ------ ------- ------- ------ ------ ------ -----
Net asset value, end of period $__ $ 12.68 $ 12.97 $ 13.90 $ 13.57 $ 11.54 $ 10.46 $ 10.49
=== ====== ======= ======= ====== ====== ====== =====
Total return (b) __% 2.8% 4.5% 18.8% 20.2% 13.4% 3.8% 9.0%
Ratios and supplemental data:
Net assets, end of period (000) $__ $ 3,853 $ 4,663 $ 3,655 $ 2,694 $ 1,821 $ 1,345 $ 732
Ratio of expenses to average
net assets (a) __% 2.0%* 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%*
Ratio of net investment
income to average net assets __% 3.0%* 2.3% 2.6% 2.3% 2.9% 3.0% 4.8%*
Portfolio turnover rate __% 84.7% 155.2% 132.3% 111.6% 103.6% 103.0% 85.0%*
Average brokerage commission
paid per share
<FN>
- ------------------------------
(a) After the reimbursement and waiver of expenses by the Adviser equivalent
to ___%, 0.2%*, 0.1%, 0.5%, 0.5%, 1.7%, 2.3% and 8.4%* of average net
assets, respectively.
(b) Total return is not annualized for periods that are less than a full
year and does not reflect the effect of sales charges.
*Annualized.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Growth Fund
Eleven
Year Months 9/4/90
Ended Ended Year ended April 30, to
3/31/96 3/31/95 1994 1993 1992 4/30/91
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $__ $ 14.57 $ 13.95 $ 14.04 $ 12.48 $ 10.00
Income from investment operations:
Net investment income (loss) ___ .02 .01 (.02) (.01) .07
Net realized and unrealized
gain (loss) on investments ___ (.28) 1.21 .20 1.60 2.50
--- ------ ------ ------ ------ ------
Total from investment operations ___ (.26) 1.22 .18 1.59 2.57
--- ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ___ - (.01) - - (.08)
Dividends from net realized capital gains ___ (.13) (.59) (.27) (.03) (.01)
--- ------ ------ ------ ------ ------
Total distributions ___ (.13) (.60) (.27) (.03) (.09)
--- ------ ------ ------ ------ ------
Net asset value, end of period $__ $ 14.18 $ 14.57 $ 13.95 $ 14.04 $ 12.48
=== ====== ====== ====== ====== ======
Total return (b) __% (1.8%) 8.9% 1.4% 12.7% 25.8%
Ratios and supplemental data:
Net assets, end of period (000) $__ $ 1,791 $ 2,089 $ 1,861 $ 1,802 $ 862
Ratio of expenses to average net assets (a) __% 2.0%* 2.0% 2.0% 2.0% 2.0%*
Ratio of net investment income to average
net assets __% 0.2%* 0.1% (0.1%) (0.1%) 0.8%*
Portfolio turnover rate __% 104.3% 87.3% 56.8% 47.3% 15.8%*
Average brokerage commission
paid per share
<FN>
- ---------------
(a) After the reimbursement and waiver of expenses by the Adviser equivalent
to ___%, 1.6%*, 1.1%, 0.7%, 0.8% and 4.5%* of average net assets,
respectively.
(b) Total return is not annualized for periods that are less than a full
year and does not reflect the effect of sales charges.
*Annualized.
</FN>
</TABLE>
<PAGE>
- ------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- ------------------------------------------------------------------------------
Each Fund has a different investment objective and may invest in different
securities. The Funds differ principally in (i) the relative importance each
places on growth potential and current income as considerations in selecting
investments, and (ii) the types of securities selected for investment.
The investment objectives of a Fund may not be changed without the approval of
a "majority of the outstanding" shares of that Fund, as defined in the
Investment Company Act of 1940. There can be no assurance that a Fund will
achieve its objectives.
STRATEGIC INCOME FUND
Strategic Income Fund seeks high current income consistent with stability of
principal, primarily through investment in convertible securities and
employing short selling to enhance income and hedge against market risk. Under
normal market conditions, the Fund will invest at least 65% of its assets in
income-producing securities. In furtherance of its objective, the Fund may
also write covered call options and purchase put options and invest in other
types of securities. See "Common Investment Practices."
Any assets of the Fund not invested in convertible securities, common stock
received upon conversion or exchange of convertible securities, or in short
sales with respect to portfolio securities may be invested in other securities
including non-convertible equity and debt securities, options, warrants,
securities of the U.S. Government, its agencies and instrumentalities,
repurchase agreements and money market instruments.
CONVERTIBLE FUND
Convertible Fund seeks current income. Growth is a secondary objective that
the Fund also considers when consistent with its objective of current income.
The Fund invests in a diversified portfolio of convertible securities,
primarily convertible bonds and convertible preferred stocks.
See "Common Investment Practices - Convertible Securities."
A significant portion of the Fund's portfolio ordinarily is invested in a
number of long-term core positions, selected on the basis of the investment
adviser's assessment of the long-term value of an investment in that issuer.
The Fund's investments are concentrated in the higher end of the credit
quality spectrum, and the Fund expects to maintain, over the long-term, an
average credit quality of BBB or better. However, debt securities acquired by
the Fund may be unrated or may be rated below investment grade, which would
present increased risk. See "Common Investment Practices - Debt Securities"
for more information, including an analysis of the Fund's past investments in
debt securities.
The Fund is substantially invested in convertible securities, including
synthetic convertible securities, under normal market conditions. See "Common
Investment Practices - Convertible Securities." At least 65% of the Fund's
assets ordinarily is invested in "true" convertibles. Any portion of the
Fund's assets not invested in convertible securities as described above may be
invested in non-convertible equity and fixed-income securities, and other
securities as described under "Common Investment Practices."
<PAGE>
GROWTH AND INCOME FUND
Growth and Income Fund seeks high long-term total return through capital
appreciation and current income. Under normal market conditions the Fund
invests at least 65% of its total assets in a diversified portfolio of
convertible, equity and fixed-income securities, with equal emphasis on
capital appreciation and current income. See "Common Investment Practices -
Convertible Securities." The Fund's assets not invested in convertible
securities are invested in common stocks that, in the judgment of the
investment adviser, provide opportunities for long-term capital appreciation,
or in other securities as described under "Common Investment Practices."
The Fund generally invests in smaller and medium-sized companies, the
securities of which tend to be more volatile and less liquid than the
securities of larger companies. The debt securities of smaller and
medium-sized companies also are less likely to be rated investment grade, and
so the debt securities acquired by the Fund may be unrated or rated below
investment grade, which would present increased risk. See "Common Investment
Practices - Debt Securities" for more information, including an analysis of
the Fund's past investment in debt securities.
GLOBAL GROWTH AND INCOME FUND
Global Growth and Income Fund seeks high long-term total return through
capital appreciation and current income. Under normal market conditions the
Fund invests at least 65% of its total assets in a globally diversified
portfolio of convertible, equity and fixed-income securities with equal
emphasis on capital appreciation and current income. Normally the Fund invests
in the securities markets of at least three countries, which may include the
United States.
The Fund generally invests in securities of companies that are medium-sized
and larger relative to the securities markets of the countries in which those
securities are traded. A significant portion of its assets will be invested in
securities of foreign issuers, which may be more volatile and less liquid than
the securities of United States companies. See "Common Investment Practices -
Foreign Securities" for more information.
The Fund's convertible and fixed-income investments are concentrated in the
higher end of the credit quality spectrum, and the Fund expects to maintain,
over the long term, an average credit quality of BBB or better or, in the case
of unrated securities, of comparable quality as determined by the Adviser. The
debt securities of foreign issuers are less likely to be rated by United
States rating agencies.
GROWTH FUND
Growth Fund seeks long-term capital growth.
In pursuing Growth Fund's investment objective, the Adviser seeks out
securities that, in its opinion, are undervalued and offer above-average
potential for earnings growth. The selection process emphasizes earnings
growth potential coupled with financial strength and stability. The Adviser
performs its own fundamental analysis, in addition to depending upon
recognized rating agencies and other sources. The portfolio may include
securities of well-established companies with large market capitalizations as
well as small, unseasoned companies. The Fund will not invest more than 5% of
its assets in the securities of unseasoned issuers.
<PAGE>
The Adviser anticipates that common stocks will generally afford the best
opportunities for capital growth. However, the Fund may invest in securities
convertible into common stock, preferred stocks, and obligations such as
bonds, debentures and notes that, in the opinion of the Adviser, present
opportunities for capital appreciation. The percentages of Fund assets
invested in various types of securities will vary in accordance with the
judgment of the Adviser. There are no limitations on the amount of the Fund's
assets that may be allocated to the various types of securities, or on the
ratings of debt securities acquired by the Fund. The Fund may also hold cash
and cash equivalents and may invest in other types of securities as described
under "Common Investment Practices."
COMMON INVESTMENT PRACTICES
GENERAL
In selecting portfolio securities for a Fund, including unrated securities,
the investment adviser performs its own credit analysis in addition to
considering evaluations by recognized rating agencies and other sources,
giving consideration to, among other things, the issuer's financial soundness,
its anticipated cash flow, interest and dividend coverage, asset coverage,
sinking fund provisions, responsiveness to changes in interest rates, business
conditions, and liquidation value relative to the market price of the
security. Securities received by a Fund upon conversion or exercise of
warrants and securities remaining upon the breakup of units or detachments of
warrants may be retained to permit orderly disposition or to establish
long-term holding periods for federal income tax purposes. Neither Convertible
Fund nor Strategic Income Fund is required to sell securities to ensure that
at least 65% of its assets are invested in convertible securities or
income-producing securities, respectively.
DEBT SECURITIES
In pursuing its investment objectives, each Fund may invest in convertible and
non-convertible debt securities, including lower-rated securities (i.e.,
securities rated BB or lower by Standard & Poor's Corporation ("S&P") or Ba or
lower by Moody's Investor Services, Inc. ("Moody's"), commonly called "junk
bonds") and securities that are not rated. There are no restrictions as to the
ratings of debt securities acquired by a Fund or the portion of a Fund's
assets that may be invested in debt securities in a particular ratings
category, except that no Fund will acquire a security rated below C.
Securities rated BBB or Baa are considered to be medium grade and to have
speculative characteristics. Lower-rated debt securities, in which Strategic
Income Fund intends to invest as much as 35% or more of its assets, are
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal. Investment in medium- or lower-quality debt
securities involves greater investment risk, including the possibility of
issuer default or bankruptcy. An economic downturn could severely disrupt the
market for such securities and adversely affect the value of such securities.
In addition, lower-quality bonds are less sensitive to interest rate changes
than higher-quality instruments and generally are more sensitive to adverse
economic changes or individual corporate developments. During a period of
adverse economic changes, including a period of rising interest rates, issuers
of such bonds may experience difficulty in servicing their principal and
interest payment obligations.
<PAGE>
Achievement by each Fund of its investment objectives will be more dependent
on the Adviser's credit analysis than would be the case if the Fund were
investing in higher-quality debt securities. Since the ratings of rating
services (which evaluate the safety of principal and interest payments, not
market risks) are used only as preliminary indicators of investment quality,
the Adviser employs its own credit research and analysis. These analyses may
take into consideration such quantitative factors as an issuer's present and
potential liquidity, profitability, internal capability to generate funds,
debt/equity ratio and debt servicing capabilities, and such qualitative
factors as an assessment of management, industry characteristics, accounting
methodology, and foreign business exposure.
Medium- and lower-quality debt securities may be less marketable than
higher-quality debt securities because the market for them is less broad. The
market for unrated debt securities is even narrower. During periods of thin
trading in these markets, the spread between bid and asked prices is likely to
increase significantly, and a Fund may have greater difficulty selling its
portfolio securities. See "Net Asset Value." The market value of these
securities and their liquidity may be affected by adverse publicity and
investor perceptions.
The table below shows the percentages of net assets (on a dollar-weighted
monthly average basis) invested in debt securities in each ratings category
during the eleven months ended March 31, 1996 for Strategic Income Fund,
Convertible Fund and Growth and Income Fund. Growth Fund invested less than 2%
of its assets in debt securities rated below investment grade during that
period.
Percentage
Rating Strategic Convertible Growth and
Category Income Fund Fund Income Fund
U.S. Govt. % % %
AAA
AA
A
BBB
BB
B
CCC
not rated
The percentages in the table are based upon ratings by S&P, or by Moody's if
the security was not rated by S&P. A description of the ratings used by S&P
and Moody's is included as an appendix to this prospectus.
<PAGE>
CONVERTIBLE SECURITIES
Although each Fund may invest in convertible securities, only Convertible Fund
has a policy of investing at least 65% of its assets in convertible securities
under normal circumstances. Strategic Income Fund and Growth and Income Fund
expect that a significant portion of their respective assets will be invested
in convertible securities, but there is no minimum percentage of their assets
that will be so invested.
The Adviser believes that the characteristics of convertible securities make
them appropriate investments for the Funds. These characteristics include: the
potential for capital appreciation as the value of the underlying common stock
increases; the relatively high yield received from dividend or interest
payments as compared to common stock dividends; and decreased risks of decline
in value relative to the underlying common stock due to their fixed-income
nature. As a result of the conversion feature, however, the interest rate or
dividend preference on a convertible security is generally less than would be
the case if the securities were issued in non-convertible form.
Convertible securities include any corporate debt security or preferred stock
that may be converted into underlying shares of common stock. The common stock
underlying convertible securities may be issued by a different entity than the
issuer of the convertible securities. Convertible securities entitle the
holder to receive interest payments paid on corporate debt securities or the
dividend preference on a preferred stock until such time as the convertible
security matures or is redeemed or until the holder elects to exercise the
conversion privilege.
The value of convertible securities is influenced by both the yield of
non-convertible securities of comparable issuers and by the value of the
underlying common stock. The value of a convertible security viewed without
regard to its conversion feature (i.e., strictly on the basis of its yield) is
sometimes referred to as its "investment value." The investment value of the
convertible security will typically fluctuate inversely with changes in
prevailing interest rates. However, at the same time, the convertible security
will be influenced by its "conversion value," which is the market value of the
underlying common stock that would be obtained if the convertible security
were converted. Conversion value fluctuates directly with the price of the
underlying common stock.
If, because of a low price of the common stock, the conversion value is
substantially below the investment value of the convertible security, the
price of the convertible security is governed principally by its investment
value. If the conversion value of a convertible security increases to a point
that approximates or exceeds its investment value, the value of the security
will be principally influenced by its conversion value. A convertible security
will sell at a premium over its conversion value to the extent investors place
value on the right to acquire the underlying common stock while holding a
fixed income security.
<PAGE>
Holders of convertible securities have a claim on the assets of the issuer
prior to the common stockholders but may be subordinated to holders of similar
non-convertible securities of the same issuer. A convertible security may be
subject to redemption at the option of the issuer at a price established in
the governing instrument pursuant to which the convertible security was
issued. If a convertible security held by a Fund is called for redemption, the
Fund will be required to redeem the security, convert it into the underlying
common stock or sell it to a third party. Certain convertible debt securities
may provide a put option to the holder which entitles the holder to cause the
security to be redeemed by the issuer at a premium over the stated principal
amount of the debt security.
"Synthetic" convertible securities, for purposes of this prospectus, are
created by combining separate securities which possess the two principal
characteristics of a true convertible security, i.e., fixed income
("fixed-income component") and the right to acquire equity securities
("convertible component"). The fixed-income component is achieved by investing
in non-convertible fixed-income securities such as non-convertible bonds,
preferred stocks and money market instruments. The convertible component is
achieved by investing in warrants, exchange or NASDAQ listed call options, or
stock index call options granting the holder the right to purchase a specified
quantity of securities within a specified period of time at a specified price
or to receive cash in the case of stock index options. Synthetic convertible
securities are not considered convertible securities for purposes of the
policies of Convertible Fund and Growth and Income Fund to normally invest at
least 65% of total assets in convertible securities.
The synthetic convertible security differs from the true convertible security
in several respects. Unlike a true convertible security, which is a single
security having a unitary market value, a synthetic convertible security is
comprised of two or more separate securities, each with its own market value.
Therefore, the "market value" of a synthetic convertible security is the sum
of the values of its fixed-income component and its convertible component. For
this reason, the values of a synthetic convertible security and a true
convertible security will respond differently to market fluctuations.
More flexibility is possible in the assembly of a synthetic convertible
security than in the purchase of a convertible security. Although synthetic
convertible securities may be selected where the two components are issued by
a single issuer, thus making the synthetic convertible security similar to the
true convertible security, the character of a synthetic convertible security
allows the combination of components representing distinct issuers, when
management believes that such a combination would better promote a Fund's
investment objective. A synthetic convertible security also is a more flexible
investment in that its two components may be purchased separately. For
example, a Fund may purchase a warrant for inclusion in a synthetic
convertible security but temporarily hold short-term investments while
postponing the purchase of a corresponding bond pending development of more
favorable market conditions.
<PAGE>
A holder of a synthetic convertible security faces the risk of a decline in
the price of the security or the level of the index involved in the
convertible component, causing a decline in the value of the call option or
warrant. Should the price of the stock fall below the exercise price and
remain there throughout the exercise period, the entire amount paid for the
call option or warrant would be lost. Since a synthetic convertible security
includes the fixed-income component as well, the holder of a synthetic
convertible security also faces the risk that interest rates will rise,
causing a decline in the value of the fixed-income instrument.
FOREIGN SECURITIES
Global Growth and Income Fund may invest all of its assets, and each other
Fund may invest up to 25% of its net assets, in securities of foreign issuers
that are not publicly traded in the United States ("foreign securities"). For
this purpose, foreign securities do not include securities represented by
American Depository Receipts (ADRs) or securities guaranteed by a United
States person.
International investing allows you to achieve greater diversification and to
take advantage of changes in foreign economies and market conditions. Many
foreign economies have, from time to time, grown faster than the U.S. economy,
and the returns on investments in those countries have exceeded those of
similar U.S. investments, although there can be no assurance that these
conditions will continue.
You should understand and consider carefully the greater risks involved in
investing internationally. Investing in securities of non-U.S. issuers,
positions in which are generally denominated in foreign currencies, and
utilization of forward foreign currency exchange contracts involve both
opportunities and risks not typically associated with investing in U.S.
securities. These include: fluctuations in exchange rates of foreign
currencies; possible imposition of exchange control regulation or currency
restrictions that would prevent cash from being brought back to the United
States; less public information with respect to issuers of securities; less
governmental supervision of stock exchanges, securities brokers and issuers of
securities; different accounting, auditing and financial reporting standards;
different settlement periods and trading practices; less liquidity and
frequently greater price volatility in foreign markets than in the United
States; imposition of foreign taxes; and sometimes less advantageous legal,
operational and financial protections applicable to foreign subcustodial
arrangements.
Although the Funds try to invest in companies and governments of countries
having stable political environments, there is the possibility of restriction
of foreign investment, expropriation of assets, or confiscatory taxation,
seizure or nationalization of foreign bank deposits or other assets,
establishment of exchange controls, the adoption of foreign government
restrictions, or other adverse political, social or diplomatic developments
that could affect investment in those countries.
<PAGE>
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the U.S. and other major
markets. There also may be a lower level of monitoring and regulation of
emerging markets and the activities of investors in such markets, and
enforcement of existing regulations has been extremely limited. Economies in
individual emerging markets may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross domestic product, rates of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging market
countries have experienced high rates of inflation for many years, which has
had and may continue to have very negative effects on the economies and
securities markets of those countries.
Any Fund may invest in ADRs that are not sponsored by the issuer of the
underlying security. To the extent it does so, the Fund would probably bear
its proportionate share of the expenses of the depository and might have
greater difficulty in receiving copies of the issuer's shareholder
communications than would be the case with a sponsored ADR.
When a Fund enters into a contract for the purchase or sale of a foreign
portfolio security, it usually is required to settle the purchase transaction
in the relevant foreign currency or receive the proceeds of the sale in that
currency. In either event, the Fund is obliged to acquire or dispose of an
appropriate amount of foreign currency by selling or buying an equivalent
amount of U.S. dollars. The Fund may wish to "lock-in" the U.S. dollar value
of a transaction at or near the time of the purchase or sale of the foreign
portfolio security at the exchange rate or rates then prevailing between the
U.S. dollar and the currency in which the security is denominated. The Fund
may accomplish such "transaction hedging" by purchasing or selling such
foreign currencies on a "spot" (i.e., cash) basis or on a forward basis
whereby the Fund purchases or sells a specific amount of foreign currency, at
a price set at the time of the contract, for receipt or delivery at a
specified date or at any time within a specified time period. In so doing, the
Fund will attempt to insulate itself against possible losses and gains
resulting from a change in the relationship between the U.S. dollar and the
foreign currency during the period between the date the security is purchased
or sold and the date on which payment is made or received. Similar
transactions may be entered into by using other currencies if the Fund seeks
to move investments denominated in one currency to investments denominated in
another.
When a Fund invests in foreign securities, in addition to the risk of change
in the market value of portfolio securities, the value of the portfolio in
U.S. dollars is subject to fluctuations in the exchange rate between the
foreign currencies and the U.S. dollar. When, in the opinion of the Adviser,
it is desirable to limit or reduce exposure in a foreign currency in order to
moderate potential changes in the U.S. dollar value of the portfolio, the Fund
may enter into a forward currency exchange contract to sell or buy such
foreign currency (or another foreign currency that acts as a proxy for that
currency) by which the U.S. dollar value of certain underlying foreign
portfolio securities can be approximately matched by an equivalent U.S. dollar
liability. This technique is known as "currency hedging" and, by locking in a
rate of exchange, is intended to moderate or reduce the risk of change in the
U.S. dollar value of the Fund's portfolio only during the period of the
forward contract. Forward contracts are usually entered into with banks and
broker-dealers, are not exchange traded, and are usually for less than one
year, but may be renewed. A default on the contract would deprive the Fund of
unrealized profits or force the Fund to cover its commitments for purchase or
sale of currency, if any, at the current market price.
Neither type of foreign currency transaction will eliminate fluctuations in
the prices of the Fund's portfolio securities or prevent loss if the price of
such securities should decline. In addition, such forward foreign currency
exchange contracts will diminish the benefit of the appreciation in the U.S.
dollar value of that foreign currency. For further information on forward
foreign currency exchange transactions, see the Statement of Additional
Information.
<PAGE>
At March 31, 1996, Convertible Fund had invested __% of its net assets in
foreign securities.
warrants
Each Fund may invest up to 5% of the value of its net assets at the time of
purchase in warrants (not including those acquired in units or attached to
other securities), including up to 2% of its net assets in warrants the
underlying common stock of which is not listed on the New York or American
stock exchange or, in the case of Global Growth and Income Fund, a recognized
foreign exchange. A warrant is a right to purchase common stock at a specific
price (usually at a premium above the market value of the underlying common
stock at time of issuance) during a specified period of time. A warrant may
have a life ranging from less than a year to twenty years or longer, but a
warrant becomes worthless unless it is exercised or sold before expiration. In
addition, if the market price of the common stock does not exceed the
warrant's exercise price during the life of the warrant, the warrant will
expire worthless. Warrants have no voting rights, pay no dividends and have no
rights with respect to the assets of the corporation issuing them. The
percentage increase or decrease in the value of a warrant may tend to be
greater than the percentage increase or decrease in the value of the
underlying common stock.
options and futures
Consistent with its objective, each Fund may purchase and write both call
options and put options on securities and on indexes, and may enter into
interest rate and index futures contracts and options on such futures
contracts ("derivative products") in order to provide additional revenue, or
to hedge against changes in security prices or interest rates. Each Fund will
limit its use of futures contracts and options on futures contracts to hedging
transactions to the extent required to do so by regulatory agencies.
An option on a security (or index) is a contract that gives the holder, in
return for a premium, the right to buy (call) from or sell (put) to the option
seller (writer) the security (or the cash value of the index) underlying the
option at a designated price during the term of the option. Prior to exercise
or expiration, an option may be closed out by an offsetting purchase or sale
of an option of the same series. A Fund may write a call or put option only if
the option is covered.
There are several risks associated with the use of derivative products. As the
writer of a covered call option, a Fund foregoes, during the option's life,
the opportunity to profit from increases in market value of the security
covering the call option above the call price. Because of low margin deposits
required, the use of futures contracts involves a high degree of leverage and
may result in losses in excess of the amount of the margin deposit. Since
there can be no assurance that a liquid market will exist when a Fund seeks to
close out a derivative product position, these risks may become magnified.
Because of these and other risks, successful use of derivative products
depends on the Adviser's ability to predict correctly changes in the level and
the direction of stock prices, interest rates and other market factors, but
even a well-conceived transaction may be unsuccessful because of an imperfect
correlation between the securities and derivative product markets. For a more
complete explanation, please refer to the Statement of Additional Information.
<PAGE>
SHORT SALES
Each Fund may attempt to hedge against market risk and enhance income by: (1)
entering into short sales of securities that it currently has the right to
acquire, without payment of any further consideration, through the conversion
or exchange of other securities that it owns or, to a lesser extent, entering
into short sales of securities that it currently owns; and (2) entering into
arrangements with the broker-dealers through which such securities are sold
short to receive income with respect to the proceeds of short sales while the
Fund's short positions remain open.
In addition, Strategic Income Fund may enter into short sales of securities
that it currently has the right to acquire upon payment of additional
consideration, for instance, upon exercise of any option or warrant. This
technique would be used to hedge against market risk in connection with a
synthetic convertible position in the same way selling short a true
convertible security owned by a Fund would hedge against market risk. During
the time such a short position is open, the Fund would maintain in a
segregated account with the Fund's custodian, cash or U.S. Government
securities in an amount such that the value of the segregated account, plus
the value of any collateral required to be deposited with the broker in
connection with the short sale, (i) will equal the current market value of the
securities sold short and (ii) will not be less than the market value of the
securities at the time they were sold short. Strategic Income Fund will
conduct its short sales so that no more than 10% of the net assets of the
Fund, when added together, will be (i) deposited with brokers as collateral,
and (ii) allocated to segregated accounts in connection with short sales, at
any time.
Short sales and short sales against the box may protect the Funds against the
risk of losses in the value of their portfolio securities because any
unrealized losses with respect to such portfolio securities should be wholly
or partially offset by a corresponding gain in the short position. However,
any potential gains in such portfolio securities should be wholly or partially
offset by a corresponding loss in the short position. The extent to which such
gains or losses are offset will depend upon the amount of securities sold
short relative to the amount the Fund owns, either directly or indirectly,
and, in the case where the Fund owns convertible securities, changes in the
conversion premium.
Short sale transactions involve certain risks. In particular, the variable
degree of correlation between the price movements of the convertible
securities (or portion of the synthetic convertible) and the price movements
of the underlying common stock being sold short creates the possibility that
losses on the short sale hedge position may be greater than gains in the value
of the portfolio securities being hedged. In addition, to the extent that a
Fund pays a conversion premium for a convertible security, the Fund is
generally unable to protect against a loss of such premium by entering into a
short sale hedge. In determining the number of shares to be sold short against
the Fund's position in the convertible securities, the anticipated fluctuation
in the conversion premiums is considered. A Fund will also incur transaction
costs in connection with short sales. Certain provisions of the Internal
Revenue Code may limit the degree to which the Funds are able to enter into
short sales, which limitations might impair a Fund's ability to achieve its
investment objective. Please refer to the Statement of Additional Information
for a more complete explanation.
<PAGE>
LENDING PORTFOLIO SECURITIES
In order to generate additional income, each Fund may from time to time lend
securities from its portfolio with a value not exceeding 33 1/3% of its total
assets to brokers, dealers and financial institutions such as banks and trust
companies for which it will receive collateral in cash, United States
Government securities or irrevocable letters of credit that will be maintained
in an amount equal to at least 100% of the current market value of the loaned
securities. Cash collateral will be invested in short-term securities, which
will increase the current income of the Fund. Such loans will be terminable at
any time. A Fund will have the right to regain record ownership of loaned
securities to exercise beneficial rights such as voting rights and rights to
interest or other distributions. A Fund may pay reasonable fees to persons
unaffiliated with the Fund for services in arranging such loans. The lending
of portfolio securities exposes a Fund to the risk of failure by the borrower
to return the securities involved in such transactions, in which event the
Fund may incur a loss. In an effort to reduce that risk, the Adviser will
monitor the creditworthiness of the firms to which the Funds lend portfolio
securities.
TEMPORARY INVESTMENTS
Each Fund may make temporary investments without limitation in periods of
unusual market conditions when the Adviser determines that its stated
investment strategy would not best achieve the Fund's investment objectives, a
defensive position is warranted, or in order to provide liquidity for
redemptions or purchases of portfolio securities. Such investments may be in
money market instruments, consisting of obligations of, or guaranteed as to
principal and interest by, the U.S. Government or its agencies or
instrumentalities; certificates of deposit, bankers' acceptances and other
obligations of domestic banks having total assets of at least $500 million and
which are regulated by the U.S. Government, its agencies or instrumentalities;
commercial paper rated in the highest category by a recognized rating agency;
and repurchase agreements. In a repurchase agreement, a Fund purchases a
security and the seller (a bank or securities dealer) simultaneously agrees to
repurchase the security at the same price plus an amount equal to an
agreed-upon interest rate, on a specified date. In the event of a bankruptcy
or other default of a seller of a repurchase agreement, a Fund could
experience delays in liquidating the underlying security and losses.
