<PAGE>
As filed with the Securities and Exchange Commission on June 24, 1997
Securities Act registration no. 33-19228
Investment Company Act file no. 811-5443
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
- --------------------------------------------------------------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 18 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 21 [X]
- --------------------------------------------------------------------------------
CALAMOS INVESTMENT TRUST
(formerly named CFS Investment Trust)
(Registrant)
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Telephone number: 630/245-7200
- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of rule 485
X on June 24, 1997 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
___ 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 Convertible Fund, Calamos
Growth and Income Fund, Calamos Strategic Income Fund, Calamos Growth Fund and
Calamos Global Growth and Income Fund. Registrant's Rule 24f-2 Notice for the
fiscal year ended March 31, 1997 was filed on or about May 30, 1997.
- --------------------------------------------------------------------------------
Amending Parts A, B and C and filing exhibits.
- --------------------------------------------------------------------------------
<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>
Item 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
<PAGE>
21(a)-(c) Distributor
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>
PROSPECTUS June 24, 1997
CALAMOS FAMILY OF FUNDS(R)
CLASS A SHARES AND CLASS C SHARES
<TABLE>
<C> <S>
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.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
GROWTH FUND Seeks long-term capital growth.
- -------------------------------------------------------------------------------
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.
</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.
SHARES OF THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT
OR ANY GOVERNMENT AGENCY.
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>
KEY FEATURES
INVESTMENT OBJECTIVES
The investment objectives of the Funds are stated on the cover of this
prospectus. 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 if held for at least one year, but subject to an
annual .25% service fee and a .75% distribution fee, and, in the case of
shares redeemed within one year, a 1% contingent deferred sales charge.
Each class of shares of a Fund represents interests in the same portfolio of
investments of the Fund. The minimum initial investment in Class A shares or
Class C shares of a Fund is $500 and subsequent investments in the Fund 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, as expenses allocable to the Class A shares and
the Class C shares, for shareholder servicing and for services in distributing
those shares. See "Management of the Funds."
INVESTMENT ADVISER
Calamos Asset Management, Inc.(R) ("CAM" or the "Adviser").
DISTRIBUTOR
Calamos Financial Services, Inc.(R) ("CFS" or the "Distributor")
2
<PAGE>
EXPENSES
The following tables show certain information concerning shareholder
transaction expenses and projected annual fund operating expenses for Class A
shares and Class C shares of the Funds:
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------------------
Global
Growth and Strategic Growth and
Convertible Income Income Growth Income
Fund Fund Fund Fund Fund
----------- ---------- --------- ------ ----------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales charge on
purchases
(as a percentage of of-
fering 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 EX-
PENSES
(AS A PERCENTAGE OF AV-
ERAGE NET ASSETS)
Management fees.......... .75% .75% .75% 1.00% 1.00%
12b-1 fees (e)........... .50 .50 .50 .50 .50
Other expenses (after ex-
pense reimbursement).... .25 .75(a) .85(a) .50(a) .50(a)
---- ---- ---- ---- ----
Total Fund operating ex-
penses
(after expense
reimbursement).......... 1.50% 2.00% 2.10%(a) 2.00% 2.00%
<CAPTION>
Class C Shares
------------------------------------------------------
Global
Growth and Strategic Growth and
Convertible Income Income Growth Income
Fund Fund Fund Fund Fund
----------- ---------- --------- ------ ----------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales charge on
purchases
(as a percentage of of-
fering 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 EX-
PENSES
(AS A PERCENTAGE OF AV-
ERAGE 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 ex-
pense reimbursement).... .25(a) .75(a) .85(a) .50(a) .50(a)
---- ---- ---- ---- ----
Total Fund operating ex-
penses
(after expense
reimbursement).......... 2.00% 2.50% 2.60%(a) 2.50% 2.50%
</TABLE>
- ------------------------------
(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 of
each Fund, as a percentage of the average net assets of the class, to
2.00% for Class A shares and 2.50% for Class C shares through August 31,
1998, and the percentages shown for "Other expenses" take into account
expected expense reimbursements. Absent that limitation, the "Other
expenses" and "Total
3
<PAGE>
Fund operating expenses," respectively, for Class A shares of the Funds
other than Convertible Fund would be .85% and 2.10% for Growth and Income
Fund; 3.85% and 5.10% for Strategic Income Fund; 1.20% and 2.70% for Growth
Fund; and 2.30% and 3.80% for Global Growth and Income Fund. In the case of
Class C shares of the Funds other than Convertible Fund, absent the expense
limitation, the "Other expenses" and "Total Fund operating expenses,"
respectively, would have been 1.35% and 3.10% for Growth and Income Fund;
3.85% and 5.60% for Strategic Income Fund; 1.20% and 3.20% for Growth Fund;
and 2.30% and 4.30% for Global Growth and Income 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 .10% 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.
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>
Convertible Fund......................................... $62 $93 $125 $218
Growth and Income Fund................................... 67 107 150 269
Strategic Income Fund.................................... 68 110 155 279
Growth Fund.............................................. 67 107 150 269
Global Growth and Income Fund............................ 67 107 150 269
<CAPTION>
Class C Shares
----------------------
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
Convertible Fund......................................... $20 $62 $107 $231
Growth and Income Fund................................... 25 78 133 284
Strategic Income Fund.................................... 26 81 138 293
Growth Fund.............................................. 25 78 133 284
Global Growth and Income Fund............................ 25 78 N/A N/A
</TABLE>
4
<PAGE>
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.
----------------
FINANCIAL HIGHLIGHTS
The tables below reflect the results of the operations of Class A shares and
Class C shares of each Fund. Information in the tables was audited by Ernst &
Young LLP, independent 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.
5
<PAGE>
CONVERTIBLE FUND
<TABLE>
<CAPTION>
Class A Shares
- ------------------------ -----------------------------------------------------------------------------------------
Year ended Eleven
March 31, Months Year Ended April 30,
---------------- Ended -------------------------------------------------------------
1997 1996 3/31/95 1994 1993 1992 1991 1990 1989 1988(b)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $ 14.49 $ 12.41 $ 13.04 $ 13.96 $ 12.72 $ 11.39 $ 10.29 $ 10.73 $ 10.56 $ 11.94
Income from investment
operations:
Net investment income .36 .40 .38 .40 .42 .41 .49 .60 .59 .62
Net realized and
unrealized gain (loss)
on investments 1.39 3.06 (.01) .53 1.32 1.43 1.25 (.32) .14 (1.24)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations 1.75 3.46 .37 .93 1.74 1.84 1.74 .28 .73 (.62)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net in-
vestment income (.45) (.31) (.32) (.39) (.40) (.45) (.52) (.63) (.56) (.66)
Dividends from net re-
alized capital gains (1.11) (1.07) (.56) (1.46) (.10) -- -- -- -- (.10)
Dividends in excess of
net realized
capital gains -- -- (.12) -- -- -- -- -- -- --
Distributions from paid
in capital -- -- -- -- -- (.06) (.12) (.09) -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (1.56) (1.38) (1.00) (1.85) (.50) (.51) (.64) (.72) (.56) (.76)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 14.68 $ 14.49 $ 12.41 $ 13.04 $ 13.96 $ 12.72 $ 11.39 $ 10.29 $ 10.73 $ 10.56
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return (a) 12.9% 28.8% 3.2% 6.5% 14.0% 16.5% 17.7% 2.4% 7.2% (5.1%)
Ratios and supplemental
data:
Net assets, end of pe-
riod (000) $35,950 $24,460 $16,646 $17,023 $17,213 $16,940 $13,953 $18,664 $21,270 $23,194
Ratio of expenses to
average net assets 1.5% 1.5% 1.6%* 1.6% 1.7% 1.2% 1.2% 1.1% 1.1% 1.2%
Ratio of net investment
income to
average net assets 2.8% 3.0% 3.3%* 2.8% 3.2% 3.4% 4.3% 5.5% 5.6% 5.6%
Portfolio turnover rate 52.3% 65.2% 42.1% 73.1% 73.1% 83.8% 63.2% 93.4% 84.7% 55.5%
Average brokerage com-
mission paid per share $ .0610 $ .0633 $ .0936 $ .0952 $ .1000 $ .0966 N/A N/A N/A N/A
</TABLE>
- ------------------------------
(a) Total return is not annualized.
(b) Calamos Asset Management, Inc. became the Fund's investment adviser on
September 21, 1987.
*Annualized
6
<PAGE>
<TABLE>
<CAPTION>
Class C Shares
- ------------------------ --------------
7/5/96
through
3/31/97
--------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $13.87
Net income from invest-
ment operations:
Net investment income .30
Net realized and
unrealized gain on
investments 1.21
------
Total from investment
operations 1.51
------
Less distributions:
Dividends from net in-
vestment income (.25)
Dividends from net re-
alized capital gains (.50)
------
Total distributions (.75)
------
Net asset value, end of
period $14.63
Total return (b) 11.1%
Ratios and supplemental
data:
Net assets, end of pe-
riod (000) $3,094
Ratio of expenses to
average net assets 2.0%*
Ratio of net investment
income to average net
assets 2.7%*
</TABLE>
7
<PAGE>
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------------------------------------------
Year ended Eleven
March 31, Months Year Ended April 30, 9/22/88
-------------- Ended -------------------------------------- through
1997 1996 3/31/95 1994 1993 1992 1991 1990 4/30/89
------ ------ ------- ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $15.62 $12.68 $12.97 $13.90 $13.57 $11.54 $10.46 $10.49 $10.00
Net income from invest-
ment operations:
Net investment income .34 .37 .35 .31 .35 .29 .31 .33 .38
Net realized and
unrealized gain (loss)
on
investments 1.52 3.70 (.02) .34 1.97 2.02 1.09 .09 .49
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 1.86 4.07 0.33 .65 2.32 2.31 1.40 .42 .87
------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net in-
vestment income (.28) (.42) (.32) (.29) (.36) (.28) (.32) (.28) (.38)
Dividends from net re-
alized capital gains (1.68) (.71) (.30) (1.29) (1.63) -- -- (.17) --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (1.96) (1.13) (.62) (1.58) (1.99) (.28) (.32) (.45) (.38)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $15.52 $15.62 $12.68 $12.97 $13.90 $13.57 $11.54 $10.46 $10.49
====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (b) 12.9% 33.0% 2.8% 4.5% 18.8% 20.2% 13.4% 3.8% 9.0%
Ratios and supplemental
data:
Net assets, end of pe-
riod (000) $8,408 $5,813 $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% 2.0% 2.0%*
Ratio of net investment
income to average net
assets (a) 2.4% 2.6% 3.0%* 2.3% 2.6% 2.3% 2.9% 3.0% 4.8%*
Portfolio turnover rate 91.5% 86.4% 84.7% 155.2% 132.2% 111.6% 103.6% 103.0% 85.0%*
Average brokerage com-
mission paid per share $.0609 $.0604 $.0924 $.1002 $.1010 $.1004 N/A N/A N/A
</TABLE>
- ------------------------------
(a) After reimbursement and waiver of expenses by the Adviser equivalent to
0.1%, 0.1%, 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.
(c) After reimbursement and waiver of expenses by the Adviser equivalent to
0.6%* of average net assets.
*Annualized
8
<PAGE>
<TABLE>
<CAPTION>
Class C Shares
- ---------------------------- --------------
8/5/96
through
3/31/97
--------------
<S> <C>
Net asset value, beginning
of period $14.52
Net income from investment
operations:
Net investment income .26
Net realized and unrealized
gain (loss) on investments 1.30
------
Total from investment op-
erations 1.56
------
Less distributions:
Dividends from net invest-
ment income (.25)
Dividends from net realized
capital gains (.33)
------
Total distributions (.58)
------
Net asset value, end of pe-
riod $15.50
======
Total return (b) 10.8%
Ratios and supplemental da-
ta:
Net assets, end of period
(000) $ 330
Ratio of expenses to aver-
age net assets (c) 2.5%*
Ratio of net investment in-
come to average net assets
(c) 2.4%*
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE>
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Class A Shares
- ------------------------ ---------------------------------------------------------
Year Ended Eleven
March 31, Months Year ended April 30, 9/4/90
-------------- Ended ---------------------- through
1997 1996 3/31/95 1994 1993 1992 4/30/91
------ ------ ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $11.07 $10.13 $10.71 $10.96 $10.58 $10.60 $10.00
Income from investment
operations:
Net investment income .50 .53 .40 .36 .39 .59 .40
Net realized and
unrealized gain (loss)
on investments .29 .83 (.43) .11 .79 .46 .61
------ ------ ------ ------ ------ ------ ------
Total from investment
operations .79 1.36 (.03) .47 1.18 1.05 1.01
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net in-
vestment income (.68) (.42) (.36) (.41) (.41) (.51) (.40)
Dividends from net re-
alized capital gains (.37) - (.19) (.31) (.39) (.56) (.01)
------ ------ ------ ------ ------ ------ ------
Total distributions (1.05) (.42) (.55) (.72) (.80) (1.07) (.41)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $10.81 $11.07 $10.13 $10.71 $10.96 $10.58 $10.60
====== ====== ====== ====== ====== ====== ======
Total return (c) 7.4% 13.6% (0.2%) 4.2% 11.5% 10.5% 10.2%
Ratios and supplemental
data:
Net assets, end of pe-
riod (000) $1.317 $1,620 $2,211 $3,004 $2,522 $1,410 $ 595
Ratio of expenses to
average net assets
(a)(b) 2.1% 2.2% 2.4%* 2.2% 2.3% 2.5% 2.6%*
Ratio of net investment
income to average net
assets (a) 4.3% 4.6% 4.0%* 3.2% 3.9% 5.3% 6.6%*
Portfolio turnover rate 152.5% 81.1% 59.9% 79.4% 73.8% 97.0% 108.9%*
Average brokerage com-
mission paid per share $.0711 $.0636 $.0966 $.0977 $.1056 $.1200 N/A
</TABLE>
- ------------------------------
(a) After reimbursement and waiver of expenses by the Adviser equivalent to
3.0%, 1.6%, 1.1%*, 1.0%, 0.7%, 1.25% and 4.8%* of average net assets,
respectively.
(b) Includes 0.1%, 0.2%, 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.
*Annualized.
10
<PAGE>
GROWTH FUND
<TABLE>
<CAPTION>
Class A Shares
- ------------------------ -------------------------------------------------------------
Year Ended Eleven
March 31, Months Year ended April 30, 9/4/90
--------------- Ended ----------------------- through
1997 1996 3/31/95 1994 1993 1992 4/30/91
------ ------ ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $15.74 $14.18 $14.57 $13.95 $14.04 $12.48 $10.00
Income from investment
operations:
Net investment income
(loss) (.09) (.09) .02 .01 (.02) (.01) .07
Net realized and
unrealized gain (loss)
on investments 3.14 4.69 (.28) 1.21 .20 1.60 2.50
------ ------ ------ ------ ------ ------ ------
Total from investment
operations 3.05 4.60 (.26) 1.22 .18 1.59 2.57
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net in-
vestment income -- (.07) -- (.01) -- -- (.08)
Dividends from net re-
alized capital gains (1.75) (2.97) (.13) (.59) (.27) (.03) (.01)
------ ------ ------ ------ ------ ------ ------
Total distributions (1.75) (3.04) (.13) (.60) (.27) (.03) (.09)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $17.04 $15.74 $14.18 $14.57 $13.95 $14.04 $12.48
====== ====== ====== ====== ====== ====== ======
Total return (b) 19.1% 35.2% (1.8%) 8.9% 1.4% 12.7% 25.8%
Ratios and supplemental
data:
Net assets, end of pe-
riod (000) $6,635 $2,866 $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% 2.0% 2.0%*
Ratio of net investment
income to average net
assets (a) (1.3)% (.08)% 0.2%* 0.1% (0.1)% (0.1)% 0.8%*
Portfolio turnover rate 173.9% 252.4% 104.3% 87.3% 56.8% 47.3% 15.8%*
Average brokerage com-
mission paid per share $.0614 $.0608 $.0910 $.0996 $.1011 $.1098 N/A
</TABLE>
- ------------------------------
(a) After reimbursement and waiver of expenses by the Adviser equivalent to
0.7%, 1.2%, 1.6%*, 1.1%, 0.7%, 0.8% and 4.5%* of average net assets,
respectively.
(b) Total return is not annualized.
(c) After reimbursement and waiver of expenses by the Adviser equivalent to
0.6% of average net assets.
*Annualized.
11
<PAGE>
GROWTH FUND
<TABLE>
<CAPTION>
Class C Shares
- ----------------------------------- --------------
9/3/96
through
3/31/97
--------------
<S> <C>
Net asset value, beginning of pe-
riod $17.63
Net income from investment opera-
tions:
Net investment income (.07)
Net realized and unrealized gain
(loss) on investments 1.07
------
Total from investment operations 1.00
------
Less distributions:
Dividends from net realized capi-
tal gains (1.65)
------
Net asset value, end of period $16.98
======
Total return (b) 5.4%
Ratios and supplemental data:
Net assets, end of period (000) $ 8
Ratio of expenses to average net
assets (c) 2.5%*
Ratio of net investment income to
average net assets (c) (1.9)%*
</TABLE>
- -------------------------------------------------------------------------------
(a) After reimbursement and waiver of expenses by the Adviser equivalent to
0.7%, 1.2%, 1.6%*, 1.1%, 0.7%, 0.8% and 4.5%* of average net assets,
respectively.
(b) Total return is not annualized.
(c) After reimbursement and waiver of expenses by the Adviser equivalent to
0.6% of average net assets.
*Annualized.
12
<PAGE>
GLOBAL GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Class A Class C
- ----------------------------------------- ----------------- ------------------
September 9, 1996 September 24, 1996
through through
March 31, 1997 March 31, 1997
----------------- ------------------
<S> <C> <C>
Net asset value, beginning of period $ 5.00 $5.00
Net income from investment operations:
Net investment income .04 .03
Net realized and unrealized gain (loss)
on investments .36 .35
------ -----
Total from investment operations .40 .38
------ -----
Less distributions:
Dividends from net investment income (.01) (.01)
------ -----
Net asset value, end of period $ 5.39 $5.37
====== =====
Total return (b) 8.0% 7.6%
Ratios and supplemental data:
Net assets, end of period (000) $2,926 $ 390
Ratio of expenses to average net assets
(a) 2.0%* 2.5%*
Ratio of net investment income to aver-
age net assets (a) 1.8%* 1.6%*
</TABLE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 9, 1996
through
March 31, 1997
-----------------
<S> <C>
Portfolio turnover rate 160.4%*
Average brokerage commission paid per share $.0758
</TABLE>
- ------------------------------
(a) After reimbursement and waiver of expenses by the Adviser equivalent to
1.82%* of average net assets.
(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.
13
<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.
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 investment grade securities, 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."
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.
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."
14
<PAGE>
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.
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.
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."
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
investment grade securities, 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.
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
15
<PAGE>
purposes. Occasionally securities may be purchased on a when-issued or
delayed-delivery basis.
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.
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 year ended March 31, 1997 for each Fund other than Growth Fund,
which did not invest in debt securities rated below investment grade during
that period.
<TABLE>
<CAPTION>
Global
Growth Growth
and Strategic and
Rating Convertible Income Income Income
Category Fund Fund Fund Fund
---------- ----------- ------ --------- ------
<S> <C> <C> <C> <C>
U.S. Govt. 0.15% 17% 0% 8
AAA -- 0 0 0
AA 0.03 2 0 0
A 0.10 4 9 7
BBB 0.15 11 24 12
BB 0.03 7 6 0
B 0.03 10 32 1
CCC -- 0 0 0
not rated 0.07 3 9 12
</TABLE>
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.
16
<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. Growth and Income Fund and Strategic 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.
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
17
<PAGE>
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
composed 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.
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
18
<PAGE>
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.
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
19
<PAGE>
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.
At March 31, 1997, Global Growth and Income Fund had invested 17% of its net
assets in foreign securities. No other Fund had as much as 1% of its net
assets so invested.
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,
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<PAGE>
please refer to the Statement of Additional Information.
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.
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
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<PAGE>
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 when the Adviser
determines that a defensive position is warranted. 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.
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%. The portfolio turnover rate
of Global Growth and Income Fund is not expected to exceed 100% under normal
circumstances. A higher 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.
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<PAGE>
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.
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.
<TABLE>
<CAPTION>
Annual 12b-1 Fees
(as a % of average
Class Initial Sales Charge daily net assets)* Other Information
- ----- -------------------- ------------------ -----------------
<S> <C> <C> <C>
Class Maximum initial sales .50% Initial sales charge waived or
A charge of 4.75% of offer- reduced for certain purchases**
ing price
Class None 1.00%*** 1% deferred sales charge on
C shares redeemed within one year
</TABLE>
- ------------------------------
*Of this amount, .25% is for administrative services and the balance is for
distribution services.
**See the note to the following table.
***The 12b-1 fee of 1% for the first year is advanced to the Selling Dealer by
CFS from its own resources at the time of investment. Annual 12b-1 fees are
paid quarterly in arrears beginning in the second year.
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<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:
----------------
<TABLE>
<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
</TABLE>
- ------------------------------
*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.
----------------
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 retains the entire
amount of any deferred sales charge on Class C shares redeemed within one year
of purchase. 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.
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<PAGE>
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.
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"), and the Summit Fund Shares were purchased by
exchange from a Fund, you may purchase shares of a Fund through your Merrill
Lynch broker by exchange of Summit Fund Shares. See "How to Redeem Shares--
Redemption by Exchange." YOU MAY NOT MAKE MORE THAN FOUR EXCHANGES FROM ANY
FUND DURING ANY CALENDAR YEAR. No sales charge is imposed on purchases of
Class A shares by exchange of Class A shares 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 purchasing 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 purchasing shares 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
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<PAGE>
the account of such person; (k) any company exchanging shares with a Fund
pursuant to a merger, acquisition or exchange offer; (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; and (m) any investor purchasing
shares through Charles Schwab & Co. or Fidelity Investments. Please note that,
if you purchase or redeem shares through a broker or dealer, the broker or
dealer may charge a fee for effecting the transaction.
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.
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
26
<PAGE>
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.
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 the exchange program for Summit
Fund Shares) if your signed, properly completed application is on file. AN
EXCHANGE TRANSACTION IS A SALE AND PURCHASE OF SHARES FOR
27
<PAGE>
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
A check for proceeds of a redemption will not be released 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.
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.
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<PAGE>
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. Convertible Fund, Growth and Income Fund, Strategic 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.
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
29
<PAGE>
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.
THE ADVISER
Each Fund's investments are managed by its investment adviser, Calamos Asset
Management, Inc. ("CAM"). At March 31, 1997, CAM managed approximately $1.9
billion in assets of individuals and institutions. CAM is controlled by John
P. Calamos, who has been engaged in the investment advisory business since
1977. Mr. Calamos is also the controlling 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. 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 ordinary 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 shares of each Fund, as a percentage of the
average net assets of the particular class of shares, to 2.00% for Class A
shares and 2.50% for Class C shares through August 31, 1998. Subject to those
expense limitations, each Fund pays all of its operating expenses not
specifically assumed by CAM.
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; 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. During the past five years, John P. Calamos has
been president and a 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, a trustee of the Trust since 1997 and a
managing director of CAM and CFS.
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. Reallowances by CFS on Class A shares are
30
<PAGE>
made quarterly in arrears. Plan payments on Class C shares are made as
follows: (1) for the first year after investment, in a single payment advanced
by CFS from its own resources; and (ii) for the second and subsequent years,
quarterly in arrears.