RISK OF INVESTMENT
All investments, including those in mutual funds, have risks. No investment is
suitable for all investors. Each Fund is designed for long-term investors who
can accept the fluctuations in portfolio value and other risks associated with
investments in securities. There can be no guarantee that a Fund will achieve
its objective.
<PAGE>
Each Fund diversifies its portfolio holdings to reduce risk. Although risk
cannot be eliminated, diversification reduces the impact of any single
investment. Certain risk factors may also be associated with the Funds'
investment practices, including investing in debt securities rated below
investment grade, short selling and investing in foreign securities. Risk
factors specific to those practices are described under "Common Investment
Practices."
Although the Funds do not purchase securities with a view to rapid turnover,
there are no limitations on the length of time portfolio securities must be
held. The turnover rate may vary significantly from year to year. The
portfolio turnover rate of any Fund may be greater than 100%. A high rate of
portfolio turnover may result in higher transaction costs and the realization
of capital gains and losses. Please refer to the Statement of Additional
Information for a more complete explanation.
INVESTMENT RESTRICTIONS
In pursuing its investment objective, a Fund will not:
1. As to 75% of its assets, invest more
than 5% of its total assets, taken at
market value at the time of a particular
purchase, in the securities of any one
issuer, except that this restriction does
not apply to securities issued or
guaranteed by the United States
Government or its agencies or
instrumentalities;
2. Acquire more than 10%, taken at the
time of a particular purchase, of the
outstanding voting securities of any
issuer; or
3. Invest in a security if more than 25% of
its total assets (taken at market value at
the time of a particular purchase) would
be invested in the securities of issuers in
any particular industry, except that
this restriction does not apply to
securities issued or guaranteed by the
U.S. Government or its agencies or
instrumentalities.
These are fundamental restrictions that cannot be changed as to a Fund without
the approval of a "majority of the outstanding" voting securities of that
Fund, as defined in the Investment Company Act of 1940. All investment
restrictions for the Funds are described in the Statement of Additional
Information.
<PAGE>
HOW TO PURCHASE SHARES
Shares of the Funds are sold through selected broker-dealers and banks that
have signed agreements with Calamos Financial Services, Inc. ("CFS"), the
Funds' distributor, or may be purchased by check or wire sent to CFS. The
minimum initial investment by a shareholder is $500 and $50 thereafter. Each
Fund reserves the right to reject any order for the purchase of its shares in
whole or in part, and to suspend the sale of its shares to the public in
response to conditions in the securities markets or otherwise. Each purchase
of shares is confirmed by a written statement mailed to the shareholder,
without issuance of share certificates.
OFFERING PRICE
Class A shares of each Fund are sold to investors at net asset value plus a
sales charge, which may be reduced or waived as described below. Class C
shares of each Fund are sold without an initial sales charge but are subject
to higher ongoing expenses than Class A shares of the same Fund. When placing
an order, you must specify whether the order is for Class A or Class C shares.
The differences between Class A shares and Class C shares lie primarily in
their initial and contingent deferred sales charge structures and in their
asset-based sales charges in the form of Rule 12b-1 distribution fees. These
differences are summarized in the table below. See also "Expenses" and "How to
Redeem Shares." Each class has distinct advantages and disadvantages for
different investors, and you may choose the class that best suits your
circumstances and objectives.
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Annual 12b-1 Fees
(as a % of average
Class Initial Sales Charge daily net assets Other Information
<S> <C> <C> <C>
Class A Maximum initial sales .50% Initial sales charge waived or
charge of 4.75% of offering reduced for certain purchases
Class C None 1.00% 1% deferred sales charge on
shares redeemed within one year
<FN>
- --------------
* Of this amount, .25% is for administrative services and the balance is for
distribution services.
</FN>
<PAGE>
The sales charges on sales of Class A shares of each Fund (except when waived
as described below under "How to Purchase Shares - Sales Charge Waiver") are
as follows:
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Sales Charge Paid by Investor on Purchase of Class A Shares
As a % of As a % of % of Offering Price
Net Amount Invested Offering Price Retained by Selling Dealer
<S> <C> <C> <C>
Less than $50,000................... 4.99% 4.75% 4.00%
$50,000 but less than $100,000...... 4.44 4.25 3.50
$100,000 but less than $250,000..... 3.63 3.50 2.75
$250,000 but less than $500,000..... 2.56 2.50 2.00
$500,000 but less than $1,000,000... 2.04 2.00 1.60
$1,000,000 or more.................. None* None* None*
<FN>
* On an investment of $1 million or more, CFS from its own resources pays the
selling dealer a commission of .25% of the amount of the investment,
subject to repayment of the commission if the shares are redeemed within
one year after purchase. If you purchase such shares without a sales
charge, a contingent deferred sales charge of 1% will be imposed on shares
that are redeemed within one year after purchase (other than by
reinvestment of dividends or distributions), determined on a first-in,
first-out basis.
</FN>
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Each Fund receives the entire net asset value of all of its Class A shares
sold. CFS, the Funds' principal underwriter, retains the sales charge on sales
of Class A shares from which it allows discounts from the applicable public
offering price to investment dealers. The normal discount to dealers is set
forth in the above table. Upon notice to all dealers with whom it has sales
agreements, CFS may reallow up to the full applicable sales charge, as shown
in the above table, during periods and for transactions specified in such
notice and such reallowances may be based upon attainment of minimum sales
levels. Dealers who receive 90% or more of the sales charge may be deemed
to be underwriters under the Securities Act of 1933. CFS may from time to
time conduct promotional campaigns in which incentives would be offered to
dealers meeting or exceeding stated target sales of shares of a Fund.
The cost of any such promotional campaign, including any incentives offered,
would be borne entirely by CFS and would have no effect on either the
public offering price of Fund shares or the percentage of the public
offering price retained by the selling dealer.
PURCHASES THROUGH DEALERS
If a purchase order accompanied by payment is received by a dealer prior to
the close of regular session trading on the New York Stock Exchange, the
applicable offering price will be the offering price per share determined on
the day the order is received by the dealer, provided the dealer conveys the
order to CFS prior to 4:30 p.m., Chicago time, on that day. Orders received by
dealers or CFS after such time will be effective on the next business day.
Neither CFS nor the dealers are permitted to withhold placing orders to
benefit themselves by a price change.
PURCHASES BY WIRE
You may also purchase shares by wiring funds from your bank. Please call the
Funds at the numbers on the front cover of this prospectus for wiring
instructions. The applicable offering price for a purchase by wire is the
offering price per share next determined after receipt by the Fund of the
wired funds. After you have wired funds, you must complete the application
form and send it to CFS. A Fund will not honor redemption requests until the
completed application has been received.
PURCHASES BY MAIL
You may also purchase shares of a Fund by sending to CFS a check payable to
the Fund, along with information identifying you and your account number. An
initial investment made by check must be accompanied by a completed
application. All checks should be drawn on a U.S. bank in U.S. funds in order
to avoid fees and delays. A charge may be imposed if any check submitted for
investment does not clear.
<PAGE>
PURCHASES BY EXCHANGE
You may purchase shares of a Fund by exchange of shares from another Fund, by
exchange of shares of Money Market Portfolio, Government Securities Portfolio
or Tax-Exempt Portfolio, each a portfolio of Cash Account Trust (such shares
are referred to as "Cash Account Shares") either by mail or by instructing
your broker-dealer or other sales agent, who will communicate your order to
CAM. If you have a brokerage account with Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") that holds shares of Summit Cash Reserves
Fund, a series of Financial Institution Series Trust (such shares are referred
to as "Summit Fund Shares"), you may also purchase shares of a Fund through
your Merrill Lynch broker by exchange of Summit Fund Shares. YOU MAY NOT MAKE
MORE THAN FOUR EXCHANGES FROM ANY FUND DURING ANY CALENDAR YEAR. No sales
charge is imposed on purchases by exchange from another Fund or by exchange of
Cash Account Shares or Summit Fund Shares, previously purchased through use of
the exchange privilege. Please review the information under "How to Redeem
Shares - Redemption by Exchange."
SALES CHARGE WAIVER
Dividends and distributions paid by a Fund will be reinvested in shares of
that Fund at net asset value (without the payment of any sales charge) unless
you elect to receive dividends and distributions in cash. Proceeds of shares
redeemed by a Fund within the previous 60 days also may be reinvested in that
Fund's shares at net asset value without the payment of any sales charge. See
"Shareholder Services - Investment in Related Funds."
In addition, the following persons or entities may purchase Class A shares of
a Fund at net asset value without payment of any sales charge, upon written
assurance that the purchase is made for investment purposes and that the
shares will not be sold except through redemption by the Fund: (a) any
investor purchasing shares upon the recommendation of an investment consultant
to which the investor pays a fee for services relating to investment
selection; (b) any investor who purchases shares of a Fund by exchange of Cash
Account Shares or Summit Fund Shares previously purchased through use of the
exchange privilege; (c) any employee benefit plan having more than 200
eligible employees or a minimum of $1 million of plan assets invested in the
Funds; (d) any employee benefit plan through an intermediary that has signed a
participation agreement with CFS specifying certain asset minimums and
qualifications, and marketing, program and trading restrictions; (e) any
insurance company separate account used to fund annuity contracts for employee
benefit plans that in the aggregate have more than 200 eligible employees or a
minimum of $1 million in plan assets invested in the Funds; (f) any employee
or registered representative of CFS, one of its affiliates or a broker-dealer
with a selling group agreement with CFS; (g) any trustee of the Trust; (h) any
member of the immediate family of a person qualifying under (f) or (g),
including a spouse, child, stepchild, sibling, parent, stepparent, grandchild
and grandparent, in each case including in-law and adoptive relationships; (i)
any trust, pension, profit sharing, or other benefit plan in which any person
qualifying under (f) is a participant; (j) any 401(k) plan (cash or deferred
arrangement intended to qualify under section 401(k) of the Internal Revenue
Code) or other qualified retirement plan to which a person qualifying under
(f), (g) or (h) makes voluntary contributions and has investment
self-direction, provided the purchase is for the account of such person; (k)
any company exchanging shares with a Fund pursuant to a merger, acquisition or
exchange offer; and (l) any investment advisory client of the Adviser or
brokerage customer of CFS who has, in writing, given investment discretion to
CFS, to the extent the investment is from the account managed by the Adviser
or CFS.
<PAGE>
Further, no sales charge will be imposed on the sale of Class A shares of a
Fund purchased and paid for with the proceeds of shares redeemed in the prior
12 months from a mutual fund on which an initial sales charge or contingent
deferred sales charge was paid, provided a waiver of the sales charge is
requested when the purchase order for Fund shares is placed, any requested
evidence of eligibility for the sales charge waiver is furnished. Further, any
shareholder of Convertible Fund at April 30, 1992, the date on which that Fund
became a series of the Trust and sales of Fund shares became subject to a
sales charge, may continue to purchase Class A shares of Convertible Fund
without a sales charge if the Fund or participating broker is notified at the
time of each qualifying purchase.
RIGHTS OF ACCUMULATION
The sales charges described above also apply on a cumulative basis to Class A
shares of the Funds and any other series of the Trust as to which a sales
charge applies, and over any period of time. Therefore, the value of all your
Class A shares of a Fund and any other series of the Trust with respect to
which a sales charge was paid, taken at the current offering price or original
cost, whichever is greater, can be combined with a current purchase to
determine the applicable offering price of the current purchase. In order to
receive the cumulative quantity reduction, you must give CFS or your dealer
notification of the prior purchases at the time of the current purchase.
LETTER OF INTENT
You may reduce the sales charges you pay on the purchase of Class A shares by
making investments pursuant to a letter of intent. The applicable sales charge
then is based upon the indicated amount intended to be invested during a
thirteen-month period in shares of the Funds as to which a sales charge would
be imposed and any other series of the Trust. You may compute the
thirteen-month period starting up to ninety days before the date of execution
of the letter of intent. Your initial investment must be at least 5% of the
amount your letter of intent indicates you intend to invest. Each investment
made during the period receives the reduced sales charge applicable to the
total amount of the intended investment. During the term of the letter of
intent, shares representing 5% of the indicated amount will be held in escrow.
Shares held in escrow have full dividend and voting privileges. The escrowed
shares will be released when the full amount indicated has been purchased. If
the full indicated amount is not purchased during the term of the letter of
intent, you will be required to pay CFS an amount equal to the difference
between the dollar amount of the sales charges actually paid and the amount of
the sales charges which you would have paid on your aggregate purchase if the
total of such purchases had been made at a single time. A letter of intent
does not obligate you to buy or a Fund to sell the indicated amount of the
shares but you should read it carefully before signing. Additional information
is contained in the letter of intent included in the application.
<PAGE>
NET ASSET VALUE
The net asset value of the shares of each Fund is determined as of the close
of regular session trading on the New York Stock Exchange, currently 3:00 p.m.
Chicago time, each day that exchange is open for trading by dividing the value
of all of the securities and other assets of the Fund, less its liabilities,
by the number of shares of the Fund outstanding.
Portfolio securities are valued on the basis of market valuation. Securities
and other assets for which market values are not readily available are valued
at a fair value as determined by a method the board of trustees believes
represents a fair value. For a more complete explanation, please refer to the
Statement of Additional Information.
HOW TO REDEEM SHARES
Shares of the Funds will be redeemed at the respective net asset value next
determined after receipt of a redemption request in good form on any day the
New York Stock Exchange is open for trading. Requests received after the time
for computation of a Fund's net asset value for that day will be processed the
next business day.
If Class C shares, or Class A shares for which the initial purchase price was
$1 million or more, on which no initial sales charge was imposed are redeemed
within one year after purchase (other than by reinvestment of dividends or
distributions), determined on a first-in, first-out basis, a contingent
deferred sales charge of 1% of the purchase price will be imposed.
REDEMPTION BY MAIL
A written request for redemption (and an endorsed share certificate, if
issued) must be received by the Fund's transfer agent, Calamos Asset
Management, Inc. ("CAM"), to constitute a valid redemption request.
Your redemption request must:
1. specify the Fund and the number of shares
or dollar amount to be redeemed, if less than
all shares are to be redeemed;
2. be signed by all owners exactly as their
names appear on the account; and
3. include a signature guarantee for each
signature on the redemption request by
CFS, by a securities firm that is a member
of the New York Stock Exchange, or by a
bank, savings bank, credit union, savings
and loan association or other entity that is
authorized by applicable state law to
guarantee signatures.
In the case of shares held by a corporation, the redemption request must be
signed in the name of the corporation by an officer whose title must be
stated, and a certified bylaw provision or resolution of the board of
directors authorizing the officer to so act may be required. In the case of a
trust or partnership, the signature must include the name of the registered
shareholder and the title of the person signing on its behalf. Under certain
circumstances, before shares can be redeemed, additional documents may be
required in order to verify the authority of the person seeking to redeem.
<PAGE>
REDEMPTION BY WIRE OR TELEPHONE
Broker-dealers or other sales agents may communicate redemption orders by wire
or telephone to CAM. These firms may charge for their services in connection
with your redemption request but neither the Funds nor CAM impose any such
charges.
EXPEDITED REDEMPTION
Unless share certificates have been issued to you, you may have redemption
proceeds of at least $5,000 wired directly to a domestic commercial bank
account or brokerage account that you have previously designated. Normally,
such payments will be transmitted no later than the second business day
following receipt of your redemption request (provided redemptions may be made
under the general criteria set forth below). A $15 service charge for payment
of redemption proceeds by wire will be deducted from the proceeds.
REDEMPTION BY EXCHANGE
You may redeem all or any portion of your shares of a Fund and use the
proceeds to purchase shares of any of the other Funds or Cash Account Shares
(or Summit Fund Shares if your Fund shares are held in a brokerage account
with Merrill Lynch and Merrill Lynch has commenced offering Summit Fund
Shares) if your signed, properly completed application is on file. AN EXCHANGE
TRANSACTION IS A SALE AND PURCHASE OF SHARES FOR FEDERAL INCOME TAX PURPOSES
AND MAY RESULT IN CAPITAL GAIN OR LOSS. YOU MAY NOT MAKE MORE THAN FOUR
EXCHANGES FROM ANY FUND IN ANY CALENDAR YEAR. Before exchanging into Cash
Account Shares (or Summit Fund Shares), you should obtain the prospectus
relating to those shares from the Adviser (or from Merrill Lynch, in the case
of Summit Fund Shares) and read it carefully. The exchange privilege is not an
offering or recommendation of Cash Account Shares or Summit Fund Shares. The
registration of the account to which you are making an exchange must be
exactly the same as that of the account from which the exchange is made and
the amount you exchange must meet any applicable minimum investment of the
fund being purchased. An exchange may be made by following the redemption
procedure described above under "Redemption by Mail" and indicating the fund
to be purchased, except that a signature guarantee normally is not required.
An exchange may also be made by instructing your broker-dealer or other sales
agent, who will communicate your instruction to CAM. No sales charge is
imposed on purchases by exchange.
GENERAL
Shares of a Fund may not be redeemed until the check used to purchase the
shares has been collected, which is usually no more than 15 days after
purchase. You may avoid this delay by purchasing shares in such a way that the
Fund receives immediate payment for your purchase, such as by wire transfer of
funds or payment by a certified or cashier's check. A Fund may suspend the
right of redemption under certain extraordinary circumstances in accordance
with the rules of the Securities and Exchange Commission. Due to the
relatively high cost of handling small accounts, each Fund reserves the right
upon 30 days' written notice to involuntarily redeem, at net asset value, the
shares of any shareholder whose account has a value of less than $500, unless
the reduction in value to less than $500 was the result of market fluctuation.
<PAGE>
PLEASE TELEPHONE THE FUNDS IF YOU HAVE ANY QUESTIONS ABOUT REQUIREMENTS FOR A
REDEMPTION BEFORE SUBMITTING A REQUEST. YOU MAY NOT CANCEL OR REVOKE YOUR
REDEMPTION REQUEST ONCE YOUR INSTRUCTIONS HAVE BEEN RECEIVED AND ACCEPTED.
SHAREHOLDER SERVICES
SHAREHOLDER ACCOUNTS
Each shareholder of a Fund receives quarterly account statements showing
transactions in shares of the Fund and with a balance denominated in Fund
shares. A confirmation will be sent to the shareholder upon purchase,
redemption, dividend reinvestment, or change of shareholder address.
RETIREMENT PLANS
You may use the Funds as investments for your Individual Retirement Account
("IRA"), profit sharing or pension plan, Section 40l(k) plan, Section
403(b)(7) plan in the case of employees of public school systems and certain
non-profit organizations, and certain other qualified plans. A master IRA plan
and information regarding plan administration, fees, and other details are
available from CFS and authorized broker-dealers.
SYSTEMATIC WITHDRAWAL PLAN
You may request that a Fund periodically redeem shares having a specified
redemption value and send you a check for the proceeds. In order to initiate
the Systematic Withdrawal Plan, your account must have a share balance of
$25,000 or more. Withdrawal proceeds are likely to exceed dividends and
distributions paid on shares in your account and therefore may deplete and
eventually exhaust your account. The periodic payments are proceeds of
redemption and are taxable as such. Because a sales charge is imposed on
purchases of shares of the Funds, you should not purchase shares while
participating in the Systematic Withdrawal Plan.
EXCHANGE PRIVILEGE
You may exchange shares of any Fund for shares of another Fund or for Cash
Account Shares (or for Summit Fund Shares if your Fund shares are held in a
brokerage account with Merrill Lynch) or exchange Cash Account Shares or
Summit Fund Shares for shares of a Fund, without payment of any sales charge
as described above under "How to Purchase Shares - Purchase by Exchange" and
"How to Redeem Shares - Redemption by Exchange."
DIVIDENDS AND DISTRIBUTIONS
Shareholders may receive two kinds of distributions from a Fund: dividends and
capital gains distributions. All dividends and capital gains distributions are
paid in the form of additional shares of the same class credited to your
account at the net asset value per share next computed after the dividend or
distribution is payable to shareholders (without a sales charge) unless you
requested on the account application or in writing that distributions be made
in cash. Strategic Income Fund, Convertible Fund, Growth and Income Fund and
Global Growth and Income Fund declare and pay dividends from net investment
income quarterly; Growth Fund declares dividends annually. Net realized
long-term capital gains, if any, are paid to shareholders by each Fund at
least annually.
If two consecutive dividend checks from a Fund are returned as undeliverable,
undelivered dividends will be invested in additional shares of that Fund at
the current net asset value and the account will be designated as a dividend
reinvestment account.
<PAGE>
TAXES
Each Fund intends to continue to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code, and thus not be subject to
federal income taxes on amounts it distributes to shareholders.
You may realize a capital gain or capital loss when you redeem (sell) shares.
The federal tax treatment will depend, of course, on how long you owned the
shares and on your individual tax position. You may be subject to state and
local taxes on your investment in a Fund, depending on the laws of your home
state and locality.
Dividends and distributions paid by a Fund are subject to taxation as of the
date of payment, except that distributions declared in October, November or
December to shareholders of record in one of those months will be treated as
received by shareholders on December 31 of the year in which they are
declared, provided they are paid prior to February 1 of the next year.
Dividends from net investment income and capital gains distributions may be
taxed to shareholders at different rates depending on their individual tax
situations. You will be advised annually as to the source of your
distributions for tax purposes. If you are not subject to income taxation, you
will not be required to pay tax on amounts distributed to you.
Each Fund is required by law to withhold federal income tax from reportable
payments (which may include redemptions, capital gains distributions and other
taxable distributions, if any) paid to any non-exempt shareholder who has
failed to certify to the Fund that the social security or taxpayer
identification number provided to the Fund is correct and that the shareholder
is not subject to backup withholding.
Please refer to the Statement of Additional Information for a more complete
explanation.
MANAGEMENT OF THE FUNDS
THE TRUSTEES
The board of trustees of CFS Investment Trust has overall responsibility for
the conduct of the affairs of the Trust. The trustees serve indefinite terms
of unlimited duration. The trustees appoint their own successors, provided
that at least two-thirds of the trustees, after any such appointment, have
been elected by the shareholders. Shareholders may remove a trustee, with or
without cause, upon the declaration in writing or vote of two-thirds of the
Trust's outstanding shares. A trustee may be removed with or without cause
upon the written declaration of a majority of the trustees.
<PAGE>
THE ADVISER
Each Fund's investments are managed by its investment adviser, Calamos Asset
Management, Inc. ("CAM"). At January 31, 1996, CAM managed approximately $1.5
billion in assets of individuals and institutions. CAM is wholly owned by John
P. Calamos, who has been engaged in the investment advisory business since
1977. Mr. Calamos is also the sole shareholder of CFS, the distributor of the
Funds.
Subject to the overall authority of the board of trustees, CAM furnishes
continuous investment supervision and management to each Fund under a
management agreement and also furnishes office space, equipment and management
personnel. For these services each Fund pays CAM a fee based on average daily
net assets that is accrued daily and paid monthly. The fee paid by Growth Fund
is at the annual rate of 1% of the first $150 million of average net assets
and .75% of average net assets in excess of $150 million. The fee paid by
Global Growth and Income Fund is at the annual rate of 1% of average net
assets. The fee paid by each other Fund is at the annual rate of .75% of the
first $150 million of average net assets and .50% of average net assets in
excess of $150 million. Although these rates are higher than those paid by
most other mutual funds, the board of trustees believes that the fees are not
significantly different from the advisory fees of many comparably sized funds
with similar investment objectives. CAM also acts as transfer agent and
dividend disbursing agent for the Funds under a transfer agency agreement.
The management agreement also provides that the total annual expenses of a
Fund, exclusive of taxes, interest, extraordinary litigation expenses and
brokers' commissions and other charges relating to the purchase and sale of
securities but including fees paid to CAM and fees paid pursuant to the
Distribution Plan, shall not exceed the limits, if any, prescribed by any
state in which shares of the Fund are being sold or are qualified for sale,
and CAM has agreed to reimburse the Fund for any such expenses in excess of
such limits. In addition, CAM has voluntarily undertaken to limit the annual
ordinary operating expenses of each class of shares, as a percentage of the
average net assets of that class, to 2.25% for Class C shares of Growth Fund,
2.50% for Class C shares of Global Growth and Income Fund and 2% for each
other Class through August 31, 1997. Subject to those expense limitations,
each Fund pays all of its operating expenses not specifically assumed by CAM.
John P. Calamos and John P. Calamos, Jr. are primarily responsible for the
day-to-day management of the portfolios of Strategic Income Fund and Growth
Fund; John P. Calamos and Nick P. Calamos are responsible for managing the
portfolios of Convertible Fund, Growth and Income Fund and Global Growth and
Income Fund. During the past five years, John P. Calamos has been president
and trustee of the Trust and president of CAM and CFS; John P. Calamos, Jr.
has been an employee of CAM; and Nick P. Calamos has been vice president
of the Trust since 1992 and managing director of CAM and CFS.
<PAGE>
DISTRIBUTION PLAN
The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940 whereby each Fund pays to CFS fees
accrued daily and paid monthly at annual rates aggregating .50% in the case of
Class A shares, or 1.00% in the case of Class C shares, of the average daily
net assets of the class (.25% as a service fee and the balance as a
distribution fee). In return, CFS bears all expenses incurred in providing
services to shareholders and potential investors, and in the distribution and
promotion of each Fund's shares, including the printing of prospectuses and
reports used for sales purposes, advertisements, expenses of preparation and
printing of sales literature, and other distribution related expenses. CFS may
reallow to investment professionals up to the full amount of the service fee
for services provided to shareholders, and up to the full amount of the
distribution fee for distribution services, based upon the level of services
provided.
The expenses incurred by CFS may be more or less than the distribution fee
paid to CFS by a Fund. Amounts paid by a Fund pursuant to the Plan are not
intended to finance distribution of the shares of the other Funds.
PERFORMANCE INFORMATION
Information about the performance of each Fund is contained in the Funds'
annual report, which may be obtained from the Trust upon request at no charge.
Each Fund may provide information about its investment performance from time
to time in advertisements, sales literature and otherwise. Strategic Income
Fund, Convertible Fund and Growth and Income Fund may quote "yield," an
annualized figure based on the amount of net investment income per share (a
hypothetical figure defined by SEC rules) earned during a 30-day period,
divided by the public offering price per share on the last day of the period.
Each Fund may advertise its "Total Return." Total Return for a period is the
percentage change in value during a period of an investment in Fund shares,
including the value of all shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" is
the average annual compounded rate of change in value represented by the Total
Return for the period. All of these calculations assume the reinvestment of
dividends and distributions in additional shares of the Fund. Quotations of
Average Annual Total Return will take into account the effect of the sales
charge on the amount available for investment; quotations of Total Return will
indicate whether the effect of the sales charge is included. Income taxes
payable by a shareholder are not taken into account. Please refer to the
Statement of Additional Information for a more complete explanation.
In advertising and sales literature, a Fund's performance may be compared with
that of market indices and other mutual funds, comparative performance as
computed in a ranking determined by Lipper Analytical Services, Inc., an
independent service that monitors the performance of over 1,000 mutual funds,
or that of another service.
Performance of a Fund will vary from time to time, and past results are not
necessarily indicative of future results. Performance information supplied by
a Fund may not provide a basis for comparison with other investments using
different reinvestment assumptions or time periods.
<PAGE>
PORTFOLIO TRANSACTIONS
Consistent with the Trust's policy of obtaining best price and execution on
portfolio transactions, the trustees have determined that portfolio
transactions for a Fund may be executed through CFS if, in the judgment of the
Adviser, the use of CFS is likely to result in a combination of net price and
execution at least as favorable to the Fund as those available from other
qualified brokers and if, in such transactions, CFS charges the Fund
commission rates consistent with those charged by CFS to comparable
unaffiliated customers in similar transactions.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable combination
of net price and execution available and such other policies as the trustees
may determine, the Adviser may consider sales of shares of a Fund as a factor
in the selection of broker-dealers to execute portfolio transactions for that
Fund.
THE TRUST AND ITS SHARES
Each Fund is a series of CFS Investment Trust (the "Trust"), which was
organized as a Massachusetts business trust on December 21, 1987 and is an
open-end diversified management investment company. Growth and Income Fund was
named "Calamos Small/Mid Cap Convertible Fund" from May 1, 1992 through April
29, 1994, "Calamos Convertible Total Return Fund" from September 1, 1990
through April 30, 1992, and "Kalliston Convertible Total Return Fund" prior to
September 1, 1990. Convertible Fund, which became a series of the Trust on
April 30, 1992, was named Calamos Convertible Income Fund before that date and
was a series of Calamos Investment Trust (named Noddings-Calamos Convertible
Income Fund and Noddings-Calamos Investment Trust, respectively, before
September 1, 1987).
SHARES
Under the terms of the Agreement and Declaration of Trust, the trustees may
issue an unlimited number of shares of beneficial interest without par value
for each series of shares authorized by the trustees and the trustees may
divide the shares of any series into two or more classes of shares of that
series. Currently each Fund offers two classes of shares (Class A and Class
C). All shares issued will be fully paid and non-assessable and will have no
preemptive or conversion rights.
Each Fund's shares are entitled to participate pro rata in any dividends and
other distributions declared by the Trust's board of trustees with respect to
shares of the Fund. All shares of a Fund have equal rights in the event of
liquidation of the Fund.
<PAGE>
Under Massachusetts law, the shareholders of the Trust may, under certain
circumstances, be held personally liable for the Trust's obligations. However,
the Trust's Declaration of Trust disclaims liability of the shareholders,
trustees, and officers of the Trust for acts or obligations of a Fund, which
are binding only on the assets and property of the Fund. The Declaration of
Trust requires that notice of such disclaimer be given in each agreement,
obligation, or contract entered into or executed by the Trust or the board of
trustees. The Declaration of Trust provides for indemnification out of a
Fund's assets of all losses and expenses of any Fund shareholder held
personally liable for the Fund's obligations. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is remote, since
it is limited to circumstances in which the disclaimer is inoperative and the
Fund itself is unable to meet its obligations.
VOTING RIGHTS
Each share has one vote and fractional shares have fractional votes. As a
business trust, the Trust is not required to hold annual shareholder meetings.
However, special meetings may be called for purposes such as electing or
removing trustees, changing fundamental policies or approving an investment
advisory agreement. On any matters submitted to a vote of shareholders, shares
are voted by individual series or class and not in the aggregate, except when
voting in the aggregate is required by the 1940 Act or other applicable law.
Shares of a Fund are not entitled to vote on any matter not affecting that
Fund. All shares of the Trust vote together in the election of trustees.
CERTAIN SHAREHOLDERS
At January 31, 1996, the Calamos Financial Services, Inc. 401(k) Profit
Sharing Plan and Trust, of which John P. Calamos and Nick P. Calamos are the
trustees, owned 105,717 shares (31.2%) of Growth and Income Fund and 71,537
shares (39.4%) of Growth Fund. Messrs. John Calamos and Nick Calamos owned
beneficially an additional 31,864 shares (9.4%) and 392 shares (0.1%),
respectively, of Growth and Income Fund, and John P. Calamos owned
beneficially an additional 28,514 shares (15.7%) of Growth Fund. No other
person is known to own beneficially 25% or more of any Fund. Under the 1940
Act, a holder of more than 25% of a Fund's outstanding shares is presumed to
control the Fund. The address of Messrs. John Calamos and Nick Calamos is 1111
East Warrenville Road, Naperville, Illinois 60563-1493.
SHAREHOLDER INQUIRIES
Inquiries regarding the Funds may be directed to the address or telephone
numbers on the cover of this prospectus.
<PAGE>
APPENDIX--DESCRIPTION OF BOND RATINGS
A rating of a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of
an issuer. Consequently, the Funds' investment adviser believes that the
quality of debt securities in which a Fund invests should be continuously
reviewed. A rating is not a recommendation to purchase, sell or hold a
security, because it does not take into account market value or suitability
for a particular investor. When a security has received a rating from more
than one service, each rating should be evaluated independently. Ratings are
based on current information furnished by the issuer or obtained by the
ratings services from other sources which they consider reliable. Ratings may
be changed, suspended or withdrawn as a result of changes in or unavailability
of such information, or for other reasons.
The following is a description of the characteristics of ratings used by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation
("S&P").
MOODY'S RATINGS
Aaa--Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. Although the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such bonds.
Aa--Bonds rated Aa are judged to be high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa bonds.
A--Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds rated Baa are considered as medium-grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
<PAGE>
Ba--Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such bonds may be in default or
there may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high
degree. Such bonds are often in default or have other marked shortcomings.
S&P RATINGS
AAA--Bonds rated AAA have the highest rating. Capacity to pay principal and
interest is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay principal and interest
and differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated
categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
capacity than for bonds in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B,
CCC and CC are regarded, on balance, as predominantly speculative with respect
to the issuer's capacity to pay interest and repay principal in accordance
with the terms of the obligation. BB indicates the lowest degree of
speculation among such bonds and CC the highest degree of speculation.
Although such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
<PAGE>
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TABLE OF CONTENTS
Page
Key Features........................................2
Expenses ...........................................4
Financial Highlights................................7
Investment Objectives and Policies.................11
Common Investment Practices........................13
Risk of Investment.................................20
Investment Restrictions............................20
How to Purchase Shares.............................20
How to Redeem Shares...............................24
Shareholder Services...............................26
Dividends and Distributions........................26
Taxes .............................................27
Management of the Funds............................27
Performance Information............................28
Portfolio Transactions.............................29
The Trust and Its Shares...........................29
Appendix--Description of Bond Ratings..............30
Investment Adviser and
Transfer Agent:
Calamos Asset Management, Inc.
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Distributor:
Calamos Financial Services, Inc.
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Counsel:
Bell, Boyd & Lloyd
Chicago, Illinois
Independent Auditors:
Ernst & Young LLP
Chicago, Illinois
Calamos
Strategic Income Fund
Convertible Fund
Growth and Income Fund
Global Growth and Income Fund
Growth Fund
Prospectus
JUNE __, 1996
1111 East Warrenville Road
Naperville, Illinois 60563-1493
(708) 245-7200
(800) 823-7386
<PAGE>
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No dealer, salesman or any other person is authorized, in connection with the
offer contained in this prospectus, to act as agent for CFS Investment Trust,
nor is any person authorized to give any information or to make any
representations not contained in this prospectus or in supplementary
information or in supplemental sales material authorized by CFS Investment
Trust, and no person is entitled to rely upon any information or
representation not contained herein or therein. This prospectus does not
constitute an offering in any jurisdiction in which such offering may not
lawfully be made.
<PAGE>
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B-33
B-1
Statement of Additional Information June __, 1996
CALAMOS FUNDS
STRATEGIC INCOME FUND
CONVERTIBLE FUND
GROWTH AND INCOME FUND
GLOBAL GROWTH AND INCOME FUND
GROWTH FUND
1111 East Warrenville Road
Naperville, Illinois 60563-1493
(708) 245-7200
Toll Free: (800) 8-CFS-FUND (800/823-7386)
This Statement of Additional Information relates to Calamos Strategic Income
Fund, Calamos Convertible Fund, Calamos Growth and Income Fund, Calamos Global
Growth and Income Fund and Calamos Growth Fund (the "Funds"), each of which is
a series of CFS Investment Trust (the "Trust"). It is not a prospectus, but
provides information that should be read in conjunction with the Funds'
prospectus dated the same date as this Statement of Additional Information and
any supplements thereto. The prospectus may be obtained without charge by
writing or telephoning the Funds at the address or telephone numbers set forth
above.
<PAGE>
TABLE OF CONTENTS
Page
Investment Objectives.......................................................3
Investment Practices........................................................3
Investment Restrictions....................................................15
Management.................................................................17
Investment Advisory Services...............................................19
Distribution Plan..........................................................20
Purchasing and Redeeming Shares............................................21
Performance Information....................................................22
Transfer Agent.............................................................25
Distributor................................................................25
Portfolio Transactions.....................................................26
Taxation.................................................................. 28
Allocation Among Funds.....................................................30
Certain Shareholders.......................................................31
Custodian..................................................................33
Independent Auditors.......................................................33
General Information........................................................33
Financial Statements.......................................................33
<PAGE>
INVESTMENT OBJECTIVES
Each Fund's investment objective is shown below:
STRATEGIC INCOME FUND seeks high current income consistent with
stability of principal, primarily through investment in convertible securities
and employing short selling to enhance income and hedge against market risk.
CONVERTIBLE FUND seeks current income. Growth is a secondary
objective that the Fund also considers when consistent with its objective of
current income.
GROWTH AND INCOME FUND seeks high long-term total return through
capital appreciation and current income derived from a diversified portfolio
of convertible, equity and fixed-income securities.
GLOBAL GROWTH AND INCOME FUND seeks high long-term total return
through capital appreciation and current income derived from a globally
diversified portfolio of convertible, equity and fixed-income securities..
GROWTH FUND seeks long-term capital growth.
The investment objective of each Fund is "fundamental," which means
that a Fund's objective cannot be changed without the approval of the holders
of a "majority of the outstanding voting securities" of that Fund, as defined
in the Investment Company Act of 1940.
<PAGE>
INVESTMENT PRACTICES
In pursuing its investment objective, each Fund will invest as
described below and in the prospectus.
FOREIGN SECURITIES
Global Growth and Income Fund may invest all of its assets, and each
other Fund may invest up to 25% of its net assets, in securities of foreign
issuers. Foreign securities may entail a greater degree of risk (including
risks arising from: exchange rate fluctuations; tax provisions; exchange and
currency controls; less public information regarding issuers of securities;
less governmental supervision of stock exchanges, securities brokers and
issuers of securities; different accounting, auditing and financial reporting
standards; different settlement practices; political risks; and expropriation
of assets) than does investment in securities of domestic issuers. For this
purpose, foreign securities do not include American Depositary Receipts (ADRs)
or securities guaranteed by a United States person.
Each Fund may also purchase foreign securities in the form of
European Depositary Receipts (EDRs), Global Depositary Receipts (GDRs) or
other securities representing underlying shares of foreign issuers. Positions
in those securities are not necessarily denominated in the same currency as
the common stocks into which they may be converted. ADRs are receipts
typically issued by an American bank or trust company evidencing ownership of
the underlying securities. EDRs are European receipts listed on the Luxembourg
Stock Exchange evidencing a similar arrangement. GDRs are U.S.
dollar-denominated receipts evidencing ownership of foreign securities.
Generally, ADRs, in registered form, are designed for the U.S. securities
markets and EDRs and GDRs, in bearer form, are designed for use in foreign
securities markets. Each Fund may invest in sponsored or unsponsored ADRs. In
the case of an unsponsored ADR, the Fund is likely to bear its proportionate
share of the expenses of the depository and it may have greater difficulty in
receiving shareholder communications than it would have with a sponsored ADR.
To the extent positions in portfolio securities are denominated in
foreign currencies, a Fund's investment performance is affected by the
strength or weakness of the U.S. dollar against those currencies. For example,
if the dollar falls in value relative to the Japanese yen, the dollar value of
a Japanese stock held in the portfolio will rise even though the price of the
stock remains unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the Japanese stock will fall. (See discussion of
transaction hedging and portfolio hedging below under "Currency Exchange
Transactions.")
<PAGE>
Investors should understand and consider carefully the risks involved
in foreign investing. Investing in foreign securities, which are generally
denominated in foreign currencies, and utilization of forward foreign currency
exchange contracts involve certain considerations comprising both risks and
opportunities not typically associated with investing in U.S. securities.
These considerations include: fluctuations in exchange rates of foreign
currencies; possible imposition of exchange control regulation or currency
restrictions that would prevent cash from being brought back to the United
States; less public information with respect to issuers of securities; less
governmental supervision of stock exchanges, securities brokers, and issuers
of securities; lack of uniform accounting, auditing and financial reporting
standards; lack of uniform settlement periods and trading practices; less
liquidity and frequently greater price volatility in foreign markets than in
the United States; possible imposition of foreign taxes; and sometimes less
advantageous legal, operational and financial protections applicable to
foreign sub-custodial arrangements.
Although the Funds intend to invest in companies and governments of
countries having stable political environments, there is the possibility of
expropriation or confiscatory taxation, seizure or nationalization of foreign
bank deposits or other assets, establishment of exchange controls, the
adoption of foreign government restrictions, or other adverse political,
social or diplomatic developments that could affect investment in these
nations. Each Fund other than Global Growth and Income Fund expects that
substantially all of its investments will be in developed nations.
CURRENCY EXCHANGE TRANSACTIONS. Currency exchange transactions may be
conducted either on a spot (i.e., cash) basis at the spot rate for purchasing
or selling currency prevailing in the foreign exchange market or through
forward currency exchange contracts ("forward contracts"). Forward contracts
are contractual agreements to purchase or sell a specified currency at a
specified future date (or within a specified time period) and price set at the
time of the contract. Forward contracts are usually entered into with banks
and broker-dealers, are not exchange traded, and are usually for less than one
year, but may be renewed.
Forward currency exchange transactions may involve currencies of the
different countries in which the Funds may invest and serve as hedges against
possible variations in the exchange rate between these currencies. Currency
exchange transactions are limited to transaction hedging and portfolio hedging
involving either specific transactions or portfolio positions, except to the
extent described below under "Synthetic Foreign Money Market Positions."
Transaction hedging is the purchase or sale of forward contracts with respect
to specific receivables or payables of a Fund accruing in connection with the
purchase and sale of its portfolio securities or the receipt of dividends or
interest thereon. Portfolio hedging is the use of forward contracts with
respect to portfolio security positions denominated or quoted in a particular
foreign currency. Portfolio hedging allows the Fund to limit or reduce its
exposure in a foreign currency by entering into a forward contract to sell
such foreign currency (or another foreign currency that acts as a proxy for
that currency) at a future date for a price payable in U.S. dollars so that
the value of the foreign denominated portfolio securities can be approximately
matched by a foreign denominated liability. The Fund may not engage in
portfolio hedging with respect to the currency of a particular country to an
extent greater than the aggregate market value (at the time of making such
sale) of the securities held in its portfolio denominated or quoted in that
particular currency, except that the Fund may hedge all or part of its foreign
currency exposure through the use of a basket of currencies or a proxy
currency where such currencies or currency act as an effective proxy for other
currencies. In such a case, the Fund may enter into a forward contract where
the amount of the foreign currency to be sold exceeds the value of the
securities denominated in such currency. The use of this basket hedging
technique may be more efficient and economical than entering into separate
forward contracts for each currency held in the Fund. The Fund may not engage
in "speculative" currency exchange transactions.
<PAGE>
If a Fund enters into a forward contract, the Fund's custodian will
segregate liquid assets of the Fund having a value equal to the Fund's
commitment under such forward contract. At the maturity of the forward
contract to deliver a particular currency, the Fund may either sell the
portfolio security related to the contract and make delivery of the currency,
or it may retain the security and either acquire the currency on the spot
market or terminate its contractual obligation to deliver the currency by
purchasing an offsetting contract with the same currency trader obligating it
to purchase on the same maturity date the same amount of the currency.
It is impossible to forecast with absolute precision the market value
of portfolio securities at the expiration of a forward contract. Accordingly,
it may be necessary for a Fund to purchase additional currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of currency the Fund is obligated to deliver
and if a decision is made to sell the security and make delivery of the
currency. Conversely, it may be necessary to sell on the spot market some of
the currency received upon the sale of the portfolio security if its market
value exceeds the amount of currency the Fund is obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
currency. Should forward prices decline during the period between the Fund's
entering into a forward contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the price
of the currency it has agreed to purchase exceeds the price of the currency it
has agreed to sell. A default on the contract would deprive the Fund of
unrealized profits or force the Fund to cover its commitments for purchase or
sale of currency, if any, at the current market price.
Hedging against a decline in the value of a currency does not
eliminate fluctuations in the value of a portfolio security traded in that
currency or prevent a loss if the value of the security declines. Hedging
transactions also preclude the opportunity for gain if the value of the hedged
currency should rise. Moreover, it may not be possible for a Fund to hedge
against a devaluation that is so generally anticipated that the Fund is not
able to contract to sell the currency at a price above the devaluation level
it anticipates. The cost to a Fund of engaging in currency exchange
transactions varies with such factors as the currency involved, the length of
the contract period, and prevailing market conditions. Since currency exchange
transactions are usually conducted on a principal basis, no fees or
commissions are involved.
<PAGE>
SYNTHETIC FOREIGN MONEY MARKET POSITIONS. Each Fund may invest in
money market instruments denominated in foreign currencies. In addition to, or
in lieu of, such direct investment, a Fund may construct a synthetic foreign
money market position by (a) purchasing a money market instrument denominated
in one currency, generally U.S. dollars, and (b) concurrently entering into a
forward contract to deliver a corresponding amount of that currency in
exchange for a different currency on a future date and at a specified rate of
exchange. For example, a synthetic money market position in Japanese yen could
be constructed by purchasing a U.S. dollar money market instrument, and
entering concurrently into a forward contract to deliver a corresponding
amount of U.S. dollars in exchange for Japanese yen on a specified date and at
a specified rate of exchange. Because of the availability of a variety of
highly liquid short-term U.S. dollar money market instruments, a synthetic
money market position utilizing such U.S. dollar instruments may offer greater
liquidity than direct investment in foreign currency and a concurrent
construction of a synthetic position in such foreign currency, in terms of
both income yield and gain or loss from changes in currency exchange rates, in
general should be similar, but would not be identical because the components
of the alternative investments would not be identical.
LENDING OF PORTFOLIO SECURITIES
Each Fund may lend its portfolio securities to broker-dealers and
banks. Any such loan must be continuously secured by collateral in cash or
cash equivalents maintained on a current basis in an amount at least equal to
the market value of the securities loaned by the Fund. The Fund would continue
to receive the equivalent of the interest or dividends paid by the issuer on
the securities loaned, and would also receive an additional return that may be
in the form of a fixed fee or a percentage of the collateral. The Fund would
have the right to call the loan and obtain the securities loaned at any time
on notice of not more than five business days. The Fund would not have the
right to vote the securities during the existence of the loan but would call
the loan to permit voting of the securities, if, in the Adviser's judgment, a
material event requiring a shareholder vote would otherwise occur before the
loan was repaid. In the event of bankruptcy or other default of the borrower,
the Fund could experience both delays in liquidating the loan collateral or
recovering the loaned securities and losses, including (a) possible decline in
the value of the collateral or in the value of the securities loaned during
the period while the Fund seeks to enforce its rights thereto, (b) possible
subnormal levels of income and lack of access to income during this period,
and (c) expenses of enforcing its rights.
REPURCHASE AGREEMENTS
Each Fund may invest in repurchase agreements, provided that it will
not invest more than 15% of net assets in repurchase agreements maturing in
more than seven days and any other illiquid securities. A repurchase agreement
is a sale of securities to the Fund in which the seller agrees to repurchase
the securities at a higher price, which includes an amount representing
interest on the purchase price, within a specified time. In the event of
bankruptcy of the seller, the Fund could experience both losses and delays in
liquidating its collateral.
<PAGE>
OPTIONS ON SECURITIES AND INDEXES
Each Fund may purchase and sell put options and call options on
securities, indexes or foreign currencies in standardized contracts traded on
recognized securities exchanges, boards of trade, or similar entities, or
quoted on NASDAQ. A Fund may purchase agreements, sometimes called cash puts,
that may accompany the purchase of a new issue of bonds from a dealer.
An option on a security (or index) is a contract that gives the
purchaser (holder) of the option, in return for a premium, the right to buy
from (call) or sell to (put) the seller (writer) of the option the security
underlying the option (or the cash value of the index) at a specified exercise
price at any time during the term of the option (normally not exceeding nine
months). The writer of an option on an individual security or on a foreign
currency has the obligation upon exercise of the option to deliver the
underlying security or foreign currency upon payment of the exercise price or
to pay the exercise price upon delivery of the underlying security or foreign
currency. Upon exercise, the writer of an option on an index is obligated to
pay the difference between the cash value of the index and the exercise price
multiplied by the specified multiplier for the index option. (An index is
designed to reflect specified facets of a particular financial or securities
market, a specific group of financial instruments or securities, or certain
economic indicators.)
A Fund will write call options and put options only if they are
"covered." For example, in the case of a call option on a security, the option
is "covered" if the Fund owns the security underlying the call or has an
absolute and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, cash or cash
equivalents in such amount are held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio.
If an option written by a Fund expires, the Fund realizes a capital
gain equal to the premium received at the time the option was written. If an
option purchased by the Fund expires, the Fund realizes a capital loss equal
to the premium paid.
Prior to the earlier of exercise or expiration, an option may be
closed out by an offsetting purchase or sale of an option of the same series
(type, exchange, underlying security or index, exercise price and expiration).
There can be no assurance, however, that a closing purchase or sale
transaction can be effected when the Fund desires.
A Fund will realize a capital gain from a closing purchase
transaction if the cost of the closing option is less than the premium
received from writing the option, or, if it is more, the Fund will realize a
capital loss. If the premium received from a closing sale transaction is more
than the premium paid to purchase the option, the Fund will realize a capital
gain or, if it is less, the Fund will realize a capital loss. The principal
factors affecting the market value of a put or a call option include supply
and demand, interest rates, the current market price of the underlying
security or index in relation to the exercise price of the option, the
volatility of the underlying security or index, and the time remaining until
the expiration date.
<PAGE>
A put or call option purchased by a Fund is an asset of the Fund,
valued initially at the premium paid for the option. The premium received for
an option written by the Fund is recorded as a deferred credit. The value of
an option purchased or written is marked-to-market daily and is valued at the
closing price on the exchange on which it is traded or, if not traded on an
exchange or no closing price is available, at the mean between the last bid
and asked prices.
Risks Associated with Options. There are several risks associated
with transactions in options. For example, there are significant differences
between the securities markets, the currency markets and the options markets
that could result in an imperfect correlation among these markets, causing a
given transaction not to achieve its objectives. A decision as to whether,
when and how to use options involves the exercise of skill and judgment, and
even a well-conceived transaction may be unsuccessful to some degree because
of market behavior or unexpected events.
There can be no assurance that a liquid market will exist when a Fund
seeks to close out an option position. If the Fund were unable to close out an
option that it has purchased on a security, it would have to exercise the
option in order to realize any profit or the option would expire and become
worthless. If the Fund were unable to close out a covered call option that it
had written on a security, it would not be able to sell the underlying
security until the option expired. As the writer of a covered call option on a
security, the Fund foregoes, during the option's life, the opportunity to
profit from increases in the market value of the security covering the call
option above the sum of the premium and the exercise price of the call.
If trading were suspended in an option purchased or written by a
Fund, the Fund would not be able to close out the option. If restrictions on
exercise were imposed, the Fund might not be able to exercise an option it has
purchased.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
Each Fund may use interest rate futures contracts, index futures
contracts and foreign currency futures contracts. An interest rate, index or
foreign currency futures contract provides for the future sale by one party
and purchase by another party of a specified quantity of a financial
instrument or the cash value of an index1 at a specified price and time. A
public market exists in futures contracts covering a number of indexes
(including, but not limited to: the Standard & Poor's 500 Index, the Value
Line Composite Index, and the New York Stock Exchange Composite Index) as well
as financial instruments (including, but not limited to: U.S. Treasury bonds,
U.S. Treasury notes, Eurodollar certificates of deposit and foreign
currencies). Other index and financial instrument futures contracts are
available and it is expected that additional futures contracts will be
developed and traded.
<PAGE>
Each Fund may purchase and write call and put futures options.
Futures options possess many of the same characteristics as options on
securities, indexes and foreign currencies (discussed above). A futures option
gives the holder the right, in return for the premium paid, to assume a long
position (call) or short position (put) in a futures contract at a specified
exercise price at any time during the period of the option. Upon exercise of a
call option, the holder acquires a long position in the futures contract and
the writer is assigned the opposite short position. In the case of a put
option, the opposite is true. The Fund might, for example, use futures
contracts to hedge against or gain exposure to fluctuations in the general
level of stock prices, anticipated changes in interest rates or currency
fluctuations that might adversely affect either the value of the Fund's
securities or the price of the securities that the Fund intends to purchase.
Although other techniques could be used to reduce or increase the Fund's
exposure to stock price, interest rate and currency fluctuations, the Fund may
be able to achieve its desired exposure more effectively and perhaps at a
lower cost by using futures contracts and futures options.
A Fund will only enter into futures contracts and futures options
that are standardized and traded on an exchange, board of trade or similar
entity, or quoted on an automated quotation system.
The success of any futures transaction depends on the Adviser
correctly predicting changes in the level and direction of stock prices,
interest rates, currency exchange rates and other factors. Should those
predictions be incorrect, the Fund's return might have been better had the
transaction not been attempted; however, in the absence of the ability to use
futures contracts, the Adviser might have taken portfolio actions in
anticipation of the same market movements with similar investment results,
but, presumably, at greater transaction costs.
- ---------
1 A futures contract on an index is an agreement pursuant to which two parties
agree to take or make delivery of an amount of cash equal to the difference
between the value of the index at the close of the last trading day of the
contract and the price at which the index contract was originally written.
Although the value of a securities index is a function of the value of certain
specified securities, no physical delivery of those securities is made.
<PAGE>
When a purchase or sale of a futures contract is made by a Fund, the
Fund is required to deposit with its custodian (or broker, if legally
permitted) a specified amount of cash or U.S. Government securities or other
securities acceptable to the broker ("initial margin"). The margin required
for a futures contract is set by the exchange on which the contract is traded
and may be modified during the term of the contract. The initial margin is in
the nature of a performance bond or good faith deposit on the futures
contract, which is returned to the Fund upon termination of the contract,
assuming all contractual obligations have been satisfied. The Fund expects to
earn interest income on its initial margin deposits. A futures contract held
by the Fund is valued daily at the official settlement price of the exchange
on which it is traded. Each day the Fund pays or receives cash, called
"variation margin," equal to the daily change in value of the futures
contract. This process is known as "marking-to-market." Variation margin paid
or received by the Fund does not represent a borrowing or loan by the Fund but
is instead settlement between the Fund and the broker of the amount one would
owe the other if the futures contract had expired at the close of the previous
day. In computing daily net asset value, the Fund will mark-to-market its open
futures positions.
The Fund is also required to deposit and maintain margin with respect
to put and call options on futures contracts written by it. Such margin
deposits will vary depending on the nature of the underlying futures contract
(and the related initial margin requirements), the current market value of the
option and other futures positions held by the Fund.
Although some futures contracts call for making or taking delivery of
the underlying securities, usually these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Fund engaging in the
transaction realizes a capital gain, or if it is more, the Fund realizes a
capital loss. Conversely, if an offsetting sale price is more than the
original purchase price, the Fund engaging in the transaction realizes a
capital gain, or if it less, the Fund realizes a capital loss. The transaction
costs must also be included in these calculations.
RISKS ASSOCIATED WITH FUTURES. There are several risks associated
with the use of futures contracts and futures options. A purchase or sale of a
futures contract may result in losses in excess of the amount invested in the
futures contract. In trying to increase or reduce market exposure, there can
be no guarantee that there will be a correlation between price movements in
the futures contract and in the portfolio exposure sought. In addition, there
are significant differences between the securities and futures markets that
could result in an imperfect correlation between the markets, causing a given
transaction not to achieve its objectives. The degree of imperfection of
correlation depends on circumstances such as: variations in speculative market
demand for futures, futures options and the related securities, including
technical influences in futures and futures options trading and differences
between the securities markets and the securities underlying the standard
contracts available for trading. For example, in the case of index futures
contracts, the composition of the index, including the issuers and the
weighing of each issue, may differ from the composition of the Fund's
portfolio, and, in the case of interest rate futures contracts, the interest
rate levels, maturities and creditworthiness of the issues underlying the
futures contract may differ from the financial instruments held in the Fund's
portfolio. A decision as to whether, when and how to use futures contracts
involves the exercise of skill and judgment, and even a well-conceived
transaction may be unsuccessful to some degree because of market behavior or
unexpected stock price or interest rate trends.
<PAGE>
Futures exchanges may limit the amount of fluctuation permitted in
certain futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a
price beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because
the limit may work to prevent the liquidation of unfavorable positions. For
example, futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses. Stock index futures contracts are not normally subject to
such daily price change limitations.
There can be no assurance that a liquid market will exist at a time
when a Fund seeks to close out a futures or futures option position. The Fund
would be exposed to possible loss on the position during the interval of
inability to close, and would continue to be required to meet margin
requirements until the position is closed. In addition, many of the contracts
discussed above are relatively new instruments without a significant trading
history. As a result, there can be no assurance that an active secondary
market will develop or continue to exist.
LIMITATIONS ON OPTIONS AND FUTURES
If other options, futures contracts or futures options of types other
than those described herein are traded in the future, a Fund may also use
those investment vehicles, provided the board of trustees determines that
their use is consistent with the Fund's investment objective.
A Fund will not enter into a futures contract or purchase an option
thereon if, immediately thereafter, the initial margin deposits for futures
contracts held by the Fund plus premiums paid by it for open futures option
positions, less the amount by which any such positions are "in-the-money,"2
would exceed 5% of the Fund's total assets.
- ---------
2 A call option is "in-the-money" if the value of the futures contract that
is the subject of the option exceeds the exercise price. A put option is
"in-the-money" if the exercise price exceeds the value of the futures
contract that is the subject of the option.
<PAGE>
When purchasing a futures contract or writing a put option on a
futures contract, a Fund must maintain with its custodian (or broker, if
legally permitted) cash or cash equivalents (including any margin) equal to
the market value of such contract. When writing a call option on a futures
contract, the Fund similarly will maintain with its custodian cash or cash
equivalents (including any margin) equal to the amount by which such option is
in-the-money until the option expires or is closed by the Fund.
A Fund may not maintain open short positions in futures contracts,
call options written on futures contracts or call options written on indexes
if, in the aggregate, the market value of all such open positions exceeds the
current value of the securities in its portfolio, plus or minus unrealized
gains and losses on the open positions, adjusted for the historical relative
volatility of the relationship between the portfolio and the positions. For
this purpose, to the extent the Fund has written call options on specific
securities in its portfolio, the value of those securities will be deducted
from the current market value of the securities portfolio.
In order to comply with Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid being deemed a "commodity pool operator," a
Fund will use commodity futures or commodity options contracts solely for bona
fide hedging purposes within the meaning and intent of Regulation 1.3(z), or,
with respect to positions in commodity futures and commodity options contracts
that do not come within the meaning and intent of 1.3(z), the aggregate
initial margin and premiums required to establish such positions will not
exceed 5% of the fair market value of the assets of the Fund, after taking
into account unrealized profits and unrealized losses on any such contracts it
has entered into [in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount (as defined in Section 190.01(x) of the
Commission Regulations) may be excluded in computing such 5%].