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 the investment performance of its
classes of shares from time to time in advertisements, sales literature and
otherwise. Convertible Fund, Growth and Income Fund and Strategic 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" for each class of
shares. Total Return for a class of shares of a Fund for a period is the
percentage change in value during a period of an investment in those 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 same class. Quotations
of Average Annual Total Return for Class A shares will take into account the
effect of the sales charge on the amount available for investment; quotations
of Total Return for Class A shares 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.
31
<PAGE>
Growth of a $10,000 Investment Over Time
Based on a hypothetical investment made in the CALAMOS Convertible Fund-
A Shares from 6/21/85 through 3/31/97. Returns are adjusted for load.
Past performance is not an indication of future results.
<TABLE>
<CAPTION>
CALAMOS CONV A Dec-1985 Dec-1986
<S> <C> <C> <C>
Calamos Conver $ 9,525 $10,197 $11,842
Lehman Brother $10,000 $10,973 $12,687
S&P 500 Index $10,000 $11,232 $13,278
CALAMOS CONV Dec-1987 Dec-1988
Calamos Conver $11,312 $12,028
Lehman Brother $12,979 $13,963
S&P 500 Index $13,966 $16,271
CALAMOS CONV Dec-1989 Dec-1990
Calamos Conver $14,022 $13,523
Lehman Brother $15,951 $17,271
S&P 500 Index $21,386 $20,703
CALAMOS CONV Dec-1991 Dec-1992 Dec-1993
Calamos Conver $18,492 $19,901 $23,395
Lehman Brother $20,057 $21,579 $23,960
S&P 500 Index $27,025 $29,102 $32,009
CALAMOS CONV Dec-1994 Dec-1995
Calamos Conver $21,749 $28,112
Lehman Brother $23,122 $27,570
S&P 500 Index $32,434 $44,596
CALAMOS CONV Dec-1996 Mar-1997
Calamos Conver $32,547 $33,224
Lehman Brother $28,370 $28,126
S&P 500 Index $54,963 $56,436
</TABLE>
Growth of a $10,000 Investment Over Time
Based on a hypothetical investment made in the CALAMOS Convertible Fund-
C Shares from 7/5/96 through 3/31/97. Returns are adjusted for load.
Past performance is not an indication of future results.
<TABLE>
<CAPTION>
CALAMOS CONV CONVERTIBLE FUND LB G/C S&P 500 INDEX
<S> <C> <C> <C>
1996 $10,000 $10,000 $10,000
1996 $10,914 $10,487 $11,180
1997 $11,016 $10,397 $11,480
</TABLE>
Growth of a $10,000 Investment Over Time
Based on a hypothetical investment made in the CALAMOS Growth and Income Fund-
A Shares from 9/22/88 through 3/31/97. Returns are adjusted for load.
Past performance is not an indication of future results.
<TABLE>
<CAPTION>
CALAMOS GROWTH & INCOME-A GROWTH & INCOME LB G/C INT S&P 500 INDEX
<S> <C> <C> <C>
Sep-1988 $ 9,525 $10,000 $10,000
Dec-1988 $ 9,611 $10,096 $10,302
Dec-1989 $11,188 $11,533 $13,541
Dec-1990 $10,801 $12,488 $13,108
Dec-1991 $15,193 $14,502 $17,112
Dec-1992 $16,729 $15,603 $18,427
Dec-1993 $19,201 $17,324 $20,267
Dec-1994 $18,182 $16,719 $20,536
Dec-1995 $23,480 $19,935 $28,237
Dec-1996 $27,990 $20,513 $34,801
Mar-1997 $28,259 $20,337 $35,733
</TABLE>
Growth of a $10,000 Investment Over Time
Based on a hypothetical investment made in the CALAMOS Growth and Income Fund-
C Shares from 8/5/96 through 3/31/97. Returns are adjusted for load.
Past performance is not an indication of future results.
<TABLE>
<CAPTION>
CALAMOS GROWTH & INCOME-C/shrs GROWTH & INCOME LB G/C INT S&P 500 INDEX
<S> <C> <C> <C>
Aug-1996 $10,000 $10,000 $10,000
Dec-1996 $10,984 $10,411 $11,698
Mar-1997 $10,965 $10,321 $12,012
</TABLE>
32
<PAGE>
Growth of a $10,000 Investment Over Time
Based on a hypothetical investment made in the CALAMOS Strategic Income Fund
from 9/4/90 through 3/31/97. Returns are adjusted for load.
Past performance is not an indication of future results.
<TABLE>
<CAPTION>
STRATEGIC INCOME FUND STRATEGIC FUND 30 DAY T BILLS LB G/C INT
<S> <C> <C> <C>
1990 $ 9,525 $10,000 $10,000
1990 $ 9,782 $10,175 $10,509
1991 $11,149 $10,693 $12,204
1992 $12,484 $11,029 $13,130
1993 $13,998 $11,342 $14,579
1994 $12,959 $11,756 $14,069
1995 $14,833 $12,432 $16,777
1996 $16,077 $13,087 $17,674
Mar-97 $16,376 $13,243 $17,522
</TABLE>
Growth of a $10,000 Investment Over Time
Based on a hypothetical investment made in the CALAMOS Growth Fund-
A Shares from 9/4/90 through 3/31/97. Returns are adjusted for load.
Past performance is not an indication of future results.
<TABLE>
<CAPTION>
CALAMOS GROWTH FUND-A GROWTH FUND S&P 500
<S> <C> <C>
1990 $ 9,525 $10,000
1990 $10,478 $10,898
1991 $14,690 $14,226
1992 $14,878 $15,320
1993 $15,524 $16,850
1994 $14,635 $17,073
1995 $18,649 $23,476
1996 $25,073 $28,933
Mar-1997 $23,566 $29,708
</TABLE>
Growth of a $10,000 Investment Over Time
Based on a hypothetical investment made in the CALAMOS Growth Fund-
C Shares from 9/3/96 through 3/31/97. Returns are adjusted for load.
Past performance is not an indication of future results.
<TABLE>
<CAPTION>
CALAMOS GROWTH FUND-C/shrs GROWTH FUND S&P 500
<S> <C> <C>
1996-3 $10,000 $10,000
1996-4 $11,223 $10,846
1997-1 $10,429 $11,137
</TABLE>
Growth of a $10,000 Investment Since Inception
Based on a hypothetical investment made in the CALAMOS Global Growth
and Income Fund-A from 9/9/96 through 3/31/97. Returns are adjusted
for load. Past performance is not an indication of future results.
<TABLE>
<CAPTION>
GLOBAL GROWTH & INCOME-A GLB GROWTH & INCOME MSCI WORLD
<S> <C> <C>
1996-3 $ 9,525 $10,000
1996-4 $10,041 $10,881
1997-1 $10,289 $10,924
</TABLE>
33
<PAGE>
Growth of a $10,000 Investment Since Inception
Based on a hypothetical investment made in the CALAMOS Global Growth
and Income Fund-C from 9/24/96 through 3/31/97. Returns are adjusted
for load. Past performance is not an indication of future results.
Global Growth & Income-C/shrs Glb Growth & MSCI World
1996-3 $10,000 $10,000
1996-4 $10,543 $10,469
1997-1 $10,656 $10,511
34
<PAGE>
CALAMOS FAMILY OF FUNDS
STANDARDIZED PERFORMANCE
<TABLE>
<CAPTION>
Total Return Average Annual Total Return
------------- -----------------------------------------------
1 Year 5 Years 10 Years Since Inception
------------- ------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Convertible Fund
A Shares--
Inception: 6/21/85 12.94% 7.59% 12.47% 11.39% 9.78% 9.25% 11.17% 10.71%
C Shares--
Inception: 7/5/96 NA NA NA NA NA NA 11.12%/1/ NA
Growth and Income Fund
A Shares--
Inception: 9/22/88 12.86% 7.49% 13.34% 12.25% NA NA 13.60% 12.95%
C Shares--
Inception: 8/5/96 NA NA NA NA NA NA 10.83%/1/ NA
Strategic Income Fund
A Shares--
Inception: 9/4/90 7.42% 2.34% 7.26% 6.21% NA NA 8.59% 7.79%
Growth Fund
A Shares--
Inception: 9/4/90 19.08% 13.46% 11.04% 9.97% NA NA 14.77% 13.92%
C Shares--
Inception: 9/3/96 NA NA NA NA NA NA 5.35%/1/ NA
Global Growth and
Income Fund
A Shares--
Inception: 9/9/96 NA NA NA NA NA NA 8.04%/1/ 2.89%/1/
C Shares--
Inception: 9/24/96 NA NA NA NA NA NA 7.64%/1/ NA
</TABLE>
This chart provides performance return numbers for the five Funds and shows
both non-load-adjusted and load-adjusted returns, taking into consideration the
maximum 4.75% sales charge on A shares. Total return and average annual total
return performance measure net investment income and capital gain or loss from
portfolio investments and reflect changes in share price, reinvestment of
income and capital gain distributions. Returns for periods of less than one
year are not annualized.
Performance has not been adjusted for the sales charge in the UNSHADED area of
the chart.
Performance has been adjusted for the 4.75% sales charge in the SHADED area of
the chart.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that an investor's shares when redeemed may
be worth more or less than their original cost.
/1/Total return is not annualized.
35
<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 Calamos 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. Prior to June 23, 1997 the
name of the Trust was CFS Investment Trust. Growth and Income Fund was named
"Calamos Small/Mid Cap Convertible Fund" prior to April 29, 1994.
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 the Trust has five series in operation, and each series
offers three classes of shares (Class A, Class C and Class I). All shares
issued will be fully paid and non-assessable and will have no preemptive or
conversion rights.
Class I shares of the Funds, which are offered only with a minimum initial
investment of $5 million, do not bear any sales, marketing or distribution
expenses. In the future, the board of trustees may authorize the issuance of
shares of additional series and additional classes of shares of any series.
Different classes of shares of a single series may bear different sales charges
and other expenses which may affect their relative performance. Information
regarding other classes of shares may be obtained by calling the Distributor at
the telephone number shown on the back cover page of this prospectus or from
any institution that makes available shares of the Funds.
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.
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
36
<PAGE>
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 May 31, 1997, John P. Calamos had the power to vote and dispose of 206,908
shares (50.2%) of Growth Fund. Of these shares, 85,442 shares (20.8%) were
held by CFS 401(k) Profit Sharing Plan and Trust, of which Mr. Calamos is
trustee and in which Mr. Calamos and other employees of Calamos Financial
Services, Inc. and Calamos Asset Management, Inc. are participants. 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 Mr. John 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.
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
37
<PAGE>
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.
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.
38
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Key Features............................................................... 2
Expenses................................................................... 3
Financial Highlights....................................................... 5
Investment Objectives and Policies......................................... 14
Common Investment Practices................................................ 15
Risk of Investment......................................................... 22
Investment Restrictions.................................................... 22
How to Purchase Shares..................................................... 23
How to Redeem Shares....................................................... 27
Shareholder Services....................................................... 28
Dividends and Distributions................................................ 29
Taxes...................................................................... 29
Management of the Funds.................................................... 29
Performance Information.................................................... 31
Portfolio Transactions..................................................... 36
The Trust and Its Shares................................................... 36
Appendix--Description of Bond Ratings...................................... 37
</TABLE>
INVESTMENT ADVISER AND
TRANSFER AGENT:
Calamos Asset Management, Inc.(R)
1111 East Warrenville Road
Naperville, Illinois 60563-1493
DISTRIBUTOR:
Calamos Financial Services, Inc.(R)
1111 East Warrenville Road
Naperville, Illinois 60563-1493
COUNSEL:
Bell, Boyd & Lloyd
Chicago, Illinois
INDEPENDENT AUDITORS:
Ernst & Young LLP
Chicago, Illinois
NO DEALER, SALESMAN OR ANY OTHER PERSON IS AUTHORIZED, IN CONNECTION WITH THE
OFFER CONTAINED IN THIS PROSPECTUS, TO ACT AS AGENT FOR CALAMOS INVESTMENT
TRUST, NOR IS ANY PERSON AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REP-
RESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN SUPPLEMENTARY INFORMATION
OR IN SUPPLEMENTAL SALES MATERIAL AUTHORIZED BY CALAMOS INVESTMENT TRUST, AND
NO PERSON IS ENTITLED TO RELY UPON ANY INFORMATION OR REPRESENTATION NOT CON-
TAINED HEREIN OR THEREIN. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN
ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
CALAMOS FAMILY OF FUNDS(R)
CONVERTIBLE FUND
GROWTH AND INCOME FUND
STRATEGIC INCOME FUND
GROWTH FUND
GLOBAL GROWTH AND INCOME FUND
PROSPECTUS
JUNE 24, 1997
1111 EAST WARRENVILLE ROAD
NAPERVILLE, ILLINOIS 60563-1493
(630) 245-7200
(800) 823-7386
<PAGE>
Prospectus June 24, 1997
CALAMOS FAMILY OF FUNDS/(R)/
Institutional Shares
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
Growth Fund Seeks long-term capital growth.
- --------------------------------------------------------------------------------
Global Growth and Seeks high long-term total return through capital
Income Fund appreciation and current income derived from a
globally diversified portfolio of convertible,
equity and fixed-income securities.
- --------------------------------------------------------------------------------
</TABLE>
Minimum initial investment: $5 million
----------------------------
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.
Shares of the Funds are neither insured nor guaranteed by the U.S. Government or
any government agency.
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>
KEY FEATURES
INVESTMENT OBJECTIVES
The investment objectives of the Funds are stated on the cover of this
prospectus. 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 I shares of each Fund (referred to in this prospectus as "Institutional
Shares") are offered without any sales charge and are not subject to any 12b-1
charges. Each Fund also offers shares of two other classes of shares that bear
certain expenses not borne by the Institutional Shares.
Each class of shares of a Fund represents interests in the same portfolio of
investments of the Fund. The minimum initial investment in Institutional Shares
is $5 million. Shares are redeemable at net asset value, which may be more or
less than original cost. See "How to Purchase Shares" and "How to Redeem
Shares."
INVESTMENT ADVISER
Calamos Asset Management, Inc./(R)/
("CAM" or the "Adviser").
DISTRIBUTOR
Calamos Financial Services, Inc./(R)/
("CFS" or the "Distributor").
2
<PAGE>
EXPENSES
The following tables show certain information concerning shareholder transaction
expenses and projected annual fund operating expenses for Institutional Shares
of the Funds:
<TABLE>
<CAPTION>
Global
Growth and Strategic Growth and
Convertible Income Income Growth Income
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)............ None None None None None
Maximum sales charge on reinvested
dividends...................................... None None None None None
Deferred sales charge......................... None None None None None
Exchange fee................................... None None None None None
Redemption fees (b)............................ 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..................................... None None None None None
Other expenses (after expense reimbursement)... .25 .75 (a) .75 (a) .50 (a) .50 (a)
---- ------ ------ ------ ------
Total Fund operating expenses
(after expense reimbursement).............. 1.00% 1.50% 1.50% 1.50% 1.50%
</TABLE>
- ------------------
(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 Institutional Shares of
each Fund, as a percentage of the average net assets of the class, to
1.50%, 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
Institutional Shares of the Funds other than Convertible Fund would be .85%
and 1.60% for Growth and Income Fund; 3.85% and 4.60% for Strategic Income
Fund; 1.20% and 2.20% for Growth Fund; and 2.30% and 3.30% for Global
Growth and Income 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 .10% of average net assets.
(b) A service charge of $15 is deducted from proceeds of redemption paid by
wire.
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:
3
<PAGE>
<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
Convertible Fund $10 $32 $55 $122
Growth and Income Fund 15 47 82 179
Strategic Income Fund 16 50 87 190
Growth Fund 15 47 82 179
Global Growth and Income Fund 15 47 N/A N/A
</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.
------------------------------------------------------
FINANCIAL HIGHLIGHTS
Institutional Shares of the Funds have not previously been offered. However, the
Funds' annual report, which may be obtained from the Trust upon request at no
charge, contains financial and performance information for the Class A shares
and Class C shares of the Funds.
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.
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 investment grade securities,
4
<PAGE>
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."
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.
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.
GROWTH FUND
Growth Fund seeks long-term capital growth.
5
<PAGE>
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.
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."
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
investment grade securities, 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.
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
6
<PAGE>
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. Occasionally securities may be purchased on a when-
issued or delayed-delivery basis.
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.
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 year ended
7
<PAGE>
March 31, 1997 for each Fund other than Growth Fund, which did not invest in
debt securities rated below investment grade during that period.
<TABLE>
<CAPTION>
Growth Global
and Strategic Growth and
Rating Convertible Income Income Income
Category Fund Fund Fund Fund
- --------------- ------------ ------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Govt. 0.15% 17% 0% 8
AAA - 0 0 0
AA 0.03 2 0 0
A 0.10 4 9 7
BBB 0.15 11 24 12
BB 0.03 7 6 0
B 0.03 10 32 1
CCC - 0 0 0
not rated 0.07 3 9 12
</TABLE>
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.
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. Growth and Income Fund and Strategic 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
8
<PAGE>
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.
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 composed 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.
9
<PAGE>
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.
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.
10
<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
11
<PAGE>
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.
At March 31, 1997, Global Growth and Income Fund had invested 17% of its net
assets in foreign securities. No other Fund had as much as 1% of its net assets
so invested.
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.
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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.
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.
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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.
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 when the Adviser
determines that a defensive position is warranted. 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.
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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.
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%. The portfolio turnover rate
of Global Growth and Income Fund is not expected to exceed 100% under normal
circumstances. A higher 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.
How to Purchase Shares
Shares of the Funds are sold by Calamos Financial Services, Inc. ("CFS"), the
Funds' distributor, and may be purchased by check
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or wire sent to CFS. Shares may also be purchased through selected broker-
dealers and banks that have signed agreements with CFS. The minimum initial
investment by a shareholder in Institutional Shares is $5 million. Each Fund
reserves the right to reject any order for the purchase of its shares in whole
or in part, to suspend the sale of its shares to the public in response to
conditions in the securities markets or otherwise or to reduce the minimum
initial investment applicable to certain purchases. Each purchase of shares is
confirmed by a written statement mailed to the shareholder, without issuance of
share certificates.
OFFERING PRICE
Institutional Shares of each Fund are sold without any sales charge. When
placing an order, you must specify that your order is for Institutional Shares.
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.
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. See
"How to Redeem Shares - Redemption by Exchange." You may not make more than four
exchanges from any Fund during any calendar year. No sales charge is imposed on
purchases of Institutional Shares by exchange of Institutional Shares from
another Fund or by exchange of Cash Account Shares provided the aggregate value
of your Institutional Shares of all Funds is at least $5 million. Please review
the information under "How to Redeem Shares - Redemption by Exchange."
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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.
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.
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
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(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 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, you should obtain
the prospectus relating to those shares from the Adviser and read it carefully.
The exchange privilege is not an offering or recommendation of Cash Account
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
A check for proceeds of a redemption will not be released 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. Each Fund reserves the
right upon 30 days' written notice to involuntarily redeem, at net asset value,
the shares of any shareholder whose Institutional Class Shares of all Funds have
an aggregate value of less than $5 million, unless the reduction in value to
less than $5 million was the result of market fluctuation.
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.
SYSTEMATIC WITHDRAWAL PLAN
You may request that a Fund periodically redeem Institutional Shares having a
specified redemption value and send you a check for the proceeds. Withdrawal
proceeds are likely to exceed dividends and
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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.
EXCHANGE PRIVILEGE
You may exchange shares of any Fund for shares of another Fund or for Cash
Account Shares or exchange Cash Account 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. Convertible Fund, Growth and Income Fund, Strategic 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.
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
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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.
THE ADVISER
Each Fund's investments are managed by its investment adviser, Calamos Asset
Management, Inc. ("CAM"). At March 31, 1997, CAM managed approximately $1.9
billion in assets of individuals and institutions. CAM is controlled by John P.
Calamos, who has been engaged in the investment advisory business since 1977.
Mr. Calamos is also the controlling 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. 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 ordinary 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 shares of each Fund, as a percentage of the average net
assets of the particular class of shares, to 1.5% for Institutional shares, to
2.00% for Class A shares and 2.50% for Class C shares through August 31, 1998.
Subject to those expense limitations, each Fund pays all of its operating
expenses not specifically assumed by CAM.
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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;
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.
During the past five years, John P. Calamos has been president and a 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, a trustee of the Trust since 1997 and a managing director of CAM and CFS.
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 the investment performance of its
classes of shares from time to time in advertisements, sales literature and
otherwise. Convertible Fund, Growth and Income Fund and Strategic 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" for each class of shares.
Total Return for a class of shares of a Fund for a period is the percentage
change in value during a period of an investment in those 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 same class. 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.
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,
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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 Calamos 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. Prior to June 23, 1997 the name
of the Trust was CFS Investment Trust. Growth and Income Fund was named "Calamos
Small/Mid Cap Convertible Fund" prior to April 29, 1994.
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 the Trust has five series in operation, and each series offers three
classes of shares (Class A, Class C and Class I). All shares issued will be
fully paid and non-assessable and will have no preemptive or conversion rights.
Class A shares of each Fund are offered at net asset value plus a sales charge
of up to 4.75% of the offering price and are subject to an annual .25% service
fee and a .25% distribution fee. Class C shares of each Fund are offered at net
asset value without an initial or contingent deferred sales charge if held for
at least one year but are subject to an annual .25% service fee and a .75%
distribution fee and, in the case of shares redeemed within one year, a 1%
contingent deferred sales charge. In the future, the board of trustees may
authorize the issuance of shares of additional series and additional classes of
shares of any series. Different classes of shares of a single series may bear
different sales charges and other expenses which may affect their relative
performance. Information regarding other classes of shares may be obtained by
calling the Distributor at the telephone number shown on the back cover page of
this prospectus or from any institution that makes available shares of the
Funds.
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.
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
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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 May 31, 1997, John P. Calamos had the power to vote and dispose of 206,908
shares (50.2%) of Growth Fund. Of these shares, 85,442 shares (20.8%) were held
by CFS 401 (k) Profit Sharing Plan and Trust, of which Mr. Calamos is trustee
and in which Mr. Calamos and other employees of Calamos Financial Services, Inc.
and Calamos Asset Management, Inc. are participants. 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 Mr. John 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.
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").
23
<PAGE>
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.
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
24
<PAGE>
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.
25
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Table of Contents
Page
----
Key Features............................2
Expenses................................3
Financial Highlights....................4
Investment Objectives and Policies......4
Common Investment Practices.............6
Risk of Investment.....................15
Investment Restrictions................15
How to Purchase Shares.................15
How to Redeem Shares...................17
Shareholder Services...................18
Dividends and Distributions............19
Taxes..................................19
Management of the Funds................20
Performance Information................21
Portfolio Transactions.................21
The Trust and Its Shares...............22
Appendix--Description of Bond Ratings..23
</TABLE>
INVESTMENT ADVISER AND
TRANSFER AGENT:
CALAMOS ASSET MANAGEMENT, INC./(R)/
1111 East Warrenville Road
Naperville, Illinois 60563-1493
DISTRIBUTOR:
CALAMOS FINANCIAL SERVICES, INC./(R)/
1111 East Warrenville Road
Naperville, Illinois 60563-1493
COUNSEL:
Bell, Boyd & Lloyd
Chicago, Illinois
INDEPENDENT AUDITORS:
Ernst & Young LLP
Chicago, Illinois
No dealer, salesman or any other person is authorized, in connection with the
offer contained in this prospectus, to act as agent for Calamos 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 Calamos 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.
CALAMOS FAMILY OF FUNDS/(R)/
CONVERTIBLE FUND
GROWTH AND INCOME FUND
STRATEGIC INCOME FUND
GROWTH FUND
GLOBAL GROWTH AND INCOME FUND
PROSPECTUS
JUNE 24, 1997
1111 EAST WARRENVILLE ROAD
NAPERVILLE, ILLINOIS 60563-1493
(630) 245-7200
(800) 823-7386
<PAGE>
Statement of Additional Information June 24, 1997
CALAMOS FAMILY OF FUNDS(R)
Convertible Fund
Growth and Income Fund
Strategic Income Fund
Growth Fund
Global Growth and Income Fund
================================================================================
1111 East Warrenville Road
Naperville, Illinois 60563-1493
(630) 245-7200
Toll Free: (800) 8-CFS-FUND (800/823-7386)
This Statement of Additional Information relates to Calamos Convertible
Fund(R), Calamos Growth and Income Fund(R), Calamos Strategic Income
Fund(R), Calamos Growth Fund(R) and Calamos Global Growth and Income
Fund(R) (the "Funds"), each of which is a series of Calamos Investment Trust
(the "Trust"), formerly named CFS Investment 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.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Objectives..................................2
Investment Practices...................................2
Investment Restrictions...............................13
Management............................................15
Investment Advisory Services..........................17
Distribution Plan.....................................18
Purchasing and Redeeming Shares.......................19
Performance Information...............................20
Transfer Agent........................................23
Distributor...........................................23
Portfolio Transactions................................24
Taxation..............................................26
Allocation Among Funds................................28
Certain Shareholders..................................28
Custodian.............................................29
Independent Auditors..................................30
General Information...................................30
Financial Statements..................................30
</TABLE>
B-1
<PAGE>
INVESTMENT OBJECTIVES
Each Fund's investment objective is shown below:
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.
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.
Growth Fund seeks long-term capital growth.
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.
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.
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.
B-2
<PAGE>
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.")
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, foreign
exchange dealers 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
B-3
<PAGE>
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.
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.
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.
B-4
<PAGE>
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 Global Growth
and Income Fund may not invest more than 15%, and each other Fund may not invest
more than 10%, of its 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.
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
B-5
<PAGE>
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.
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 index/1/ 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 Russell 2000 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
- ----------------------
/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.
B-6
<PAGE>
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.
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.
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, although a Fund's broker may require
margin deposits in excess of the minimum required by the exchange. 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.
B-7
<PAGE>
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.
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.
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
- ------------------------
/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.
B-8
<PAGE>
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.
If a Fund writes an equity call option/3/ 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.
- ------------------------
/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).
B-9
<PAGE>
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.
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
B-10
<PAGE>
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.
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.
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
B-11
<PAGE>
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.
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.
B-12
<PAGE>
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 illiquid 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 net
assets in Rule 144A securities.
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;
B-13
<PAGE>
(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;
(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 agreements/4/
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;
(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
- --------------------
/4/ No Fund currently intends to enter into reverse repurchase agreements.
B-14
<PAGE>
as collateral or allocated to segregated accounts in connection with short sales
other than those described in clause (i);
(e) 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;
(f) write an option on a security unless the option is issued by the
Options Clearing Corporation, an exchange or similar entity;
(g) 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;
(h) 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;
(i) 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 (i) 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.
MANAGEMENT
Trustees and Officers
Set forth below is information about the trustees and officers of CFS
Investment Trust (the "Trust").
<TABLE>
<CAPTION>
Name, Position(s) with Trust Principal Occupation(s)
and Age at March 31, 1997 During Past Five Years
- ---------------------------- -----------------------
<S> <C>
John P. Calamos(1) President, Calamos Asset Management, Inc.
Trustee and President, 56 ("CAM"), an investment adviser and the Funds'
investment adviser; President, Calamos
Financial Services, Inc. ("CFS"), a broker-
dealer and the Funds' distributor.
Nick P. Calamos Managing Director, CAM and CFS.
Trustee and Vice President, 37
</TABLE>
B-15
<PAGE>
<TABLE>
<CAPTION>
Name, Position(s) with Trust Principal Occupation(s)
and Age at March 31, 1997 During Past Five Years
- ---------------------------- -----------------------
<S> <C>
Richard J. Dowen (2) Professor of Finance, Northern Illinois
Trustee, 52 University.
Robert Frost (2) Management Consultant, ECOM Consultants, Inc.
Trustee, 57
William A. Kaun (2) Principal, W.A. Kaun Co. (investment adviser
Trustee, 69 and publisher).
Helen L. Callaghan Controller, CAM and CFS.
Treasurer, 33
Nancy B. Lynn Vice president, compliance officer of CAM
Secretary, 39 and CFS since 1997; vice president, Heitman/
PRA Advisors, Inc. (investment adviser),
prior thereto.
- ----------------------
</TABLE>
(1) John P. Calamos and Nick P. Calamos 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.
The address of Mr. Dowen is Department of Finance, Northern Illinois
University, DeKalb, Illinois 60115; that of Mr. Frost is 53 Ward Drive, New
Rochelle, New York 10804; 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 year
ended March 31, 1997 to each trustee who was not an "interested person" of the
Trust:
<TABLE>
<CAPTION>
Aggregate
Compensation
Name of Trustee from the Trust*
--------------- ---------------
<S> <C>
Richard J. Dowen $6,700
Robert Frost 6,700
William A. Kaun 6,700
</TABLE>
--------------------
*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.
B-16
<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 Year Months
Ended Ended Ended
3/31/97 3/31/96 3/31/95
-------- -------- --------
<S> <C> <C> <C>
Convertible Fund $230,573 $148,187 $113,445
Growth and Income Fund
Advisory fee $ 54,520 $ 32,870 $ 27,059
Waiver or reimbursement 7,042 4,132 6,006
-------- -------- --------
Net fee $ 47,478 $ 28,738 $ 21,053
Strategic Income Fund
Advisory fee $ 11,203 $ 14,092 $ 17,684
Waiver or reimbursement 45,456 29,705 25,683
-------- -------- --------
Net fee $(34,253) $(15,613) $ (7,999)
Growth Fund
Advisory fee $ 47,557 $ 23,290 $ 17,037
Waiver or reimbursement 33,966 27,383 27,587
-------- -------- --------
Net fee $ 13,591 $ (4,093) $(10,550)
Global Growth and Income Fund*
Advisory Fee $ 13,646 $ -- --
Waiver or reimbursement 24,597 -- --
-------- -------- --------
Net Fee $(10,951) $ -- $ --
--------------------
</TABLE>
* Global Growth and Income Fund commenced operations on September 9, 1996.
The Agreement will remain in effect with respect to each Fund until July 5,
1998, 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 "Calamos" in the name of the Trust and 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
B-17
<PAGE>
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.
The Adviser has voluntarily undertaken to reimburse each class of shares
for any annual operating expenses through August 31, 1998 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.
DISTRIBUTION PLAN
The Trust has adopted a plan pursuant to rule 12b-1 under the Investment
Company Act of 1940 (the "Plans"), whereby Class A shares and Class C shares of
each Fund pay 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 Class A shares and Class C 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.
B-18
<PAGE>
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.
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, 1997, each of the Funds made payments to
CFS pursuant to the Plan in the following amounts:
<TABLE>
<CAPTION>
Global
Convertible Growth and Strategic Growth and
Fund Income Fund Income Fund Growth Fund Income Fund
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$160,037 $36,700 $7,469 $23,787 $7,384
</TABLE>
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.
B-19
<PAGE>
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.
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:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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)
</TABLE>
Total Return (taking into account the effect of the sales charge) and
Average Annual Total Return for Class A shares of each of 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, 1997. As of that date, no Class
I shares of any Fund had been issued.
B-20
<PAGE>
<TABLE>
<CAPTION>
Average Annual
Total Return Total Return
------------ ------------
Class A Class C Class A Class C
------- ------- ------- -------
<S> <C> <C> <C> <C>
Convertible Fund
One year.................................... 7.59% NA 7.59% NA
Five years.................................. 71.50 NA 11.39 NA
Ten years................................... 142.29 NA 9.25 NA
Life of Fund (June 21, 1985 - A Shares,
July 5, 1996 - C Shares)................... 231.57 11.12% 10.71 NA
Growth and Income Fund
One year.................................... 7.49 NA 7.49 NA
Five years.................................. 78.26 NA 12.25 NA
Life of Fund (September 22, 1988 - A Shares,
August 5, 1996 - C Shares)................. 182.41 10.83 12.95 NA
Strategic Income Fund
One year.................................... 2.34 NA 2.34 NA
Five years.................................. 35.17 NA 6.21 NA
Life of Fund (September 4, 1990)............ 63.76 NA 7.79 NA
Growth Fund
One year.................................... 13.46 NA 13.46 NA
Five years.................................. 60.85 NA 9.97 NA
Life of Fund (September 4, 1990 - A Shares,
September 3, 1996 - C Shares).............. 135.66 5.35 13.92 NA
Global Growth and Income Fund
Life of Fund (September 9, 1996 - A Shares,
September 24, 1996 - C Shares)............. 2.89 7.64 NA NA
---------------------
*Not annualized
</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.
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 Class A shares of Strategic Income Fund for the 30
days ended March 31, 1997 was 3.53%. No Class C shares or Class I shares of that
Fund were outstanding.
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
B-21
<PAGE>
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.
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:
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
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.
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.
B-22
<PAGE>
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.
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:
B-23
<PAGE>
<TABLE>
<CAPTION>
Eleven
Year Year Months
Ended Ended Ended
3/31/97 3/31/96 3/31/95
------- -------- -------
<S> <C> <C> <C>
Convertible Fund
Commissions received $98,409 $150,460 $5,191
Commissions retained 40,973 25,675 1,015
Growth and Income Fund
Commissions received 6,485 15,718 7,324
Commissions retained 4,981 2,741 1,264
Strategic Income Fund
Commissions received - 1,605 3,505
Commissions retained - 394 698
Growth Fund
Commissions received 759 706 2,539
Commissions retained 401 706 1,607
Global Growth and Income Fund*
Commissions received 76 N/A N/A
Commissions retained 36 N/A N/A
</TABLE>
------------------------------
* Global Growth and Income Fund commenced operation on September 9, 1996.
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.
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
B-24
<PAGE>
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.
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)
------------ --- ------------ --- ----------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Convertible Fund
Year ended 3/31/97 $42,848,432 29% $16,460,059 76% $38,540 $30,227 78%
Year ended 3/31/96 27,314,393 36 12,402,558 80 21,060 14,829 70
11 mos. ended 3/31/95 13,968,604 34 4,979,389 97 16,754 15,702 94
Growth and Income Fund
Year ended 3/31/97 14,964,889 32 5,344,755 91 12,005 11,414 95
Year ended 3/31/96 7,311,519 45 3,615,330 91 7,032 6,735 96
11 mos. ended 3/31/95 5,481,305 44 2,544,532 95 6,155 5,949 97
Strategic Income Fund
Year ended 3/31/97 5,870,089 24 1,639,136 85 3,897 3,521 90
Year ended 3/31/96 5,325,874 36 1,877,281 100 3,999 3,999 100
11 mos. ended 3/31/95 4,367,420 44 1,924,842 100 7,090 7,010 99
</TABLE>
B-25
<PAGE>
<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)
------------ --- ------------ --- ----------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Growth Fund
Year ended 3/31/97 18,832,387 90 18,516,353 91 41,099 37,360 91
Year ended 3/31/96 11,228,653 98 10,920,952 100 23,240 23,240 100
11 mos. ended 3/31/95 3,485,833 95 3,353,543 100 13,668 13,668 100
Global Growth and Income Fund
Year ended 3/31/97 7,350,637 13 1,557,089 63 3,477 2,429 70
</TABLE>
Of the aggregate brokerage commissions paid during the year ended March 31,
1997, Convertible Fund, Growth and Income Fund, Strategic Income Fund, Growth
Fund and Global Growth and Income Fund paid commissions of $5,138, $36, $353,
$3,739 and $781, respectively, to brokers who furnished research services.
Neither Strategic Income Fund nor Growth Fund paid any commissions to brokers
furnishing research.
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").
B-26
<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.
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.
B-27
<PAGE>
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.
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.
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, 1997 were:
B-28
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Number of Outstanding
Shareholder Shares Shares of the Funds
----------- ------ -------------------
<S> <C> <C>
STRATEGIC INCOME FUND
Vernon B. Marquez Testamentary 19,108 15.69%
Trust u/w Caryl Broome Marquez
Jefferson Guaranty Bank, TR
P.O. Box 8527, Suite 301
Metairie, Louisiana 70011
Lincoln Trust Company 11,904 9.78%
Custodian Donald E. Lindley
P.O. Box 5831
Denver CO 80217
Lincoln Trust Company 6,681 5.49%
Custodian Ralph E. Lassa
P.O. Box 5831
Denver CO 80217
Prudential Securities FBO 9,621 7.90%
Marjorie K. Flannery Trustee
of Marjorie K Flannery
Revocable Trust DTD 3-28-84
1365 Elmhurst Drive NE
Cedar Rapids IA 52402-4771
Bernice Slotky and 8,146 6.69%
Brian E. Slotky, JT TEN
671 S. Hollybrook Drive #109
Pembroke Pines, FL 33025
GROWTH AND INCOME FUND
John P. Calamos* 189,772 6.58%
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Nick P. Calamos* 120,992 4.19%
1111 East Warrenville Road
Naperville, Illinois 60563-1493
GROWTH FUND
Calamos Financial Services, Inc. 85,442 20.75%
401(k) Profit Sharing Plan and Trust*
Calamos Financial Services, Inc. 30,345 7.37%
1111 East Warrenville Road
Naperville, Illinois 60563-1493
John P. Calamos* 206,908 50.25%
GLOBAL GROWTH AND INCOME FUND
Calamos Financial Services, Inc. 89,477 12.64%
401(k) Profit Sharing Plan and Trust*
1111 East Warrenville Road
Naperville, Illinois 60563-1493
John P. Calamos* 144,857 20.46%
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Nick P. Calamos* 89,477 12.64%
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Rosanah M. Sather 40,577 5.73%
529 Meadow Wood Drive
Joliet IL 60431
</TABLE>
------------------
* 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.
At May 31, 1997 the trustees and officers of the Trust as a group owned
beneficially shares of the Funds as follows: 60,250 shares (2%) of Convertible
Fund; 70,040 shares (11%) of Growth and Income Fund; 655 shares (1%) of
Strategic Income Fund; 121,466 shares (29%) of Growth Fund; and 55,569 shares
(8%) of Global Growth and Income Fund.
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,
B-29
<PAGE>
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 Calamos Investment Trust (formerly named CFS
Investment Trust). Calamos Growth and Income Fund was named Calamos Small/Mid
Cap Convertible Fund prior to April 30, 1994. 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 1997 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 and a report of independent auditors, all of which (but no other part
of the annual report) is incorporated herein by reference.
B-30
<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:
Financial Highlights
(ii) Financial statements included in Part B of this registration
statement:
The following schedule and statements of each of Calamos
Convertible Fund, Calamos Strategic Income Fund, Calamos
Growth and Income Fund, Calamos Growth Fund and Calamos
Global Growth and Income Fund:
Schedule of investments - March 31, 1997
Statement of assets and liabilities - March 31, 1997
Statement of operations - year ended March 31, 1997 (from
Sept. 9, 1996 for Calamos Global Growth & Income Fund)
Statement of changes in net assets - years ended March 31,
1997 (except for Calamos Global Growth and Income Fund
and March 31, 1996
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 year ended March 31, 1997. (A copy of that annual report
was filed with the Commission but, except for those portions
incorporated by reference, is not deemed to be filed as part
of this registration statement.)
Schedule I for each Fund has been omitted as the required
information is presented in the Schedules of Investments -
March 31, 1997. Schedules II - V for each Fund are omitted
as the required information is not present.
(iii) Financial Statements included in Part C of this amendment:
None
(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 Amended and Restated Agreement and Declaration of Trust
2 Bylaws (as amended through March 25, 1997)
3 None
4 None
5.1 Management agreement with Calamos Asset Management, Inc. dated
July 5, 1988 - Calamos Growth and Income Fund
C-1
<PAGE>
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
5.3 Notification dated April 30, 1992 pursuant to section 1(b) of
management agreement for series designated Calamos Convertible
Fund
5.4 Form of notification pursuant to section 1(b) of management
agreement for series designated Calamos Global Growth and Income
Fund (exhibit 5.4 to Post-effective Amendment no. 13*)
6.1 Form of distribution agreement with Calamos Financial Services,
Inc. dated June 19, 1996 (exhibit 6.1 to Post-effective Amendment
no. 13*)
6.2 Form of selling group agreement, revised 1996 (exhibit 6.2 to
Post-effective Amendment no. 13*)
7 None
8 Custody agreement with Prudential-Bache Securities, Inc. dated
April 20, 1990
9.1 Transfer agency agreement with Calamos Asset Management, Inc.
dated July 20, 1988
9.2 Appointment of transfer agent dated August 22, 1990- Calamos
Strategic Income Fund and Calamos Growth Fund
9.3 Appointment of transfer agent dated April 30, 1992 - Calamos
Convertible Fund
9.4 Form of appointment of transfer agent dated June 19, 1996 -
Calamos Global Growth and Income Fund (exhibit 9.4 to Post-
effective Amendment no. 13*)
9.5 Use of name agreement dated August 23, 1990
10.1 Opinion of Goodwin, Procter & Hoar dated April 2, 1996 (exhibit
10 to Post-effective Amendment no. 13*)
10.2 Opinion of Bell, Boyd & Lloyd dated June 19, 1997
11 Consent of independent auditors
12 None
13.1 Subscription agreement - Calamos Growth and Income Fund
13.2 Organizational expenses agreement - Calamos Growth and Income
Fund
13.3 Form of subscription agreement - Calamos Strategic Income Fund
and Calamos Growth Fund
13.4 Form of organizational expenses agreement - Calamos Strategic
Income Fund and Calamos Growth Fund
C-2
<PAGE>
13.5 Form of organizational expenses agreement dated June __, 1996
- Calamos Global Growth and Income Fund (exhibit 13.5 to
Post-effective Amendment no. 13*)
14 CFS Investment Trust Individual Retirement Account Prototype
Plan, disclosure statement and application
15 Form of distribution plan dated June 24, 1996 (exhibit 15 to
Post-effective Amendment no. 13*)
16 Schedule of computation of performance quotations
17 Financial data schedule
18.1 Application form for Class A and Class C shares
18.2 Application form for Class I shares
18.3 Form of automatic investment plan application
18.4 Form of systematic withdrawal application
- -------------------
* Incorporated by reference.
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 March 31, 1997 the respective series of registrant had the
following numbers of record holders:
<TABLE>
<CAPTION>
Series Record Holders
------ --------------
<S> <C>
Calamos Strategic Income Fund 55
Calamos Convertible Fund 747
Calamos Growth and Income Fund 252
Calamos Growth Fund 120
Calamos Global Growth and Income Fund 114
</TABLE>
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
C-3
<PAGE>
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").
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.
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.
C-4
<PAGE>
(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
Calamos Investment Trust
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Item 31. Management Services
None
Item 32. Undertakings
(a) Not applicable
(b) Not applicable.
(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.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant certifies that it meets all of the
requirements for effectiveness of this amendment to the registration statement
pursuant to rule 485(b) under the Securities Act of 1933 and 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 June 24,
1997.