As long as a Fund continues to sell its shares in certain states, the
Fund's options and futures transactions will also be subject to certain
non-fundamental investment restrictions set forth under "Investment
Restrictions" in this Statement of Additional Information.
TAXATION OF OPTIONS AND FUTURES
If a Fund exercises a call or put option that it holds, the premium
paid for the option is added to the cost basis of the security purchased
(call) or deducted from the proceeds of the security sold (put). For cash
settlement options and futures options exercised by the Fund, the difference
between the cash received at exercise and the premium paid is a capital gain
or loss.
If a call or put option written by a Fund is exercised, the premium
is included in the proceeds of the sale of the underlying security (call) or
reduces the cost basis of the security purchased (put). For cash settlement
options and futures options written by the Fund, the difference between the
cash paid at exercise and the premium received is a capital gain or loss.
Entry into a closing purchase transaction will result in capital gain
or loss. If an option written by a Fund was in-the-money at the time it was
written and the security covering the option was held for more than the
long-term holding period prior to the writing of the option, any loss realized
as a result of a closing purchase transaction will be long-term. The holding
period of the securities covering an in-the-money option will not include the
period of time the option is outstanding.
<PAGE>
If a Fund writes an equity call option3 other than a "qualified
covered call option," as defined in the Internal Revenue Code, any loss on
such option transaction, to the extent it does not exceed the unrealized gains
on the securities covering the option, may be subject to deferral until the
securities covering the option have been sold.
A futures contract held until delivery results in capital gain or
loss equal to the difference between the price at which the futures contract
was entered into and the settlement price on the earlier of delivery notice
date or expiration date. If the Fund delivers securities under a futures
contract, the Fund also realizes a capital gain or loss on those securities.
For federal income tax purposes, a Fund generally is required to
recognize as income for each taxable year its net unrealized gains and losses
as of the end of the year on futures, futures options and non-equity options
positions ("year-end mark-to-market"). Generally, any gain or loss recognized
with respect to such positions (either by year-end mark-to-market or by actual
closing of the positions) is considered to be 60% long-term and 40%
short-term, without regard to the holding periods of the contracts. However,
in the case of positions classified as part of a "mixed straddle," the
recognition of losses on certain positions (including options, futures and
futures options positions, the related securities and certain successor
positions thereto) may be deferred to a later taxable year. Sale of futures
contracts or writing of call options (or futures call options) or buying put
options (or futures put options) that are intended to hedge against a change
in the value of securities held by the Fund: (1) will affect the holding
period of the hedged securities; and (2) may cause unrealized gain or loss on
such securities to be recognized upon entry into the hedge.
If a Fund were to enter into a short index future, short index
futures option or short index option position and the Fund's portfolio were
deemed to "mimic" the performance of the index underlying such contract, the
option or futures contract position and the Fund's stock positions would be
deemed to be positions in a mixed straddle, subject to the above-mentioned
loss deferral rules.
In order for a Fund to continue to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities and gains from the sale of
securities or foreign currencies, or other income (including but not limited
to gains from options, futures or forward contracts). In addition, gains
realized on the sale or other disposition of securities held for less than
three months must be limited to less than 30% of the Fund's annual gross
income. Any net gain realized from futures (or futures options) contracts will
be considered gain from the sale of securities and therefore be qualifying
income for purposes of the 90% requirement. In order to avoid realizing
excessive gains on securities held less than three months, the Fund may be
required to defer the closing out of certain positions beyond the time when it
would otherwise be advantageous to do so.
- ---------
3 An equity option is defined to mean any option to buy or sell stock,
and any other option the value of which is determined by reference to an
index of stocks of the type that is ineligible to be traded on a commodity
futures exchange (e.g., an option contract on a sub-index based on the price
of nine hotel-casino stocks). The definition of equity option excludes
options on broad-based stock indexes (such as the Standard & Poor's 500 index).
<PAGE>
Each Fund distributes to shareholders annually any net capital gains
that have been recognized for federal income tax purposes (including year-end
mark-to-market gains) on options and futures transactions. Such distributions
are combined with distributions of capital gains realized on the Fund's other
investments, and shareholders are advised of the nature of the payments.
PORTFOLIO TURNOVER
Although the Funds do not purchase securities with a view to rapid
turnover, there are no limitations on the length of time that portfolio
securities must be held. Portfolio turnover can occur for a number of reasons,
including calls for redemption, general conditions in the securities markets,
more favorable investment opportunities in other securities, or other factors
relating to the desirability of holding or changing a portfolio investment.
The portfolio turnover rates may vary greatly from year to year. A high rate
of portfolio turnover in a Fund would result in increased transaction expense,
which must be borne by that Fund. High portfolio turnover may also result in
the realization of capital gains or losses and, to the extent net short-term
capital gains are realized, any distributions resulting from such gains will
be considered ordinary income for federal income tax purposes. See "Risk of
Investment" and "Dividends and Distributions" in the Prospectus.
SHORT SALES
Each Fund may attempt to hedge against market risk and to enhance
income by selling short "against the box," that is: (1) entering into short
sales of securities that it currently has the right to acquire through the
conversion or exchange of other securities that it owns, or to a lesser
extent, entering into short sales of securities that it currently owns; and
(2) entering into arrangements with the broker-dealers through which such
securities are sold short to receive income with respect to the proceeds of
short sales during the period the Fund's short positions remain open. Each
Fund other than Strategic Income Fund may make short sales of securities only
if at all times when a short position is open the Fund owns an equal amount of
such securities or securities convertible into or exchangeable for, without
payment of any further consideration, securities of the same issue as, and
equal in amount to, the securities sold short.
In addition to selling short against the box, Strategic Income Fund
may sell short securities that it currently has the right to acquire upon
payment of additional consideration, for instance, upon exercise of a warrant
or option. This technique would be used by Strategic Income Fund to hedge
against market risk in connection with a synthetic convertible security in the
same way selling short against the box hedges against market risk in
connection with a true convertible security.
<PAGE>
In a short sale against the box, a Fund does not deliver from its
portfolio the securities sold and does not receive immediately the proceeds
from the short sale. Instead, the Fund borrows the securities sold short from
a broker-dealer through which the short sale is executed, and the
broker-dealer delivers such securities, on behalf of the Fund, to the
purchaser of such securities. Such broker-dealer is entitled to retain the
proceeds from the short sale until the Fund delivers to such broker-dealer the
securities sold short. In addition, the Fund is required to pay to the
broker-dealer the amount of any dividends paid on shares sold short. Finally,
to secure its obligation to deliver to such broker-dealer the securities sold
short, the Fund must deposit and continuously maintain in a separate account
with the Fund's custodian an equivalent amount of the securities sold short or
securities convertible into or exchangeable for such securities without the
payment of additional consideration. The Fund is said to have a short position
in the securities sold until it delivers to the broker-dealer the securities
sold, at which time the Fund receives the proceeds of the sale. Because the
Fund ordinarily will want to continue to hold securities in its portfolio that
are sold short, the Fund will normally close out a short position by
purchasing on the open market and delivering to the broker-dealer an equal
amount of the securities sold short, rather than by delivering portfolio
securities.
A short sale works the same way, except that the Fund places in the
segregated account cash or U.S. government securities equal in value to the
difference between (i) the market value of the securities sold short at the
time they were sold short and (ii) any cash or U.S. government securities
required to be deposited with the broker as collateral. In addition, so long
as the short position is open, the Fund must daily adjust the value of the
segregated account so that the amount deposited in it, plus any amount
deposited with the broker as collateral, will equal the current market value
of the security sold short. However, the value of the segregated account may
not be reduced below the point at which the segregated account, plus any
amount deposited with the broker, is equal to the market value of the
securities sold short at the time they were sold short.
Short sales may protect a Fund against the risk of losses in the
value of its portfolio securities because any unrealized losses with respect
to such portfolio securities should be wholly or partially offset by a
corresponding gain in the short position. However, any potential gains in such
portfolio securities should be wholly or partially offset by a corresponding
loss in the short position. The extent to which such gains or losses are
offset will depend upon the amount of securities sold short relative to the
amount the Fund owns, either directly or indirectly, and, in the case where
the Fund owns convertible securities, changes in the conversion premium.
<PAGE>
Short sale transactions of a Fund involve certain risks. In
particular, the imperfect correlation between the price movements of the
convertible securities and the price movements of the underlying common stock
being sold short creates the possibility that losses on the short sale hedge
position may be greater than gains in the value of the portfolio securities
being hedged. In addition, to the extent that a Fund pays a conversion premium
for a convertible security, the Fund is generally unable to protect against a
loss of such premium pursuant to a short sale hedge. In determining the number
of shares to be sold short against a Fund's position in the convertible
securities, the anticipated fluctuation in the conversion premiums is
considered. A Fund will also incur transaction costs in connection with short
sales. Certain provisions of the Internal Revenue Code may limit the degree to
which the Fund is able to enter into short sales, which limitations might
impair the Fund's ability to achieve its investment objective. See "Taxation."
In addition to enabling a Fund to hedge against market risk, short
sales may afford a Fund an opportunity to earn additional current income to
the extent the Fund is able to enter into arrangements with broker-dealers
through which the short sales are executed to receive income with respect to
the proceeds of the short sales during the period the Fund's short positions
remain open.
UNSEASONED ISSUERS
Each Fund may invest up to 5% of its total assets in the securities
of unseasoned issuers, that is, issuers that, together with predecessors, have
been in operation less than three years. The Adviser believes that investment
in securities of unseasoned issuers may provide opportunities for long-term
capital growth, although the risks of investing in such securities are greater
than with common stocks of more established companies because unseasoned
issuers have only a brief operating history and may have more limited markets
and financial resources. No Fund other than Global Growth and Income Fund and
Growth Fund currently intends to invest in securities of unseasoned issuers.
"WHEN ISSUED" AND DELAYED DELIVERY SECURITIES AND REVERSE REPURCHASE AGREEMENTS
Each Fund may purchase securities on a when-issued or
delayed-delivery basis. Although the payment and interest terms of these
securities are established at the time the Fund enters into the commitment,
the securities may be delivered and paid for a month or more after the date of
purchase, when their value may have changed. The Fund makes such commitments
only with the intention of actually acquiring the securities, but may sell the
securities before settlement date if the Adviser deems it advisable for
investment reasons. The Fund may utilize spot and forward foreign currency
exchange transactions to reduce the risk inherent in fluctuations in the
exchange rate between one currency and another when securities are purchased
or sold on a when-issued or delayed-delivery basis.
<PAGE>
Each Fund may enter into reverse repurchase agreements with banks and
securities dealers. A reverse repurchase agreement is a repurchase agreement
in which the Fund is the seller of, rather than the investor in, securities
and agrees to repurchase them at an agreed-upon time and price. Use of a
reverse repurchase agreement may be preferable to a regular sale and later
repurchase of securities because it avoids certain market risks and
transaction costs.
At the time when a Fund enters into a binding obligation to purchase
securities on a when-issued basis or enters into a reverse repurchase
agreement, liquid assets (cash, U.S. Government securities or other
"high-grade" debt obligations) of the Fund having a value at least as great as
the purchase price of the securities to be purchased will be segregated on the
books of the Fund and held by the custodian throughout the period of the
obligation. The use of these investment strategies, as well as borrowing under
a line of credit as described below, may increase net asset value fluctuation.
ILLIQUID SECURITIES
Global Growth and Income Fund may invest up to 15% of its total
assets, and each other Fund may invest up to 10% of its total assets, taken at
market value, in illiquid securities, including any securities that are not
readily marketable either because they are restricted securities or for other
reasons. Restricted securities are securities that are subject to restrictions
on resale because they have not been registered for sale under the Securities
Act of 1933. A position in restricted securities might adversely affect the
liquidity and marketability of a portion of the Fund's portfolio, and the Fund
might not be able to dispose of its holdings in such securities promptly or at
reasonable prices. In those instances where a Fund is required to have
restricted securities held by it registered prior to sale by the Fund and the
Fund does not have a contractual commitment from the issuer or seller to pay
the costs of such registration, the gross proceeds from the sale of securities
would be reduced by the registration costs and underwriting discounts. Any
such registration costs are not included in the percentage limitation on a
Fund's investment in restricted securities. The Funds do not intend to invest
in illiquid securities during the next fiscal year, except that the Funds may
invest in options traded on the NASDAQ National Market System.
RULE 144A SECURITIES
If the Trust is a qualified institution, each Fund may purchase
securities that have been privately placed but that are eligible for purchase
and sale under Rule 144A under the 1933 Act. That Rule permits certain
qualified institutional buyers to trade in privately placed securities that
have not been registered for sale under the 1933 Act. The Adviser, under the
supervision of the board of trustees, will consider whether securities
purchased under Rule 144A are illiquid and thus subject to the Fund's
restriction of investing no more than a specified percentage of its net assets
in illiquid securities. A determination of whether a Rule 144A security is
liquid or not is a question of fact. In making this determination, the Adviser
will consider the trading markets for the specific security, taking into
account the unregistered nature of a Rule 144A security. In addition, the
Adviser could consider the (1) frequency of trades and quotes, (2) number of
dealers and potential purchasers, (3) dealer undertakings to make a market and
(4) nature of a security and of marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
transfer). The liquidity of Rule 144A securities would be monitored and, if as
a result of changed conditions, it is determined that a Rule 144A security is
no longer liquid, the Fund's holdings of illiquid securities would be reviewed
to determine what, if any, steps are required to assure that the Fund does not
invest more than the specified percentage of its assets in illliquid
securities. Investing in Rule 144A securities could have the effect of
increasing the amount of a Fund's assets invested in illiquid securities if
qualified institutional buyers are unwilling to purchase such securities. No
Fund expects to invest as much as 5% of its total assets in Rule 144A
securities.
<PAGE>
REPURCHASE AGREEMENTS
As part of its strategy for the temporary investment of cash, each
Fund may enter into "repurchase agreements" pertaining to U.S. Government
securities with member banks of the Federal Reserve System or primary dealers
(as designated by the Federal Reserve Bank of New York) in such securities. A
repurchase agreement arises when a Fund purchases a security and
simultaneously agrees to resell it to the vendor at an agreed upon future
date. The resale price is greater than the purchase price, reflecting an
agreed upon market rate of return that is effective for the period of time the
Fund holds the security and that is not related to the coupon rate on the
purchased security. Such agreements generally have maturities of no more than
seven days and could be used to permit a Fund to earn interest on assets
awaiting long term investment. The Funds require continuous maintenance by the
custodian for the Fund's account in the Federal Reserve/Treasury Book Entry
System of collateral in an amount equal to, or in excess of, the market value
of the securities that are the subject of a repurchase agreement. Repurchase
agreements maturing in more than seven days are considered illiquid
securities. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying security and losses, including: (a) possible decline in the value
of the underlying security during the period while the Fund seeks to enforce
its rights thereto; (b) possible subnormal levels of income and lack of access
to income during this period; and (c) expenses of enforcing its rights.
INVESTMENT RESTRICTIONS
Each Fund operates under the following investment restrictions. A
Fund may not (except as indicated):
(i) as to 75% of its assets, invest more than 5% of its total assets,
taken at market value at the time of a particular purchase, in the
securities of any one issuer, except that this restriction does not
apply to securities issued or guaranteed by the United States
Government or its agencies or instrumentalities;
(ii) acquire more than 10%, taken at the time of a particular purchase, of
the outstanding voting securities of any one issuer;
(iii) act as an underwriter of securities, except insofar as it may be
deemed an underwriter for purposes of the Securities Act of 1933 on
disposition of securities acquired subject to legal or contractual
restrictions on resale;
(iv) purchase or sell real estate (although it may purchase securities
secured by real estate or interests therein, or securities issued by
companies which invest in real estate or interests therein),
commodities or commodity contracts;
(v) make loans, but this restriction shall not prevent the Fund from (a)
investing in debt obligations, (b) investing in repurchase agreements
or (c) lending portfolio securities;
<PAGE>
(vi) invest more than 10% (or 15% in the case of Global Growth and Income
Fund) of the Fund's net assets (taken at market value at the time of
each purchase) in illiquid securities, including repurchase
agreements maturing in more than seven days;
(vii) borrow, except that the Fund may (a) borrow up to 10% of its total
assets, taken at market value at the time of such borrowing, as a
temporary measure for extraordinary or emergency purposes, but not to
increase portfolio income (the total of reverse repurchase
agreements4 and such borrowings will not exceed 10% of total assets,
and the Fund will not purchase securities when its borrowings exceed
5% of total assets) and (b) enter into transactions in options;
(viii) invest in a security if more than 25% of its total assets (taken at
market value at the time of a particular purchase) would be invested
in the securities of issuers in any particular industry, except that
this restriction does not apply to securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities; or
(ix) issue any senior security, except that Strategic Income Fund may
sell securities short.
The above restrictions are fundamental policies and may not be
changed with respect to a Fund without the approval of a "majority" of the
outstanding shares of that Fund, which for this purpose means the approval of
the lesser of (a) more than 50% of the outstanding voting securities of that
Fund or (b) 67% or more of the outstanding shares if the holders of more than
50% of the outstanding shares of that Fund are present or represented at the
meeting by proxy.
In addition to the fundamental restrictions listed above, no Fund
may:
(a) invest in any of the following: (i) interests in oil, gas,
or other mineral exploration or development programs; (ii) puts, calls,
straddles, spreads, or any combination thereof (except that each Fund may
enter into transactions in options, futures and options on futures); and (iii)
shares of other open-end investment companies (except in connection with a
plan of merger or reorganization);
(b) invest in companies for the purpose of exercising control or
management;
(c) purchase securities on margin (except for use of such
short-term credits as are necessary for the clearance of transactions,
including transactions in options, futures and options on futures), or
participate on a joint or a joint and several basis in any trading account in
securities, except in connection with transactions in options, futures and
options on futures;
<PAGE>
(d) make short sales of securities, except that a Fund may make
short sales of securities (i) if the Fund owns an equal amount of such
securities, or owns securities that are convertible or exchangeable, without
payment of further consideration, into an equal amount of such securities and
(ii) Strategic Income Fund may make short sales of securities other than those
described in clause (i), provided that no more than 10% of its net assets
would, when added together, be deposited with brokers as collateral or
allocated to segregated accounts in connection with short sales other than
those described in clause (i);
(e) purchase or hold securities of an issuer if 5% of the
securities of such issuer are owned by those officers, directors, or trustees
of the Trust or of its investment adviser who each own beneficially more than
1/2 of 1% of the securities of that issuer;
(f) invest more than (a) 5% of the Fund's total assets (valued
at the time of investment) in securities of issuers (other than issuers of
federal agency obligations or securities issued or guaranteed by any foreign
country or asset-backed securities) that, together with any predecessors or
unconditional guarantors, have been in continuous operation for less than
three years ("unseasoned issuers") or (b) in the case of Global Growth and
Income Fund, more than 15% of its total assets (valued at time of investment)
in restricted securities and securities of unseasoned issuers;
(g) pledge, mortgage or hypothecate the Fund's assets, except as
may be necessary in connection with permitted borrowings or in connection with
options, futures, and options on futures;
(h) invest more than 5% of the Fund's net assets (valued at time
of purchase) in warrants, nor more than 2% of its net assets in warrants that
are not listed on the New York or American stock exchange or a recognized
foreign exchange;
(i) write an option on a security unless the option is issued by the
Options Clearing Corporation, an exchange or similar entity;
(j) buy or sell an option on a security, a futures contract or
an option on a futures contract, unless the option, the futures contract or
the option on the futures contract is offered through the facilities of a
recognized securities association or listed on a recognized exchange or
similar entity;
(k) purchase a put or call option if the aggregate premiums paid
for all put and call options exceed 20% of its net assets (less the amount by
which any such positions are in-the-money), excluding put and call options
purchased as closing transactions;
- ---------
4 No Fund currently intends to enter into reverse repurchase agreements.
<PAGE>
(l) invest more than 25% of its net assets (valued at time of
purchase) in securities of foreign issuers (other than securities represented
by American Depositary Receipts and securities guaranteed by a U.S. person),
except that Global Growth and Income Fund may invest all of its assets in
securities of foreign issuers.
Restrictions (a) through (l) may be changed by the board of trustees
without shareholder approval.
Notwithstanding the foregoing investment restrictions, a Fund may
purchase securities pursuant to the exercise of subscription rights, subject
to the condition that such purchase will not result in the Fund's ceasing to
be a diversified investment company. Far Eastern and European corporations
frequently issue additional capital stock by means of subscription rights
offerings to existing shareholders at a price substantially below the market
price of the shares. The failure to exercise such rights would result in the
Fund's interest in the issuing company being diluted. The market for such
rights is not well developed in all cases and, accordingly, the Fund may not
always realize full value on the sale of rights. The exception applies in
cases where the limits set forth in the investment restrictions would
otherwise be exceeded by exercising rights or would have already been exceeded
as a result of fluctuations in the market value of the Fund's portfolio
securities with the result that the Fund would be forced either to sell
securities at a time when it might not otherwise have done so, to forego
exercising the rights.
If a percentage restriction is adhered to at the time of an
investment, a later increase or decrease in the percentage resulting from
fluctuation in the market values of assets will not constitute a violation of
such restriction.
MANAGEMENT
TRUSTEES AND OFFICERS
Set forth below is information about the trustees and officers of CFS
Investment Trust (the "Trust").
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION(S)
POSITION(S) WITH TRUST DURING PAST FIVE YEARS
- ---------------------- -----------------------
<S> <C>
John P. Calamos (1) President, Calamos Asset Management, Inc. ("CAM"), an
Trustee and President investment adviser and the Funds' investment adviser;
President, Calamos Financial Services, Inc. ("CFS"), a broker-
dealer and the Funds' distributor.
Richard J. Dowen (2) Professor of Finance, Northern Illinois University.
Trustee
Robert Frost (2) Management Consultant, ECOM Consultants, Inc.
Paul J. Marnell (1) Senior Vice President and Chief Administrative Officer, CAM
and CFS since December 1994; Vice President and Manager,
IndoSuez Carr Futures, Inc., an investment manager, January
1992 - November 1994; consultant, October 1991 - January
1992; Senior Director - Operations, Continental Bank Global
Finance, prior thereto.
William A. Kaun (2) Principal, W.A. Kaun Co. (investment adviser and publisher),
Trustee since January 1992; partner, Mueller & Company (certified
public accountants), prior thereto.
Nick P. Calamos Managing Director, CAM and CFS
Vice President
Helen L. Callaghan Controller, CAM and CFS
Secretary and Treasurer
Diane Anderson Administrative Assistant, CAM and CFS, since 1995; Assistant
Assistant Secretary Secretary, Alpha Source Asset Management, Inc. 1992-1995;
Assistant Secretary, Hamilton Investments, Inc. prior thereto
<FN>
- ----------------------
(1) John P. Calamos and Paul J. Marnell are trustees who are "interested
persons" of the Trust as defined in the Investment Company Act of
1940 (the "1940 Act") and are members of the executive committee of
the board of trustees, which has authority during intervals between
meetings of the board of trustees to exercise the powers of the
board.
(2) Messrs. Dowen, Frost and Kaun are members of the audit committee of
the board of trustees, which makes recommendations regarding the
selection of the Trust's independent auditors and meets with
representatives of the independent auditors to determine the scope
and review the results of each audit.
</FN>
</TABLE>
<PAGE>
The address of Mr. Dowen is Department of Finance, Northern Illinois
University, DeKalb, Illinois 60115; that of Mr. Frost is 475 Park Avenue
South, New York, New York 10016; and that of Mr. Kaun is 1750 Grandstand
Place, Elgin, Illinois 60123. The address of the officers of the Trust is 1111
East Warrenville Road, Naperville, Illinois 60563-1493. Nick Calamos is a
nephew of John Calamos.
The following table shows the compensation paid by the Trust for the
eleven months ended March 31, 1996 to each trustee who was not an "interested
person" of the Trust:
AGGREGATE
COMPENSATION
NAME OF TRUSTEE FROM THE TRUST*
- --------------- ---------------
Richard J. Dowen $
Robert Frost
William A. Kaun
- -------------------------
*The Trust is not part of a fund complex.
Trustees who are "interested " persons of the Trust, as well as officers of
the Trust, are compensated by the Adviser and not by the Trust. The Trust does
not provide any pension or retirement benefits to its trustees.
<PAGE>
INVESTMENT ADVISORY SERVICES
Investment management and administrative services are provided to the
Funds by Calamos Asset Management, Inc. (the "Adviser") pursuant to an
Investment Management Agreement (the "Agreement") dated July 5, 1988. See the
prospectus - "Management of the Funds -- The Adviser." Each Fund pays the
Adviser a fee accrued daily and paid monthly. Growth Fund pays a fee at the
annual rate of 1% of the first $150 million of the Fund's average daily net
assets and .75% of average daily net assets in excess of $150 million. Global
Growth and Income Fund pays a fee at the annual rate of 1% of average net
assets. Each other Fund pays a fee at the annual rate of .75% of the first
$150 million of average net assets and .50% of average net assets in excess of
$150 million.
During the periods shown below, the Funds paid total advisory fees
and were reimbursed by the Adviser for expenses in excess of applicable
expense limitations as follows:
<TABLE>
<CAPTION>
Eleven
Year Months Year
Ended Ended Ended
3/31/96 3/31/95 4/30/94
------- ------- -------
<S> <C> <C> <C>
Strategic Income Fund
Advisory fee $ 17,684 $ 22,706
Waiver or reimbursement 25,683 28,776
Net fee $ (7,999) $ (6,070)
Convertible Fund $ 113,445 $ 131,180
Growth and Income
Fund Advisory fee $ 27,059 $ 34,072
Waiver or reimbursement 6,006 5,876
Net fee $ 21,053 $ 28,196
Growth Fund
Advisory fee $ 17,037 $ 20,610
Waiver or reimbursement 27,587 21,653
---------- ------------- -------------
Net fee $ (10,550) $ (1,043)
========== ============= =============
</TABLE>
<PAGE>
Global Growth and Income Fund had not commenced operations as of the date of
this prospectus.
The Agreement will remain in effect with respect to each Fund until
July 5, 1996, and from year to year thereafter so long as such continuation is
approved at least annually by (1) the board of trustees or the vote of a
majority of the outstanding voting securities of the Fund, and (2) a majority
of the trustees who are not interested persons of any party to the Agreement,
cast in person at a meeting called for the purpose of voting on such approval.
The Agreement may be terminated as to a Fund at any time, without penalty, by
either the Trust or the Adviser upon 60 days' written notice, and is
automatically terminated in the event of its assignment as defined in the 1940
Act.
The use of the name "CFS" in the name of the Trust and the use of the
name "Calamos" in the names of the Funds are pursuant to licenses granted by
the Adviser, and the Trust has agreed to change the names to remove those
references if the Adviser ceases to act as investment adviser to the Funds.
EXPENSES
Subject to the expense limitations described below, the Funds pay all
their own operating expenses that are not specifically assumed by the Adviser,
including (i) fees of the investment adviser; (ii) interest, taxes and any
governmental filing fees; (iii) compensation and expenses of the trustees,
other than those who are interested persons of the Trust, the investment
adviser or the distributor; (iv) legal, audit, custodial and transfer agency
fees and expenses; (v) fees and expenses related to the organization of the
Funds and registration and qualification of the Funds and their shares under
federal and state securities laws; (vi) expenses of printing and mailing
reports, notices and proxy material to shareholders, and expenses incidental
to meetings of shareholders; (vii) expenses of preparing prospectuses and of
printing and distributing them to existing shareholders; (viii) insurance
premiums; (ix) litigation and indemnification expenses and other extraordinary
expenses not incurred in the normal course of the business of the Trust; (x)
distribution expenses pursuant to the Funds' Distribution Plans; and (xi)
brokerage commissions and other transaction-related costs.
<PAGE>
Pursuant to the Investment Management Agreement, the Adviser will
reimburse each Fund to the extent that the total annual expenses of that Fund,
exclusive of taxes, interest, brokers' commissions and other charges related
to the purchase and sale of securities and extraordinary litigation expenses,
exceed the limits, if any, prescribed by any state in which shares of that
Fund are being sold or are qualified for sale. The Trust believes that the
most restrictive expense limitation applicable to a Fund is currently 2-1/2%
of the first $30 million of average daily net assets of the Fund, 2% of the
next $70 million of average daily net assets and 1-1/2% per year of average
daily net assets in excess of $100 million. In addition, the Adviser has
voluntarily undertaken to reimburse each class of shares for any annual
operating expenses through August 31, 1997 in excess of certain limits as
described in the prospectus under "Management of the Funds -- The Adviser."
In connection with the exchange privilege, the Adviser provides
subaccounting and other services to Money Market Portfolio, Government
Securities Portfolio and Tax-Exempt Portfolio, which are portfolios of Cash
Account Trust. For its services it receives from the portfolios or their
affiliates a fee of .15% in the case of Money Market Portfolio, and .10% in
the case of the other two portfolios, of the average annual net assets of each
account in those portfolios established through the exchange privilege.
<PAGE>
DISTRIBUTION PLAN
The Trust has adopted a plan pursuant to rule 12b-1 under the
Investment Company Act of 1940 (the "Plans"), whereby each Fund pays to
Calamos Financial Services, Inc., the Funds' distributor ("CFS"), service and
distribution fees as described in the prospectus under "Management of the
Funds -- Distribution Plan."