CALAMOS 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.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ John P. Calamos Trustee and President )
- ------------------------ (principal executive officer) )
John P. Calamos )
)
)
)
/s/ Nick P. Calamos Trustee )
- ------------------------ )
Nick P. Calamos )
)
)
)
/s/ Richard J. Dowen Trustee )
- ------------------------ )
Richard J. Dowen )
)
) June 24, 1997
Trustee )
- ------------------------ )
Robert Frost )
)
)
)
/s/ William A. Kaun Trustee )
- ------------------------ )
William A. Kaun )
)
)
)
/s/ Helen L. Callaghan Treasurer (principal financial )
- ------------------------ and accounting officer) )
Helen L. Callaghan
</TABLE>
<PAGE>
Exhibit Index
-------------
Exhibit
- -------
1 Amended and Restated Agreement and Declaration of Trust
2 Bylaws
5.1 Management agreement with Calamos Asset Management, Inc. dated July 5,
1988 - Calamos Growth and Income Fund
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
5.3 Notification dated April 30, 1992 pursuant to section 1(b) of management
agreement for series designated Calamos Convertible Fund
7 None
8 Custody agreement with Prudential-Bache Securities, Inc. dated April 20,
1990
9.1 Transfer agency agreement with Calamos Asset Management, Inc. dated June
20, 1988
9.2 Appointment of transfer agent dated August 22, 1990 - Calamos Strategic
Income Fund and Calamos Growth Fund
9.3 Appointment of transfer agent dated April 30, 1992 - Calamos Convertible
Fund
9.5 Use of name agreement dated August 23, 1990
10.2 Opinion of Bell, Boyd & Lloyd dated June 19, 1997
11 Consent of independent auditors
13.1 Subscription agreement - Calamos Growth and Income Fund
13.2 Organizational expenses agreement - Calamos Growth and Income Fund
13.3 Form of subscription agreement - Calamos Strategic Income Fund and
Calamos Growth Fund
13.4 Form of organizational expense agreement - Calamos Strategic Income Fund
and Calamos Growth Fund
14 CFS Investment Trust Individual Retirement Account Prototype Plan,
disclosure statement and application
<PAGE>
<TABLE>
<S> <C>
16 Schedule of computation of performance quotations
17 Financial data schedule
18.1 Application form for Class A and Class C shares
18.2 Application form for Class I shares
18.3 Form of automatic investment plan application
18.4 Form of systematic withdrawal application
</TABLE>
2
<PAGE>
Exhibit 1
CALAMOS INVESTMENT TRUST
FIRST AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
June 23, 1997
<PAGE>
CALAMOS INVESTMENT TRUST
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I NAME AND DEFINITIONS......................................... 2
Section 1.1 Name and Principal Office.................................... 2
Section 1.2 Definitions.................................................. 2
(a) "Trust"...................................................... 2
(b) "Trustees"................................................... 2
(c) "Shares"..................................................... 2
(d) "Series"..................................................... 2
(e) "Shareholder"................................................ 2
(f) "1940 Act"................................................... 2
(g) "Commission"................................................. 2
(h) "Declaration of Trust"....................................... 2
(i) "By-Laws".................................................... 2
(j) "class"...................................................... 2
ARTICLE II PURPOSE OF TRUST............................................. 3
ARTICLE III THE TRUSTEES................................................. 3
Section 3.1 Number, Designation, Election, Term, etc..................... 3
(a) Trustees..................................................... 3
(b) Number....................................................... 3
(c) Election and Term............................................ 3
(d) Resignation and Retirement................................... 3
(e) Removal...................................................... 3
(f) Vacancies.................................................... 4
(g) Effect of Death, Resignation, etc............................ 4
(h) No Accounting................................................ 4
Section 3.2 Powers of Trustees........................................... 4
(a) Investments.................................................. 5
(b) Disposition of Assets........................................ 5
(c) Ownership Powers............................................. 5
(d) Subscription................................................. 5
(e) Form of Holding.............................................. 5
(f) Reorganization, etc.......................................... 6
(g) Voting Trusts, etc........................................... 6
(h) Compromise................................................... 6
(i) Partnerships, etc............................................ 6
(j) Borrowing and Security....................................... 6
(k) Guarantees, etc.............................................. 6
(l) Insurance.................................................... 6
(m) Pensions, etc................................................ 6
(n) Distribution Plans........................................... 7
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Section 3.3 Certain Contracts............................................ 7
(a) Advisory..................................................... 7
(b) Administration............................................... 7
(c) Distribution................................................. 7
(d) Custodian and Depository..................................... 8
(e) Transfer and Dividend Disbursing Agency...................... 8
(f) Shareholder Servicing........................................ 8
(g) Accounting................................................... 8
Section 3.4 Payment of Trust Expenses and Compensation of Trustees....... 9
Section 3.5 Ownership of Assets of the Trust............................. 9
ARTICLE IV SHARES....................................................... 9
Section 4.1 Description of Shares........................................ 9
Section 4.2 Establishment and Designation of Sub-Trusts and Classes...... 11
(a) Assets Belonging to Sub-Trusts............................... 11
(b) Liabilities Belonging to Sub-Trusts.......................... 11
(c) Dividends.................................................... 12
(d) Liquidation.................................................. 13
(e) Voting....................................................... 13
(f) Redemption by Shareholder.................................... 13
(g) Redemption by Trust.......................................... 13
(h) Net Asset Value.............................................. 14
(i) Transfer..................................................... 14
(j) Equality..................................................... 14
(k) Fractions.................................................... 15
(l) Conversion Rights............................................ 15
(m) Class Differences............................................ 15
Section 4.3 Ownership of Shares.......................................... 16
Section 4.4 Investments in the Trust..................................... 16
Section 4.5 No Preemptive Rights......................................... 16
Section 4.6 Status of Shares and Limitation of Personal Liability........ 16
ARTICLE V SHAREHOLDERS' VOTING POWERS AND MEETINGS..................... 17
Section 5.1 Voting Powers................................................ 17
Section 5.2 Meetings..................................................... 17
Section 5.3 Record Dates................................................. 18
Section 5.4 Quorum and Required Vote..................................... 18
Section 5.5 Action by Written Consent.................................... 18
Section 5.6 Inspection of Records........................................ 18
Section 5.7 Additional Provisions........................................ 18
Section 5.8 Shareholder Communications................................... 19
ARTICLE VI LIMITATION OF LIABILITY; INDEMNIFICATION..................... 19
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice... 19
Section 6.2 Trustees' Good Faith Action; Expert Advice; No Bond or Surety 20
Section 6.3 Indemnification of Shareholders.............................. 20
Section 6.4 Indemnification of Trustees, Officers, etc................... 20
Section 6.5 Compromise Payment........................................... 21
Section 6.6 Indemnification Not Exclusive, etc........................... 21
Section 6.7 Liability of Third Persons Dealing with Trustees............. 22
</TABLE>
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ARTICLE VII MISCELLANEOUS................................................ 22
Section 7.1 Duration and Termination of Trust............................ 22
Section 7.2 Reorganization............................................... 22
Section 7.3 Amendments................................................... 23
Section 7.4 Filing of Copies; References; Headings....................... 23
Section 7.5 Applicable Law............................................... 24
Section 7.6 Resident Agent............................................... 24
</TABLE>
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<PAGE>
CALAMOS INVESTMENT TRUST
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
THIS FIRST AND AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made
this 17th day of June, 1997, by the Trustees hereunder on behalf of themselves
and all other persons who become Trustees hereunder, and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH
WHEREAS, the Trust was created by an Agreement and Declaration of Trust
dated and executed in Boston, Massachusetts on December 21, 1987 and was named
CFS Investment Trust;
WHEREAS, the Agreement and Declaration of Trust dated December 21, 1978 has
heretofore been amended by amendments dated July 26, 1988, June 26, 1990,
February 5, 1992, February 22, 1996, March 18, 1996 and March 28, 1996,
respectively;
WHEREAS, the Trust has been formed to carry on the business of an
investment company pursuant to the provisions of the Investment Company Act of
1940 and the rules and regulations thereunder, all as amended from time to time;
WHEREAS, the Trust is authorized to issue its shares of beneficial interest
in separate series, each separate series to be a Sub-Trust hereunder, and to
issue classes of Shares of any Sub-Trust or divide Shares of any Sub-Trust into
two or more classes, all in accordance with the provisions hereinafter set
forth;
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as Trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth; and
WHEREAS, the Trustees desire to amend further and restate in its entirety
the Agreement and Declaration of Trust as heretofore amended by adopting this
First Amended and Restated Agreement and Declaration of Trust, which shall
supersede such Agreement and Declaration of Trust as heretofore amended and be
the governing instrument of the Trust from and after the date hereof.
NOW, THEREFORE, effective as of June 23, 1997 the Trustees hereby amend and
restate in its entirety the Agreement and Declaration of Trust as heretofore
amended and declare that they will hold all cash, securities and other assets
which they may from time to time acquire in any manner as Trustee hereunder in
trust to manage and dispose of the same upon the following terms and conditions
for the benefit of the holders from time to time of shares of beneficial
interest in this Trust or Sub-Trusts created hereunder as hereinafter set forth.
<PAGE>
ARTICLE I
---------
NAME AND DEFINITIONS
--------------------
Section 1.1 Name and Principal Office. This trust shall be known as
Calamos Investment Trust and the Trustees shall conduct the business of the
Trust under that name or any other name or names as they may from time to time
determine. The principal office of the Trust shall be located at 1111 East
Warrenville Road, Naperville, Illinois 60563 or at such other location as the
Trustees may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established
by this Agreement and Declaration of Trust, as amended from time to time,
inclusive of each and every Sub-Trust established hereunder;
(b) "Trustees" refers to the Trustees of the Trust and of each Sub-Trust
hereunder named herein or elected in accordance with Article III;
(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;
(d) "Series" refers to Series of Shares established and designated under or
in accordance with the provisions of Article IV, each of which Series shall be a
Sub-Trust of the Trust;
(e) "Shareholder" means a record owner of Shares;
(f) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(g) The term "Commission" shall have the meaning given it in the 1940 Act;
(h) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time;
(i) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time; and
(j) "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.
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ARTICLE II
----------
PURPOSE OF TRUST
----------------
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities, debt instruments, futures and
options on futures. The Trust shall also have the power to invest in precious
metals, bullion and gold coins.
ARTICLE III
-----------
THE TRUSTEES
------------
Section 3.1 Number, Designation, Election, Term, etc.
(a) Trustees. The current Trustees hereof are John P. Calamos, 1111 East
Warrenville Road, Naperville, Illinois; Nick P. Calamos, 1111 East Warrenville
Road, Naperville, Illinois; Richard J. Dowen, Northern Illinois University,
DeKalb, Illinois; Robert Frost, 733 Third Avenue, New York, New York; and
William A. Kaun, 1750 Grandstand Place, Elgin, Illinois.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming a Trustee, may increase or decrease the number of Trustees to
a number other than the number theretofore determined. No decrease in the number
of Trustees shall have the effect of removing any Trustee from office prior to
the expiration of his term, but the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to subsection (e) of this
Section 3.1.
(c) Election and Term. Except as otherwise provided in this subsection
(c), the Trustees shall be elected by Shareholders of the Trust. Each Trustee,
whether named above or hereafter becoming a Trustee, shall serve as a Trustee of
the Trust and of each Sub-Trust hereunder during the lifetime of this Trust and
until its termination as hereinafter provided except as such Trustee sooner
dies, resigns or is removed. Subject to Section 16(a) of the 1940 Act, the
Trustees may elect their own successors and may, pursuant to subsection (f) of
this Section 3.1, appoint Trustees to fill vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to the
other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as is
specified in such instrument and shall be effective as to the Trust and each
Sub-Trust hereunder.
(e) Removal. Any Trustee may be removed with or without cause at any
time: (i) by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date upon which such removal
shall become effective; or (ii) by vote of Shareholders holding not less than
two-thirds of the Shares then outstanding, cast in person or by proxy at any
meeting called for the purpose; or (iii) by a written declaration signed by
Shareholders holding not less than two-thirds of the Shares then outstanding and
filed with the Trust's Secretary. Any such removal shall be effective as to the
Trust and each Sub-Trust hereunder.
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(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the other Trustees may (but need not unless required by
the 1940 Act) be filled either by a majority of the remaining Trustees, subject
to the provisions of Section 16(a) of the 1940 Act, through the appointment in
writing of such other person as such remaining Trustees in their discretion
shall determine and such appointment shall be effective upon the written
acceptance of the person named therein to serve as a Trustee and agreement by
such person to be bound by the provisions of this Declaration of Trust, except
that any such appointment in anticipation of a vacancy to occur by reason of
retirement, resignation, or increase in number of Trustees to be effective at a
later date shall become effective only at or after the effective date of said
retirement, resignation, or increase in number of Trustees. As soon as any
Trustee so appointed shall have accepted such appointment and shall have agreed
in writing to be bound by this Declaration of Trust and the appointment is
effective, the Trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of the Trustees, or any one of them, shall
not operate to annul or terminate the Trust or any Sub-Trust hereunder or to
revoke or terminate any existing agency or contract created or entered into
pursuant to the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act or under
circumstances which would justify his removal for cause, no person ceasing to be
a Trustee as a result of his death, resignation, retirement, removal or
incapacity (nor the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
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. 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 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 purpose; 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 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,
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<PAGE>
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, 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 of the Trustees, to sign documents
and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with the
1940 Act or other applicable law, the Trustees shall have power and authority
for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
(a) Investments. To invest and reinvest cash and other property, and to
hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or other
assets;
(e) Form of Holding. To hold any security or other asset in a form not
indicating any trust, whether in bearer, unregistered or other negotiable form,
or in the name of the Trustees or of the Trust or of any Sub-Trust or in the
name of a custodian, subcustodian or other depositary or a nominee or nominees
or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security or debt instrument of which is or was held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any securities or
debt instruments in acting through a committee, depositary, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
5
<PAGE>
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depositary or
trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any Sub-Trust or any matter in controversy,
including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds, securities or other assets
and to mortgage and pledge the assets of the Trust or any part thereof to secure
obligations arising connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge the
Trust property or any part thereof to secure any of or all such obligations;
(l) Insurance. To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, consultants, investment advisers, managers,
administrators, distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such person in
any such capacity, including any action taken or omitted that may be determined
to constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability;
(m) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trust and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust; and
(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.
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 the Trust or any Sub-Trust may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum, consisting of at least a majority of
the Trustees then in office, being present), within or without
6
<PAGE>
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).
Section 3.3 Certain Contracts. Subject to compliance with the provisions of
the 1940 Act, but notwithstanding any limitations of present and future law or
custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one or more
contracts with any one or more corporations, trusts, associations, partnerships,
limited partnerships, other type of organizations, or individuals ("Contracting
Party"), to provide for the performance and assumption of some or all of the
following services, duties and responsibilities to, for or on behalf of the
Trust and/or any Sub-Trust, and/or the Trustees, and to provide for the
performance and assumption of such other services, duties and responsibilities
in addition to those set forth below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and in
conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to manage
such investments and assets, make investment decisions with respect thereto, and
to place purchase and sale orders for portfolio transactions relating to such
investments and assets;
(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 any classes 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 be 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;
(d) Custodian and Depository. To act as depository for and to maintain
custody of the property of the Trust and each Sub-Trust and accounting records
in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records of the
ownership of outstanding Shares, the issuance and redemption and the transfer
thereof, and to disburse any dividends and distributions declared by the
Trustees and in accordance with the policies of the Trustees and/or the
instructions of any particular Shareholder to reinvest any such dividends or
distributions;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
7
<PAGE>
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are not inconsistent
with the 1940 Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine. Nothing herein shall preclude, prevent or limit the Trust or a
Contracting Party from entering into sub-contractual arrangements relative to
any of the matters referred to in Sections 3.3(a) through (g) hereof.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate of any Contracting
Party or that the Contracting Party or any parent or affiliate thereof is a
Shareholder or has an interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or have other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any Sub-
Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer of
the Trust from voting upon or executing the same or create any liability or
accountability to the Trust, any Sub-Trust or its Shareholders, provided that in
the case of any relationship or interest referred to in the proceeding clause
(i) on the part of any Trustee or officer of the Trust either (x) the material
facts as to such relationship or interest have been disclosed to or are known by
the Trustees not having any such relationship or interest and the contract
involved is approved in good faith by a majority of such Trustees not having any
such relationship or interest (even though such unrelated or disinterested
Trustees are less than a quorum of all of the Trustees), (y) the material facts
as to such relationship or interest and as to the contract have been disclosed
to or are known by the Shareholders entitled to vote thereon and the contract
involved is specifically approved in good faith by vote of the Shareholders, or
(z) the specific contract involved is fair to the Trust as of the time it is
authorized, approved or ratified by the Trustees or by the Shareholders.
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
8
<PAGE>
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.
Section 3.5 Ownership of Assets of the Trust. Title to all of the assets of
the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
----------
SHARES
------
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 those Sub-Trusts
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 Stockholders 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.
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 further classes, of said Sub-Trust without
approval of the holders of the initial class thereof, or previously established
and designated class or classes thereof, provided that the establishment and
designation of such further separate classes would not adversely affect the
rights of the holders of the initial or previously established and designated
class or classes.
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
9
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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 upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation and
the relative rights and preferences of the Shares of such Sub-Trust or class, or
as otherwise provided in 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 referred to in this
paragraph shall have the status of an amendment to this Declaration of Trust.
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 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 shall have three classes of Shares, Class A, Class C and Class I
or such classes as may from time to time be established and designated. 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 the Trustees otherwise determine with respect to
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some further Sub-Trust or class 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.
(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.
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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.
(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
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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.
(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 with respect to maintenance of Shareholder accounts of
not less than a minimum value. 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
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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.
(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, Class C
shares or Class I shares of a Sub-Trust shall have, upon its issuance, all of
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and
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conditions of redemption currently accorded each other share of beneficial
interest in that Sub-Trust, including that each Class A share, each Class C
share and each Class I share shall be charged equally with each other share in
the Sub-Trust with the expenses and liabilities of the Sub-Trust in respect of
Class A, Class C and Class I shares or such other shares and in respect of any
general expenses and liabilities of the Sub-Trust allocated to Class A shares,
Class C shares and Class I 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:
(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 Sub-Trust 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 Sub-Trust 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 (i) above (or to any plan or
other document adopted by a Sub-Trust relating to said agreements,
arrangements, expenses or liabilities) and is submitted to a vote of
shareholders of the Sub-Trust, 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 Sub-Trust, except where otherwise required by
law or permitted by the Trustees.
Subject to the foregoing, the Class A Shares of each Sub-Trust are Shares that
are offered to investors at net asset value plus a sales charge that shall not
be greater than the maximum sales charge for such Shares set forth in the
relevant offering prospectus ("Prospectus") from time to time, the Class C
Shares of each Sub-Trust are Shares that are offered to investors at net asset
value without any sales charge other than a contingent deferred sales charge if
redeemed within one year after purchase and the Class I shares of each Sub-Trust
are shares that are offered to investors at net asset value without any sales
charge; but there may be included as expenses and liabilities of each Class of
each Sub-Trust or on the holders of Shares thereof fees (such as service and
distribution fees), which may vary as to Class, Sub-Trust and holders as
determined by the Trustees to be appropriate and as described in the Prospectus
from time to time.
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 Shares 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.
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Section 4.4 Investments in the Trust. The Trustees may accept investments
in the Trust and each Sub-Trust thereof from such persons and on such terms and
for such consideration, not inconsistent with the provisions of the 1940 Act, as
they from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.5 No Preemptive Rights. Shareholders shall have no preemptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the Trust or any Sub-Trust thereof nor
entitle the representative of any deceased Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees, but
only to the rights of said decedent under this Trust. Ownership of Shares shall
not entitle the Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
ARTICLE V
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SHAREHOLDERS' VOTING POWERS AND MEETINGS'
-----------------------------------------
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 or any Sub-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. 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
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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.
Section 5.2 Meetings. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Written notice of any
meeting of Shareholders shall be given or caused to be given by the Trustees by
mailing such notice at least seven days before such meeting, postage prepaid,
stating the time, place and purpose of the meeting, to each Shareholder at the
Shareholder's address as it appears on the records of the Trust. The Trustees
shall promptly call and give notice of a meeting of Shareholders for the purpose
of voting upon removal of any Trustee of the Trust when requested to do so in
writing by Shareholders holding not less than 10% of the Shares then
outstanding. If the Trustees shall fail to call or give notice of any meeting of
Shareholders for a period of 30 days after written application by Shareholders
holding at least 10% of the Shares then outstanding requesting a meeting be
called for a purpose requiring action by the Shareholders as provided herein or
in the By-Laws, then Shareholders holding at least 10% of the Shares then
outstanding may call and give notice of such meeting, and thereupon the meeting
shall be held in the manner provided for herein in case of call thereof by the
Trustees.
Section 5.3 Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 60 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
dispose of his Shares, and no Shareholder becoming such after that date and time
shall be so entitled to vote at such meeting or any adjournment thereof or to be
treated as a Shareholder of record for purposes of such other action.
Section 5.4 Quorum and Required Vote. A majority of the Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting without the necessity of further notice. A
majority of the Shares voted, at a meeting of which a quorum is present shall
decide any questions and a plurality shall elect a Trustee, except when a
different vote is required or permitted by any provision of the 1940 Act or
other applicable law or by this Declaration of Trust or the By-Laws.
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Section 5.5 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust or the By-Laws) consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the trust shall be open
to inspection by Shareholders to the same extent as is permitted stockholders of
a Massachusetts business corporation under the Massachusetts Business
Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 Shareholder Communications. Whenever ten or more Shareholders
of record have been such for at least six months preceding the date of
application, and who hold in the aggregate either Shares having a net asset
value of at least $25,000 or at least 1% of the outstanding Shares, whichever is
less, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a Shareholder meeting and accompanied by a form of communication and
request which they wish to transmit, the Trustees shall within five business
days after receipt of such application either (1) afford to such applicants
access to a list of the names and addresses of all Shareholders as recorded on
the books of the Trust or Sub-Trust, as applicable; or (2) inform such
applicants as to the approximate number of Shareholders of record, and the
approximate cost of mailing to them the proposed communication and form of
request.
If the Trustees elect to follow the course specified in clause (2) in the
preceding paragraph, the Trustees, upon written request of such applicants,
accompanied by a tender of the material to be mailed and of the reasonable
expenses of mailing, shall, with reasonable promptness, mail such material to
all Shareholders of record at their addresses as recorded on the books, unless
within five business days after such tender the Trustees shall mail to such
applicants and file with the Commission, together with a copy of the material to
be mailed, a written statement signed by at least a majority of the Trustees to
the effect that in their opinion either such material contains untrue statements
of fact or omits to state facts necessary to make the statements contained
therein not misleading, or would be in such violation of applicable law, and
specifying the basis of such opinion. The Trustees shall thereafter comply with
the requirements of the 1940 Act.
ARTICLE VI
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LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-trust nor the Trustees, nor any of
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the Trust's officers, employees or agents, whether past, present or future, nor
any other Sub-Trust shall be personally liable therefor. Every note, bond,
contract, instrument, certificate or undertaking and every other act or thing
whatsoever executed or done by or on behalf of the Trust, any Sub-Trust or the
Trustees or any of them in connection with the Trust shall be conclusively
deemed to have been executed or done only by or for the Trust (or the Sub-Trust)
or the Trustees and not personally. Nothing in this Declaration of Trust shall
protect any Trustee or officer against any liability to the Trust or the
Shareholders to which such Trustee or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee or of such
officer.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that this
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or made
by or on behalf of the Trust or by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust, or the particular Sub-Trust in
question, as the case may be, but the omission thereof shall not operate to bind
any Trustees or Trustee or officers or officer or Shareholders or Shareholder
individually.
Section 6.2 Trustees' Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (a) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
custodian or transfer, dividend disbursing, Shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for the act or omission
of any other Trustee; (b) the Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust
and their duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice;
and (c) in discharging their duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of account of the Trust and upon
written reports made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee of a Contracting
Party appointed by the Trustees pursuant to Section 3.3. The Trustees as such
shall not be required to give any bond or surety or any other security for the
performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder (or
former Shareholder) of any Sub-Trust of the Trust shall be charged or held to be
personally liable for any obligation or liability of the Trust solely by reason
of being or having been a Shareholder and not because of such Shareholder's acts
or omissions or for some other reason, said Sub-Trust (upon proper and timely
request by the Shareholder) shall assume the defense against such charge and
satisfy any judgment thereon, and the Shareholder or former Shareholder (or his
heirs, executors, administrators or other legal representatives or in the case
of a corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets of
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said Sub-Trust estate to be held harmless from and indemnified against all loss
and expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc.. 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").
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 1940 Act 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 or
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.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not a party to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a)
or by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any
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amount paid to such Covered Person in accordance with any of such clauses as
indemnification if such Covered Person is subsequently adjudicated by a court of
competent jurisdiction not to have acted 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 to have been liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators, an "interested Covered Person" is one against whom the
action, suit or other proceeding in question or another action, suit or other
proceeding on the same or similar grounds is then or has been pending or
threatened, and a "disinterested" person is a person against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened.
Nothing contained in this article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VII
-----------
MISCELLANEOUS
-------------
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust or class thereof shall operate to
terminate the Trust. The Trust may be terminated at any time by a majority of
the Trustees then in office subject to a favorable vote of a majority of the
outstanding voting Shares, as defined in the 1940 Act, of each Sub-Trust voting
separately by Sub-Trust.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Sub-Trusts, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Sub-Trust of the Trust, in exchange for cash, shares
or other securities (including, in the case of a transfer to another
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Sub-Trust of the Trust, Shares of such other Sub-Trust or any class thereof)
with such transfer either (1) being made subject to, or with the assumption by
the transferee of, the liabilities belonging to each Sub-Trust the assets of
which are so transferred, or (2) not being made subject to, or not with the
assumption of, such liabilities; provided, however, that no assets belonging to
any particular Sub-Trust shall be so transferred unless the terms of such
transfer shall have first been approved at a meeting called for the purpose by
the affirmative vote of the holders of a majority of the outstanding voting
Shares, as defined in the 1940 Act, of that Sub-Trust. Following such transfer,
the trustees shall distribute such cash, shares or other securities (giving due
effect to the assets and liabilities belonging to and any other differences
among the various Sub-Trusts and classes the assets belonging to which have been
so transferred) among the Shareholders of the Sub-Trust the assets belonging to
which have been so transferred; and if all of the assets of the Trust have been
so transferred, the Trust shall be terminated.
The Trust, or any one or more Sub-Trusts, may, either as the successor,
survivor, or non-survivor, (1) consolidate with one or more other trusts,
partnerships, associations or corporations organized under the laws of the
Commonwealth of Massachusetts or any other state of the United States, to form a
new consolidated trust, partnership, association or corporation under the laws
of which any one of the constituent entities is organized, or (2) merge into one
or more other trusts, partnerships, associations or corporations organized under
the laws of the Commonwealth of Massachusetts or any other state of the United
States, or have one or more such trusts, partnerships, associations or
corporations merged into it, any such consolidation or merger to be upon such
terms and conditions as are specified in an agreement and plan of reorganization
entered into by the Trust, or one or more Sub-Trusts as the case may be, in
connection therewith. The terms "merge" or "merger" as used herein shall also
include the purchase or acquisition of any assets of any other trust,
partnership, association or corporation which is an investment company organized
under the laws of the Commonwealth of Massachusetts or any other state of the
United States. Any such consolidation or merger shall require the affirmative
vote of the holders of a majority of the outstanding voting Shares, as defined
in the 1940 Act, of each Sub-Trust affected thereby.
Section 7.3 Amendments. All rights granted to the Shareholders under this
Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) 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 1940 Act, by
an instrument in writing signed by a majority of the then trustees (or by an
officer of the Trust pursuant to the vote of a majority of such Trustees). Any
amendment to this Declaration of Trust that adversely affects the rights of
Shareholders may be adopted at any time by an instrument in writing signed by a
majority of the then Trustees (or by an officer of the trust pursuant to a vote
of a majority of such Trustees) when authorized to do so by the vote in
accordance with subsection (e) of Section 4.2 of Shareholders holding a majority
of the Shares entitled to vote. Subject to the foregoing, any such amendment
shall be effective as provided in the instrument containing the terms of such
amendment or, if there is no provision therein with respect to effectiveness,
upon the execution of such instrument and of a certificate (which may
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be a part of such instrument) executed by a Trustee or officer of the Trust to
the effect that such amendment has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of The Commonwealth of Massachusetts and with the Boston City Clerk,
as well as any other governmental office where such filing may from time to time
be required, but the failure to make any such filing shall not impair the
effectiveness of this instrument or any such amendment. Anyone dealing with the
Trust may rely on a certificate by an officer of the Trust as to whether or not
any such amendments have been made, as to the identities of the Trustees and
officers, and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder" shall be
deemed to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. The masculine gender shall include the
feminine and neuter genders. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 7.5 Applicable Law. This Agreement and Declaration of Trust is
created under and is to be governed by and construed and administered according
to the laws of the Commonwealth of Massachusetts, including the Massachusetts
Business Corporation Law as the same may be amended from time to time, to which
reference is made with the intention that matters not specifically covered
herein or as to which an ambiguity may exist shall be resolved as if the Trust
were a business corporation organized in Massachusetts, but the reference to
said Business Corporation Law is not intended to give the Trust, the Trustees,
the Shareholders or any other person any right, power, authority or
responsibility available only to or in connection with an entity organized in
corporate form. The Trust shall be of the type referred to in Section 1 of
Chapter 182 of the Massachusetts General Laws and of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust.
Section 7.6 Resident Agent. William B. King, Goodwin, Procter & Hoar,
Exchange Place, Boston, Massachusetts is hereby designated as the resident agent
of the Trust in Massachusetts. The Trustees may change the designated resident
agent in Massachusetts from time to time.
IN WITNESS WHEREOF, the undersigned, a Trustee and President of the Trust,
hereby certifies that the foregoing First Amended and Restated Agreement and
Declaration of Trust was duly adopted by a majority of the Trustees of the Trust
on June 17, 1997 and has hereunto set his hand and seal this 17th day of June,
1997.
/s/ John P. Calamos
--------------------------------------
John P. Calamos
Trustee and President
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Exhibit 2
CALAMOS INVESTMENT TRUST
------------------------
By-Laws
(as amended March 25, 1997)
ARTICLE 1
Agreement and Declaration of Trust
1.1 General. These By-Laws shall be subject to the Agreement and
Declaration of Trust, as from time to time in effect (the "Declaration of
Trust"), of Calamos Investment Trust, a Massachusetts business trust (the
"Trust") established by the Declaration of Trust. [amended 3/25/97]
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held with
or without notice at such places and at such times as the Trustees may from time
to time determine, provided that the place and time of any such regular meeting
held without notice shall be subject to unanimous determination by the Trustees.
2.2 Telephone Meetings. Except as provided in the Investment Company Act
of 1940, Trustees may participate in any regular or special meeting of the
Trustees 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.
2.3 Notice of Meetings. Subject to the provisions of Section 2.1., notice
of the place, day and hour of every regular and special meeting shall be given
to each Trustee by mailing at least three (3) days, or by telegraphing or
telephoning or delivering personally the same at least one (1) day, before the
meeting. It shall not be requisite to the validity of any meeting of the
trustees that notice thereof shall have been given to any Trustee who is present
threat, or if absent waives notice thereof in writing, filed with the minutes of
the meeting, either before or after the holding thereof. No notice of any
adjourned meeting of the Trustees need be given.
2.4 Quorum. A majority of the Trustees then in office shall be necessary
to constitute a quorum for the transaction of business at every meeting of the
Trustees; but, if at any meeting there be less than a quorum present, a majority
of those present may adjourn the meeting from time to time, without notice other
than by announcement at the meeting until a quorum shall attend. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
convened.
<PAGE>
2.5 Action by Consent. Any action required or permitted to be taken at
any meeting of the Trustees or any committee thereof may be taken without a
meeting, if a written consent to such action is signed by a majority of the
Trustees then in office or a majority of the members of such committee, as the
case may be, and such written consent is filed with the minutes of the
proceedings of the Trustees or such committee.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, if any, as the
Trustees from time to time may in their discretion elect. The Trust may also
have such agents as the Trustees from time to time may in their discretion
appoint. Any officer may be, but need not be, a Trustee or Shareholder. Any
two (2) more offices may be held by the same person.
3.2 Election. The President, the Vice Presidents (if any), the Treasurer
and the Secretary shall be elected annually by the Trustees at their first
meeting in each calendar year or at such later meeting in such year as a
majority of the Trustees then in office may determine. Other officers, if any,
may be elected by the Trustees at such meeting or at any other time. Vacancies
in any office may be filled at any time.
3.3 Tenure. Each officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him as if the Trust were organized as a Massachusetts
business corporation and such other duties as the Trustees may from time to time
designate. The Trustees may, however, restrict the powers or duties of any
officer.
3.5 President. Unless the Trustees otherwise provide, the President shall
be the chief executive officer of the Trust and shall preside at all meetings of
the Shareholders.
3.6 Vice Presidents. The Vice Presidents shall, in the absence or
disability of the President, and in the order designated by the Trustees,
perform the duties and exercise the powers of the President and, in addition,
shall at all time perform such other duties and exercise such other powers as
may be prescribed by the Trustees or the President, to whose supervision they
shall be subject.
3.7 Secretary. The Secretary shall attend all meetings of the Trustees
and all meetings of the Shareholders and record all the proceedings of such
meetings in a book to be kept for that purpose. Subject to Section 2.1 hereof,
he shall give, or cause to be given, notice of all meetings of the Trustees and
meetings of the Shareholders, and shall perform such other duties as may be
prescribed by the Trustees or President, to whose supervision he shall be
subject. The Secretary shall keep in safe custody the seal of the Trust and,
when authorized by
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the Trustee, affix the same to any instrument requiring it, which seal when so
affixed may be attested by his signature or by the signature of the Treasurer or
an Assistant Secretary.
3.8 Treasurer. The Treasurer shall be the chief financial and accounting
officer of the Trust and shall, subject to the provisions of the Declaration of
Trust and to any arrangement made by the Trustees with any custodian, investment
adviser, or transfer, accounting or Shareholder servicing or similar agent, be
in charge of the valuable papers, books of account and accounting records of the
Trust and shall have such other duties and powers as may be designated from time
to time by the Trustees or by the President.
3.9 Resignations and Removals. Any Trustee or officer may resign at any
time by written instrument signed by him and delivered to the President, the
Secretary or the Trustees. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. The Trustees may remove
any officer elected by them with or without cause. Except to the extent
expressly provided in a written agreement with the Trust, no Trustee or officer
resigning and no officer removed shall have any right to any compensation for
any period following his resignation or removal, or any right to damages on
account of such removal.
ARTICLE 4
Committees
4.1 Quorum; Voting. A majority of the members of any Committee of the
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a majority of the
members present (a quorum being present) or evidenced by one or more writings
signed by a majority of the members of such Committee. Members of a Committee
may participate in a meeting of such Committee be 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.
ARTICLE 5
Offices, Fiscal Year and Seal
5.1 Offices. The Trust shall maintain an office of record in Boston,
Massachusetts, which office may be the office of any resident agent appointed by
the Trust if located in that City. The Trust may maintain one or more other
offices, including its principal office, outside of Massachusetts, in such
cities as the Trustees may determine from time to time. Unless the Trustees
otherwise determine, the principal office of the Trust shall be located in Oak
Brook, Illinois.
5.2 Fiscal Year. Except as from time to time otherwise provided by the
Trustees, the initial fiscal year of the Trust shall end on such date as in
determined in advance or in arrears by the Trustees and subsequent fiscal years
shall end on such date in subsequent years.
5.3 Seal. The Trustees may, but shall not be required to, adopt a seal of
the Trust.
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ARTICLE 6
Records, Reports and Execution Of Papers
6.1 Records. Except as may otherwise be required by law or by the
Trustees, the records of the Trust need not be retained at either the principal
office of the Trust or at the Trust's office of record in Boston, Massachusetts,
and may be retained by one or more of any adviser, custodian, transfer,
accounting, Shareholder servicing or similar agents, but such records shall at
all times be made available to any officer of the Trust having charge thereof,
to the Trustees, and to any other officer or agent of the Trust authorized by
the Trustees or the President to have access to such records.
6.2 Reports. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
6.3 Execution of Papers. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other manner, all
deeds, leases, contracts, notes and other obligations made by the Trustees shall
be signed by the President, any Vice President or by the Treasurer and need not
bear the seal of the Trust, but shall state the substance of, or more make
reference to, the provisions of Section 6.1. of the Declaration of Trust.
ARTICLE 7
Issuance of Certificates For Shares
7.1 Certificates. In lieu of issuing certificates for Shares of one or
more of the Funds, the Trustees or the transfer agent may either issue receipts
therefor or may keep accounts upon the books of the Trust for the record holders
of such Shares, who shall in either case be deemed, for all purposes hereunder,
to be the holders of such Shares and shall be held to have expressly assented
and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of certificates
representing Shares of one or more of the Funds. In that event, each
Shareholder upon request shall be entitled to a certificate stating the number
of Shares of the applicable Fund owned by him, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the President or a Vice President and by the Treasurer or Assistant
Treasurer. Such signatures may be facsimiles if the certificate bears the
manual signature of a transfer agent or registrar, other than a Trustee, officer
or employee of the Trust. In case any officer who has signed or whose facsimile
signature has been placed on such certificate shall cease to be such officer
before such certificate is issued, it may be issued by the Trust with the same
effect as if he were such officer at the time of its issue.
7.2 Loss of Certificates. In case of the alleged loss or destruction or
the mutilation of a certificate, a duplicate certificate may be issued in place
thereof, upon such terms and with such indemnity and/or surety as the Trustees
shall prescribe.
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7.3 Issuance of New Certificate to Pledgee. A pledgee of Shares of any
Fund as to which the Trust issues certificates shall be entitled to a new
certificate if the instrument or transfer substantially describes the debt or
duty that is intended to be secured thereby. Such new certificate shall express
on its face that it is held as collateral security, and the name of the pledgor
shall be stated thereon, who alone shall have the rights (including, without
limitation, dividend and distribution rights and voting rights) of the
Shareholder. A pledgee of Shares of any Fund as to which the Trust does not
issue certificates shall be entitled to have the pledge registered on the books
of the Trust pertaining to that Fund.
7.4 Discontinue of Issuance of Certificates. The Trustees may at any time
discontinue the issuance of certificates for Shares of one or more of the Funds,
and may, by written notice to each Shareholder, require the surrender of
certificates representing the Shares of the applicable Fund to the Trust for
cancellation. Such surrender and cancellation shall not effect the ownership of
the Shares of such Fund.
ARTICLE 8
Amendments to the By-Laws
8.1 General. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, by one or more writings signed by such a majority.
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Exhibit 5.1
MANAGEMENT AGREEMENT
--------------------
AGREEMENT made as of the 5th day of July, 1988, between CALAMOS ASSET
MANAGEMENT, 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 "Manager"), and CFS INVESTMENT TRUST, a Massachusetts business
trust having its principal office and place of business in Oak Brook, Illinois
(the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, the Manager is engaged principally in the business of
rendering investment management services and is so registered under the
Investment Advisers Act of 1940; and
WHEREAS, the Trust is authorized to issue shares of beneficial
interest in separate series with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust now offers shares in two series, Kalliston
Convertible Total Return Fund and Kalliston Preferred Plus Fund (such series
(the "Initial Funds") together with all other series subsequently established by
the Trust with respect to which the Trust desires to retain the Manager to
render investment advisory services hereunder and the Manager is willing so to
do, being herein collectively referred to as the "Funds");
THEREFORE, it is agreed between the parties as follows:
1. APPOINTMENT OF MANAGER.
(a) Initial Funds. The Trust appoints the Manager to act as manager
and investment adviser to the Initial Funds for the period and on the
terms herein set forth. The Manager accepts such appointment and
agrees to render the services herein set forth, for the compensation
herein provided.
(b) Additional Funds. In the event that the Trust establishes one or
more series of shares other than the Initial Funds with respect to
which it desires to retain the Manager to render management and
investment advisory services hereunder, it shall notify the Manager in
writing, indicating the advisory fee which will be payable with
respect to the additional series of shares. If the Manager is willing
to render such services, it shall notify the Trust in writing,
whereupon such series of shares shall become a Fund hereunder.
<PAGE>
2. DUTIES OF MANAGER.
The Manager, at its own expense, shall furnish the following services
and facilities to the Trust:
(a) Investment Program. The Manager will (i) furnish continuously an
investment program of each Fund, (ii) determine (subject to the
overall supervision and review of the Board of Trustees of the Trust
(the "Trustees")) what investments shall be purchased, held, sold or
exchanged by each Fund and what portion, if any, of the assets of each
Fund shall be held uninvested, and (iii) make changes on behalf of the
Trust in the investments of each Fund. The Manager will also manage,
supervise and conduct the other affairs and business of the Trust and
each Fund thereof and matters incidental thereto, subject always to
the control of the Trustees and to the provisions of the Declaration
of Trust and By-laws and the 1940 Act.
(b) Office Space and Facilities. The Manager shall furnish the Trust
office space in the offices of the Manager, or in such other place or
places as may be agreed upon from time to time, and all necessary
office facilities, simple business equipment, supplies, utilities, and
telephone service for managing the affairs and investments of the
Trust. These services are exclusive of the necessary services and
records of any dividend disbursing agent, transfer agent, registrar or
custodian, and accounting and bookkeeping services to be provided by
the custodian.
(c) Personnel. The Manager shall provide all necessary executive and
clerical personnel for administering the affairs of the Trust and
shall compensate the Trustees and all personnel and officers of the
Trust if such persons are also employees of the Manager or its
affiliates, except as provided in Paragraph 3(f) hereof.
(d) Portfolio Transactions. The Manager shall place all orders for
the purchase and sale of portfolio securities for the account of each
Fund with brokers or dealers selected by the Manager, although the
Trust will pay the actual brokerage commissions on portfolio
transactions in accordance with Paragraph 3(c). In executing portfolio
transactions and selecting brokers or dealers, the Manager will use
its best efforts to seek on behalf of the Trust or any Fund thereof
the best overall terms available for any transaction. The Manager
shall consider all factors it deems relevant, including the breadth of
the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any (for the specific transaction
and on a continuing basis). In evaluating the best overall terms
available, and in selecting the broker or dealer to execute a
particular transaction, the Manager may also consider the brokerage
and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934)
2
<PAGE>
provided to any Fund and/or other accounts over which the Manager or
an affiliate of the Manager exercises investment discretion.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. and subject to seeking the most favorable
price and execution available, Manager may consider sales of shares of
Trust as a factor in the selection of broker-dealers to execute
portfolio transaction for Trust. Manager (or an affiliate of Manager)
may act as broker for Trust in connection with the purchase or sale of
securities by or to Trust if and to the extent permitted by procedures
adopted from time to time by the board of trustees of Trust. Such
brokerage services are not within the scope of the duties of Manager
under this agreement, and, within the limits permitted by law and the
board of trustees of Trust, Manager (or an affiliate of Manager) may
receive brokerage commissions, fees or other remuneration from Trust
for such services in addition to its fee for services as Manager.
Within the limits permitted by law Manager may receive compensation
from Trust for other services performed by it for Trust which are not
within the scope of the duties of Manager under this agreement. The
Manager is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for any Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting
that transaction if, but only if, the Manager determines in good faith
that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer,
viewed in terms of that particular transaction or in terms of all of
the accounts over which investment discretion is so exercised.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the Manager
as set forth in Paragraph 2 above, the Trust assumes and shall pay all expenses
for all other Trust operations and activities and shall reimburse the Manager
for any such expenses incurred by the Manager. The expenses to be borne by the
Trust shall include, without limitation:
(a) the charges and expenses of any registrar, stock transfer or
dividend disbursing agent, custodian, or depository appointed by the
Trust for the safekeeping of its cash, portfolio securities and other
property;
(b) the charges and expenses of auditors;
(c) brokerage commissions for transactions in the portfolio
securities of the Trust;
(d) all taxes, including issuance and transfer taxes, and corporate
fees payable by the Trust to Federal, state or other governmental
agencies;
(e) the cost of stock certificates (if any) representing shares of
the Trust;
3
<PAGE>
(f) expenses involved in registering and maintaining registrations of
the Trust and of its shares with the Securities and Exchange
Commission and various states and other jurisdictions, including
reimbursements of actual expenses incurred by the Manager in
performing such functions for the Trust;
(g) all expenses of shareholders' and Trustees' meetings, including
meetings of committees and of preparing, printing and mailing proxy
statements, quarterly reports, semi-annual reports, annual reports and
other communications to shareholders;
(h) all expenses of preparing and setting in type prospectuses, and
expenses of printing and mailing the same to shareholders (but not
expenses of printing and mailing of prospectuses and literature used
for promotional purposes);
(i) compensation and travel expenses of Trustees who are not
"interested persons" within the meaning of the 1940 Act;
(j) the expense of furnishing, or causing to be furnished, to each
shareholder a statement of his account, including the expense of
mailing;
(k) charges and expenses of legal counsel in connection with matters
relating to the Trust, including, without limitation, legal services
rendered in connection with the Trust's corporate and financial
structure and relations with its shareholders, issuance of Trust
shares and registration and qualification of securities under Federal,
state and other laws.
(l) the expenses of attendance at professional meetings of
organizations such as the Investment Company Institute, the No Load
Mutual Fund Association, or Commerce Clearing House by the Trustees
and officers of the Trust, and the membership or association dues of
such organizations;
(m) the cost and expense of maintaining the books and records of the
Trust, including general ledger accounting;
(n) the expense of obtaining and maintaining insurance including a
fidelity bond as required by Section 17(g) of the 1940 Act;
(o) interest payable on Trust borrowings; and
(p) postage.
4. ADVISORY FEE.
(a) For the services and facilities to be provided to each of the
Funds by the Manager as provided in Paragraph 2 hereof, the Trust
shall pay the Manager a monthly fee with respect to each of the Funds
as soon as practical after the last day of each calendar month, which
fee shall be paid at the rate set forth below
4
<PAGE>
based upon the Monthly Average Net Assets (as defined in subparagraph
(c) below) of such Fund for such calendar month:
ADVISORY FEE SCHEDULE
Monthly Average Net Assets Monthly Fee Rate
-------------------------- ----------------
Up to and including $150 million 1/12 of .75%
Over $150 million 1/12 of .50%
(b) In the case of termination of this Agreement with respect to any
Fund during any calendar month, the fee with respect to such Fund for
that month shall be reduced proportionately based upon the number of
calendar days during which it is in effect and the fee shall be
computed upon the average net assets of such Fund for the business
days during which it is so in effect.
(c) The "Monthly Average Net Assets" of any Fund of the Trust for any
calendar month shall be equal to the quotient produced by dividing (i)
the sum of the net assets of such Fund, determined in accordance with
procedures established from time to time by or under the direction of
the Trustees in accordance with the Declaration of Trust of the Trust,
as of the close of business on each day during such month that such
Fund was open for business, by (ii) the number of such days.
5. EXPENSE LIMITATION.
The Manager agrees that for any fiscal year of the Trust during which
the total of all expenses of any series of the Trust (including investment
advisory fees under this agreement, but excluding interest, portfolio brokerage
commissions and expenses, taxes and extraordinary items) exceeds the lowest
expense limitation imposed in any state in which that series of the Trust is
then making sales of its shares or in which its shares are then qualified for
sale, the Manager will reimburse that series of the Trust for such expenses not
otherwise excluded from reimbursement by this Paragraph 5 to the extent that
they exceed such expense limitation.
6. TRUST TRANSACTIONS.
The Manager agrees that neither it nor any of its officers or
directors will take any long or short position in the shares of the Trust;
provided, however, that such prohibition:
(a) shall not prevent the Manager from purchasing shares of the Trust
if orders to purchase such shares are placed upon the receipt by the
Manager of purchase orders for such shares and are not in excess of
such purchase orders received by the Manager; and
(b) shall not prevent the purchase of shares of the Trust by any of
the persons above described for their account and for investment.
5
<PAGE>
7. RELATIONS WITH TRUST.
Subject to and in accordance with the Declaration of Trust and Bylaws
of the Trust and the Articles of Incorporation and Bylaws of the Manager,
respectively, it is understood that the Trustees, officers, agents and
shareholders of the Trust are or may be interested in the Manager (or any
successor thereof) as directors, officers, or otherwise, that directors,
officers, agents and shareholders of the Manager are or may be interested in the
Trust as Trustees, officers, shareholders or otherwise, and that the effect of
any such adverse interests shall be governed by said Declaration of Trust,
Articles of Incorporation and Bylaws.
8. LIABILITY OF MANAGER AND OFFICERS AND TRUSTEES OF THE TRUST
No provision of this Agreement shall be deemed to protect the Manager
against any liability to the Trust or its shareholders to which it might
otherwise be subject by reason of any willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations and duties under this Agreement. Nor shall any provision hereof be
deemed to protect any Trustee or officer of the Trust against any such liability
to which he might otherwise be subject by reason of any willful misfeasance, bad
faith, gross negligence or reckless disregard of his obligations and duties. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise - the remainder of this Agreement shall not
be affected thereby.
9. DURATION AND TERMINATION OF THIS AGREEMENT
(a) Duration. This Agreement shall become effective with respect to
the Initial Funds on the date hereof and, with respect to any
additional Fund, on the date of receipt by the Trust of notice from
the Manager in accordance with Paragraph l(b) hereof that the Manager
is willing to serve as Manager with respect to such Fund. Unless
terminated as herein provided, this Agreement shall remain in full
force and effect until July 5, 1990 with respect to the Initial Funds
and shall continue in full force and effect for periods of one year
thereafter with respect to each Fund so long as such continuance with
respect to any such Fund is approved at least annually (i) by either
the Trustees or by vote of a majority of the outstanding voting shares
(as defined in the 1940 Act) of such Fund, and (ii) in either event by
the vote of a majority of the Trustees who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of any
such party, cast in person at a meeting called for the purpose of
voting on such approval.
Any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 1940 Act) of any Fund shall
be effective to continue this Agreement with respect to any such Fund
notwithstanding (i) that this Agreement has not been approved by the
holders of a majority of the outstanding shares of any other Fund
affected thereby, and (ii) that this Agreement has not been approved
by the vote of a majority of the outstanding
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<PAGE>
shares of the Trust, unless such approval shall be required by any
other applicable law or otherwise.