The board of trustees of the Trust has determined that a continuous
cash flow resulting from the sale of new shares is necessary and appropriate
to meet redemptions and to take advantage of buying opportunities without
having to make unwarranted liquidations of portfolio securities. The board
also considered that continuing growth in the size of the Funds would be in
the best interests of shareholders because increased size would allow the
Funds to realize certain economies of scale in their operations and would
likely reduce the proportionate share of expenses borne by each shareholder.
The board of trustees therefore determined that it would benefit each of the
Funds to have monies available for the direct distribution and service
activities of CFS, as the Funds' distributor, in promoting the continuous sale
of the Funds' shares. The board of trustees, including the non-interested
trustees, concluded, in the exercise of their reasonable business judgment and
in light of their fiduciary duties, that there is a reasonable likelihood that
the Plans will benefit the Funds and their shareholders.
The Plan has been approved by the board of trustees, including all of
the trustees who are non-interested persons as defined in the 1940 Act. The
substance of the Plan has also been approved by the vote of a majority of the
outstanding shares of each of the Funds. The Plan must be reviewed annually
and may be continued from year to year by vote of the board of trustees,
including a majority of the trustees who are non-interested persons of the
Funds and who have no direct or indirect financial interest in the operation
of the Plan ("non-interested trustees"), cast in person at a meeting called
for that purpose. It is also required that the selection and nomination of
non-interested trustees be done by non-interested trustees. The Plan and any
distribution or service agreement may be terminated at any time, without any
penalty, by such trustees, by any act that terminates the distribution
agreement between the Trust and CFS, or, as to any Fund, by vote of a majority
of that Fund's outstanding shares. Any agreement related to the Plan,
including any distribution or service agreement, may be terminated in the same
manner, except that termination by a majority of the outstanding shares must
be on not more than 60 days' written notice to any other party to such
agreement. Any distributor, dealer or institution may also terminate its
distribution or service agreement at any time upon written notice.
Neither the Plan nor any distribution or service agreement may be
amended to increase materially the amount spent for distribution or service
expenses or in any other material way without approval by a majority of the
outstanding shares of the affected Fund, and all such material amendments to
the Plan or any distribution or service agreement must also be approved by the
non-interested trustees, in person, at a meeting called for the purpose of
voting on any such amendment.
<PAGE>
CFS is required to report in writing to the board of trustees at
least quarterly on the amounts and purpose of any payments made under the Plan
and any distribution or service agreement, as well as to furnish the board
with such other information as may reasonably be requested in order to enable
the board to make an informed determination of whether the Plan should be
continued. Payments by a Fund pursuant to the Plan are not intended to finance
distribution of shares of the other Funds.
During the year ended March 31, 1996, each of the Funds made payments
to CFS pursuant to the Plan, and CFS paid expenses in connection with the
distribution of that Fund's shares, as shown below. As of that date no Class C
shares of any Fund had been issued.
<TABLE>
<CAPTION>
Strategic Convertible Growth and Growth
Income Fund Fund Income Fund Fund
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Payments by Fund to CFS $ $ $ $
Distribution Expenses Paid by CFS:
Reallowance to outside brokers $ $ $ $
Advertising
Prospectuses and reports
Sales representative travel
Overhead allocation for personnel ----------- ------------ ------------ -----------
Total $ $ $ $
</TABLE>
<PAGE>
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the Funds' prospectus
under the headings "How to Purchase Shares" and "How to Redeem Shares." All of
that information is incorporated herein by reference.
NET ASSET VALUE. In computing the net asset value of each Fund,
portfolio securities, including options, that are traded on a national
securities exchange and securities reported on the NASDAQ National Market
System are valued at the last reported sales price. Securities traded in the
over-the-counter market and listed securities for which no sales were reported
are valued at the mean of the most recently quoted bid and asked prices. Each
outstanding futures contract is valued at the official settlement price for
the contract on the exchange on which the contract is traded, except that if
the market price of the contract has increased or decreased by the maximum
amount permitted on the valuation date ("up or down the limit"), the contract
is valued at a fair value as described below. Short-term obligations with
maturities of 60 days or less are valued at amortized cost.
When market quotations are not readily available for a Fund's
securities, such securities are valued at a fair value following procedures
approved by the board of trustees. These procedures include determining fair
value on the basis of valuations furnished by pricing services approved by the
board of trustees, which include market transactions for comparable securities
and various relationships between securities which are generally recognized by
institutional traders, as well as on the basis of appraisals received from a
pricing service using a computerized matrix system, or appraisals derived from
information concerning the securities or similar securities received from
recognized dealers in those securities.
Each Fund's net asset value is determined only on days on which the
New York Stock Exchange (the "NYSE") is open for trading. That Exchange is
regularly closed on Saturdays and Sundays and on New Year's Day, the third
Monday in February, Good Friday, the last Monday in May, Independence Day,
Labor Day, Thanksgiving and Christmas. If one of these holidays falls on a
Saturday or Sunday, the NYSE will be closed on the preceding Friday or the
following Monday, respectively.
Securities that are principally traded in a foreign market are valued
as of the close of the appropriate exchange or other designated time. Trading
in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the
close of business on each day on which the NYSE is open. Trading of these
securities may not take place on every NYSE business day. In addition, trading
may take place in various foreign markets on Saturdays or on other days when
the NYSE is not open and on which the Fund's net asset value is not
calculated. Therefore, such calculation does not take place contemporaneously
with the determination of the prices of many of the portfolio securities used
in such calculation and the value of the Fund's portfolio may be significantly
affected on days when shares of the Fund may not be purchased or redeemed.
<PAGE>
REDEMPTION IN KIND. The Funds have elected to be governed by Rule
18f-1 under the Investment Company Act of 1940 pursuant to which they are
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1%
of the net asset value of a Fund during any 90-day period for any one
shareholder. Redemptions in excess of these amounts will normally be paid in
cash, but may be paid wholly or partly by a distribution in kind of
securities.
PERFORMANCE INFORMATION
Total Return. From time to time the Funds may quote total return
figures. "Total Return" for a period is the percentage change in value during
a period of an investment in Fund shares, including the value of shares
acquired through reinvestment of all dividends and capital gains
distributions. "Average Annual Total Return" is the average annual compounded
rate of change in value represented by the Total Return for the period.
Average Annual Total Return will be computed as follows:
ERV = P(1+T)n
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 investment
made at the beginning of the period, at the end of the
period (or fractional portion thereof)
Total Return (taking into account the effect of the sales charge) and
Average Annual Total Return for the Funds (other than Global Growth and Income
Fund, which had not commenced operations) was as shown below for the following
periods ended March 31, 1996.
<TABLE>
<CAPTION>
Average Annual
Total Return Total Return
------------ --------------
<S> <C> <C>
Strategic Income Fund
One year...................................
Five years.................................
Life of Fund...............................
(September 4, 1990)
Convertible Fund
One year...................................
Five years.................................
Life of Fund...............................
(June 21, 1985)
Growth and Income Fund
One year...................................
Five years.................................
Life of Fund...............................
(September 22, 1988)
Growth Fund
One year...................................
Five years.................................
Life of Fund...............................
(September 4, 1990)
</TABLE>
YIELD. Each Fund other than Growth Fund may also quote yield figures.
The yield of a Fund is calculated by dividing its net investment income per
share (a hypothetical figure as defined in SEC rules) during a 30-day period
by the net asset value per share on the last day of the period. The yield
formula provides for semiannual compounding, which assumes that net investment
income is earned and reinvested at a constant rate and annualized at the end
of a six-month period. The yield is not based on actual dividends paid.
<PAGE>
Yield will be computed as follows:
YIELD = 2[((a-b/cd)+1)6-1]
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
The annualized yield of Strategic Income Fund for the 30 days ended
March 31, 1996 was ____%.
The figures quoted assume reinvestment of all dividends and
distributions. Quotations of Average Annual Total Return take into account the
effect of any sales charge on the amount available for investment or
redemption; quotations of Total Return will indicate whether or not the effect
of the sales charge is included. Income taxes are not taken into account. The
figures will not necessarily be indicative of future performance. The
performance of a Fund is a result of conditions in the securities markets,
portfolio management, and operating expenses. Although information such as
yield and total return is useful in reviewing a Fund's performance and in
providing some basis for comparison with other investment alternatives, it
should not be used for comparison with other investments using different
reinvestment assumptions or time periods.
In advertising and sales literature, the performance of a Fund may be
compared with that of other mutual funds, indexes or averages of other mutual
funds, indexes of related financial assets or data, other accounts or
partnerships managed by Calamos Asset Management, Inc., and other competing
investment and deposit products available from or through other financial
institutions. The composition of these indexes, averages or accounts differs
from that of the Funds. Comparison of a Fund to an alternative investment
should consider differences in features and expected performance.
<PAGE>
All of the indexes and averages noted below will be obtained from the
indicated sources or reporting services, which the Funds generally believe to
be accurate. A Fund may also note its mention (including performance or other
comparative rankings) in newspapers, magazines, or other media from time to
time. However, the Funds assume no responsibility for the accuracy of such
data. Newspapers and magazines which might mention the Funds include, but are
not limited to, the following:
Barron's Money
Business Week Mutual Fund Letter
Changing Times Mutual Fund Values (Morningstar)
Chicago Tribune Newsweek
Chicago Sun-Times The New York Times
Crain's Chicago Business Pensions and Investments
Consumer Reports Personal Investor
Consumer Digest Stanger Reports
Financial World Time
Forbes USA Today
Fortune U.S. News and World Report
Investor's Daily The Wall Street Journal
Los Angeles Times
Each Fund may compare its performance to the Consumer Price Index
(All Urban), a widely recognized measure of inflation.
The performance of a Fund may be compared to the following indexes or
averages: CONVERTIBLE FUND AND GROWTH AND INCOME FUND - Standard & Poor's 400
MidCap Index, Value Line Index, Lipper Balanced Fund Index, Lipper Convertible
Fund Index, Lipper Growth and Income Index, Lehman Brothers
Government/Corporate Index; STRATEGIC INCOME FUND - Lipper Long-Term Income
Fund Index, Lehman Brothers Corporate/Government Index, 30-day Treasury Bills;
GROWTH FUND - Standard & Poor's 500 Stock Index, Value Line Index, Lipper
Growth Fund Average; GLOBAL GROWTH AND INCOME FUND - Morgan Stanley Capital
International World Index. The performance of a Fund may also be compared to
the Russell 2000 Index, the Wilshire Small Growth Index, and the Fisher
Small-Cap Growth Index, all supplied by the Carmack Group. All three of these
indexes represent equity investments in smaller-capitalization stocks.
<PAGE>
The Lipper averages are unweighted averages of total return
performance of mutual funds as classified, calculated and published by Lipper
Analytical Services, Inc. ("Lipper"), an independent service that monitors the
performance of more than 1,000 funds. The Funds may also use comparative
performance as computed in a ranking by Lipper or category averages and
rankings provided by another independent service. Should Lipper or another
service reclassify a Fund to a different category or develop (and place a Fund
into) a new category, that Fund may compare its performance or ranking against
other funds in the newly assigned category, as published by the service.
Moreover, each Fund may compare its performance or ranking against all funds
tracked by Lipper or another independent service.
To illustrate the historical returns on various types of financial
assets, the Portfolios may use historical data provided by Ibbotson
Associates, Inc. ("Ibbotson"), a Chicago-based investment firm. Ibbotson
constructs (or obtains) very long-term (since 1926) total return data
(including, for example, total return indexes, total return percentages,
average annual total returns and standard deviations of such returns) for
common stocks, small company stocks, long-term corporate bonds, long-term
government bonds, intermediate-term government bonds, U.S. Treasury bills and
Consumer Price Index.
<PAGE>
TRANSFER AGENT
For its services as transfer agent and dividend disbursing agent for
the Trust, Calamos Asset Management, Inc. ("CAM") receives from each Fund an
annual fee of $16.00 for each shareholder account of that Fund. The board of
trustees believes the charges by CAM to the Funds are comparable to those of
others performing similar services.
CAM records all sales, transfers and redemptions of shares of each
Fund, disburses dividends of the Funds and performs other recordkeeping
functions. CAM is responsible for all personnel, office space and equipment
expenses related to the performance of these services for the Funds. The Funds
pay all other out-of-pocket expenses, including postage, mailing and
stationery expenses.
DISTRIBUTOR
Calamos Financial Services, Inc. ("CFS"), a broker-dealer whose sole
shareholder and principal officer is John P. Calamos, serves as distributor
for the Funds, subject to change by a majority of the "non-interested"
trustees at any time. CFS is located at 1111 East Warrenville Road,
Naperville, Illinois 60563-1493. CFS is responsible for all purchases, sales,
redemptions and other transfers of shares of the Funds without any charge to
the Funds except the fees paid to CFS under the Distribution Plans. CFS is
also responsible for all expenses incurred in connection with its performance
of services for the Funds, including, but not limited to, personnel, office
space and equipment, telephone, postage and stationery expenses. CFS receives
commissions from sales of shares of the Funds that are not expenses of the
Funds but represent sales commissions added to the net asset value of shares
purchased from the Funds. See "How to Purchase Shares -- Offering Price" in
the prospectus. CFS also receives brokerage commissions for executing
portfolio transactions for the Funds. See "Portfolio Transactions." CFS
received and retained commissions on the sale of shares of the Funds as shown
below during the indicated periods:
<PAGE>
<TABLE>
<CAPTION>
Eleven
Year Months Year
Ended Ended Ended
3/31/96 3/31/95 4/30/94
--------- -------------- ----------------
<S> <C> <C> <C>
Strategic Income Fund
Commissions received $ 3,505 $ 5,513
Commissions retained 698 1,575
Convertible Fund
Commissions received 5,191 16,128
Commissions retained 1,015 4,379
Growth and Income Fund
Commissions received 7,324 16,005
Commissions retained 1,264 5,159
Growth Fund
Commissions received 2,539 4,829
Commissions retained 1,607 3,089
</TABLE>
CFS has the exclusive right to distribute shares of the Funds through
affiliated and unaffiliated dealers. The obligation of CFS is an agency or
"best efforts" arrangement, which does not obligate CFS to sell any stated
number of shares.
In connection with the exchange privilege, CFS acts as a service
organization for the Money Market Portfolio, Government Securities Portfolio
and Tax-Exempt Portfolio, which are portfolios of Cash Account Trust. For its
services it receives from the portfolios or their affiliates fees at a rate of
up to .50% in the case of Tax-Exempt Portfolio, and .60% in the case of the
other two portfolios, of the average annual net assets of each account in
those portfolios established through the exchange plan.
CFS from its own resources may pay additional compensation to persons
who sell Fund shares or provide subaccounting and shareholder servicing. Such
additional compensation may amount to as much as 25% of the offering price,
depending on the volume of sales or anticipated volume of sales attributable
to the recipient of the commission, and up to .10% of the annual average value
of shares held in such accounts.
<PAGE>
PORTFOLIO TRANSACTIONS
See "Management of the Funds -- The Adviser" and "Portfolio
Transactions" in the prospectus.
Portfolio transactions on behalf of the Funds effected on stock
exchanges involve the payment of negotiated brokerage commissions. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Funds usually includes an
undisclosed dealer commission or mark-up. In underwritten offerings, the price
paid by the Funds includes a disclosed, fixed commission or discount retained
by the underwriter or dealer.
In executing portfolio transactions, the Adviser uses its best
efforts to obtain for the Funds the most favorable price and execution
available. In seeking the most favorable price and execution, the Adviser
considers all factors it deems relevant, including price, the size of the
transaction, the nature of the market for the security, the amount of
commission, the timing of the transaction taking into account market prices
and trends, the execution capability of the broker-dealer and the quality of
service rendered by the broker-dealer in other transactions.
The trustees have determined that portfolio transactions for the
Funds may be executed through CFS if, in the judgment of the Adviser, the use
of CFS is likely to result in prices and execution at least as favorable to
the Funds as those available from other qualified brokers and if, in such
transactions, CFS charges the Funds commission rates consistent with those
charged by CFS to comparable unaffiliated customers in similar transactions.
The board of trustees, including a majority of the trustees who are not
"interested" trustees, has adopted procedures that are reasonably designed to
provide that any commissions, fees or other remuneration paid to CFS are
consistent with the foregoing standard. The Funds will not effect principal
transactions with CFS.
In allocating the Funds' portfolio brokerage transactions to
unaffiliated broker-dealers, the Adviser may take into consideration the
research, analytical, statistical and other information and services provided
by the broker-dealer, such as general economic reports and information,
reports or analyses of particular companies or industry groups, market timing
and technical information, and the availability of the brokerage firm's
analysts for consultation. Although the Adviser believes these services have
substantial value, they are considered supplemental to the Adviser's own
efforts in the performance of its duties under the management agreement. As
permitted by Section 28(e) of the Securities Exchange Act of 1934 ("1934
Act"), the Adviser may pay a broker-dealer that provides brokerage and
research services an amount of commission for effecting a securities
transaction for a Fund in excess of the commission that another broker-dealer
would have charged for effecting that transaction if the amount is believed by
the Adviser to be reasonable in relation to the value of the overall quality
of the brokerage and research services provided. Other clients of the Adviser
may indirectly benefit from the availability of these services to the Adviser,
and the Funds may indirectly benefit from services available to the Adviser as
a result of transactions for other clients.
<PAGE>
The following table shows for each Fund for the past three fiscal
years: (i) the aggregate principal amount of all portfolio transactions; (ii)
the percentage of the aggregate principal amount of all portfolio transactions
executed by CFS as agent; (iii) the aggregate principal amount of all
transactions executed on an agency basis, as to which the Fund paid brokerage
commissions; (iv) the percentage of the aggregate principal amount of such
transactions executed through CFS; (v) the aggregate brokerage commissions
(excluding the gross underwriting spread on securities purchased in
underwritten public offerings) paid to all brokers; (vi) the aggregate
brokerage commissions paid to CFS; and (vii) the percentage of aggregate
brokerage commissions paid to CFS.
<TABLE>
<CAPTION>
(i) (ii) (iii) (iv) (v) (vi) (vii)
--- ---- ----- ---- --- ---- -----
% of (i) % of (iii)
Amount Executed Amount Executed Commissions (vi)
of All through of Agency through Aggregate Paid as %
Transactions CFS Transactions CFS Commissions to CFS of (v)
------------ --- ------------ --- ----------- ------ ------
Strategic Income Fund:
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended 3/31/96 $ % $ % $ $ %
11 mos. ended 3/31/95 4,367,420 44 1,924,842 44 7,090 7,010 99
Year ended 4/30/94 5,928,489 35 2,101,091 100 7,498 7,498 100
Convertible Fund:
Year ended 3/31/96
11 mos. ended 3/31/95 13,968,604 34 4,979,389 97 16,754 15,702 94
Year ended 4/30/94 25,582,534 27 7,967,561 86 18,738 15,832 84
Growth and Income Fund:
Year ended 3/31/96
11 mos. ended 3/31/95 5,481,305 44 2,544,532 95 6,155 5,949 97
Year ended 4/30/94 12,357,052 37 4,715,465 96 10,806 10,536 98
Growth Fund:
Year ended 3/31/96
11 mos. ended 3/31/95 3,485,833 95 3,353,543 100 13,668 13,668 100
Year ended 4/30/94 3,720,379 79 2,938,684 100 13,317 13,317 100
</TABLE>
Of the aggregate brokerage commissions paid during the eleven months ended
March 31, 1996, Convertible Fund and Growth and Income Fund paid commissions
of $____ and $____, respectively, to brokers who furnished research services.
Strategic Income Fund and Growth Fund paid no commissions to brokers
furnishing research.
<PAGE>
TAXATION
The following is only a summary of certain tax considerations
affecting the Funds and their shareholders. No attempt is made to present a
detailed explanation of the tax treatment of the Funds or their shareholders,
and the discussion here is not intended as a substitute for careful tax
planning. Investors are urged to consult their tax advisers with specific
reference to their own tax situations.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY. Each Fund intends to
continue to qualify and elect to be treated as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, a Fund will be exempt from federal
income tax on its net investment income and capital gains that it distributes
to shareholders, provided that it distributes at least 90% of its investment
company taxable income (net investment income and the excess of net short-term
capital gain over net long-term capital loss) for the year (the "Distribution
Requirement") and satisfies certain other requirements of the Code described
below. Distributions of investment company taxable income made during the
taxable year or, under certain specified circumstances, after the close of the
taxable year will satisfy the Distribution Requirement.
In addition to satisfaction of the Distribution Requirement, a Fund
must (1) derive at least 90% of its gross income from dividends, interest,
certain payments with respect to securities loans, gains from the sale or
other disposition of stock or securities and other income derived with respect
to its business of investing in such stock or securities (the "Income
Requirement"); and (2) derive less than 30% of its gross income (exclusive of
certain offsetting gains from "designated hedge" transactions that are
described below) from the sale or other disposition of stock, securities (as
defined in Section 2(a)(36) of the 1940 Act) or options held for less than
three months (the "Short-Short Test"). There is currently pending in Congress
a proposal to repeal the Short-Short Test.
In addition, a Fund must diversify its holdings so that, at the close
of each quarter of its taxable year, at least 50% of the value of its assets
consists of cash and cash items, U.S. Government securities, securities of
other regulated investment companies, and securities of other issuers (as to
which the Fund has not invested more than 5% of the value of its total assets
in securities of such issuer and as to which the Fund does not hold more than
10% of the outstanding voting securities of such issuer), and no more than 25%
of the value of its total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other
regulated investment companies), or of two or more issuers which the Fund
controls and which are engaged in the same or similar trades or businesses
(the "Diversification Requirement").
<PAGE>
Because of the Short-Short Test, a Fund may have to limit the sale of
appreciated (but not depreciated) securities that it has held for less than
three months. The short sale of (including for this purpose the acquisition of
a put option) (1) stock or securities held on the date of the short sale or
acquired after the short sale and on or before the date of closing thereof or
(2) stock or securities which are "substantially identical" to stock or
securities held on the date of the short sale or acquired after the short sale
and on or before the date of the closing thereof may reduce the holding period
of such stock or securities for purposes of the Short-Short Test. Where
preferred stock or bonds are convertible into common stock of the same
corporation, the relative values, price changes and other circumstances may be
such as to cause the bonds or preferred stock and the common stock to be
treated as "substantially identical" for this purpose.
Any increase in value of a position that is part of a "designated
hedge" will be offset by any decrease in value (whether realized or not) of
the offsetting hedging position during the period of such hedge for purposes
of the Short-Short Test. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of the Short-Short Test.
Each Fund anticipates engaging in hedging transactions that qualify as
designated hedges. However, because of the failure of the U.S. Treasury to
promulgate regulations as authorized by the Code, it is not clear at the
present time whether this treatment will be available to all of a Fund's
hedging transactions. To the extent a Fund's transactions do not qualify as
designated hedges, the Fund's investments in short sales, options or other
transactions may be limited.
A Fund's option and hedging activities are subject to special
provisions of the Code that may, among other things, limit the use of losses
of the Fund and affect the holding period of the securities held by the Fund
and the nature of the income realized by the Fund. These provisions may also
require a Fund to mark-to-market some of the positions in its portfolio (i.e.,
treat them as if they were closed out), which may cause a Fund to recognize
income without the cash to distribute such income. A Fund and its shareholders
may recognize taxable income as a result of the Fund's hedging activities, a
portion of which may be treated as long-term capital gains. Each Fund will
monitor its transactions and may make certain tax elections in order to
mitigate the effect of these rules and prevent disqualification of the Fund as
a regulated investment company.
<PAGE>
TAXATION OF DISTRIBUTIONS. Each Fund distributes substantially all of
its net investment income and net short-term capital gains for any taxable
(i.e., fiscal) year. Distributions will be taxable to shareholders as
described below, regardless of whether such distributions are paid in cash or
are reinvested in shares. Shareholders receiving a distribution from a Fund in
the form of additional shares will generally be treated as receiving a taxable
distribution in an amount equal to the fair market value of the shares
received on the distribution date and will take a tax basis for such shares
equivalent to the amount deemed to have been distributed to them. Each Fund
intends to distribute to shareholders its excess of net long-term capital gain
over net short-term capital loss ("net capital gain") for each taxable year as
a capital gain dividend. A capital gain dividend will be taxable to
shareholders as long-term capital gain, regardless of the length of time the
shareholder has held his shares, whether the net capital gain distributed by
the Fund was recognized prior to the date on which a shareholder acquired
shares and whether the distribution was paid in cash or reinvested in shares.
The aggregate amount of distributions designated by the Fund as capital gain
dividends may not exceed the net capital gain of the Fund for any taxable
year, determined by excluding any net capital loss or net long-term capital
loss attributable to transactions occurring after October 31 of such year and
by treating any such loss as if it arose on the first day of the following
taxable year.
Dividends (whether received in cash or reinvested in shares) will
generally be subject to taxation when received. Dividends declared in October,
November or December of any year payable to shareholders of record on a
specified date in such a month, however, will be deemed to have been received
by the shareholders and paid by the Fund on December 31 of such year, if such
dividends are paid during January of the following year.
Each Fund is required in certain cases to withhold and remit to the
United States Treasury a portion of dividends paid to any shareholder (1) who
has provided either an incorrect tax identification number or no number at
all, (2) who is subject to backup withholding by the Internal Revenue Service
for failure to report the receipt of interest or dividend income properly, or
(3) who has failed to certify to the Fund that such shareholder is not subject
to backup withholding or that such shareholder is an "exempt recipient."
Shareholders will be advised annually as to the U.S. federal income
tax consequences of distributions made during the year.
<PAGE>
CORPORATE INVESTORS. In the case of corporate shareholders, Fund
distributions (other than capital gain dividends) for any taxable year
generally will qualify for the 70% dividends received deduction for regular
federal income tax purposes to the extent of the gross amount of eligible
dividends received by the Fund for the year with respect to stock that has
been held for more than 45 days (more than 90 days in the case of certain
preferred stock). Legislation has been introduced from time to time to reduce
the percentage of dividends entitled to the dividends received deduction;
however, it is not known whether Congress will consider any such legislation
in the near future. A Fund's investment policies may affect the availability
of the dividends received deduction with respect to dividends paid on certain
stocks in that Fund's portfolio. For example, the holding period of any
dividend paying stock will not be deemed to include any day more than 45 days
(or more than 90 days in the case of certain preferred stock) after the date
on which the stock becomes ex-dividend or any period in which a Fund holds a
put option on, has contracted to sell, or has made but not closed a short sale
of, "substantially identical" stock or securities. Convertible bonds or
convertible preferred stock may be deemed "substantially identical" to common
stock for purposes of this rule. Each Fund will provide a statement annually
to shareholders of the amount of dividends eligible for the dividends received
deduction.
Corporate investors should also note that although the dividends
received deduction is available to reduce regular corporate federal income tax
liability, any amount so deducted may increase the tax base upon which the
corporate alternative minimum tax and environmental tax is imposed.
ALLOCATION AMONG FUNDS
The assets received by the Trust from the sale of shares of each
Fund, and all income, earnings, profits and proceeds thereof, subject only to
the rights of creditors, are specifically allocated to that Fund, and
constitute the underlying assets of that Fund. The underlying assets of each
Fund are required to be segregated on the books of account, and are to be
charged with the expense in respect to that Fund and with a share of the
general expenses of the Trust. Any general expenses of the Trust not readily
identifiable as belonging to a particular Fund shall be allocated by or under
the direction of the trustees in such manner as the trustees determine to be
fair and equitable. Each share of each Fund represents an equal proportionate
interest in that Fund with each other share and is entitled to such dividends
and distributions out of the income belonging to that Fund as are declared by
the trustees. Upon any liquidation of a Fund, shareholders thereof are
entitled to share pro rata in the net assets belonging to that Fund available
for distribution.
<PAGE>
CERTAIN SHAREHOLDERS
The only persons known to own beneficially (as determined in
accordance with rule 13d-3 under the 1934 Act) 5% or more of the outstanding
shares of any Fund at May 31, 1996 were:
<TABLE>
<CAPTION>
Percentage of
Number Outstanding Shares
Shareholder of Shares of the Funds
----------- --------- ------------
<S> <C> <C>
STRATEGIC INCOME FUND
Harvey S. Johnson and Elaine H. Johnson Joint
Revocable Inter Vivos Trust
5517 San Luis Drive
North Fort Myers, Florida 33903
Lincoln Trust Company, Custodian for Donald E.
Lindley
P.O. Box 5831
Denver, Colorado 80217
Vernon B. Marquez Testamentary Trust u/w Caryl
Broome Marquez
Jefferson Guaranty Bank, Trustee
P.O. Box 8527, Suite 301
Metairie, Louisiana 70011
Prudential Securities FBO Marjorie K. Flannery,
Trustee of Marjorie K. Flannery Revocable Trust
dtd 3/28/84
1365 Elmhurst Drive, N.E.
Cedar Rapids, Iowa 52402-4771
GROWTH AND INCOME FUND
Calamos Financial Services, Inc.
401(k) Profit Sharing Plan and Trust*
1111 East Warrenville Road
Naperville, Illinois 60563-1493
John P. Calamos*
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Nick P. Calamos*
1111 East Warrenville Road
Naperville, Illinois 60563-1493
<PAGE>
GROWTH FUND
K. R. Bertlet and D.M. Cravens
P/F TTEE for PS/MP Plans
c/o Triad Consultants, Inc.
175 Olde Half Day Road
Lincolnshire, Illinois 60069
Calamos Financial Services, Inc.