(b) Termination. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Trustees or by vote of
a majority of the outstanding shares (as defined in the 1940 Act), or
by the Manager on sixty (60) days' written notice to the other party.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment.
10. NAME OF TRUST.
It is understood that the name "CFS", and any logo associated with
that name, is the valuable property of Calamos Asset Management, Inc., and that
the Trust has the right to include "CFS" as a part of its name or the name of
any Fund only so long as this Agreement shall continue. Upon termination of this
Agreement the Trust shall forthwith cease to use the "CFS" name and logo and
shall take such action as is necessary to change the name of any Fund and to
amend its Declaration of Trust to change the Trust's name.
11. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
12. SERVICES NOT EXCLUSIVE.
The services of the Manager to the Trust hereunder are not to be
deemed exclusive and the Manager shall be free to render similar services to
others so long as its services hereunder are not impaired thereby.
13. 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.
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<PAGE>
IN WITNESS WHEREOF, this Management Agreement has been executed for
the Manager and the Trust by their duly authorized officers, as of the date
first set forth above.
CALAMOS ASSET MANAGEMENT, INC.
By: /s/ John P. Calamos
-------------------
John P. Calamos,
President
Attest:
/s/ Joyce A. Cagnina
- ---------------------------
Joyce A. Cagnina, Secretary
CFS INVESTMENT TRUST
By: /s/ John P. Calamos
-------------------
John P. Calamos,
President
Attest:
/s/ Joyce A. Cagnina
- ---------------------------
Joyce A. Cagnina, Secretary
8
<PAGE>
Exhibit 5.2
August 22, 1990
Calamos Asset Management, Inc.
2001 Spring Road, Suite 750
Oak Brook, Illinois 60521
Ladies and Gentlemen:
Management Agreement
--------------------
Pursuant to paragraph l(a) of the Management Agreement between CFS
Investment Trust and Calamos Asset Management, Inc. dated July 5, 1988, we
hereby notify you that the board of trustees of CFS Investment Trust has
established two additional Sub-Trusts, designated Calamos Strategic Income Fund
and Calamos Growth Fund, and has appointed you as Manager to act as manager and
investment adviser to those Sub-Trusts on the terms and conditions set forth in
the Agreement, except that the advisory fee schedule applicable to the Sub-
Trusts designated Calamos Strategic Income Fund and Calamos Growth Fund shall be
as follows:
<TABLE>
<CAPTION>
Monthly Fee Rate
--------------------------
<S> <C> <C>
Strategic
Monthly Average Net Assets Growth Fund Income Fund
-------------------------- ----------- -----------
Up to and including $150 million 1/12 of 1% 1/12 of .75%
Over $150 million 1/12 of .75% 1/12 of .50%
</TABLE>
Very truly yours,
CFS INVESTMENT TRUST
By /s/ Joyce A. Cagnina
----------------------------
Joyce A. Cagnina
Vice President and Secretary
Appointment as Manager for the Sub-Trusts designated Calamos Strategic Income
Fund and Calamos Growth Fund accepted this 23rd day of August, 1990.
CALAMOS ASSET MANAGEMENT, INC.
By /s/ Robert M. Slotky
---------------------------
Robert M. Slotky
Senior Vice President
<PAGE>
Exhibit 5.3
April 30, 1992
Calamos Asset Management, Inc.
2001 Spring Road, Suite 750
Oak Brook, Illinois 60521
Ladies and Gentlemen:
Management Agreement
--------------------
Pursuant to paragraph l(a) of the Management Agreement between CFS
Investment Trust and Calamos Asset Management, Inc. dated July 5, 1988, we
hereby notify you that the board of trustees of CFS Investment Trust has
established an additional Sub-Trust designated Calamos Convertible Fund, and has
appointed you as Manager to act as manager and investment adviser to that Sub-
Trust on the terms and conditions set forth in the Agreement, except that the
advisory fee schedule applicable to the Sub-Trust designated Calamos Convertible
Fund shall be 1/12 of .75% of the first $150 million of monthly average net
assets, and 1/12 of .50% of monthly average net assets in excess of $150
million.
Very truly yours,
CFS INVESTMENT TRUST
By /s/ Robert M. Slotky
--------------------
Robert M. Slotky
Vice President and Secretary
Appointment as Manager for the Sub-Trust designated Calamos Convertible
Fund accepted this 30th day of April, 1992.
CALAMOS ASSET MANAGEMENT, INC.
By /s/ Robert M. Slotky
--------------------
Robert M. Slotky
Senior Vice President
<PAGE>
Exhibit 8
CUSTODY AGREEMENT
AGREEMENT made as of the 20th of April 1990, between CFS Investment Trust,
an unincorporated business trust organized under the laws of the Commonwealth of
Illinois, having its principal office and place of business at 2001 Spring Road,
Oak Brook, Illinois 60521, (hereinafter referred to as the "Trust"), and
PRUDENTIAL-BACHE SECURITIES, INC., a Delaware corporation, with a principal
place of business at New York, New York (hereinafter referred to as the
"Custodian").
W I T N E S S E T H:
-------------------
That for and in consideration of the mutual promises herein-after set
forth, the Trust and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include the Secretary,
Treasurer or any other person, whether or not any such person is an Officer or
employee of the Trust, duly authorized by the Board of Trustees of the Trust to
give Oral Instructions and Written Instructions on behalf of the Trust and
listed in the certification annexed hereto as Appendix A or such other
certification as may be received by the Custodian from time to time.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency Securities, its successor or
successors and its nominee or nominees, in which the Custodian is hereby
specifically authorized to make deposits.
3. "Certificate" shall mean any notice, instruction or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf of
the Trust by any Authorized Person or any Officer thereof.
4. "Declaration of Trust" shall mean the Declaration of Trust of CFS
Investment, dated December 21, 1987, as the same is amended from time to time.
5. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission under
Section 17(a) of the Securities Exchange Act of 1934, as amended, its successor
or successors and its nominee or nominees, in which the Custodian is hereby
specifically authorized to make deposits. The term "Depository" shall further
mean and include any other person, other than the Book-Entry System, authorized
to act as a depository under the 1940 Act, its successor or successors and its
<PAGE>
nominee or nominees, specifically identified in a certified copy of a resolution
of the Trust's Board of Trustees approving deposits therein by the Custodian.
6. "Money Market Security" shall be deemed to include, without
limitation, debit obligations issued or guaranteed as to interest and principal
by the Government of the United States or agencies or instrumentalities thereof,
commercial paper, bank certificates of deposit, bankers' acceptances and short-
term corporate obligations, where the purchase or sale of such securities
normally requires settlement in federal funds on the same day as such purchase
or sale, and repurchase and reverse repurchase agreements with respect to any of
the foregoing types of securities.
7. "Officer" shall be deemed to include the President, any Vice
President, the Secretary or any Assistant Secretary, the Treasurer or any
Assistant Treasurer and any other person or persons duly authorized by the Trust
to execute any Certificate, instruction, notice or other instrument on behalf of
the Trust and listed in the certification annexed hereto as Appendix B or such
other certification as may be received by the Custodian from time to time.
8. "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from an Authorized Person or from a person reasonably believed
by the Custodian to be an Authorized Person.
9. "Prospectus" shall mean the most current effective prospectus relating
to the particular Sub-Trust Shares under the Securities Act of 1933, as amended.
10. "Security" or "Securities" shall be deemed to include, without
limitation, Money Market Securities, stocks, shares, bonds, debentures, debt
securities (convertible or non-convertible), notes, mortgages or other
obligations and any certificates, receipts, options, warrants or other
instruments representing rights to receive, purchase, sell or subscribe for the
same, or evidencing or representing any other rights or interest therein, or in
any commodities, property or assets, or any instrument as may be permitted by
the Prospectus of the Trust, or any other commodities, property or assets in
which the Trust or any Sub-Trust may invest as permitted by the Prospectus of
the Trust.
11. "Shares" refers to the transferable units of interest into which the
beneficial interest in the Trust or any Sub-Trust of the Trust (as the context
may require) shall be divided from time to time.
12. "Sub-Trust" shall mean each series of Shares established and
designated under or in accordance with the provisions of Article IV of the
Declaration of Trust, including the Kalliston Convertible Total Return Fund Sub-
Trust and the Kalliston Preferred Plus Fund Sub-Trust and such other separate
and distinct sub-trusts as may from time to time be created by the Trust.
13. "Transfer Agent" shall mean the person which performs the transfer
agent, dividend disbursing agent and shareholder servicing agent functions for
the Trust.
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<PAGE>
14. "Written Instructions" shall mean a written communication actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communication is able to verify through
codes or otherwise with a reasonable degree of certainty the authenticity of the
sender of such communication.
15. The "1940 Act" refers to the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder, all as amended from time to
time .
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Trust hereby constitutes and appoints the Custodian as custodian
of all of the Securities and moneys at the time owned by or in the possession of
the Trust and specifically allocated to a Sub-Trust during the period of this
Agreement.
2. The Custodian hereby accepts appointment as such custodian for each
Sub-Trust and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
COMPENSATION
1. Each Sub-Trust will initially compensate the Custodian for its
services rendered under this Agreement in accordance with the fees set forth in
the Fee Schedule annexed hereto and incorporated herein for the existing Sub-
Trusts. Such Fee Schedule does not include out-of-pocket disbursements of the
Custodian for which the Custodian shall be entitled to bill separately. Out-of-
pocket expenses shall include, but shall not be limited to, the item specified
in the Schedule of Out-of-Pocket charges annexed hereto which schedule may be
modified or changed by the Custodian upon not less than twenty days' prior
written notice to the Trust.
2. The parties hereto will agree upon the compensation for acting as
custodian for any Sub-Trust hereafter designated and established at the time
that the Custodian commences serving as such for said Sub-Trust, and such
agreement shall be reflected in a Fee Schedule for that Sub-Trust, dated and
signed by an authorized officer of each party hereto, to be attached to this
Agreement.
3. Any compensation agreed to hereunder may be adjusted from time to time
by attaching a revised Fee Schedule, dated and signed by an Officer of each
party hereto, to this Agreement.
4. The Custodian will bill the Trust for each Sub-Trust as soon as
practicable after the end of each calendar month, and said billings will be
detailed in accordance with the Fee Schedules for each Sub-Trust. The Trust will
promptly pay to the Custodian the amount of such billing.
3
<PAGE>
ARTICLE IV
CUSTODY OF CASH AND SECURITIES
1. The Trust will deliver or cause to be delivered to the Custodian all
Securities and all moneys owned by it, including cash received for the issuance
of its Shares, at any time during the period of this Agreement and shall specify
the Sub-Trust to which the Securities and moneys are to be specifically
allocated. The Custodian will not be responsible for such Securities and such
moneys until actually received by it. The Custodian will be entitled to reverse
any credits made on behalf of a Sub-Trust where such credits have been
previously made and moneys are not finally collected. The Trust shall instruct
the Custodian from time to time in its sole discretion, by means of a
Certificate, or, in connection with the purchase or sale of Money Market
Securities, by means of Oral Instructions or a Certificate, as to the manner in
which and in what amounts Securities and moneys of a Sub-Trust are to be
deposited on behalf of such Sub-Trust in the Book-Entry System or the Depository
and specifically allocated on the books of the Custodian to such Sub-Trust;
provided, however, that prior to the deposit of Securities of a Sub-Trust in the
Book-Entry system or the Depository, including a deposit in connection with the
settlement of a purchase or sale, the Custodian shall have received a certified
resolution of the Board of Trustees of the Trust specifically approving such
deposits by the Custodian in the Book-Entry System or the Depository. Securities
and moneys of the Trust deposited in the Book-Entry System or the Depository
will be represented in accounts which include only assets held by the Custodian
for customers, including but not limited to accounts in which the Custodian acts
in a fiduciary or representative capacity.
2. The Custodian shall establish and maintain a separate account for each
Sub-Trust and shall credit to the separate account of each Sub-Trust all moneys
received by it for the account of such Sub-Trust and shall disburse the same
only :
(a) In payment for Securities purchased for such Sub-Trust, as provided in
Article V hereof;
(b) In payment of dividends or distributions with respect to the Shares of
such Sub-Trust, as provided in Article VII hereof;
(c) In payment of original issue or other taxes with respect to the Shares
of such Sub-Trust, as provided in Article VIII hereof;
(d) In payment for Shares of such Sub-Trust redeemed by it, as provided in
Article VIII hereof;
(e) In payment of the expenses and liabilities of a Sub-Trust, pursuant to
Certificates setting forth the name of the Sub-Trust, the name and address
of the person to whom the payment is to be made, the amount to be paid and
the purpose for which payment is to be made; or
4
<PAGE>
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to such Sub-Trust, as provided in
Article XII hereof.
3. Promptly after the close of business on each day, the Custodian shall
furnish the Trust with confirmations and a summary of all transfers to or from
the account of each Sub-Trust during said day. Where Securities are transferred
to the account of a Sub-Trust, the Custodian shall also by book entry or
otherwise identify as belonging to such Sub-Trust a quantity of Securities in a
fungible bulk of Securities registered in the name of the Custodian (or its
nominee) or shown on the Custodian's account on the books of the Depository or
the Book-Entry system. At least monthly and from time to time, the Custodian
shall furnish the Trust with a detailed statement of the Securities and moneys
held for each Sub-Trust under this Agreement.
4. All Securities held for a Sub-Trust which are issued or issuable only
in bearer form, except such Securities as are held in the Book-Entry System,
shall be held by the Custodian in that form; all other Securities held for a
Sub-Trust may be registered in the name of that Sub-Trust, in the name of any
duly appointed registered nominee of the Custodian as the Custodian may from
time to time determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or nominees. The
Trust reserves the right to instruct the Custodian as to the method of
registration and safekeeping of the Securities of each Sub-Trust. The Trust
agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry System or the
Depository, any Securities which it may hold for the account of a Sub-Trust and
which may from time to time be registered in the name of a Sub-Trust. The
Custodian shall hold all such Securities specifically allocated to a Sub-Trust
which are not held in the Book-Entry System or the Depository in a separate
account for such Sub-Trust in the name of such Sub-Trust physically segregated
at all times from those of any other person or persons.
5. Unless otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System or the
Depository with respect to Securities therein deposited, shall with respect to
all Securities held for a Sub-Trust in accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon all Securities
which may mature or be called, redeemed or retired, or otherwise become
payable;
(c) Surrender Securities in temporary form for definitive Securities;
(d) Execute, as custodian, any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or regulations of
any other taxing authority now or hereafter in effect; and
(e) Hold directly, or through the Book-Entry System or the Depository with
respect to Securities therein deposited, for the account of each Sub-Trust
of the Trust all
5
<PAGE>
rights and similar Securities issued with respect to any Securities held by
the Custodian hereunder for each Sub-Trust.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver or cause to be executed and delivered to such
persons as may be designated in such Certificate proxies, consents,
authorizations, and any other instruments whereby the authority of the
Trust as owner of any Securities may be exercised;
(b) Deliver or cause to be delivered any Securities held for a Sub-Trust
in exchange for other Securities or cash issued or paid in connection with
the liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
(c) Deliver or cause to be delivered any Securities held for a Sub-Trust
to any protective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and receive and hold
under the terms of this Agreement in the separate account for each Sub-
Trust such certificates of deposit, interim receipts or other instruments
or documents as may be issued to it to evidence such delivery;
(d) Make or cause to be made such transfers or exchanges of the assets
specifically allocated to the separate account of a Sub-Trust and take such
other steps as shall be stated in said Certificate to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust or any Sub-Trust;
(e) Deliver Securities owned by the Trust or any Sub-Trust upon sale of
such Securities for the account of the Trust or any Sub-Trust pursuant to
Article V;
(f) Deliver Securities owned by the Trust or any Sub-Trust upon the
receipt of payment in connection with any repurchase agreement related to
such Securities entered into by the Trust;
(g) Deliver Securities owned by the Trust or any Sub-Trust to the issuer
thereof or its agent when such Securities are called, redeemed, retired or
otherwise become payable; provided, however, that in any such case the cash
or other consideration is to be delivered to the Custodian;
(h) Deliver Securities owned by the Trust or any Sub-Trust for delivery in
connection with any loans of securities made by the Trust or any Sub-Trust
but only against receipt of adequate collateral as agreed upon from time to
time by the Custodian and the Trust, which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities;
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(i) Deliver Securities owned by the Trust or any Sub-Trust for delivery as
security in connection with any borrowings by a Sub-Trust requiring a
pledge of assets by a Sub-Trust, but only against receipt of amounts
borrowed;
(j) Deliver Securities owned by the Trust or any Sub-Trust upon receipt of
instructions from the Transfer Agent for delivery to such Transfer Agent or
to the holders of shares in connection with distributions in kind, as may
be described from time to time in the Trust's Prospectus, in satisfaction
of requests by holders of shares for repurchase or redemption; and
(k) Deliver Securities owned by the Trust or any Sub-Trust for any other
proper corporate purpose, but only upon receipt of, in addition to written
instructions, a certified copy of a resolution of the Board of Trustees
signed by an Authorized Person of the trust and certified by the Secretary
or an Assistant Secretary of the Trust, specifying the securities to be
delivered, setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper to be a proper corporate purpose, and
naming the person or persons to whom delivery of such securities shall be
made.
7. The Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by the Custodian for
the account of a Sub-Trust.
ARTICLE V
PURCHASE AND SALE OF INVESTMENTS OF THE SUB-TRUSTS
1. Promptly after each purchase of Securities by the Trust for a Sub-
Trust, the Trust shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a Certificate, and
(ii) with respect to each purchase of Money Market Securities, either a
Certificate or Oral Instructions, in either case specifying with respect to each
purchase: (a) the name of the Sub-Trust to which such Securities are to be
specifically allocated; (b) the name of the issuer and the title of the
Securities; (c) the number of shares or the principal amount purchased and
accrued interest, if any; (d) the date of purchase and settlement; (e) the
purchase price per unit; (f) the total amount payable upon such purchase; (g)
the name of the person from whom or the broker through whom the purchase was
made; (h) whether or not such purchase is to be settled through the Book-Entry
System or the Depository; and (i) whether the Securities purchased are to be
deposited in the Book-Entry System or the Depository. The Custodian shall
receive all Securities purchased by or for a Sub-Trust of the Trust and upon
receipt of such Securities shall pay out of the moneys held for the account of
such Sub-Trust the total amount payable upon such purchase, provided that the
same conforms to the total amount payable as set forth in such Certificate or
such Oral Instructions.
2. Promptly after each sale of Securities by the Trust for a Sub-Trust,
the Trust shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate, and (ii) with
respect to each sale of Money Market Securities, either a Certificate or Oral
Instructions, in either case specifying with respect to such sale: (a) the name
of the Sub-Trust to which the Securities sold were specifically allocated; (b)
the name of the
7
<PAGE>
issuer and the title of the Securities; (c) the number of shares or principal
amount sold, and accrued interest, if any; (d) the date of sale; (e) the sale
price per unit; (f) the total amount payable to the Sub-Trust upon such sale;
(g) the name of the broker through whom or the person to whom the sale was made;
and (h) whether or not such sale is to be settled through the Book-Entry System
or the Depository. The Custodian shall deliver or cause to be delivered the
Securities to the broker or other person designated by the Trust upon receipt of
the total amount payable to such Sub-Trust upon such sale, provided that the
same conforms to the total amount payable to such Sub-Trust as set forth in such
Certificate or such Oral Instructions. Subject to the foregoing, the Custodian
may accept payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs prevailing
among dealers in Securities.
ARTICLE VI
LENDING OF SUB-TRUST SECURITIES
1. If the Trust or any Sub-Trust is permitted by the terms of the Trust's
Declaration of Trust and as disclosed in its Prospectus to lend Securities
specifically allocated to a Sub-Trust, within 24 hours after each loan of
Securities, the Trust shall deliver to the Custodian a Certificate specifying
with respect to each such loan: (a) the Sub-Trust to which the loaned
Securities are specifically allocated; (b) the name of the issuer and the title
of the Securities; (c) the number of shares or the principal amount loaned; (d)
the date of loan and delivery; (e) the total amount to be delivered to the
Custodian, and specifically allocated to such Sub-Trust against the loan of the
Securities, including the amount of cash collateral and the premium, if any,
separately identified; (f) the name of the broker, dealer or financial
institution to which the loan was made; and (g) whether the Securities loaned
are to be delivered through the Book-Entry System or the Depository.
Promptly after each termination of a loan of Securities specifically
allocated to a Sub-Trust, the Trust shall deliver to the Custodian a Certificate
specifying with respect to each such loan termination and return of Securities:
(a) the name of the Sub-Trust to which such loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities to be
returned; (c) the number of shares or the principal amount to be returned; (d)
the date of termination; (e) the total amount to be delivered to the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate); (f) the name of the broker, dealer or
financial institutional from which the Securities will be returned; and (g)
whether such return is to be effected through the Book-Entry System or the
Depository. The Custodian shall receive all Securities returned from the broker,
dealer or financial institutional to which such Securities were loaned and upon
receipt thereof shall pay, out of the moneys specifically allocated to such Sub-
Trust, the total amount payable upon such return of Securities as set forth in
the Certificate. Securities returned to the Custodian shall be held as they were
prior to such loan.
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<PAGE>
ARTICLE VII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Trust shall furnish to the Custodian a resolution of the Board of
Trustees of the Trust certified by the Secretary (i) authorizing the declaration
of dividends with respect to a Sub-Trust on a specified periodic basis and
authorizing the Custodian to rely on Oral Instructions or a Certificate
specifying the date of the declaration of such dividend or distribution, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of the record date and the total amount payable to the Transfer Agent
on the payment date, or (ii) setting forth the date of declaration of any
dividend or distribution by a Sub-Trust, the date of payment thereof, the record
date as of which shareholders entitled to payment shall be determined, the
amount payable per share to the shareholders of record as of the record date and
the total amount payable to the Transfer Agent on the payment date.
2. Upon the payment date specified in such resolution, Oral Instructions
or Certificate, as the case may be, the Custodian shall pay out of the moneys
specifically allocated to the appropriate Sub-Trust the total amount payable to
the Transfer Agent of the Trust.
ARTICLE VIII
SALE AND REDEMPTION OF SHARES OF THE SUB-TRUSTS
1. Whenever the Trust shall sell any Shares of a Sub-Trust, the Trust
shall deliver or cause to be delivered to the Custodian a Certificate duly
specifying:
(a) The name of the Sub-Trust whose Shares were sold;
(b) The number of Shares sold, trade date, and price; and
(c) The amount of money to be received by the Custodian for the sale of
such Shares and specifically allocated to such Sub-Trust.
2. Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account of the Sub-Trust specified in
subparagraph (a) of paragraph 1 of this Article.