401(k) Profit Sharing Plan and Trust*
Calamos Financial Services, Inc.*
1111 East Warrenville Road
Naperville, Illinois 60563-1493
John P. Calamos*
FirstBank, IRA FBO
M. Clark Colvard, Jr.
102 Gross Crescent Circle, Suite 300
Fort Oglethorpe, Georgia 30742
<FN>
- ------------------
* John P. Calamos and Nick P. Calamos are the trustees of the Calamos
Financial Services, Inc. 401(k) Profit Sharing Plan and Trust.
The shares owned beneficially by Messrs. John Calamos and Nick
Calamos include the shares owned by the Calamos Financial Services, Inc.
401(k) Profit Sharing Plan and Trust. The shares shown as owned
beneficially by Mr. John Calamos also include the shares shown as
owned by Calamos Financial Services, Inc.
</FN>
</TABLE>
At May 31, 1996 the trustees and officers of the Trust as a group
owned beneficially _____ shares (___%) of Strategic Income Fund, _____ shares
(___%) of Convertible Fund, _____ shares (___%) of Growth and Income Fund and
_____ shares (___%) of Growth Fund.
<PAGE>
CUSTODIAN
Prudential Securities, Inc., One New York Plaza, New York, New York
10292, is the custodian for the assets of the Funds. The custodian is
responsible for holding all cash and securities of the Funds, directly or
through a book entry system, delivering and receiving payment for securities
sold by the Funds, receiving and paying for securities purchased by the Funds,
collecting income from investments of the Funds and performing other duties,
all as directed by authorized persons of the Trust. The custodian does not
exercise any supervisory functions in such matters as the purchase and sale of
securities by a Fund, payment of dividends or payment of expenses of a Fund.
INDEPENDENT AUDITORS
Ernst & Young LLP, Sears Tower, 233 South Wacker Drive, Chicago,
Illinois 60606, audits and reports on the Funds' annual financial statements,
reviews certain regulatory reports and the Funds' federal income tax returns,
and performs other professional accounting, tax and advisory services when
engaged to do so by the Funds.
GENERAL INFORMATION
Each Fund is a series of CFS Investment Trust. Calamos Growth and
Income Fund began operations on September 22, 1988. It was named Kalliston
Convertible Total Return Fund until September 1, 1990, Calamos Convertible
Total Return Fund from that date until April 30, 1992 and Calamos Small/Mid
Cap Convertible Fund from May 1, 1992 to April 30, 1994. Calamos Strategic
Income Fund and Calamos Growth Fund began operations on September 4, 1990.
Calamos Convertible Fund began operations on June 21, 1985 as a series of
Noddings-Calamos Investment Trust (named Calamos Investment Trust from 1987
until May 1, 1992) until it became a series of CFS Investment Trust on May 1,
1992; it was named Noddings-Calamos Convertible Fund until 1987 and Calamos
Convertible Income Fund since 1987. As of March 18, 1996 all shares of each
Fund then outstanding were re-designated as Class A shares of that Fund.
FINANCIAL STATEMENTS
The 1996 annual report of the Trust, a copy of which accompanies this
Statement of Additional Information, contains financial statements, notes
thereto, supplementary information entitled "Financial Highlights" for each of
the Funds other than Global Growth and Income Fund and a report of independent
auditors, all of which (but no other part of the annual report) is
incorporated herein by reference.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PART C OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
(i) Financial statements included in Part A of this
registration statement:
None.
(ii) Financial statements included in Part B of this
registration statement:
The following schedule and statements of each of
Calamos Strategic Income Fund, Calamos Convertible
Fund, Calamos Growth and Income Fund and Calamos
Growth Fund:
Schedule of investments - March 31, 1995
Statement of assets and liabilities - March
31, 1995 Statement of operations - eleven
months ended March 31, 1995 Statement of
changes in net assets - eleven months ended
March 31, 1995 and year ended April 30, 1994
as well as the report of independent auditors and
notes to financial statements, all of which are
incorporated by reference to registrant's annual
report to shareholders for the eleven months ended
March 31, 1995. (A copy of that annual report was
attached to post-effective amendment no. 13 to this
registration statement but, except for those
portions incorporated by reference, was furnished
for the information of the Commission and was not
deemed to be filed as part of this registration
statement.)
(iii) Financial Statements included in Part C of this
amendment:
None
Note: Schedules II, III, IV, V, VI and VII are omitted as
the required information is not present, except
with respect to Calamos Strategic Income Fund, as
to which Schedule V is presented in the Schedules
of Investments at September 30, 1995 and March 31,
1995.
<PAGE>
(b) EXHIBITS:
As used herein, the term "Registration Statement"
means the registration statement of registrant on
form N-1A under the Securities Act of 1933,
registration No. 33-19228, and the terms
"Pre-effective Amendment" and "Post-effective
Amendment" refer to a pre-effective and
post-effective amendment to the Registration
Statement.
1.1 Agreement and Declaration of Trust (exhibit 1 to
Registration Statement*)
1.2 Amendment no. 1 to Agreement and Declaration of
Trust (exhibit 1.2 to Pre-effective
Amendment No. 3*)
1.3 Amendment no. 2 to Agreement and Declaration of
Trust (exhibit 1.3 to Post-effective
Amendment No. 4*)
1.4 Amendment no. 3 to Agreement and Declaration of
Trust (exhibit 1.4 to Post-effective
Amendment No. 8*)
1.5 Amendment no. 4 to Agreement and Declaration of
Trust
1.6 Amendment no. 5 to Agreement and Declaration of
Trust
1.7 Amendment no. 6 to Agreement and Declaration of
Trust
2 Bylaws (exhibit 2 to Registration Statement*)
3 None
4 None
<PAGE>
5.1 Form of management agreement with Calamos Asset
Management, Inc. dated July 5, 1988 - Calamos
Growth and Income Fund (exhibit 5 to Pre-effective
Amendment No. 3*)
5.2 Notification dated August 22, 1990 pursuant to
section 1(b) of management agreement for series
designated Calamos Strategic Income Fund and
Calamos Growth Fund (exhibit 5.1 to Post-effective
Amendment No. 5*)
5.3 Form of notification pursuant to section 1(b) of
management agreement for series designated Calamos
Convertible Fund (exhibit 5.2 to Post-effective
Amendment No. 8*)
5.4 Form of notification pursuant to section 1(b) of
management agreement for series designated
Calamos Global Growth and Income Fund
6.1 Form of distribution agreement with Calamos
Financial Services, Inc. dated June __, 1996
6.2 Form of selling group agreement, revised 1996**
7 None
8 Custody agreement with Prudential-Bache Securities,
Inc. dated April 20, 1990 (exhibit 8 to
Post-Effective Amendment No. 4*)
9.1 Form of transfer agency agreement with Calamos Asset
Management, Inc. (exhibit 9 to Registration
Statement*)
9.2 Form of appointment of transfer agent - Calamos
Strategic Income Fund and Calamos Growth Fund
(exhibit 9.1 to Post-effective Amendment No. 4*)
9.3 Form of appointment of transfer agent - Calamos
Convertible Fund (exhibit 9.3 to Post-effective
Amendment No. 8*)
9.4 Form of appointment of transfer agent dated June __,
1996 - Calamos Global Growth and Income Fund
9.5 Use of name agreement dated August 23, 1990
(exhibit 9.2 to Post-effective Amendment No. 5*)
<PAGE>
10 Opinion of Goodwin, Procter & Hoar dated April 2,
1996
11 Consent of independent auditors
12 None
13.1 Subscription agreement - Calamos Growth and Income
Fund (exhibit 13.1 to Pre-effective Amendment
No. 3*)
13.2 Organizational expense agreement - Calamos Growth
and Income Fund (exhibit 13.2 to Pre-effective
Amendment No. 2*)
13.3 Form of subscription agreement - Calamos Strategic
Income Fund and Calamos Growth Fund (exhibit 13.3
to Post-effective Amendment No. 4*)
13.4 Form of organizational expense agreement - Calamos
Strategic Income Fund and Calamos Growth Fund
(exhibit 13.4 to Post-effective Amendment No. 4*)
13.5 Form of organizational expense agreement dated
June __, 1996 - Calamos Global Growth and Income
Fund
14 CFS Investment Trust Individual Retirement Account
Prototype Plan, disclosure statement and application
(exhibit 14 to Post-effective Amendment No. 8*)
15 Form of distribution plan dated June __, 1996
16 Schedule of computation of performance quotations
(exhibit 16 to Post-effective Amendment No. 8*)
17 Not applicable
18.1 Application forms and redemption request
(exhibit 17 to Post-effective Amendment No. 8*)
18.2 Form of automatic investment plan application
(exhibit 17.1 to Post-effective
Amendment No. 4*)
18.3 Form of systematic withdrawal application
(exhibit 17.2 to Post-effective Amendment No. 4*)
18.4 Form of redemption request (exhibit 17.3 to
Post-effective Amendment No. 4*)
- --------------------
*Incorporated by reference.
**To be filed by amendment.
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The information in the prospectuses under the captions
"Management of the Funds - Adviser" and "The Trust and Its Shares - Certain
Shareholders" and in the Statement of Additional Information under the caption
"Management" and "Certain Shareholders" is incorporated by reference.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of January 31, 1996 there were 76 record holders of the
series of registrant's shares designated Calamos Strategic Income Fund; 743
record holders of the series designated Calamos Convertible Fund; 182 record
holders of the series of registrant's shares designated Calamos Growth and
Income Fund; and 74 record holders of the series of registrant's shares
designated Calamos Growth Fund. No shares of the series designated Calamos
Global Growth and Income Fund had been issued at that date.
ITEM 27. INDEMNIFICATION
Article VI of the agreement and declaration of trust of
registrant (exhibit 1 to this registration statement which is incorporated
herein by reference) provides that the Trust shall indemnify (from the assets
of the Sub-Trust or Sub-Trusts in question) each of its Trustees and officers
(including persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise [hereinafter referred to as a "Covered
Person"]) against all liabilities, including but not limited to amounts paid
in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such person may be or
may have been threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined in one of the manners
described below, that such covered Person (i) did not act in good faith in the
reasonable belief that such Covered Person's action was in or not opposed to
the best interests of the Trust or (ii) had acted with willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of such Covered Person's office (either and both of the conduct
described in (i) and (ii) being referred to hereafter as "Disabling Conduct").
<PAGE>
A determination that the Covered Person is not entitled to
indemnification due to Disabling Conduct may be made by (i) a final decision
on the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified was not liable by reason of Disabling
Conduct, (ii) dismissal of a court action or an administrative proceeding
against a Covered Person for insufficiency of evidence of Disabling Conduct,
or (iii) a reasonable determination, based upon a review of the facts, that
the indemnitee was not liable by reason of Disabling Conduct by (a) a vote of
a majority of a quorum of Trustees who are neither "interested persons" of the
Trust as defined in section 2(a)(19) of the Investment Company Act of 1940 nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion. Expenses, including accountants' and counsel fees so incurred by any
such Covered Person (but excluding amounts paid in satisfaction of judgments,
in compromise or as fines or penalties), may be paid from time to time in
advance of the final disposition of any such action, suit or proceeding,
provided that the Covered Person shall have undertaken to repay the amounts so
paid to the Sub-Trust in question if it is ultimately determined that
indemnification of such expenses is not authorized under this Article VI and
(i) the Covered Person shall have provided security for such undertaking, (ii)
the Trust shall be insured against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of the disinterested Trustees who
are not a party to the proceeding, or an independent legal counsel in a
written opinion, shall have determined, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is reason to
believe that the Covered Party ultimately will be found entitled to
indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a trustee, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The information in the prospectus in the first two
paragraphs under the caption "Management of the Funds -- The Adviser" is
incorporated by reference.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Calamos Financial Services, Inc., distributor of
registrant's shares, also acts as distributor of
the shares of Calamos Investment Trust.
(b) The information in the statement of additional
information under the caption "Management --
Trustees and Officers" is incorporated by
reference.
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
John P. Calamos, President
CFS Investment Trust
1111 East Warrenville Road
Naperville, Illinois 60563-1493
ITEM 31. MANAGEMENT SERVICES
None
ITEM 32. UNDERTAKINGS
(a) Not applicable
(b) Registrant undertakes to file, within four to six
months after effectiveness of a post-effective
amendment containing a prospectus and statement of
additional information for Registrant's new series,
Calamos Global Growth and Income Fund, a further
post-effective amendment containing financial
statement of that Fund, which need not be audited.
(c) Registrant undertakes to furnish to each person to
whom a prospectus is delivered, upon request and
without charge, a copy of its latest annual report
to shareholders.
(d) Registrant undertakes, if required to do so by the
holders of at least 10% of the Registrant's
outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the
question of removal of a director or directors and
to assist in communications with other shareholders
as required by Section 16(c) of the Investment
Company Act of 1940.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant certifies that it has duly caused this
amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Naperville, Illinois on April 6,
1996.
CFS INVESTMENT TRUST
By /s/ John P. Calamos
---------------------------
John P. Calamos, President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ John P. Calamos Trustee and President (April 6, 1996)
John P. Calamos (principal executive
officer)
/s/ Richard J. Dowen Trustee (April 6, 1996)
Richard J. Dowen
/s/ Robert Frost Trustee (April 6, 1996)
Robert Frost
/s/ William A. Kaun Trustee (April 6, 1996)
William A. Kaun
/s/ Paul J. Marnell Trustee (April 6, 1996)
Paul J. Marnell
/s/ Helen L. Callaghan Treasurer (principal (April 6, 1996)
Helen L. Callaghan financial and accounting
officer)
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EXHIBIT INDEX
Exhibit
1.5 Amendment no. 4 to Agreement and Declaration of Trust
1.6 Amendment no. 5 to Agreement and Declaration of Trust
1.7 Amendment no. 6 to Agreement and Declaration of Trust
5.4 Form of notification pursuant to section 1(b) of management agreement
for series designated Calamos Global Growth and Income Fund
6.1 Form of distribution agreement with Calamos Financial Services, Inc.
dated June __, 1996
6.2 Selling Agreement.
9.4 Form of appointment of transfer agent dated June __, 1996 - Calamos
Global Growth and Income Fund
10 Opinion of Goodwin, Procter & Hoar dated April 2, 1996 - Calamos
Global Growth and Income Fund
11 Consent of independent auditors
13.5 Organizational expense agreement dated June __, 1996 - Calamos Global
Growth and Income Fund
15 Form of distribution plan dated June __, 1996
<PAGE>
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EXHIBIT 1.5
CFS INVESTMENT TRUST
Amendment No. 4 to
Agreement and Declaration of Trust
A trust known as CFS Investment Trust (the "Trust") was created by an
Agreement and Declaration of Trust dated December 21, 1987 by Robert M.
Slotky, Trustee, on behalf of himself and all other persons who became
trustees thereunder. Section 7.3 of that Agreement and Declaration of Trust
provides that the provisions of the Agreement and Declaration of Trust may be
amended at any time, so long as such amendment does not adversely affect the
rights of any Shareholder with respect to which such amendment is or purports
to be applicable and so long as such amendment is not in contravention of
applicable law, including the Investment Company Act of 1940, by an instrument
in writing signed by an officer of the Trust pursuant to the vote of a
majority of the then Trustees. Pursuant to the authority granted by Section
7.3 and Section 4.2 of the Agreement and Declaration of Trust and the
affirmative vote on February 22, 1996 of a majority of the Trustees of the
Trust:
There is hereby established a new Sub-Trust, designated
"Calamos Global Growth and Income Fund," the Shares of which shall
have the relative rights and preferences set forth in Section 4.2 of
the Agreement and Declaration of Trust.
* * * * *
IN WITNESS WHEREOF, the undersigned, a Trustee and Vice President of
the Trust, hereby certifies that the foregoing amendment was duly adopted by a
majority of the Trustees of the Trust on February 22, 1996 and has hereunto
set his hand and seal this 22nd day of February, 1996.
/s/ Paul J.
Marnell
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Paul J. Marnell
Trustee and Vice President,
CFS Investment Trust
<PAGE>
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EXHIBIT 1.6
CFS INVESTMENT TRUST
Amendment No. 5 to
Agreement and Declaration of Trust
A trust known as CFS Investment Trust (the "Trust") was created by an
Agreement and Declaration of Trust dated December 21, 1987 by Robert M.
Slotky, Trustee, on behalf of himself and all other persons who became
trustees thereunder. Section 7.3 of that Agreement and Declaration of Trust,
as heretofore amended (the "Agreement and Declaration of Trust"), provides
that the provisions of the Agreement and Declaration of Trust may be amended
at any time, so long as such amendment does not adversely affect the rights of
any Shareholder with respect to which such amendment is or purports to be
applicable and so long as such amendment is not in contravention of applicable
law, including the Investment Company Act of 1940, by an instrument in writing
signed by an officer of the Trust pursuant to the vote of a majority of the
then Trustees. Pursuant to the authority granted by Section 7.3 and Section
4.2 of the Agreement and Declaration of Trust and the affirmative vote on
March 18, 1996 of a majority of the Trustees of the Trust, the following
amendment to the Agreement and Declaration of Trust has been adopted:
1. Section 1.2(c) is amended to read as follows:
(c) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust and each Sub-Trust of the Trust and/or
any class of any Sub-Trust (as the context may require) shall be divided from
time to time;
2. Sections 1.2(d) - (j) are renumbered as Sections 1.2(e) - (k) and
the following Section 1.2(d) is added to Article I:
(d) "class" refers to any class of Shares of any Series or
Sub-Trust established and designated under or in accordance with the provisions
of Article IV; and
3. The first paragraph of Section 3.2 is amended to read as follows:
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. The Trustees in all
instances shall act as principals, and are and shall be free from the control
of the Shareholders. The Trustees shall have full power and authority to do
any and all acts and to make and execute any and all contracts and instruments
that they may consider necessary or appropriate in connection with the
management of the Trust. The Trustees shall not be bound or limited by present
or future laws or customs with regard to investment by trustees or
fiduciaries, but shall have full authority and absolute power and control over
the assets of the Trust and the business of the Trust to the same extent as if
the Trustees were the sole owners of the assets of the Trust and the business
in their own right, including such authority, power and control to do all acts
and things as they, in their uncontrolled discretion, shall deem proper to
accomplish the purposes of this Trust. Without limiting the foregoing, the
Trustees may adopt By-Laws not inconsistent with this Declaration of Trust
providing for the conduct of the business and affairs of the Trust and may
amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; they may sue or be sued in the name of the Trust;
they may from time to time in accordance with the provisions of Section 4.1
hereof establish Sub-Trusts, each such Sub-Trust to operate as a separate and
distinct investment medium and with separately defined investment objectives
and policies and distinct investment purposes; they may from time to time in
accordance with the provisions of Section 4.1 hereof establish classes of
Shares of any Series or Sub-Trust or divide the Shares of any Series or
Sub-Trust into classes; they may as they consider appropriate elect and remove
officers and appoint and terminate agents and consultants and hire and
terminate employees, any one or more of the foregoing of whom may be a
Trustee, and may provide for the
<PAGE>
compensation of all of the foregoing; they may appoint from their own number,
and terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may, when
the Trustees are not in session and subject to the 1940 Act, exercise some or
all of the power and authority of the Trustees as the Trustees may determine;
in accordance with Section 3.3 they may employ one or more advisers,
administrators, depositories and custodians and may authorize any depository
or custodian to employ subcustodians or agents and to deposit all or any part
of such assets in a system or systems for the central handling of securities
and debt instruments, retain transfer, dividend, accounting or Shareholder
servicing agents or any of the foregoing, provide for the distribution of
Shares by the Trust through one or more distributors, principal underwriters
or otherwise, and set record dates or times for the determination of
Shareholders or various of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers,
advisers, administrators, custodians, other agents, consultants and employees
of the Trust or the Trustees on such terms as they deem appropriate; and in
general they may delegate to any officer of the Trust, to any committee of the
Trustees and to any employee, adviser, administrator, distributor, depository,
custodian, transfer and dividend disbursing agent, or any other agent or
consultant of the Trust such authority, powers, functions and duties as they
consider desirable or appropriate for the conduct of the business and affairs
of the Trust, including without implied limitation, the power and authority to
act in the name of the Trust and any Sub-Trust and of the Trustees, to sign
documents and to act as attorney-in-fact for the Trustees.
4. The following Section 3.2(n) is added to Article III:
(n) Distribution Plans. To adopt on behalf of the Trust or any
Sub-Trust with respect to any class thereof a plan of distribution and related
agreements thereto pursuant to the terms of Rule 12b-1 of the 1940 Act and to
make payments from the assets of the Trust or the relevant Sub-Trust or
Sub-Trusts pursuant to said Rule 12b-1 Plan.
5. Sections 3.3(b) and (c) are amended to read as follows:
(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with respect to
the operations of the Trust and each Sub-Trust (including each class thereof),
to supervise all or any part of the operations of the Trust and each
Sub-Trust, and to provide all or any part of the administrative and clerical
personnel, office space and office equipment and services appropriate for the
efficient administration and operations of the Trust and each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and each
Sub-Trust (including any classes thereof) to the principal underwriter of such
Shares, and/or to act as agent of the Trust and each Sub-Trust in the sale of
Shares and the acceptance or rejection of orders for the purchase of Shares;
6. Section 3.4 is amended to read as follows:
<PAGE>
Section 3.4 Payment of Trust Expenses and Compensation of Trustees.
The Trustees are authorized to pay or to cause to be paid out of the principal
or income of the Trust or any Sub-Trust, or partly out of principal and partly
out of income, and to charge or allocate the same to, between or among such
one or more of the Sub-Trusts and/or one or more classes of Shares thereof
that may be established and designated pursuant to Article IV, as the Trustees
deem fair, all expenses, fees, charges, taxes and liabilities incurred or
arising in connection with the Trust, any Sub-Trust and/or any class of Shares
thereof, or in connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser,
administrator, distributor, principal underwriter, auditor, counsel,
depository, custodian, transfer agent, dividend disbursing agent, accounting
agent, Shareholder servicing agent, and such other agents, consultants, and
independent contractors and such other expenses and charges as the Trustees
may deem necessary or proper to incur. Without limiting the generality of any
other provision hereof, the Trustees shall be entitled to reasonable
compensation from the Trust for their services as Trustees and may fix the
amount of such compensation.
7. Section 3.6 is amended to read as follows:
Section 3.6 Action by Trustees. Except as otherwise provided by the
1940 Act or other applicable law, this Declaration of Trust or the By-Laws,
any action to be taken by the Trustees on behalf of or with respect to the
Trust or any Sub-Trust or class thereof may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum, consisting of at least
one-half of the Trustees then in office, being present), within or without
Massachusetts, including any meeting held by means of a conference telephone
or other communications equipment by means of which all persons participating
in the meeting can hear each other at the same time, and participation by such
means shall constitute presence in person at a meeting, or by written consents
of a majority of the Trustees then in office (or such larger or different
number as may be required by the 1940 Act or other applicable law).
8. Sections 4.1, 4.2 and 4.3 are amended to read as follows:
Section 4.1 Description of Shares. The beneficial interest in the
Trust shall be divided into Shares, all without par value, but the Trustees
shall have the authority from time to time to issue Shares in one or more
Series (each of which Series of Shares shall represent the beneficial interest
in a separate and distinct Sub-Trust of the Trust, including without
limitation each Sub-Trust specifically established and designated in Section
4.2), as they deem necessary or desirable. For all purposes under this
Declaration of Trust or otherwise, including, without implied limitation, (i)
with respect to the rights of creditors and (ii) for purposes of interpreting
the relevant rights of each Sub-Trust and the Shareholders of each Sub-Trust,
each Sub-Trust established hereunder shall be deemed to be a separate trust.
The Trustees shall have exclusive power without the requirement of Shareholder
approval to establish and designate such separate and distinct Sub-Trusts, and
to fix and determine the relative rights and preferences as between the shares
of the separate Sub-Trusts as to right of redemption and the price, terms and
manner of redemption, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase fund provisions,
conversion rights, and conditions under which the several Sub-Trusts shall
have separate voting rights or no voting rights.
<PAGE>
In addition, the Trustees shall have exclusive power, without the
requirement of Shareholder approval, to issue classes of Shares of any
Sub-Trust or divide the Shares of any Sub-Trust into classes, each class
having such different dividend, liquidation, voting and other rights as the
Trustees may determine, and may establish and designate the specific classes
of Shares of each Sub-Trust. The fact that a Sub-Trust shall have initially
been established and designated without any specific establishment or
designation of classes (i.e., that all Shares of such Sub-Trust are initially
of a single class), or that a Sub-Trust shall have more than one established
and designated class, shall not limit the authority of the Trustees to
establish and designate separate classes, or one or more additional classes,
of said Sub-Trust without approval of the holders of the initial class
thereof, or previously established and designated class or classes thereof.
The number of authorized Shares and the number of Shares of each Sub-Trust or
class thereof that may be issued is unlimited, and the Trustees may issue
Shares of any Sub-Trust or class thereof for such consideration and on such
terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (h) of Section 4.2). The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Sub-Trust or class thereof into one or more Sub-Trusts or
classes thereof that may be established and designated from time to time. The
Trustees may hold as treasury Shares, reissue for such consideration and on
such terms as they may determine, or cancel, at their discretion from time to
time, any Shares of any Sub-Trust or class thereof reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders
of Shares entitled to be treated as such, to the extent provided or referred
to in Section 5.3.
The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective (i) upon the execution by a majority of the
then Trustees of an instrument setting forth such establishment and
designation of the relative rights and preferences of the Shares of such
Sub-Trust or class, (ii) upon the execution of an instrument in writing by an
officer of the Trust pursuant to the vote of a majority of the Trustees, or
(iii) as otherwise provided in either such instrument. At any time that there
are no Shares outstanding of any particular Sub-Trust or class previously
established and designated, the Trustees may by an instrument executed by a
majority of their number (or by an instrument executed by an officer of the
Trust pursuant to the vote of a majority of the Trustees) abolish that
Sub-Trust or class and the establishment and designation thereof. Each
instrument establishing and designating any Sub-Trust shall have the status of
an amendment to this Declaration of Trust.
<PAGE>
Any Trustee, officer or other agent of the Trust, and any
organization in which any such person is interested may acquire, own, hold and
dispose of Shares of any Sub-Trust (including any classes thereof) of the
Trust to the same extent as if such person were not a Trustee, officer or
other agent of the Trust; and the Trust may issue and sell or cause to be
issued and sold and may purchase Shares of any Sub-Trust (including any
classes thereof) from any such person or any such organization subject only to
the general limitations, restrictions or other provisions applicable to the
sale or purchase of Shares of such Sub-Trust (including any classes thereof)
generally.
Section 4.2 Establishment and Designation of Sub-Trusts and Classes.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Sub-Trusts, the Trustees hereby establish
and designate Sub-Trusts: each of which shall have class(es) of Shares. The
Shares of such Sub-Trusts and any Shares of any further Sub-Trust that may
from time to time be established and designated by the Trustees shall (unless
the Trustees otherwise determine with respect to some further Sub-Trust at the
time of establishing and designating the same) have the following relative
rights and preferences:
(a) Assets Belonging to Sub-Trusts. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust or any classes
thereof, together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Sub-Trust or class thereof and shall
irrevocably belong to that Sub-Trust (and be allocable to any classes thereof)
for all purposes, and shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment of
such proceeds, in whatever form the same may be, together with any General
Items (as hereinafter defined) allocated to that Sub-Trust as provided in the
following sentence, are herein referred to as "assets belonging to" that
Sub-Trust (and allocable to any classes thereof). In the event that there are
any assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any particular
Sub-Trust (collectively "General Items"), the Trustees shall allocate such
General Items to and among any one or more of the Sub-Trusts established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable; and any General Items so
allocated to a particular Sub-Trust shall belong to that Sub-Trust (and be
allocable to any classes thereof). Each such allocation by the Trustees shall
be conclusive and binding upon the holders of all Shares of all Sub-Trusts
(including any classes thereof) for all purposes.
<PAGE>
(b) Liabilities Belonging to Sub-Trusts. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves belonging to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one
or more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair
and equitable. In addition, the liabilities in respect of a particular class
of Shares of a particular Sub-Trust and all expenses, costs, charges and
reserves belonging to that class of Shares, and any general liabilities,
expenses, costs, charges or reserves of that particular Sub-Trust which are
not readily identifiable as belonging to any particular class of Shares of
that Sub-Trust shall be allocated and charged by the Trustees to and among any
one or more of the classes of Shares of that Sub-Trust established and
designated from time to time in such manner and on such basis as the Trustees
in their sole discretion deem fair and equitable. The liabilities, expenses,
costs, charges and reserves allocated and so charged to a Sub-Trust or class
thereof are herein referred to as "liabilities belonging to" that Sub-Trust or
class thereof. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the
Shareholders, creditors and any other persons dealing with the Trust or any
Sub-Trust (including any classes thereof) for all purposes. Any creditor of
any Sub-Trust may look only to the assets of that Sub-Trust to satisfy such
creditor's debt.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular
Sub-Trust or any class thereof may be paid with such frequency as the Trustees
may determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the
Trustees may determine, to the holders of Shares of that Sub-Trust or class,
from such of the income and capital gains, accrued or realized, from the
assets belonging to that Sub-Trust, or in the case of a class, belonging to
that Sub-Trust and allocable to that class, as the Trustees may determine,
after providing for actual and accrued liabilities belonging to that Sub-Trust
or class. All dividends and distributions on Shares of a particular Sub-Trust
or class thereof shall be distributed pro rata to the holders of Shares of
that Sub-Trust or class in proportion to the number of Shares of that
Sub-Trust or class held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that in
connection with any dividend or distribution program or procedure the Trustees
may determine that no dividend or distribution shall be payable on Shares as
to which the Shareholder's purchase order and/or payment have not been
received by the time or times established by the Trustees under such program
or procedure. Such dividends and distributions may be made in cash or Shares
of that Sub-Trust or class or a combination thereof as determined by the
Trustees or pursuant to any program that the Trustees may have in effect at
the time for the election by each Shareholder of the mode of the making of
such dividend or distribution to that Shareholder. Any such dividend or
distribution paid in Shares will be paid at the net asset value thereof as
determined in accordance with subsection (h) of Section 4.2.