3. Upon issuance of any Shares of a Sub-Trust in accordance with the
foregoing provisions of this Article, the Custodian shall pay, out of the moneys
specifically allocated to such Sub-Trust, all original issue or other taxes
required to be paid in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereafter, whenever any Shares of a Sub-Trust are
redeemed, the Trust shall furnish to the Custodian a Certificate, specifying:
9
<PAGE>
(a) The name of the Sub-Trust whose Shares were redeemed;
(b) The number of Shares redeemed; and
(c) The amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent of advice setting forth the
number of Shares of a Sub-Trust received by the Transfer Agent for redemption
and that such Shares are valid and in good form for redemption, the Custodian
shall make payment to the Transfer Agent out of the moneys specifically
allocated to the Sub-Trust specified in subparagraph (a) of paragraph 4 of this
Article of the total amount specified in the Certificate issued pursuant to
paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
Shares of a Sub-Trust, whenever such Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Trust or Sub-
Trust, the Custodian, unless otherwise instructed by a Certificate, shall, upon
receipt of an advise from the Trust or its agent setting forth the name of the
Sub-Trust whose Shares are being redeemed and stating that the redemption is in
good form for redemption in accordance with the check redemption procedure,
honor the check presented as part of such check redemption privilege out of the
moneys specifically allocated to the Sub-Trust specified in such advise for such
purpose.
ARTICLE IX
OVERDRAFTS OR INDEBTEDNESS
1. If the moneys held by the Custodian shall be insufficient to pay the
total amount payable upon purchase of Securities as set forth in a Certificate
or Oral Instructions issued pursuant to Article V or if the Trust is for any
other reason indebted to the Custodian, the Custodian shall immediately notify
the Trust of such fact and the Trust shall obtain a loan from a mutually
agreeable bank, broker-dealer, or other source in an amount sufficient to cover
said indebtedness.
2. The Trust will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Trust borrows money for temporary
administrative purposes using Securities as collateral for such borrowings, a
notice or undertaking in the form currently employed by any such bank setting
forth the amount which such bank will loan to the Trust against delivery of a
stated amount of collateral. The Trust shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the name of the
Sub-Trust for which the borrowing is to be made; (b) the name of the bank; (c)
the amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by the Trust, or other
loan agreement; (d) the time and date, if known, on which the loan is to be
entered into the (the "borrowing date"); (e) the date on which the loan becomes
due and payable; (f) the total amount payable to the Trust for the separate
account of the Sub-Trust on the borrowing date; (g) the market value of
securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal
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<PAGE>
amount of any particular Securities; (h) whether the Custodian is to deliver
such collateral through the Book-Entry System or the Depository; and (i) a
statement that such loan is in conformance with the 1940 Act and Trust's
Prospectus.
3. Upon receipt of the Certificate referred to in subparagraph 2 above,
the Custodian shall deliver on the borrowing date such specified collateral and
the executed promissory note, if any, against delivery by the lending bank of
the total amount of the loan payable, provided that the same conforms to the
total amount payable as set forth in the Certificate. The Custodian may, at the
option of the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement. The Custodian shall deliver as
additional collateral in the manner directed by the Trust from time to time such
Securities specifically allocated to such Sub-Trust as may be specified in a
Certificate to collateralize further any transaction described in this
paragraph. The Trust shall cause all Securities released from collateral status
to be returned directly to the Custodian, and the Custodian shall receive from
time to time such return of collateral as may be tendered to it. In the event
that the Trust fails to specify in a Certificate all of the information required
by this paragraph, the Custodian shall not be under any obligation to deliver
any Securities. Collateral returned to the Custodian shall be held hereunder as
it was prior to being used as collateral.
ARTICLE X
PERSONS HAVING ACCESS TO ASSETS OF THE SUB-TRUSTS
1. No Trustee, officer, employee or agent of the Trust, and no officer,
director, employee or agent of Calamos Asset Management Inc., the Trust's
Adviser, shall have access to the assets of the Trust held by the Custodian or
be authorized or permitted to withdraw any investments of the Trust, nor shall
the Custodian deliver any assets of the Trust to any such person.
2. Nothing in this Article X shall prohibit any officer, employee or
agent of the Trust, or any officer, director, employee or agent of Calamos Asset
Management Inc., the Trust's Adviser, from giving Oral Instructions or Written
Instructions to the Custodian or executing a Certificate so long as it does not
result in delivery of or access to assets of the Trust prohibited by paragraph 1
of this Article X.
ARTICLE XI
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including counsel fees, resulting from
its action or omission to act or otherwise, except for any such loss or damage
arising out of its own negligence or willful misconduct. The Custodian may, with
respect to questions of law, apply for and obtain the advise and opinion of
counsel to the Trust or of its own counsel, at the expense of the Trust, and
shall be fully protected with respect to anything done or omitted by it in good
faith in conformity
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with such advice or opinion. The Custodian shall be liable to the Trust for any
loss or damage resulting from the use of the Book-Entry System or the Depository
arising by reason of any negligence, misfeasance or misconduct on the part of
the Custodian or any its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall
be under no duty or obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased by the Trust or
any Sub-Trust, the legality of the purchase thereof, or the propriety of
the amount paid therefor;
(b) The legality of the sale of any Securities by the Trust or any Sub-
Trust, or the propriety of the amount for which the same are sold;
(c) The legality of the issue or sale by the Trust or any Sub-Trust of any
Shares, or the sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any Shares of the Trust or any Sub-
Trust, or the propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any dividend or other
distribution of the Trust of any Sub-Trust;
(f) The legality of any loan of Securities of the Trust or any Sub-Trust
pursuant to Article VI of this Agreement, nor shall the Custodian be under
any duty or obligation to see to it that any collateral delivered to it by
a broker, dealer or financial institution or held by it at any time as a
result of such loan of the Securities of any Sub-Trust is adequate
collateral for the Trust against any loss it might sustain as a result of
such loan. The Custodian specifically, but not by way of limitation, shall
not be under any duty or obligation to check periodically or notify the
Trust that the amount of such cash collateral held by it in connection with
any such loan for any Sub-Trust is sufficient collateral for such loan, but
such duty or obligation shall be the sole responsibility of the Trust. In
addition, the Custodian shall be under no duty or obligation to see to it
that any broker, dealer or financial institution to which Securities are
lent pursuant to Article VI of this Agreement makes payment to it of any
dividends or interest which are payable to or for the account of the Trust
during the period of such loan or at the termination of such loan;
provided, however, that the Custodian shall promptly notify the Trust in
the event that such dividends or interest are not paid and received when
due; or
(g) The legality of any borrowing for temporary administrative purposes.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Trust
or any Sub-Trust until the Custodian actually
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receives and collects such money directly or by the final crediting of the
account representing the Trust's interest in the Book-Entry System or the
Depository.
4. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Trust or any Sub-Trust from the
Transfer Agent for the Trust nor to take any action to effect payment or
distribution by such Transfer Agent of any amount paid by the Custodian to such
Transfer Agent in accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount, if the Securities upon which such amount is
payable are in default, or if payment is refused after due demand or
presentation, unless and until (a) it shall be directed to take such action by a
Certificate and (b) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
6. The Custodian may appoint one or more banking institutions, including
but not limited to banking institutions located in foreign countries, to act as
Depository or Depositories or as Sub-Custodian or as Sub-Custodians of
Securities and moneys at any time owned by the Trust or any Sub-Trust, upon
terms and conditions specified in a Certificate.
7. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the Trust and
specifically allocated to a Sub-Trust are such as may properly be held by the
Trust and Specifically allocated to such Sub-Trust under the provisions of the
Declaration of Trust.
8. The Custodian shall be entitled to receive, and the Trust agrees to
pay to the Custodian from the assets of the applicable Sub-Trust, such
compensation as may be agreed upon from time to time between the Custodian and
the Trust. The Custodian may charge against any moneys specifically allocated to
a Sub-Trust such compensation and any expenses incurred by the Custodian in the
performance of its duties pursuant to such agreement with respect to such Sub-
Trust. The Custodian shall also be entitled to charge against any money held by
it and specifically allocated to a Sub-Trust the amount of any loss, damage,
liability or expense incurred with respect to such Sub-Trust, including counsel
fees, for which it shall be entitled to reimbursement under the provisions of
this Agreement. The expenses which the Custodians may charge against such
account include, but are not limited to, the expenses of Sub-Custodians and
foreign branches of the Custodian incurred in settling transactions outside of
New York, New York involving the purchase and sale of Securities.
9. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably believed
by the Custodian to be genuine and to be signed by two Officers of the Trust.
The Custodian shall be entitled to rely upon any Oral Instructions actually
received by the Custodian pursuant to Articles IV, V, and VII hereof and
reasonably believed by the Custodian to be genuine and to be given by an
Authorized Person. The Trust agrees to use its best efforts to forward to the
Custodian Written Instructions from an Authorized Person confirming such Oral
Instructions in such manner so that such Written Instructions are received by
the Custodian, whether by hand delivery, telex or otherwise, by the close of
business on the same day that such Oral Instructions are given to the Custodian.
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The Trust agrees that the fact that such confirming instructions are not
received by the Custodian shall in no way effect the validity of the
transactions or enforceability of the transactions hereby authorized by the
Trust. The Trust agrees that the Custodian shall incur no liability to the Trust
in acting upon Oral Instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably appear to have been
received from a duly Authorized Person.
10. The books and records of the Custodian shall be open to inspection and
audit at reasonable times by Officers and auditors employed by the Trust and by
employees of the Securities and Exchange Commission.
11. The Custodian shall provide the Trust with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System
or the Depository and with such reports on its own systems of internal
accounting control as the Trust may reasonably request from time to time.
12. The Trust agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article VIII as part of the check redemption privilege program of
any Sub-Trust, except for any such liability, claim, loss and demand arising out
of the Custodian's own negligence or willful misconduct. The provisions of this
paragraph are not intended to protect the Custodian for its action or failure to
act in any capacity in connection with the check redemption privilege program
other than for its action or failure to act in its capacity as Custodian in
accordance with the terms of this Agreement.
ARTICLE XII
TERM AND TERMINATION
1. Either of the parties hereto may terminate this Agreement with respect
to any Sub-Trust or Sub-Trusts by giving to the other party a notice in writing
specifying the date of such termination, which, in the case of termination by
the Trust, shall be not less than 60 days after the date of receipt of such
notice, and which, in the case of termination by the Custodian, shall be not
less than 90 days after the date of receipt of such notice. In the event such
notice is given by the Trust, it shall be accompanied by a certified resolution
of the Board of Trustees of the Trust, electing to terminate this Agreement with
respect to any Sub-Trust or Sub-Trusts and designating a successor custodian or
custodians, each of which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. In the event such
notice is given by the Custodian, the Trust shall, on or before the termination
date, deliver to the Custodian a certified resolution of the Board of Trustees
of the Trust designating a successor custodian or custodians. In the absence of
such designation by the Trust, the Custodian may designate a successor custodian
which shall be a bank or trust company having not less than $2,000,000 aggregate
capital, surplus, and undivided profits. If the Trust fails to designate a
successor Custodian for any Sub-Trust or Sub-Trusts, the Trust shall upon the
date
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specified in the notice of termination of this Agreement and upon delivery by
the Custodian of all Securities and moneys then owned by such Sub-Trust or Sub-
Trusts be deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement.
2. Upon the date set forth in such notice under paragraph 1 of this
Article XII, this Agreement shall terminate to the extent specified in such
notice, and the Custodian shall upon receipt of a notice of acceptance by the
successor custodian on that date deliver directly to the successor custodian all
Securities and moneys then held by the Custodian and specifically allocated to
the Sub-Trust or Sub-Trusts specified, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall then be
entitled with respect to such Sub-Trust or Sub-Trusts.
ARTICLE XIII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a certification signed by two of the
present Officers of the Trust setting forth the names and the signatures of the
present Authorized Persons. The Trust agrees to furnish to the Custodian a new
certificate in similar form in the event that any such present Authorized Person
ceases to be such an Authorized Person or in the event that other or additional
Authorized Persons are elected or appointed. Until such new certification shall
be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of the present
Authorized Persons as set forth in the last delivered certification.
2. Annexed hereto as Appendix B is a certification signed by two of the
present Officers of the Trust setting forth the names and the signatures of the
present Officers of the Trust. The Trust agrees to furnish to the Custodian a
new certification in similar form in the event any such present Officer ceases
to be such an Officer of the Trust or in the event that other or additional
Officers are elected or appointed. Until such new certificates shall be
received, the Custodian shall be fully protected in acting under the provisions
of this Agreement upon the signature of the Officers as set forth in the last
delivered certification.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 100
Gold Street, New York, New York 10292 or at such other place as the Custodians
may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Trust, shall be sufficiently given if
addressed to the Trust and mailed or delivered to it at its offices at 2001
Spring Road, Oak Brook, Illinois 60521 or at such other place as the Trust may
from time to time designate in writing.
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5. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality as this
Agreement, and approved by a resolution of the Board of Trustees of the Trust.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Trust without the written consent
of the Custodian, or by the Custodian without the written consent of the Trust
authorized or approved by a resolution of the Board of Trustees of the Trust,
and any attempted assignment without such written consent shall be null and
void.
7. This Agreement shall be construed in accordance with the laws of the
State of Illinois.
8. The term "CFS Investment Trust Funds" means and refers to the Trustees
from time to time serving under the Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. 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 bind only the trust 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 of the Trust and
signed by an authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees 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.
9. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunder duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
CFS Investment Trust
By: /s/ Joyce A. Cagnina
--------------------
Joyce A. Cagnina
Attest:
/s/ Robert M. Slotky
- --------------------
Prudential-Bache Securities Inc.
By: /s/ [signature]
---------------
Attest:
/s/ [signature]
- ---------------
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APPENDIX A
I, Joyce A Cagnina, Secretary of CFS Investment Trust, a Massachusetts
business trust (the "Trust"), do hereby certify that:
The following individuals have been duly authorized as Authorized Persons
to give Oral Instructions and Written Instructions on behalf of the Trust and
the signatures set forth opposite their respective names are their true and
correct signatures:
Name Signature
---- ---------
John P. Calamos /s/ John P. Calamos
---------------------- -----------------------------
Nick P. Calamos /s/ Nick P. Calamos
---------------------- -----------------------------
Robert M. Slotky /s/ Robert M. Slotky
---------------------- -----------------------------
Joyce A. Cagnina /s/ Joyce A. Cagnina
---------------------- -----------------------------
Nancy J. Annicella /s/ Nancy J. Annicella
---------------------- -----------------------------
Michael Wasz /s/ Michael Wasz
---------------------- -----------------------------
Angelo Calamos /s/ Angelo Calamos
---------------------- -----------------------------
Senka Rutovich /s/ Senka Rutovich
---------------------- -----------------------------
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APPENDIX B - OFFICERS
I, Joyce A. Cagnina, Secretary of CFS Investment Trust, a Massachusetts
business trust (the "Trust"), do hereby certify that:
The following individuals serve in the following positions with the Trust
and each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Trust's Declaration of Trust and the
signatures set forth opposite their respective names are their true and correct
signatures:
Name Position Signature
---- -------- ---------
John P. Calamos President /s/ John P. Calamos
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Joyce A. Cagnina Secretary /s/ Joyce A. Cagnina
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Robert M. Slotky Treasurer /s/ Robert M. Slotky
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Nancy J. Annicella Assistant Secretary /s/ Nancy J. Annicella
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Fee Schedule
Prudential-Bache Securities Inc. and CFS Investment Trust agree to the
following Financial Arrangements to our Custody Agreement dated April 20, 1990.
Prudential-Bache shall charge CFS Investment Trust $15.00 per receive or
deliver of securities for the custody account.
Agreed: /s/ Robert M. Slotky
--------------------
CFS Investment'Trust
/s/ [signature]
---------------
Prudential-Bache Securities Inc.
<PAGE>
Exhibit 9.1
TRANSFER AGENCY AGREEMENT
AGREEMENT made as of the 20th of July, 1988, between CALAMOS ASSET
MANAGEMENT, 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 "Transfer Agent"), and CFS INVESTMENT TRUST, a Massachusetts
business trust having its principal office and place of business in Oak Brook,
Illinois (the "Trust").
W I T N E S S E T H:
-------------------
That for and in consideration of the mutual promises hereinafter set forth,
the Trust and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
(a) "Authorized Person" shall be deemed to include the President, any Vice
President, the Secretary or any Assistant Secretary, the Treasurer or any
Assistant Treasurer, the persons listed in Appendix A hereto, or any other
person, whether or not any such person is an Officer or employee of the Trust,
duly authorized to give Oral Instructions and Written Instructions on behalf of
the Trust as indicated in a certification pursuant to Section 6(d) or 6(e)
hereof as may be received by the Transfer Agent from time to time;
(b) "Certificate" shall mean any notice, instruction or other instrument in
writing, authorized or required by this Agreement to be given to the Transfer
Agent, which is actually received by the Transfer Agent and signed on behalf of
the Trust by any two Officers thereof;
(c) "Commission" shall have the meaning given to it in the 1940 Act;
(d) "Custodian" refers to the custodian of all of the securities and other
moneys owned by the Trust;
(e) "Declaration of Trust" shall mean the Declaration of Trust of CFS
Investment Trust dated December 21, 1987, as the same may be amended from time
to time;
(f) "Officer" shall mean the President, Vice President, Secretary and
Treasurer.
(g) "Oral Instructions" shall mean instructions orally communicated and
actually received by the Transfer Agent from an Authorized Person or from a
person reasonably believed by the Transfer Agent to be an Authorized Person;
(h) "Prospectus" shall mean the most current effective prospectus relating
to the particular Sub-Trust's Shares under the Securities Act of 1933, as
amended;
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(i) "Shares" refers to the transferable units of interest into which the
beneficial interest in the Trust or any Sub-Trust of the Trust (as the context
may require) shall be divided from time to time;
(j) "Shareholder" means a record owner of Shares;
(k) "Sub-Trust" shall mean each series of Shares established and designated
under or in accordance with the provisions of Article IV of the Declaration of
Trust, including Calamos Convertible Growth Fund Sub-Trust, Calamos Convertible
Total Return Fund Sub-Trust, and Calamos Convertible Preferred Fund Sub-Trust
and such other separate and distinct Sub-Trusts as may from time to time be
created by the Trust;
(1) "Trust" refers to CFS Investment Trust, a Massachusetts business trust
established under the Declaration of Trust;
(m) "Trustees" or "Board of Trustees" refers to the duly elected Trustees
of the Trust;
(n) "Written Instructions" shall mean a written communication actually
received by the Transfer Agent from an Authorized Person or from a person
reasonably believed by the Transfer Agent to be an Authorized Person by telex or
any other such system whereby the receiver of such communication is able to
verify through codes or otherwise with a reasonable degree of certainty the
authenticity of the sender of such communication; and
(o) The "1940 Act" refers to the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder, all as amended from time to
time.
2. Representation of Transfer Agent. The Transfer Agent does hereby
represent and warrant to the Trust that it is duly registered as a transfer
agent as provided in Section 17A(c) of the Securities Exchange Act of 1934, as
amended.
3. Appointment of the Transfer Agent. The Trust hereby appoints and
constitutes the Transfer Agent as transfer agent for all of the Shares of the
Sub-Trusts of the Trust in existence as of the date hereof, and as shareholder
servicing agent for the Trust, and the Transfer Agent accepts such appointments
and agrees to perform the duties herein set forth. If the Board of Trustees,
pursuant to Article IV of the Declaration of Trust, hereafter designates and
establishes a new Sub-Trust, the Transfer Agent agrees that it will act as
transfer agent and shareholder servicing agent for such new Sub-Trust on the
terms set forth herein. The Trustees shall cause a written notice to be sent to
the Transfer Agent to the effect that it has established a new Sub-Trust and
that it appoints Transfer Agent as transfer agent and shareholder servicing
agent for the new Sub-Trust. Compensation of the Transfer Agent shall be
established pursuant to Section 4 hereof. The Trust shall be obligated to
provide such documents and further documents as are specified in Sections 5 and
6 hereof as the Transfer Agent may reasonably request.
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4. Compensation.
(a) The Trust will initially compensate the Transfer Agent for its services
rendered under this Agreement in accordance with the fees set forth in the fee
schedule annexed hereto and incorporated herein for the existing Sub-Trust.
(b) The parties hereto will agree upon the compensation for acting as
transfer agent for any Sub-Trust hereafter designated and established at the
time that the Transfer Agent commences serving as such for said Sub-Trust, and
such agreement shall be reflected in a fee schedule for that Sub-Trust, dated
and signed by an authorized officer of each party hereto, to be attached to this
Agreement.
(c) Any compensation agreed to hereunder may be adjusted from time to time
by attaching a revised fee schedule, dated and signed by an Officer of each
party hereto, to this Agreement.
(d) The Transfer Agent will bill the Trust for each Sub-Trust as soon as
practicable after the end of each calendar month, and said billings will be
detailed in accordance with the fee schedule for each Sub-Trust. The Trust will
promptly pay to the Transfer Agent the amount of such billing.
5. Documents. In connection with the appointment of the Transfer Agent,
the Trust shall, on or before the date this Agreement goes into effect, file
with the Transfer Agent the following documents:
(a) A copy of the Declaration of Trust as then in effect;
(b) A copy of the by laws of the Trust, as then in effect;
(c) A copy of the resolution of the Trustees authorizing this Agreement;
(d) If applicable, a specimen of the certificate for Shares of each Sub-
Trust of the Trust in the form approved by the Trustees, with a Certificate of
the Secretary of the Trust as to such approval;
(e) All account application forms and other documents relating to
Shareholder accounts or relating to any plan, program or service offered by the
Trust; and
(f) A list of Shareholders of the existing Sub-Trusts with the name,
address and tax identification number of each Shareholder, and the number of
Shares of the existing Sub-Trusts held by each, certificate numbers and
denominations (if any certificates have been issued), lists of any accounts
against which stops have been placed, together with the reasons for said stops,
and the number of Shares redeemed by the Sub-Trusts.
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6. Further Documentation. The Trust will also furnish from time to time
the following documents:
(a) Each resolution of the Trustees authorizing the original issue of
Shares or establishing a new Sub-Trust;
(b) Each registration statement filed with the Commission, and all
amendments and orders with respect thereto, in effect with respect to the sale
of Shares of the Trust;
(c) A copy of each amendment to the Declaration of Trust and the by laws of
the Trust;
(d) Copies of each vote of the Trustees designating Authorized Persons to
give instructions to the Transfer Agent;
(e) Certificates as to any change in any Officer or Trustee of the Trust;
(f) Specimens of all new certificates for Shares, accompanied by the
Trustees' resolutions approving such forms; and
(g) Such other certificates, documents or opinions as may mutually by
deemed necessary or appropriate for the Transfer Agent in the proper performance
of its duties.
7. Representations of the Trust. The Trust represents to Transfer Agent
that, as of the date hereof, it is authorized to issue an unlimited number of
Shares. All outstanding Shares are validly issued, fully paid and nonassessable
by the Trust. The Trust may hereafter issue an unlimited number of Shares of
each Sub-Trust presently existing or hereafter created. When Shares are
hereafter issued in accordance with the terms of the Prospectus, such Shares
shall be validly issued, fully paid and nonassessable by the Trust.
8. Duties of the Transfer Agent.
(a) The Transfer Agent shall be responsible for administering and/or
performing transfer agent functions, for acting as service agent in connection
with dividend and distribution functions and for performing shareholder account
administrative agent functions in connection with the issuance, transfer and
redemption or repurchase (including coordination with the Custodian) of the
Trust's Shares. The details of the operating standards and procedures to be
followed shall be determined from time to time by agreement between the Transfer
Agent and the Trust.
(b) The Transfer Agent shall create and maintain all necessary records
including those specified in Section 17 hereof, in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and those records pertaining to the
various functions performed by it hereunder. All records shall be available for
inspection and use by the Trust. Where applicable, such records shall be
maintained by the Transfer Agent for the periods and in the places required by
Rule 31a-2 under the 1940 Act.