<PAGE>
The Trustees shall have full discretion to determine which items
shall be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
(d) Liquidation. In the event of the liquidation or dissolution of
the Trust, the holders of Shares of each Sub-Trust or any class thereof that
has been established and designated shall be entitled to receive, when and as
declared by the Trustees, the excess of the assets belonging to that
Sub-Trust, or in the case of a class, belonging to that Sub-Trust and
allocable to that class, over the liabilities belonging to that Sub-Trust or
class. The assets so distributable to the holders of Shares of any particular
Sub-Trust or class thereof shall be distributed among such holders in
proportion to the number of Shares of that Sub-Trust or class thereof held by
them and recorded on the books of the Trust. The liquidation of any particular
Sub-Trust or class thereof may be authorized at any time by vote of a majority
of the Trustees then in office.
(e) Voting. On each matter submitted to a vote of the Shareholders,
each holder of a Share shall be entitled to one vote for each whole Share
standing in such Shareholder's name on the books of the Trust irrespective of
the Series thereof or class thereof and all Shares of all Series and classes
thereof shall vote together as a single class; provided, however, that as to
any matter (i) with respect to which a separate vote of one or more Series or
classes thereof is required by the 1940 Act or the provisions of the writing
establishing and designating the Sub-Trust or class, such requirements as to a
separate vote by such Series or class thereof shall apply in lieu of all
Shares of all Series and classes thereof voting together; and (ii) as to any
matter which affects the interests of one or more particular Series or classes
thereof, only the holders of Shares of the one or more affected Series or
classes shall be entitled to vote, and each such Series or class shall vote as
a separate class.
(f) Redemption by Shareholder. Each holder of Shares of a particular
Sub-Trust or any class thereof shall have the right at such times as may be
permitted by the Trust to require the Trust to redeem all or any part of such
holder's Shares of that Sub-Trust or class thereof at a redemption price equal
to the net asset value per Share of that Sub-Trust or class thereof next
determined in accordance with subsection (h) of this Section 4.2 after the
Shares are properly tendered for redemption, subject to any contingent
deferred sales charge or redemption charge in effect at the time of
redemption. Payment of the redemption price shall be in cash; provided,
however, that if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly in cash unwise or
undesirable, the Trust may, subject to the requirements of the 1940 Act, make
payment wholly or partly in securities or other assets belonging to the
Sub-Trust of which the Shares being redeemed are part at the value of such
securities or assets used in such determination of net asset value.
<PAGE>
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust or class thereof to require the Trust to redeem Shares of that
Sub-Trust during any period or at any time when and to the extent permissible
under the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust or class
thereof that has been established and designated is subject to redemption by
the Trust at the redemption price which would be applicable if such Share was
then being redeemed by the Shareholder pursuant to subsection (f) of this
Section 4.2: (i) at any time, if the Trustees determine in their sole
discretion and by majority vote that failure to so redeem may have materially
adverse consequences to the Trust or any Sub-Trust or to the holders of the
Shares of the Trust or any Sub-Trust thereof or class thereof, or (ii) upon
such other conditions as may from time to time be determined by the Trustees
and set forth in the then current Prospectus of the Trust. Upon such
redemption the holders of the Shares so redeemed shall have no further right
with respect thereto other than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Sub-Trust
shall be (i) in the case of a Sub-Trust whose Shares are not divided into
classes, the quotient obtained by dividing the value of the net assets of that
Sub-Trust (being the value of the assets belonging to that Sub-Trust less the
liabilities belonging to that Sub-Trust) by the total number of Shares of that
Sub-Trust outstanding, and (ii) in the case of a class of Shares of a
Sub-Trust whose Shares are divided into classes, the quotient obtained by
dividing the value of the net assets of that Sub-Trust allocable to such class
(being the value of the assets belonging to that Sub-Trust allocable to such
class less the liabilities belonging to such class) by the total number of
Shares of such class outstanding; all determined in accordance with the
methods and procedures, including without limitation those with respect to
rounding, established by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share
of any Sub-Trust at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declarations of income attributable to that Sub-Trust as dividends
payable in additional Shares of that Sub-Trust at the designated constant
dollar amount and for the handling of any losses attributable to that
Sub-Trust. Such procedures may provide that in the event of any loss each
Shareholder shall be deemed to have contributed to the capital of the Trust
attributable to that Sub-Trust such Shareholder's pro rata portion of the
total number of Shares required to be cancelled in order to permit the net
asset value per Share of that Sub-Trust to be maintained, after reflecting
such loss, at the designated constant dollar amount. Each Shareholder of the
Trust shall be deemed to have agreed, by making an investment in any Sub-Trust
with respect to which the Trustees shall have adopted any such procedure, to
make the contribution referred to in the preceding sentence in the event of
any such loss.
<PAGE>
(i) Transfer. All Shares of each particular Sub-Trust or class
thereof shall be transferable, but transfers of Shares of a particular
Sub-Trust or class thereof will be recorded on the Share transfer records of
the Trust applicable to that Sub-Trust or class only at such times as
Shareholders shall have the right to require the Trust to redeem Shares of
that Sub-Trust or class and at such other times as may be permitted by the
Trustees.
(j) Equality. Except as provided herein or in the instrument
designating and establishing any class of Shares or any Sub-Trust, all Shares
of each particular Sub-Trust or class thereof shall represent an equal
proportionate interest in the assets belonging to that Sub-Trust, or in the
case of a class, belonging to that Sub-Trust and allocable to that class,
subject to the liabilities belonging to that Sub-Trust or class, and each
Share of any particular Sub-Trust or class shall be equal to each other Share
of that Sub-Trust or class; but the provisions of this sentence shall not
restrict any distinctions permissible under subsection (c) of this Section 4.2
that may exist with respect to dividends and distributions on Shares of the
same Sub-Trust or class. The Trustees may from time to time divide or combine
the Shares of any particular Sub-Trust or class into a greater or lesser
number of Shares of that Sub-Trust or class without thereby changing the
proportionate beneficial interest in the assets belonging to that Sub-Trust or
class or in any way affecting the rights of Shares of any other Sub-Trust or
class.
(k) Fractions. Any fractional Share of any Sub-Trust or class, if any
such fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole Share of that Sub-Trust or class, including
rights and obligations with respect to voting, receipt of dividends and
distributions, redemption of Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Sub-Trust or class thereof shall have the right to convert said
Shares into Shares of one or more other Sub-Trust or class thereof in
accordance with such requirements and procedures as may be established by the
Trustees.
(m) Class Differences. The relative rights and preferences of the
classes of any Sub-Trust may differ in such other respects as the Trustees may
determine to be appropriate in their sole discretion, provided that such
differences are set forth in the instrument establishing and designating such
classes and executed by a majority of the Trustees (or by an instrument
executed by an officer of the Trust pursuant to a vote of a majority of the
Trustees).
<PAGE>
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust and each class thereof that has been established and designated. No
certificates certifying the ownership of Shares need be issued except as the
Trustees may otherwise determine from time to time. The Trustees may make such
rules as they consider appropriate for the issuance of Share certificates, the
use of facsimile signatures, the transfer of Shares and similar matters. The
record books of the Trust as kept by the Trust or any transfer or similar
agent, as the case may be, shall be conclusive as to who are the Shareholders
and as to the number of Shares of each Sub-Trust and class thereof held from
time to time by each such Shareholder.
9. Section 5.1 is amended to read as follows:
Section 5.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act,
(iii) with respect to any termination or reorganization of the Trust to the
extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in
Section 7.3, (v) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class
action on behalf of the Trust or any Sub-Trust thereof or the Shareholders
(provided, however, that a Shareholder of a particular Sub-Trust shall not be
entitled to a derivative or class action on behalf of any other Sub-Trust (or
Shareholder of any other Sub-Trust) of the Trust) and (vi) with respect to
such additional matters relating to the Trust as may be required by the 1940
Act, this Declaration of Trust, the By-Laws or any registration of the Trust
with the Commission (or any successor agency) or any state, or as the Trustees
may consider necessary or desirable. There shall be no cumulative voting in
the election of Trustees. Shares may be voted in person or by proxy. Proxies
may be given orally or in writing or pursuant to any computerized, telephonic,
or mechanical data gathering process specifically approved by the Trustees. A
proxy with respect to Shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of the
proxy the Trust receives a specific written notice to the contrary from any
one of them. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration of Trust or the
By-Laws to be taken by Shareholders.
* * * * *
IN WITNESS WHEREOF, the undersigned, a Trustee and Vice President of
the Trust, hereby certifies that the foregoing amendment was duly adopted by a
majority of the Trustees of the Trust on March 18, 1996 and has hereunto set
his hand and seal this 18th day of March, 1996.
/s/ Paul J. Marnell
---------------------------
Paul J. Marnell
Trustee and Vice President,
CFS Investment Trust
<PAGE>
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EXHIBIT 1.7
CFS INVESTMENT TRUST
Amendment No. 6 to
Agreement and Declaration of Trust
A trust known as CFS Investment Trust (the "Trust") was
created by an Agreement and Declaration of Trust dated December 21, 1987 by
Robert M. Slotky, Trustee, on behalf of himself and all other persons who
became trustees thereunder. Section 7.3 of that Agreement and Declaration of
Trust, as heretofore amended (the "Agreement and Declaration of Trust"),
provides that the provisions of the Agreement and Declaration of Trust may be
amended at any time, so long as such amendment does not adversely affect the
rights of any Shareholder with respect to which such amendment is or purports
to be applicable and so long as such amendment is not in contravention of
applicable law, including the Investment Company Act of 1940, by an instrument
in writing signed by an officer of the Trust pursuant to the vote of a
majority of the then Trustees. Pursuant to the authority granted by Section
7.3 and Section 4.2 of the Agreement and Declaration of Trust and the
affirmative vote on March 18, 1996 of a majority of the Trustees of the Trust,
the following amendment to the Agreement and Declaration of Trust, which
amends and corrects Section 4.2 thereof as set forth in Amendment No. 5
thereto, has been adopted:
Section 4.2 is amended to read as follows:
Section 4.2 Establishment and Designation of Sub-Trusts and Classes.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Sub-Trusts, the Trustees hereby establish
and designate five Sub-Trusts:
Calamos Convertible Fund;
Calamos Growth and Income Fund;
Calamos Global Growth and Income Fund;
Calamos Growth Fund; and
Calamos Strategic Income Fund
each of which may have two class(es) of Shares, Class A and Class C. Each
Share of each Sub-Trust outstanding upon the effectiveness of Amendement No. 6
to this Agreement and Declaration of Trust is hereby designated a Class A
Share of such Sub-Trust. The Shares of such Sub-Trusts and any Shares of any
further Sub-Trust or class that may from time to time be established and
designated by the Trustees shall (unless otherwise determine with respect to
some further Sub-Trust or class at the time of establishing and designating
the same) have the following relative rights and preferences:
<PAGE>
(a) Assets Belonging to Sub-Trusts. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust or any classes
thereof, together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Sub-Trust or class thereof and shall
irrevocably belong to that Sub-Trust (and be allocable to any classes thereof)
for all purposes, and shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment of
such proceeds, in whatever form the same may be, together with any General
Items (as hereinafter defined) allocated to that Sub-Trust as provided in the
following sentence, are herein referred to as "assets belonging to" that
Sub-Trust (and allocable to any classes thereof). In the event that there are
any assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any particular
Sub-Trust (collectively "General Items"), the Trustees shall allocate such
General Items to and among any one or more of the Sub-Trusts established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable; and any General Items so
allocated to a particular Sub-Trust shall belong to that Sub-Trust (and be
allocable to any classes thereof). Each such allocation by the Trustees shall
be conclusive and binding upon the holders of all Shares of all Sub-Trusts
(including any classes thereof) for all purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves belonging to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one
or more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair
and equitable. In addition, the liabilities in respect of a particular class
of Shares of a particular Sub-Trust and all expenses, costs, charges and
reserves belonging to that class of Shares, and any general liabilities,
expenses, costs, charges or reserves of that particular Sub-Trust which are
not readily identifiable as belonging to any particular class of Shares of
that Sub-Trust shall be allocated and charged by the Trustees to and among any
one or more of the classes of Shares of that Sub-Trust established and
designated from time to time in such manner and on such basis as the Trustees
in their sole discretion deem fair and equitable. The liabilities, expenses,
costs, charges and reserves allocated and so charged to a Sub-Trust or class
thereof are herein referred to as "liabilities belonging to" that Sub-Trust or
class thereof. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the
Shareholders, creditors and any other persons dealing with the Trust or any
Sub-Trust (including any classes thereof) for all purposes. Any creditor of
any Sub-Trust may look only to the assets of that Sub-Trust to satisfy such
creditor's debt.
<PAGE>
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular
Sub-Trust or any class thereof may be paid with such frequency as the Trustees
may determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the
Trustees may determine, to the holders of Shares of that Sub-Trust or class,
from such of the income and capital gains, accrued or realized, from the
assets belonging to that Sub-Trust, or in the case of a class, belonging to
that Sub-Trust and allocable to that class, as the Trustees may determine,
after providing for actual and accrued liabilities belonging to that Sub-Trust
or class. All dividends and distributions on Shares of a particular Sub-Trust
or class thereof shall be distributed pro rata to the holders of Shares of
that Sub-Trust or class in proportion to the number of Shares of that
Sub-Trust or class held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that in
connection with any dividend or distribution program or procedure the Trustees
may determine that no dividend or distribution shall be payable on Shares as
to which the Shareholder's purchase order and/or payment have not been
received by the time or times established by the Trustees under such program
or procedure. Such dividends and distributions may be made in cash or Shares
of that Sub-Trust or class or a combination thereof as determined by the
Trustees or pursuant to any program that the Trustees may have in effect at
the time for the election by each Shareholder of the mode of the making of
such dividend or distribution to that Shareholder. Any such dividend or
distribution paid in Shares will be paid at the net asset value thereof as
determined in accordance with subsection (h) of Section 4.2.
The Trustees shall have full discretion to determine which items
shall be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
(d) Liquidation. In the event of the liquidation or dissolution of
the Trust, the holders of Shares of each Sub-Trust or any class thereof that
has been established and designated shall be entitled to receive, when and as
declared by the Trustees, the excess of the assets belonging to that
Sub-Trust, or in the case of a class, belonging to that Sub-Trust and
allocable to that class, over the liabilities belonging to that Sub-Trust or
class. The assets so distributable to the holders of Shares of any particular
Sub-Trust or class thereof shall be distributed among such holders in
proportion to the number of Shares of that Sub-Trust or class thereof held by
them and recorded on the books of the Trust. The liquidation of any particular
Sub-Trust or class thereof may be authorized at any time by vote of a majority
of the Trustees then in office.
<PAGE>
(e) Voting. On each matter submitted to a vote of the Shareholders,
each holder of a Share shall be entitled to one vote for each whole Share
standing in such Shareholder's name on the books of the Trust irrespective of
the Series thereof or class thereof and all Shares of all Series and classes
thereof shall vote together as a single class; provided, however, that as to
any matter (i) with respect to which a separate vote of one or more Series or
classes thereof is required by the 1940 Act or the provisions of the writing
establishing and designating the Sub-Trust or class, such requirements as to a
separate vote by such Series or class thereof shall apply in lieu of all
Shares of all Series and classes thereof voting together; and (ii) as to any
matter which affects the interests of one or more particular Series or classes
thereof, only the holders of Shares of the one or more affected Series or
classes shall be entitled to vote, and each such Series or class shall vote as
a separate class.
(f) Redemption by Shareholder. Each holder of Shares of a particular
Sub-Trust or any class thereof shall have the right at such times as may be
permitted by the Trust to require the Trust to redeem all or any part of such
holder's Shares of that Sub-Trust or class thereof at a redemption price equal
to the net asset value per Share of that Sub-Trust or class thereof next
determined in accordance with subsection (h) of this Section 4.2 after the
Shares are properly tendered for redemption, subject to any contingent
deferred sales charge or redemption charge in effect at the time of
redemption. Payment of the redemption price shall be in cash; provided,
however, that if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly in cash unwise or
undesirable, the Trust may, subject to the requirements of the 1940 Act, make
payment wholly or partly in securities or other assets belonging to the
Sub-Trust of which the Shares being redeemed are part at the value of such
securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust or class thereof to require the Trust to redeem Shares of that
Sub-Trust during any period or at any time when and to the extent permissible
under the 1940 Act.
<PAGE>
(g) Redemption by Trust. Each Share of each Sub-Trust or class
thereof that has been established and designated is subject to redemption by
the Trust at the redemption price which would be applicable if such Share was
then being redeemed by the Shareholder pursuant to subsection (f) of this
Section 4.2: (i) at any time, if the Trustees determine in their sole
discretion and by majority vote that failure to so redeem may have materially
adverse consequences to the Trust or any Sub-Trust or to the holders of the
Shares of the Trust or any Sub-Trust thereof or class thereof, or (ii) upon
such other conditions as may from time to time be determined by the Trustees
and set forth in the then current Prospectus of the Trust. Upon such
redemption the holders of the Shares so redeemed shall have no further right
with respect thereto other than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Sub-Trust
shall be (i) in the case of a Sub-Trust whose Shares are not divided into
classes, the quotient obtained by dividing the value of the net assets of that
Sub-Trust (being the value of the assets belonging to that Sub-Trust less the
liabilities belonging to that Sub-Trust) by the total number of Shares of that
Sub-Trust outstanding, and (ii) in the case of a class of Shares of a
Sub-Trust whose Shares are divided into classes, the quotient obtained by
dividing the value of the net assets of that Sub-Trust allocable to such class
(being the value of the assets belonging to that Sub-Trust allocable to such
class less the liabilities belonging to such class) by the total number of
Shares of such class outstanding; all determined in accordance with the
methods and procedures, including without limitation those with respect to
rounding, established by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share
of any Sub-Trust at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declarations of income attributable to that Sub-Trust as dividends
payable in additional Shares of that Sub-Trust at the designated constant
dollar amount and for the handling of any losses attributable to that
Sub-Trust. Such procedures may provide that in the event of any loss each
Shareholder shall be deemed to have contributed to the capital of the Trust
attributable to that Sub-Trust such Shareholder's pro rata portion of the
total number of Shares required to be cancelled in order to permit the net
asset value per Share of that Sub-Trust to be maintained, after reflecting
such loss, at the designated constant dollar amount. Each Shareholder of the
Trust shall be deemed to have agreed, by making an investment in any Sub-Trust
with respect to which the Trustees shall have adopted any such procedure, to
make the contribution referred to in the preceding sentence in the event of
any such loss.
(i) Transfer. All Shares of each particular Sub-Trust or class
thereof shall be transferable, but transfers of Shares of a particular
Sub-Trust or class thereof will be recorded on the Share transfer records of
the Trust applicable to that Sub-Trust or class only at such times as
Shareholders shall have the right to require the Trust to redeem Shares of
that Sub-Trust or class and at such other times as may be permitted by the
Trustees.
<PAGE>
(j) Equality. Except as provided herein or in the instrument
designating and establishing any class of Shares or any Sub-Trust, all Shares
of each particular Sub-Trust or class thereof shall represent an equal
proportionate interest in the assets belonging to that Sub-Trust, or in the
case of a class, belonging to that Sub-Trust and allocable to that class,
subject to the liabilities belonging to that Sub-Trust or class, and each
Share of any particular Sub-Trust or class shall be equal to each other Share
of that Sub-Trust or class; but the provisions of this sentence shall not
restrict any distinctions permissible under subsection (c) of this Section 4.2
that may exist with respect to dividends and distributions on Shares of the
same Sub-Trust or class. The Trustees may from time to time divide or combine
the Shares of any particular Sub-Trust or class into a greater or lesser
number of Shares of that Sub-Trust or class without thereby changing the
proportionate beneficial interest in the assets belonging to that Sub-Trust or
class or in any way affecting the rights of Shares of any other Sub-Trust or
class.
(k) Fractions. Any fractional Share of any Sub-Trust or class, if any
such fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole Share of that Sub-Trust or class, including
rights and obligations with respect to voting, receipt of dividends and
distributions, redemption of Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Sub-Trust or class thereof shall have the right to convert said
Shares into Shares of one or more other Sub-Trust or class thereof in
accordance with such requirements and procedures as may be established by the
Trustees.
(m) Class Differences. The relative rights and preferences of the
classes of any Sub-Trust may differ in such other respects as the Trustees may
determine to be appropriate in their sole discretion, provided that such
differences are set forth in the instrument establishing and designating such
classes and executed by a majority of the Trustees (or by an instrument
executed by an officer of the Trust pursuant to a vote of a majority of the
Trustees). Without limiting the generality of the foregoing, each share of
Class A shares or Class C shares of a series shall have, upon its issuance,
all of the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption currently accorded each other share of beneficial
interest in that series, including that each Class A share and each Class C
share shall be charged equally with each other share in the series with the
expenses and liabilities of the series in respect of Class A and Class C
shares or such other shares and in respect of any general expenses and
liabilities of the series allocated to Class A shares, Class C shares or such
other shares designated by the Trustees in accordance with the Agreement and
Declaration of Trust, as amended from time to time, provided however, that to
the extent permitted by rule or order of the Securities and Exchange
Commission or any successor governmental authority:
<PAGE>
(i) Shares of each class shall bear the expenses and
liabilities relating to any agreements or arrangements entered into by or on
behalf of a series pursuant to which an organization or other person agrees to
provide services with respect to shares of that class but not with respect to
shares of the other classes of the series as well as any other expenses and
liabilities directly attributable to that class which the Trustees determine
should be borne solely by such class; and
(ii) On any matter that pertains to the agreements,
arrangements, expenses or liabilities described in clause (a) above (or to any
plan or other document adopted by a series relating to said agreements,
arrangements, expenses or liabilities) and is submitted to a vote of
shareholders of the series, only shares relating to the affected class shall
be entitled to vote, except that if the matter affects other shares of
beneficial interest in the Trust, such other affected shares shall also be
entitled to vote, and in such case all shares shall be voted in the aggregate
and not by class or series, except where otherwise required by law or
permitted by the Trustees.
* * * * *
IN WITNESS WHEREOF, the undersigned, a Trustee and President
of the Trust, hereby certifies that the foregoing amendment was duly adopted
by a majority of the Trustees of the Trust on March 18, 1996 and has hereunto
set his hand and seal this 28th day of March, 1996.
/s/ John P. Calamos
-----------------------
John P. Calamos
Trustee and President,
CFS Investment Trust
<PAGE>
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EXHIBIT 5.4
CFS INVESTMENT TRUST
June ____, 1996
Calamos Asset Management, Inc.
1111 East Warrenville Road
Naperville, IL 60563-1493
Ladies and Gentlemen:
Management Agreement
Pursuant to paragraph 1(b) of the Management Agreement between CFS
Investment Trust and Calamos Asset Management, Inc. dated July 5, 1988 (the
"Agreement"), we hereby notify you that the board of trustees of CFS
Investment Trust has established an additional Sub-Trust designated Calamos
Global Growth and Income Fund (the "Fund"), and has appointed you as manageer
to act as manager and investment adviser to that Sub-Trust upon the terms and
conditions set forth in the Agreement. The fee payable by the Fund purusant to
the paragraph 4 of the Agreement shall be at the monthly rate of 1/12 of 1%
(1.00% annually) of the Monthly Average Net Assets of the Fund, as defined in
subparagraph 4(c) of the Agreement.
Very truly yours,
CFS INVESTMENT TRUST
By_____________________________
Paul J. Marnell
Vice President
Appointment as manager for the Sub-Trust designated Calamos Global
Growth and Income Fund accepted this ______ day of June, 1996.
CALAMOS ASSET MANAGEMENT, INC.
By______________________________
John P. Calamos
President
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EXHIBIT 6.1
CFS INVESTMENT TRUST
Distribution Agreement
AGREEMENT made as of June __, 1996, between CALAMOS
FINANCIAL SERVICES, INC., a corporation organized under the laws of the State
of Illinois and having its principal office and place of business in Oak
Brook, Illinois (the "Distributor"), and CFS INVESTMENT TRUST, a Massachusetts
business trust having its principal office and place of business in Oak Brook,
Illinois (the "Trust"), which offers shares of beneficial interest in
different series representing interests in different portfolios of assets
(each series being referred to herein as a "Fund").
WITNESSETH:
In consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the parties, it is agreed:
1. Appointment of Distributor. The Trust hereby appoints Distributor
as its exclusive agent to sell and distribute Class A Shares and Class C
Shares (collectively "Shares") of each Fund at the offering price thereof as
from time to time determined in the manner herein provided. Distributor hereby
accepts such appointment and agrees during the term of this Distribution
Agreement to provide the services and to assume the obligations herein set
forth. The Trust agrees that it will not, without Distributor's consent, sell
or agree to sell any Shares otherwise than through Distributor, except that
(a) the Trust may itself sell Shares as an investment to the trustees,
officers, directors and bona fide full-time employees of the Trust,
Distributor and the Trust's investment adviser; and (b) the Trust may issue
Shares in connection with a merger, consolidation or acquisition of assets on
such basis as may be authorized or permitted under the Investment Company Act
of 1940; provided that in no event as to any of the foregoing exceptions shall
the Shares be issued and sold at less than the net asset value thereof.
2. Basis of Sale of Shares. Distributor does not agree to sell any
specific number of Shares. Shares will be sold by Distributor as agent for
the Trust only against orders therefor. Distributor will not purchase Shares
from anyone other than the Trust except as agent for the Trust.
3. Offering Price. All Shares offered for sale by the Distributor
shall be offered for sale at a price per share (the "Offering Price") equal to
(a) the net asset value per share of the Fund (determined in the manner set
forth in the Declaration of Trust of the Trust) plus (b) in the case of Class
A Shares, except as set forth in the then current Prospectus, a sales charge
applicable to Shares, which shall be the percentage of the Offering Price of
such Shares as set forth in the Fund's then current effective Prospectus. The
Offering Price, if not an exact multiple of one cent, shall be adjusted to the
nearest cent.
4. Manner of Offering. Distributor will conform to the securities
laws of any jurisdiction in which it sells, directly or indirectly, any
Shares. Distributor also agrees to furnish to the Trust sufficient copies of
any agreements, plans or sales literature it intends to use in connection with
any sales of Shares in adequate time for the Trust to file and clear them with
the proper authorities before they are put in use, and not to use them until
so filed and cleared.
<PAGE>
Distributor shall have the right to accept or reject orders
for the purchase of Shares. Any consideration which Distributor may receive in
connection with a rejected purchase order will be returned promptly to the
prospective purchaser. The Trust or its transfer agent or shareholder
servicing agent is authorized to confirm sales of Shares on behalf of the
Distributor. The Trust shall register or cause to be registered all Shares
sold by Distributor pursuant to the provisions hereof in such name or names
and amounts as Distributor may request from time to time and the Trust shall
issue or cause to be issued certificates evidencing such Shares for delivery
to Distributor or pursuant to Distributor's direction if and to the extent
that the Trust contemplates the issuance of such share certificates. All
Shares, when so issued and paid for, shall be fully paid and nonassessable.
5. Securities Laws. The Trust has delivered to Distributor a copy of
the current Prospectus relating to Shares. The Trust agrees that it will use
its best efforts to continue the effectiveness of the Trust's Registration
Statement under the Securities Act of 1933. The Trust further agrees to
prepare and file any amendments to its Registration Statement as may be
necessary and any supplemental data in order to comply with the Securities Act
of 1933. The Trust has already registered under the Investment Company Act of
1940 as an investment company, and it will use its best efforts to maintain
such registration and to comply with the requirements of said Act.
At Distributor's request, the Trust will take such steps as
may be necessary and feasible to qualify Shares for sale in states,
territories or dependencies of the United States of America, in the District
of Columbia and in foreign countries, in accordance with the laws thereof, and
to renew or extend any such qualification; provided, however, that the Trust
shall not be required to qualify Shares or to maintain the qualification of
Shares in any state, territory, dependency, district or country where it shall
deem such qualification disadvantageous to the Trust.
Distributor agrees that:
(a) Neither Distributor nor any of Distributor's officers
will take any long or short position in the Shares, but this
provision shall not prevent Distributor or Distributor's officers
from acquiring Shares for investment purposes only;
(b) Distributor shall furnish to the Trust any pertinent
information required to be inserted with respect to Distributor as
Distributor within the purview of the Securities Act of 1933 in any
reports or registration required to be filed with any governmental
authority; and
(c) Distributor will not make any representations
inconsistent with the Registration Statement or Prospectus(es) of the
Fund filed under the Securities Act of 1933, as in effect from time
to time.
<PAGE>
6. Allocation of Expenses.
(a) The Trust, either directly or through its investment
adviser, will be responsible for, and shall pay the expenses of:
(i) providing all necessary services, including
fees and disbursements of counsel, related to the
preparation, setting in type, printing and filing of any
registration statement and/or prospectus(es) and statement
of additional information required under the Securities Act
of 1933, as amended, or under state securities laws,
covering its Shares, and all amendments and supplements
thereto, the mailing of any such prospectus(es) and
statement of additional information to existing
shareholders, and preparing, setting in type, printing and
mailing periodic reports to existing shareholders;
(ii) the cost of all registration or qualification
fees;
(iii) the cost of preparing temporary and
permanent share certificates for Shares;
(iv) all the Federal and state (if any) issue
and/or transfer taxes payable upon the issue by or transfer
from the Trust to the Distributor of any and all Shares
distributed hereunder.
(b) The Distributor shall bear all sales, promotion or
distribution expenses in connection with the distribution of Shares
and shall be the sole judge of the extent to which sales or promotion
expenses shall be incurred. Expenses incurred in complying with laws
regulating the issue or sale of securities shall not be deemed to be
sales, promotion or distribution expenses. Distributor agrees that,
after the prospectus(es), statement of additional information and
periodic reports have been set in type, it will bear the expense of
printing and distributing any copies thereof which are to be used in
connection with the offering of Shares to investors. Distributor
further agrees that it will bear the expenses of preparing, printing
and distributing any other literature used by Distributor or
furnished by it for use in connection with the offering of the Shares
for sale to the public.
(c) The Trust will be responsible for, and shall pay the
expenses of, maintaining shareholder accounts and furnishing or
causing to be furnished to each shareholder a statement of his
account.
<PAGE>
7. Distributor is Independent Contractor. Distributor shall be an
independent contractor. Distributor is responsible for its own conduct, for
the employment, control and conduct of its agents and employees and for injury
to such agents or employees or to others through its agents or employees.
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employer taxes thereunder.
8. Term of Contract. This Distribution Agreement shall go into effect
on the date hereof and shall continue in effect until ____________, 1997, and
thereafter for successive periods of one year each if such continuance is
approved at least annually thereafter (i) either by an affirmative vote of a
majority of the outstanding Shares or by the Trustees, (ii) in either case by
a majority of the Trustees who are not interested persons of the Distributor
or (otherwise than as Trustees) of the Trust, cast in person at a meeting
called for the purpose of voting on such approval. Written notice of
discontinuance of this Distribution Agreement may be given by one party hereto
to the other upon not less than sixty (60) days notice.
9. Assignment. This Distribution Agreement may not be assigned by
Distributor and shall automatically terminate in the event of an attempted
assignment by Distributor; provided, however, that Distributor may employ or
enter into agreements with such other person, persons, corporation, or
corporations, as it shall determine in order to assist it in carrying out this
Distribution Agreement.
10. Indemnification by Distributor. Distributor agrees to indemnify
and hold harmless the Trust or any other person who has been, is, or may
hereafter be an officer, Trustee or employee of the Trust against any loss,
damage or expense reasonably incurred by any of them in connection with any
claim or in connection with any action, suit, or proceeding to which any of
them may be a party, which arises out of or is alleged to arise out of or is
based upon any untrue statement or alleged untrue statement of a material
fact, or the omission or alleged omission to state a material fact necessary
to make the statements made not misleading, on the part of Distributor or any
agent or employee of Distributor or any other person for whose acts
Distributor is responsible or is alleged to be responsible, such as any dealer
or person through whom sales are made pursuant to an agreement with
Distributor, unless such statement or omission was made in reliance upon
written information furnished by the Trust. The term "expenses" for purposes
of this and the next paragraph includes attorneys fees and amounts paid in
satisfaction of judgments or in settlements which are made with Distributor's
consent. The foregoing rights of indemnification shall be in addition to any
other rights to which the Trust or a Trustee may be entitled as a matter of
law.
<PAGE>
11. Indemnification by Trust. The Trust agrees to indemnify and hold
harmless Distributor and each person who has been, is, or may hereafter be an
officer, director, employee or agent of Distributor against any loss, damage
or expense reasonably incurred by any of them in connection with any claim or
in connection with any action, suit or proceeding to which any of them may be
a party, which arises out of or is alleged to arise out of or is based upon
any untrue or alleged untrue statement of material fact, or the omission or
alleged omission to state a material fact necessary to make the statements
therein not misleading, contained in a registration statement or prospectus,
or any amendment or supplement thereto, unless such statement or omission was
made in reliance upon written information furnished by Distributor. The
foregoing rights of indemnification shall be in addition to any other rights
to which Distributor may be entitled as a matter of law. Nothing contained
herein shall relieve Distributor of any liability to the Trust or its
shareholders to which distributor would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties or reckless disregard of its obligations and duties hereunder.
12. Non-exclusive Agreement. The services of Distributor to the Trust
hereunder shall not be deemed to be exclusive, and Distributor shall be free
to (a) render similar services to, and act as underwriter or distributor in
connection with the distribution of shares of, other investment companies, and
(b) engage in any other businesses and activities from time to time.
13. Amendment. This Distribution Agreement may be amended at
any time by mutual agreement in writing of the parties hereto, provided
that any such amendment is approved by a majority of the Trustees who are not
interested persons of the Distributor or by the holders of a majority of the
outstanding Shares or Funds affected.
14. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Illinois.
15. Limitation of Liability. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but shall bind only the assets and property of the Trust as
provided in the Declaration of Trust of the Trust. The execution and delivery
of this Agreement have been authorized by the Trustees and shareholders of the
Trust and signed by an authorized officer of the Trust, acting as such, and
neither such authorization by the Trustees and shareholders nor such execution
and delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the assets and property of the Trust as provided in its Declaration
of Trust.
<PAGE>
16. Termination of Prior Agreement. All prior Distribution
Agreements between the parties are hereby terminated.
IN WITNESS WHEREOF, this Distribution Agreement has been
executed for the Distributor and the Trust by their duly authorized officers,
as of the date first set forth above.
CALAMOS FINANCIAL SERVICES, INC.
By:_______________________
Paul J. Marnell
Vice President
CFS INVESTMENT TRUST
By:______________________
John P. Calamos
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8
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EXHIBIT 6.2
Calamos Financial Services, Inc.
1111 East Warrenville Road Naperville Illinois 60563 800-823-7386
Selling Group Agreement
CFS Investment Trust
<PAGE>
Selling Group Agreement - CFS Investment Trust
- --------------------------------------
Name of Firm
- --------------------------------------
Address of Principal Office
- --------------------------------------
City State Zip Code
Ladies and Gentlemen:
We are the principal underwriter, as defined in the Investment
Company Act of 1940, of the shares ("Shares") of CFS Investment Trust (the
"Trust"), a Massachusetts business trust. We understand that you are a member
of the National Association of Securities Dealers, Inc. (the "NASD") and, on
the basis of such understanding, invite you to become a member of the Selling
Group to distribute the Shares of the Trust on the following terms:
1. Each of us certifies that we and you are a member, in good standing, of the
National Association of Securities Dealers, Inc. ("NASD") and agree to
maintain membership in the NASD. You and ourselves agree to abide by the
Constitution and By-Laws, of the NASD and all the rules and regulations of the
NASD concerning distribution of the securities of open-end investment
companies, including without limitation, Section 26 of Article III of the NASD
Rules of Fair Practice, all of which are incorporated herein as if set forth
in full, and all other rules and regulations that are now or may become
applicable to transactions hereunder.
2. Orders for Shares received from you and accepted by us will be at the
public offering price applicable to each order in accordance with the then
current effective Prospectus relating to the Shares. The procedure relating to
the handling of orders shall be subject to instructions which we shall forward
from time to time to all members of the Selling Group. All orders are subject
to acceptance by us and we reserve the right in our sole discretion to reject
any order in whole or in part
<PAGE>
3. You shall be entitled to receive from the public offering price of Class A
Shares sold by you the portion of sales commission on such shares that is to
be retained by selling dealers as set forth in the then current effective
Prospectus relating to the Shares, except during any period designated by us
as a period during which shares may be purchased without a sales commission.
In addition, the Trust will remit to us in accordance with the Distribution
Plan (the "Plan ") adopted by the Trust under the Investment Company Act of
1940, a Service Fee at the annual rate of 0.25% of the average daily net
assets of the Trust and a Distribution Fee at the annual rate of 0.25% in the
case of Class A Shares, and 0.75% in the case of Class C Shares, of the
average daily net assets of the respective classes of shares. In turn, we will
pay you, in accordance with the provisions of the Plan, an amount based on the
average daily net asset value of Shares of each class owned by shareholders
for whom you perform account servicing (as defined in the Plan) or for whom
you are the dealer or holder of record at the annual rate of 0.30% in the case
of Class A Shares and 1.00% in the case of Class C Shares; provided, however,
that you are not entitled to receive any reimbursement in the event that we
cease to receive payments from the Trust on account of shares of a series of
the Trust under the Plan and our reimbursement to you will be reduced to the
extent the payment to us from the Trust is reduced. Our liability is solely
limited to the proceeds of the concession receivable from the Trust. Payments
to you shall be made after the end of the calendar quarter for which
reimbursement is being made. There shall be no commissions payable on the
purchase of Shares through the direct reinvestment of any distributions made
by the Trust.
which shall be at the current net asset value.
<PAGE>
4. All purchases of Class A Shares made under any cumulative purchase
privilege or letter of intent as set forth in the then current effective
Prospectus relating to the Shares shall be considered a collective individual
transaction for the purpose of determining the commission to which you are
entitled as set forth in paragraph 3 hereof.
5. As a member of the Selling Group, you agree to purchase Shares only through
us or from your customers. Purchases through us shall be made only for the
purpose of covering purchase orders already received from your customers, and
we agree that we will not place orders for the purchase of Shares from the
Trust except to cover purchase orders already received by us. Purchases from
your customers shall be at a price not less than the net asset value quoted by
the Trust at the time of such purchase.
6. You agree that you will not withhold placing customers' orders so as to
profit yourself as a result of such withholding.
7. You agree to sell Shares only (a) to your customers at the public offering
price then in effect or (b) to us as agent for the Trust or to the Trust
itself at the redemption price, as described in the Trust's then current
effective Prospectus relating to the Shares.
8. Settlement shall be made promptly, but in no case later than three (3)
business days after our acceptance of the order or, if so specified by you, we
will make delivery by draft on you, the amount of which draft you agree to pay
on presentation to you. If payment is not so received or made, the right is
reserved forthwith to cancel the sale or, at our option, to resell the Shares
to the Trust at the then prevailing offering price in which latter case you
agree to be responsible for any loss resulting to the Trust or to us from your
failure to make payment as aforesaid.
9. If any Shares sold to you under the terms of this Agreement are repurchased
by the Trust or by us as agent, or are tendered to the Trust for redemption
within seven (7) business days after the date of our confirmation to you of
your original purchase order therefor, you agree to pay forthwith to us the
full amount of the commission allowed to you on the original sale and we agree
to pay such amount to the Trust when received by us. We shall notify you of
such repurchase within ten (10) days of the effective date of such repurchase.
10. All sales will be subject to receipt of Shares by us from the Trust. We
reserve the right in our discretion without notice to you to suspend sales or
withdraw the offering of Shares entirely, or to modify or cancel this
Agreement, which shall be construed in accordance with the laws of the State
of Illinois. All sales shall be subject to the terms and provisions set forth
in the Trust's then current effective Prospectus relating to the Shares.
11. No person is authorized to make any representations concerning the Trust
or its Shares except those contained in the then current effective Prospectus
or Statement of Additional Information relating to the Shares and any such
information as may be released by the Trust as information expressly
supplemental to such Prospectus or Statement of Additional Information
relating to the Shares. In purchasing Shares through us you shall rely solely
on the representations contained in the then current effective Prospectus or
Statement of Additional Information relating to the Shares and supplemental
information mentioned above.
<PAGE>
12. Additional copies of any such Prospectus(es) or Statement of Additional
Information and any printed information issued as supplemental to such
Prospectus(es) or Statement of Additional Information will be supplied by us
to members of the Selling Group in reasonable quantities upon request.
13. In no transaction shall you have any authority whatever to act as agent of
the Trust or of us or of any other member of the Selling Group, and nothing in
this agreement shall constitute either of us the agent of the other or shall
constitute you or the Trust the agent of the other. In all transactions in the
Shares between you and us, we are acting as agent for the Trust and not as
principal.
14. We acknowledge that the names and addresses and other information
concerning your customers are not our property, and we will not, nor will our
affiliates, use such names, addresses or other information for any purpose
except in connection with the performance of our duties and responsibilities
hereunder and except for providing servicing and informational mailings to the
Trust. Notwithstanding the foregoing, this Paragraph 14 shall not prohibit us
or any of its affiliates from utilizing the names of your customers for any
purpose if such names and addresses are obtained in any manner other than from
you pursuant to this agreement. For purposes of this Section the Trust shall
not be deemed to be an "affiliate" of ours.
15. All communications to us shall be sent to us at 1111 East Warrenville
Road, Naperville, Illinois 60563-1448. Any notice to you shall be duly given
if mailed or electronically sent to you at your address as registered from
time to time with the NASD.
16. This Agreement may be terminated upon written notice by either party at
any time, and shall automatically terminate upon its attempted assignment by
you, whether by operation of law or otherwise, or by us otherwise than by
operation on of law.
17. We reserve the right, from time to time and for limited periods, to
increase the sales commission you are entitled to receive under paragraph 3,
but in no event will such sales commission be in excess of the maximum sales
commission as set forth in the then current effective prospectus relating to
the Shares.
18. By accepting this Agreement, you represent that you are registered as a
broker-dealer under the Securities Exchange Act of l934, are qualified to act
as a dealer in the states or other jurisdictions where you transact business,
and are a member in good standing of the NASD and you agree that you will
maintain such registrations, qualification, and membership in good standing in
full force and effect throughout the term of this Agreement. You further agree
to comply with all applicable Federal laws, the laws of the states or other
jurisdictions concerned, the rules and regulations promulgated thereunder and
the Constitution, By-Laws and Rules of Fair Practice of the NASD and that you
will not offer or sell Shares in any state or jurisdiction where they may not
lawfully be offered and/or sold by you. You agree to indemnify us and the
Trust and to hold us and the Trust harmless from any damage or expense on
account of any wrongful act or omission, not in compliance with this Agreement
by you or any of your employees, representatives or agents.
<PAGE>
If you are offering and selling Shares in jurisdictions outside the several
states, territories, and possessions of the United States and are not
otherwise required to be registered, qualified, or a member of the NASD, as
set forth above, you nevertheless agree to observe the applicable laws of the
jurisdiction in which such offer and/or sale is made, to comply with the full
disclosure requirements of the Securities Act of 1933 and the regulations
promulgated thereunder, to conduct your business in accordance with the spirit
of the Rules of Fair Practice of the NASD and to obey all applicable laws and
regulations. Your expulsion from the NASD will automatically terminate this
Agreement without notice. Your suspension from the NASD or a violation by you
of applicable state and federal laws and regulations of authorized regulatory
agencies will terminate this Agreement effective upon notice received by you
from us.
19. This Agreement shall become effective upon receipt by us of a signed copy
hereof, and shall supersede any and all prior Selling Group agreements
relating to the Shares. All amendments to this Agreement shall take effect
with respect to and on the date of any orders placed by you after the date set
forth in the notice of amendment sent to you by the undersigned.
20. The parties to this agreement hereby agree to indemnify and hold harmless
each other, their officers and directors, and any person who is or may be
deemed to be a controlling person of each other, from and against any losses,
claims, damages, liabilities or expenses (including reasonable fees of
counsel) to which any such person or entity may become subject insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of material fact, or any omission or alleged omission to
state a material fact made or omitted by it herein, or (b) any willful
misfeasance or gross misconduct by it in the performance of its duties and
obligations hereunder.
21.You acknowledge that we may enter into similar agreements with others
without your consent.
22. If any provision of this agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be
affected thereby.
Dated:___________________________
CALAMOS FINANCIAL SERVICES, INC.
By:______________________________
<PAGE>
The undersigned accepts your invitation to become a member of the Selling
Group and agrees to abide by the foregoing terms and conditions. The
undersigned acknowledges receipt of Prospectuses of the Trust for use in
connection with this offering.
Dated:____________________________________________
Firm Name:________________________________________
Address:__________________________________________
By:_______________________________________________
Authorized Signature
--------------------------------------------------
Print Name of Authorized Signatory and Title
The above Agreement should be executed in duplicate and both copies returned
to Calamos Financial Services. Inc. We will execute and return an original
for your files
- -------------------------------------------------------------------------------
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EXHIBIT 9.4
CFS INVESTMENT TRUST
June __, 1996
Calamos Asset Management, Inc.
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Ladies and Gentlemen:
Transfer Agency Agreement
Pursuant to paragraph 3 of the Transfer Agency Agreement between CFS
Investment Trust and Calamos Asset Management, Inc. dated July 5, 1988 (the
"Agreement"), we hereby notify you that the board of trustees of CFS
Investment Trust has established an additional Sub-Trust designated Calamos
Global Growth and Income Fund, and has designated you as transfer agent and
shareholder servicing agent for that Sub-Trust upon the terms and conditions
set forth in the Agreement.
Very truly yours,
CFS INVESTMENT TRUST
By_________________________________
Paul J. Marnell
Vice President
Appointment as transfer agent for the Sub-Trust designated Calamos
Global Growth and Income Fund accepted this ______ day of June, 1996.
CALAMOS ASSET MANAGEMENT, INC.
By________________________________
John P. Calamos
President
- -------------------------------------------------------------------------------
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EXHIBIT 10
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
TELEPHONE (617) 570-1000
TELECOPIER (617) 227-8590
April 2, 1996
CFS Investment Trust
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Gentlemen:
As special Massachusetts counsel to CFS Investment Trust, a
Massachusetts business trust (the "Trust"), we have been asked to deliver
this opinion in connection with the issuance of an indefinite number of
Class A shares and Class C shares, without par value, of each of the Trust's
series designated Calamos Convertible Fund, Calamos Growth and Income Fund,
Calamos Global Growth and Income Fund, Calamos Growth Fund and Calamos
Strategic Income Fund (the "Shares") that are subject of Form N-1A
Registration Statement, Post-Effective Amendment No. 13 to 1933 Act
Registration No. 33-19228, and Amendment No. 16 to Investment Company Act
Registration No. 811-5443 (the "Registration Statement").
We have examined the Declaration of Trust of the Trust as amended and
filed with the Secretary of State of the Commonwealth of Massachusetts, the
By-Laws of the Trust, such records of the proceedings of the Trustees of the
Trust as we deem appropriate, and the Registration Statement.
Based upon the foregoing, we are of the opinion under Massachusetts
law, that when issued and sold and paid for in accordance with the then
applicable Prospectus included as a part of the Registration Statement as then
in effect, the Shares will be duly authorized, validly issued, fully paid and
nonassessable by the Trust.
We consent to a copy of this opinion being filed as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Goodwin, Procter & Hoar, LLP
GOODWIN, PROCTER & HOAR, LLP
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Financial
Highlights" and to the use of our report dated May 11, 1995 in the
Registration Statement (Form N-1A) and in the related Prospectus of CFS
Investment Trust, filed with the Securities and Exchange Commission in this
Post-Effective Amendment No. 13 to the Registration Statement under the
Securities Act of 1933 (Registration No. 33-19228) and in this Amendment No.
16 to the Registration Statement under the Investment Company Act of 1940
(Registration No. 811-5443).
ERNST & YOUNG LLP
Chicago, Illinois
April 3, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
EXHIBIT 13.5
CALAMOS GLOBAL GROWTH AND INCOME FUND
Organizational Expenses Agreement
CFS INVESTMENT TRUST, a Massachusetts business trust (the
"Trust), and CALAMOS ASSET MANAGEMENT, INC., an Illinois corporation ("CAM"),
in consideration for the engagement by CAM as the investment adviser for the
series of the Trust designated Calamos Global Growth and Income Fund (the
"Fund") pursuant to a separate agreement, agree:
1. Advancement of Expenses. CAM shall pay all of the organizational
expenses of the Fund, including but not limited to initial franchise taxes,
registration fees and fees for services rendered prior to commencement of the
initial public offering of shares of such series, subject to the right to be
reimbursed pursuant to paragraph 2.
2. Reimbursement and Amortization of Expenses. The Fund shall
amortize the organizational expenses on a straight line basis from the earlier
of (a) the time the Fund's total assets first reach $2.5 million or (b) three
years after the commencement of the initial public offering of the Fund, until
five years from the commencement of such public offering, and the Trust shall
reimburse CAM during the period of such amortization by paying to CAM on the
last business day of each month an amount equal to the organizational expenses
amortized by the Fund during that month.
3. Limitation on Reimbursement. If the Fund should be liquidated
during such five-year period prior to the complete amortization of all
organizational expenses, the Fund shall have no duty to reimburse CAM for
organizational expenses unamortized as of the time of liquidation.
4. Obligation of the Trust. This agreement is executed by an officer
of the Trust on behalf of the Trust and the Fund and not individually, and the
obligations of this agreement are binding only upon the assets and property of
the Fund and not upon the trustees, officers or shareholders of the Trust
individually. The Declaration of Trust under which the Trust was organized and
operates is on file with the Secretary of the Commonwealth of Massachusetts.
Dated June __, 1996
CALAMOS FINANCIAL SERVICES, INC.
By:_________________________________
Paul J. Marnell, Vice President
CFS INVESTMENT TRUST
By:_________________________________
John P. Calamos, President
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- -------------------------------------------------------------------------------
EXHIBIT 15
CFS INVESTMENT TRUST
Amended and Restated Distribution Plan
Pursuant to the provisions of Rule 12b-1 under the Investment Company
Act of 1940 (the "Act"), this amended and restated 12b-1 plan (the "Plan") has
been adopted for Calamos Strategic Income Fund, Calamos Convertible Fund,
Calamos Growth and Income Fund, Calamos Global Growth and Income Fund and
Calamos Growth Fund (the "Funds"), each a series of CFS Investment Trust (the
"Trust"), by a majority of the trustees of the Trust, including a majority of
the trustees who are not "interested persons" of the Trust (as defined in the
Act) and who have no direct or indirect financial interest in the operation of
the Plan or in any agreements related to the Plan (the "non-interested
trustees"). The substance of the Plan has also been approved by the vote of a
majority of the outstanding shares of each of the Funds. This Plan shall
become effective on _________ __, 1996 and shall amend and restate in their
entirety the 12b-1 plans previously adopted by the Trust.
Section 1. Distribution Plan. Each class of shares of each Fund shall
pay to Calamos Financial Services, Inc. (the "Distributor"), at the end of
each month, a Distribution Fee equal to the average daily net assets of the
class multiplied by that portion of the percentage indicated below for that
class which the number of days in the month bears to 365:
Class A shares .25%
Class C shares .75%
Such payment represents compensation for expenses incurred by the Distributor
for the promotion and distribution of the shares of the Fund making the
payment, including, but not limited to the printing of prospectuses and
reports used for sales purposes, advertisements, expenses of preparation and
printing of sales literature and other distribution-related expenses,
including any Distribution Fees paid to securities dealers and others who have
executed selling group agreements with the Distributor.
Section 2. Service Fee. Each Fund shall pay to the Distributor, at
the end of each month, a Service Fee equal to the average net assets of the
Fund multiplied by that portion of .25% which the number of days in the month
bears to 365. Such payment represents compensation for personal services
provided by the Distributor to the shareholders of the Fund, including
answering inquiries from clients of the Distributor and other shareholders
regarding the Fund; assisting clients in changing account designations and
addresses; assisting clients in processing purchase and redemption
transactions; investing client cash account balances automatically in shares
of the Fund; such other services as the Fund may request, to the extent the
Distributor is permitted to render such services by applicable statute, rule,
or regulation; and payment of Service Fees to securities dealers and others
("Service Agents") who provide such services to their clients who are Fund
shareholders. Subject to the limitations in this paragraph, the Distributor
shall determine the amounts to be paid by it to Service Agents and the basis
on which such amounts shall be determined. Service Fees paid to any Service
Agent for the activities covered by the Plan shall not exceed .25% of the
average daily net asset value of Fund shares owned by shareholders for whom
the Service Agent performs services.
<PAGE>
Section 3. Other Compensation. No additional payments are to be made
by the Trust or the Funds as a result of the Plan other than (a) the
compensation the Trust is otherwise obligated to pay to Calamos Asset
Management, Inc. (the "Adviser") pursuant to the Investment Management
Agreement and the Transfer Agency Agreement as in effect at any time, (b)
payments pursuant to Sections 1 and 2 of this Plan, and (c) payments made by
the Trust or the Funds in the ordinary course of their business. To the extent
any payments by the Trust or the Funds under subsection (c) above, or to or by
the Adviser, the Distributor, or other parties on behalf of the Trust, Adviser
or Distributor, are deemed to be payments for the financing of any activity
primarily intended to result in the sales of Fund shares issued by the Trust
within the context of Rule 12b-1 under the Act, then such payments shall be
deemed to have been made pursuant to the Plan. The costs and activities the
payment of which are intended to be within the scope of the Plan shall
include, but not necessarily be limited to, the following:
(i) the costs of the preparation, printing, and mailing of
all required reports and notices to existing shareholders;
(ii) the costs of the preparation, printing, and mailing or
other dissemination of all prospectuses (including statements of
additional information); and
(iii) the costs of preparation, printing and mailing of any
proxy statements and proxies.
Section 4. Information to be Provided by Distributor. The Distributor
shall prepare written reports to the Trust's board of trustees on a quarterly
basis showing all amounts paid under this Plan and any distribution or service
agreements and the purposes for which such payments were made, plus a summary
of the expenses incurred by the Distributor hereunder, together with such
other information as from time to time shall be reasonably requested by the
board of trustees of the Trust.
Section 5. Non-interested Trustees. So long as the Plan is in effect,
nominees for election as non-interested trustees shall be selected by the
non-interested trustees as required by Rule 12b-1 under the Act.
Section 6. Term of Plan. The Plan shall remain in effect until
____________, 1997 and shall continue in effect from year to year thereafter
only so long as such continuance is specifically approved at least annually by
the vote of a majority of the trustees of the Trust, including a majority of
the non-interested trustees of the Trust who have no direct or indirect
financial interest in the Plan or in any agreements related to the Plan, cast
in person at a meeting called for such purpose.
<PAGE>
Section 7. Termination of Plan. The Plan may be terminated as to a
Fund, without penalty, at any time by either a majority of the non-interested
trustees of the Trust or by vote of a majority of the outstanding voting
securities of that Fund, and shall terminate automatically in the event of any
act that terminates the Distribution Agreement with the Distributor.
Section 8. Related Agreements. Any agreement related to the Plan,
including any distribution or service agreement, may be terminated, without
penalty, at any time by either a majority of the non-interested trustees of
the Trust or by vote of a majority of the outstanding voting securities of the
Fund or Funds to which the agreement relates on not more than 60 days' written
notice to any other party to such agreement, and shall terminate automatically
in the event of any act that terminates the Plan or the Distribution Agreement
with the Distributor. Any such related agreement shall terminate automatically
in the event of any act that constitutes its assignment.
Section 9. Amendments. Neither the Plan nor any distribution or
service agreement may be amended to increase materially the amount deemed to
be spent for distribution or servicing of a Fund's shares without approval by
a majority of that Fund's outstanding voting securities, and all material
amendments to the Plan and any distribution or service agreement shall be
approved by a vote of a majority of the trustees of the Trust, including a
majority of the non-interested trustees of the Trust who have no direct or
indirect financial interest in the Plan or in any agreements related to the
Plan, cast in person at a meeting called for such purpose.
Section 10. Limitation of Liability. Any obligation of the Trust
hereunder shall be binding only upon the assets of the Trust (or the Fund) and
shall not be binding upon any trustee, officer, employee, agent, or
shareholder of the Trust. Neither the authorization of any action by the
trustees or shareholders of the Trust nor the execution of this Plan on behalf
of the Trust shall impose any liability upon any trustee or any shareholder.
This Plan and the terms and provisions thereof are hereby accepted
and agreed to by the Trust and the Distributor as evidenced by their execution
hereof.
Dated as of _________ __, 1996
CFS INVESTMENT TRUST CALAMOS FINANCIAL SERVICES, INC.
By: _______________________ By: _______________________
Paul J. Marnell John P. Calamos
Vice President President
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1 A futures contract on an index is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last
trading day of the contract and the price at which the index contract
was originally written. Although the value of a securities index is a
function of the value of certain specified securities, no physical
delivery of those securities is made.
2 A call option is "in-the-money" if the value of the futures contract
that is the subject of the option exceeds the exercise price. A put
option is "in-the-money" if the exercise price exceeds the value of the
futures contract that is the subject of the option.
3 An equity option is defined to mean any option to buy or sell stock, and
any other option the value of which is determined by reference to an
index of stocks of the type that is ineligible to be traded on a
commodity futures exchange (e.g., an option contract on a sub-index
based on the price of nine hotel-casino stocks). The definition of
equity option excludes options on broad-based stock indexes (such as the
Standard & Poor's 500 index).
4 No Fund currently intends to enter into reverse repurchase agreements.