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(c) The Transfer Agent shall make available during regular business hours
all records and other data created and maintained pursuant to this agreement for
reasonable audit and inspection by the Trust or any person retained by the
Trust. Upon reasonable notice by the Trust, the Transfer Agent shall make
available during regular business hours its facilities and premises employed in
connection with its performance of this agreement for reasonable visitation by
the Trust or any person retained by the Trust.
(d) At the expense of the Trust, the Transfer Agent shall maintain an
adequate supply of blank share certificates for each Sub-Trust to meet the
Transfer Agent's requirements therefor. Such share certificates shall be
properly signed by facsimile. The Trust agrees that, notwithstanding the death,
resignation, or removal of any Officer of the Trust whose signature appears on
such certificates, the Transfer Agent may continue to countersign certificates
which bear such signatures until otherwise directed by the Trust.
(e) The Transfer Agent shall issue replacement share certificates in lieu
of certificates which have been lost, stolen or destroyed, without any further
action by the Board of Trustees or any Officer of the Trust, upon receipt by the
Transfer Agent of properly executed affidavits and lost certificate bonds, in
form satisfactory to the Transfer Agent, with the Trust and the Transfer Agent
as obligees under the bond.
(f) The Transfer Agent shall also maintain a record of each certificate
issued, the number of Shares represented thereby and the holder of record. With
respect to shares held in open account, i.e. no certificate being issued with
respect thereto, the Transfer Agent shall maintain comparable records of the
record holders thereof, including their addresses and tax identification
numbers. The Transfer Agent shall further maintain a stop transfer record on
lost and/or replaced certificates.
(g) The Transfer Agent will address and mail all communications by the
Trust to its Shareholders, including reports to Shareholders, dividend and
distribution notices and proxy material for its meetings of Shareholders.
(h) The Transfer Agent will investigate all Shareholder inquiries relating
to Shareholder accounts and will answer all correspondence from Shareholders,
securities brokers and others relating to its duties hereunder and such other
correspondence as may from time to time be mutually agreed upon between the
Transfer Agent and the Trust.
(i) The Transfer Agent shall furnish the Trust state by state registration
reports, such periodic and special reports as the Trust may reasonably request,
and such other information, including Shareholder lists and statistical
information concerning accounts, as may be agreed upon from time to time between
the Trust and the Transfer Agent.
(j) In connection with special and annual meetings of Shareholders, the
Transfer Agent will prepare Shareholder lists, mail and certify as to the
mailing of proxy materials, process and tabulate returned proxy cards, report on
proxies voted prior to meetings, act as teller at meetings and certify Shares
voted at meetings.
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9. Sale of Trust Shares.
(a) Whenever the Trust shall sell or cause to be sold any Shares of a Sub-
Trust, the Trust shall deliver or cause to be delivered to the Transfer Agent a
Certificate duly specifying: (i) the name of the Sub-Trust whose Shares were
sold; (ii) the number of Shares sold, trade date, and price; (iii) the amount of
money to be delivered to the Custodian for the sale of such Shares and
specifically allocated to such Sub-Trust; and (iv) in the case of a new account,
a new account application or sufficient information to establish an account.
(b) The Transfer Agent will, upon receipt by it of a check or other payment
identified by it as an investment in Shares of one of the Sub-Trusts and drawn
or endorsed to the Transfer Agent as agent for, or identified as being for the
account of, one of the Sub-Trusts, promptly deposit such check or other payment
to the appropriate account postings necessary to reflect the investment. The
Transfer Agent will notify the Trust, or its designee, and the Custodian of all
purchases and related account adjustments.
(c) Upon receipt of the notification required under paragraph (a) hereof
and the notification from the Custodian that such money has been received by it,
the Transfer Agent shall issue to the purchaser or his authorized agent such
Shares as he is entitled to receive, based on the appropriate net asset value of
the Sub-Trust's Shares, determined in accordance with applicable Federal law or
regulation. In issuing Shares to a purchaser or his authorized agent, the
Transfer Agent shall be entitled to rely upon the latest written directions, if
any, previously received by the Transfer Agent from the purchaser or his
authorized agent concerning the delivery of such Shares.
(d) The Transfer Agent shall not be required to issue any Shares of the
Trust where it has received a Written Instruction from the Trust or written
notification from any appropriate Federal or state authority that the sale of
the Shares of the Sub-Trust in question has been suspended or discontinued, and
the Transfer Agent shall be entitled to rely upon such Written Instructions or
written notification.
(e) Upon the issuance of any Shares of any Sub-Trust in accordance with the
foregoing provisions of this Section, the Transfer Agent shall not be
responsible for the payment of any original issue or other taxes required to be
paid by the Trust in connection with such issuance.
(f) The Transfer Agent may establish such additional rules and regulations
governing the transfer or registration of certificates for Shares as it may deem
advisable and consistent with such rules and regulations generally adopted by
bank transfer agents.
10. Returned Checks. In the event that any check or other order for the
payment of money is returned unpaid for any reason, the Transfer Agent will: (i)
give prompt notice of such return to the Trust or its designee; (ii) place a
stop transfer order against all Shares issued or held on deposit as a result of
such check or order; (iii) in the case of any Shareholder who has obtained
redemption checks, place a stop payment order on the checking account on which
such
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checks are issued; and (iv) take such other steps as the Transfer Agent may, in
its discretion, deem appropriate or as the Trust or its designee may instruct.
11. Redemptions.
(a) Means of Redemption. Shares of any Sub-Trust may be redeemed in
accordance with the procedures set forth in the Prospectus of the Trust and the
Transfer Agent will duly process all redemption requests.
12. Transfers and Exchanges. The Transfer Agent is authorized to review and
process transfers of Shares of each Sub-Trust, exchanges between Sub-Trusts on
the records of the Sub-Trusts maintained by the Transfer Agent, and exchanges
between the Trust and other funds as may be permitted by the Prospectus of the
Trust. If Shares to be transferred are represented by outstanding certificates,
the Transfer Agent will, upon surrender to it of the certificates in proper form
for transfer, and upon cancellation thereof, countersign and issue new
certificates for a like number of Shares and deliver the same. If the Shares to
be transferred are not represented by outstanding certificates, the Transfer
Agent will, upon an order therefor by or on behalf of the registered holder
thereof in proper form, credit the same to the transferee on its books. If
Shares are to be exchanged for Shares of another fund, the Transfer Agent will
process such exchange in the same manner as a redemption and sale of Shares,
except that it may in its discretion waive requirements for information and
documentation.
13. Right to Seek Assurances. The Transfer Agent reserves the right to
refuse to transfer or redeem Shares until it is satisfied that the requested
transfer or redemption is legally authorized, and it shall incur no liability
for the refusal, in good faith, to make transfer or redemptions which the
Transfer Agent, in its judgment, deems improper or unauthorized, or until it is
satisfied that there is no basis for any claims adverse to such transfer or
redemption. The Transfer Agent may, in effecting transfers, rely upon the
provisions of the Uniform Act for the Simplification of Fiduciary Security
Transfers or the Uniform Commercial Code, as the same may be amended from time
to time, which in the opinion of legal counsel for the Trust or of its own legal
counsel protect it in not requiring certain documents in connection with the
transfer or redemption of Shares of any Sub-Trust, and the Trust shall indemnify
the Transfer Agent for any act done or omitted by it in reliance upon such laws
or opinions of counsel of the Trust or of its own counsel.
14. Distributions.
(a) The Trust will promptly notify the Transfer Agent of the declaration of
any dividend or distribution. The Trust shall furnish to the Transfer Agent a
resolution of the Board of Trustees certified by the Secretary: (i) authorizing
the declaration of dividends on a specified periodic basis and authorizing the
Transfer Agent to rely on Oral Instructions or a Certificate specifying the date
of the declaration of such dividend or distribution, the date of payment
thereof, the record date as of which Shareholders entitled to payment shall be
determined and the amount payable per share to Shareholders of record as of that
date and the total amount payable to the Transfer Agent of the Trust on the
payment date; or (ii) setting forth the date of the declaration of any dividend
or distribution by a Sub-Trust, the date of payment thereof, the
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record date as of which Shareholders entitled to payment shall be determined,
and the amount payable per share to the Shareholders of record as of that date
and the total amount payable to the Transfer Agent on the payment date.
(b) The Transfer Agent will, on or before the payable date of any dividend
or distribution, notify the Custodian of the estimated amount of cash required
to pay said dividend or distribution, and the Trust agrees that, on or before
the mailing date of such dividend or distribution, it shall instruct the
Custodian to place in a dividend disbursing account funds equal to the cash
amount to be paid out. The Transfer Agent will calculate, prepare and mail
checks to, or (where appropriate) credit such dividend or distribution to the
account of, Sub-Trust Shareholders and maintain and safeguard all underlying
records.
(c) The Transfer Agent will replace lost checks upon receipt of properly
executed affidavits and maintain stop payment orders against replaced checks.
(d) The Transfer Agent will maintain all records necessary to reflect the
crediting of dividends which are reinvested in Shares of the Trust, including
without limitation any dividends declared daily.
(e) The Transfer Agent shall not be liable for any improper payments made
in accordance with the resolution of the Board of Trustees.
(f) If the Transfer Agent shall not receive from the Custodian sufficient
cash to make payment to all Shareholders of the Trust as of the record date, the
Transfer Agent shall, upon notifying the Trust, withhold payment to all
Shareholders of record as of the record date until such sufficient cash is
provided to the Transfer Agent.
15. Other Duties. In addition to the duties expressly provided for herein,
the Transfer Agent shall perform such other duties and functions and shall be
paid such amounts therefore as may from time to time be agreed in writing.
16. Taxes. The Transfer Agent shall file such appropriate information
returns concerning the payment of dividends and capital gain distributions with
the proper Federal, state and local authorities as are required by law to be
filed by the Trust and shall withhold such sums as are required to be withheld
by applicable law.
17. Books and Records.
(a) The Transfer Agent shall maintain records showing for each
Shareholder's account the following: (i) names, addresses and tax identification
numbers; (ii) numbers of Shares held; (iii) historical information regarding the
account of each Shareholder, including dividends paid and date and price of all
transactions on a Shareholder's account; (vi) any stop or restraining order
placed against a Shareholder's account; (v) information with respect to
withholdings in the case of a foreign account; (vi) any capital gain or dividend
reinvestment order, plan application, dividend address and correspondence
relating to the current maintenance of a Shareholder's account; (vii)
certificate numbers and denominations for any Shareholder's
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holding certificates; (viii) any information required in order for the Transfer
Agent to perform the calculations contemplated or required by this Agreement;
and (ix) such other information and data as may be required by applicable law.
(b) Any records required to be maintained by Rule 31a-1 under the 1940 Act
will be preserved for the periods prescribed in Rule 31a-2 under the 1940 Act.
Such records may be inspected by the Trust at reasonable times. The Transfer
Agent may, at its option at any time, and shall forthwith upon the Trust's
demand, turn over to the Trust and cease to retain in the Transfer Agent's
files, records and documents created and maintained by the Transfer Agent in
performance of its services or for its protection. At the end of the six-year
retention period, such records and documents will either be turned over to the
Trust or destroyed in accordance with the Trust's authorization.
18. Reliance by Transfer Agent; Instructions.
(a) The Transfer Agent shall be protected in acting upon any paper or
document believed by it to be genuine and to have been signed by an Authorized
Person and shall not be held to have any notice of any change of authority of
any person until receipt of written certification thereof from the Trust. It
shall also be protected in processing Share certificates which it reasonably
believes to bear the proper manual of facsimile signatures of the Officers of
the Trust and the proper countersignature of the Transfer Agent.
(b) At any time the Transfer Agent may apply to any Authorized Person of
the Trust for Written Instructions, and, at the expense of the Trust, may seek
advice from legal counsel for the Trust or its own legal counsel, with respect
to any matter arising in connection with this Agreement, and it shall not be
liable for any action taken or not taken or suffered by it in good faith in
accordance with such Written Instructions or with the opinion of such counsel.
In addition, the Transfer Agent, its officers, agents or employees, shall accept
instructions or requests given to them by any person representing or acting on
behalf of the Trust only if said representative is known by the Transfer Agent,
its officers, agents or employees, to be an Authorized Person. The Transfer
Agent shall have no duty or obligation to inquire into, nor shall the Transfer
Agent be responsible for, the legality of any act done by it upon the request or
direction of Authorized Persons of the Trust.
(c) Notwithstanding any of the foregoing provisions of this Agreement, the
Transfer Agent shall be under no duty or obligation to inquire into, and shall
not be liable for: (i) the legality of the issue or sale of any Shares of the
Trust, or the sufficiency of the amount to be received therefor; (ii) the
legality of the redemption of any Shares of the Trust, or the propriety of the
amount to be paid therefor; (iii) the legality of the declaration of any
dividend by the Trust, or the legality of the issue of any dividend by the
Trust, or the legality of the issue of any Shares of the Trust in payment of any
stock dividend; or (iv) the legality of any recapitalization or readjustment of
the Shares of the Trust.
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19. Standard of Care and Indemnification.
(a) The Transfer Agent may, in connection with this Agreement, employ
agents or attorneys in fact, and shall not be liable for any loss arising out of
or in connection with its actions under this Agreement so long as it acts in
good faith and with due diligence, and is not negligent or guilty of any willful
misconduct.
(b) The Trust hereby agrees to indemnify and hold harmless the Transfer
Agent from and against any and all claims, demands, expenses and liabilities
(whether with or without basis in fact or law) of any and every nature which the
Transfer Agent may sustain or incur or which may be asserted against the
Transfer Agent by any person by reason of, or as a result of: (i) any action
taken or omitted to be taken by the Transfer Agent in good faith in reliance
upon any Certificate, instrument, order or stock certificate believed by it to
be genuine and to be signed, countersigned or executed by any duly authorized
person, upon the Oral Instructions or Written Instructions of an Authorized
Person of the Trust or upon the opinion of legal counsel for the Trust or its
own counsel; or (ii) any action taken or omitted to be taken by the Transfer
Agent in connection with its appointment in good faith in reliance upon any law,
act, regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended or repealed. However,
indemnification hereunder shall not apply to actions or omissions of the
Transfer Agent or its directors, officers, employees or agents in case of its
own negligence, willful misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
20. Affiliation Between Trust and Transfer Agent. It is understood that
the directors, officers, employees, agents or stockholders of the Transfer Agent
may be interested in the Trust as Trustees, officers, employees, agents,
Shareholders, or otherwise. The fact that the officers, Trustees, directors,
employees, agents or Shareholders of the Trust are or may be affiliated persons
(as defined in the 1940 Act) of the Transfer Agent shall not affect the validity
of this Agreement.
21. Term.
(a) This Agreement shall become effective on January ___, 1988 (the
"Effective Date") and shall continue in effect from year to year thereafter, on
and after two years from the Effective Date, so long as such continuance is
specifically approved at least annually both: (i) by either the Trustees or the
vote of a majority of the outstanding voting securities of the Trust; and (ii)
by a vote of the majority of the Trustees who are not interested persons of the
Trust (as defined in the 1940 Act) cast in person at a meeting called for the
purpose of voting upon such approval.
(b) Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which, in the case of termination by the Trust, shall be not less than 60 days
after the date of receipt of such notice, and which, in the case of termination
by the Transfer Agent, shall be not less than 90 days after the date of receipt
of such notice. In the event such notice is given by the Trust, it shall be
accompanied by
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a resolution of the Board of Trustees, certified by the Secretary, electing to
terminate this Agreement and designating a successor transfer agent.
22. Amendment. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the formality of
this Agreement, and (i) authorized or approved by a resolution of the Board of
Trustees, including a majority of the Trustees who are not interested persons of
the Trust as defined in the 1940 Act, or (ii) authorized and approved by such
other procedures as may be permitted or required by the 1940 Act.
23. Subcontracting. The Trust agrees that Transfer Agent may, in its
discretion, subcontract for certain of the services to be provided hereunder.
24. Security. The Transfer Agent represents and warrants that, to the best
of its knowledge, the various procedures and systems which the Transfer Agent
has implemented with regard to safeguarding from loss or damage attributable to
fire, theft or any other cause (including provision for twenty-four hours a day
restricted access) the Trust's blank checks, records and other data and the
Transfer Agent's records, data, equipment, facilities and other property used in
the performance of its obligations hereunder are adequate and that it will make
such changes therein from time to time as in its judgment are required for the
secure performance of its obligations hereunder. The parties shall review such
systems and procedures on a periodic basis.
25. Miscellaneous.
(a) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Trust or the Transfer Agent
without the written consent of the other.
(b) This Agreement shall be construed in accordance with the laws of the
State of Illinois.
(c) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
26. 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 bind only the trust property
of the Trust, as provided in the Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and signed by an
authorized Officer of the Trust, acting as such, and neither such authorization
by the Trustees 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.
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IN WITNESS WHEREOF, this Transfer Agency Agreement has been executed for
the Transfer Agent and the Trust by their duly authorized officers, as of the
date first set forth above.
CALAMOS ASSET MANAGEMENT, INC.
By: /s/ John P. Calamos
--------------------------
John P. Calamos, President
Attest:
/s/ Joyce A. Cagnina
- ---------------------------
Joyce A. Cagnina, Secretary
CFS INVESTMENT TRUST
By: /s/ John P. Calamos
--------------------------
John P. Calamos, President
Attest:
/s/ Joyce A. Cagnina
- ---------------------------
Joyce A. Cagnina, Secretary
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FEE SCHEDULE
Commencing on the date shares of CFS Investment Trust (the "Trust") are
first offered for sale to the public, the compensation payable by CFS Investment
Trust (the "Trust") to Calamos Asset Management, Inc. (the "Transfer Agent")
pursuant to Section 4 of the Transfer Agency Agreement between the Trust and the
Transfer Agent dated November ___ , 1987 shall be as follows:
<TABLE>
<CAPTION>
<S> <C>
Monthly fee per Shareholder account $ .75
Fee per Shareholder initiated transaction
(purchase other than by reinvestment,
transfer or redemption) 1.00
Fee per account for dividend or distribution
paid .50
</TABLE>
There is no charge for processing changes in account information or for
furnishing information with respect to any account, and there is no charge for
opening a new account other than the $1 fee for the initial purchase. A dividend
and distribution payable on the same date shall result in the imposition of only
one fee per account. The full monthly account fee will be payable with respect
to an account that is open for any portion of a month.
Approved:
CFS INVESTMENT TRUST CALAMOS ASSET MANAGEMENT, INC.
By: /s/ John P. Calamos By: /s/ John P. Calamos
------------------- -------------------
<PAGE>
Exhibit 9.2
August 22, 1990
Calamos Asset Management, Inc.
2001 Spring Road, Suite 750
Oak Brook, Illinois 60521
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, we
hereby notify you that the board of trustees of CFS Investment Trust has
established two additional Sub-Trusts, designated Calamos Strategic Income Fund
and Calamos Growth Fund, and has designated you as transfer agent and
shareholder servicing agent for those Sub-Trusts upon the terms and conditions
set forth in the Transfer Agency Agreement.
Very truly yours,
CFS INVESTMENT TRUST
By /s/ Joyce A. Cagnina
--------------------
Joyce A. Cagnina
Vice President and Secretary
Appointment as transfer agent for the Sub-Trusts designated Calamos Strategic
Income Fund and Calamos Growth Fund accepted this 23rd day of August, 1990.
CALAMOS ASSET MANAGEMENT, INC.
By /s/ Robert M. Slotky
--------------------
Robert M. Slotky
Senior Vice President
<PAGE>
Exhibit 9.3
April 30, 1992
Calamos Asset Management, Inc.
2001 Spring Road, Suite 750
Oak Brook, Illinois 60521
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, we
hereby notify you that the board of trustees of CFS Investment Trust has
established an additional Sub-Trust, designated Calamos Convertible 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 Transfer Agency
Agreement.
Very truly yours,
CFS INVESTMENT TRUST
By /s/ Robert M. Slotky
------------------------------------
Robert M. Slotky
Vice President and Secretary
Appointment as transfer agent for the Sub-Trust designated Calamos Convertible
Fund accepted this 21st day of April, 1992.
CALAMOS ASSET MANAGEMENT, INC.
By /s/ Robert M. Slotky
-------------------------------------
Robert M. Slotky
Senior Vice President
<PAGE>
EXHIBIT 9.5
USE OF NAME AGREEMENT
CFS INVESTMENT TRUST, a Massachusetts business trust registered as an
open-end management investment company under the Investment Company Act of 1940
(the "Trust"), and CALAMOS ASSET MANAGEMENT, INC., an Illinois corporation with
its principal place of business in Oak Brook, Illinois ("CAM"), in consideration
for the engagement of CAM by the Trust as manager and investment adviser to the
Trust for its series designated CALAMOS STRATEGIC INCOME FUND and CALAMOS GROWTH
FUND, agree that:
1. The name "Calamos" and any logo associated with that name are the
valuable property of CAM.
2. For so long as CAM serves as investment adviser to any series of
the Trust, the Trust shall have the right to use the name "Calamos" and any logo
associated with that name in the names of such series of the Trust, and in
related marketing materials, including any prospectus and statement of
additional information.
3. Upon the cessation of CAM's services as investment adviser to a
series of the Trust, the Trust agrees to cease to use the "Calamos" name and any
associated logo in connection with such series as promptly as it can reasonably
do so.
Dated: August 23, 1990
CFS INVESTMENT TRUST
By /s/ Joyce A. Cagnina
------------------------------------
Joyce A. Cagnina
Vice President and Secretary
CALAMOS ASSET MANAGEMENT, INC.
By /s/ Robert M. Slotky
------------------------------------
Robert M. Slotky
Senior Vice President
<PAGE>
Exhibit 10.2
Bell, Boyd & Lloyd
THREE FIRST NATIONAL PLAZA
70 WEST MADISON STREET, SUITE 3300
CHICAGO, ILLINOIS 60602-4207
312 372-1121
FAX 312 372-2098
June 19, 1997
CFS Investment Trust
1111 East Warrenville Road
Naperville, Illinois 60563-1497
Ladies and Gentlemen:
We have acted as counsel for CFS Investment Trust (the "Trust") in
connection with the registration under the Securities Act of 1933 (the "Act") of
an indefinite number of Class I shares of beneficial interest (the "Shares") of
each series of the Trust designated Calamos Convertible Fund, Calamos Growth and
Income Fund, Calamos Strategic Income Fund, Calamos Growth Fund and Calamos
Global Growth and Income Fund (the "Funds") in registration statement no. 33-
19228 on form N-1A (the "Registration Statement").
In this connection we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate and other
records, certificates and other papers as we deemed it necessary to examine for
the purpose of this opinion, including the agreement and declaration of trust
(the "Trust Agreement") and by-laws (the "By-laws") of the Trust, actions of the
board of trustees of the Trust authorizing the issuance of shares of the Funds
and the Registration Statement.
We assume that, upon sale of the Shares, the Trust will receive the
authorized consideration therefor, and that such consideration will in each case
at least equal the net asset value of the Shares.
Based on such examination, we are of the opinion that upon the issuance and
delivery of the Shares of any Fund after the post-effective amendment has been
declared effective and in accordance with the Trust Agreement and the actions of
the board of trustees authorizing the issuance of the Shares, and the receipt by
the Trust of the authorized consideration therefor, the Shares so issued will be
validly issued, fully paid and nonassessable (although shareholders of the Fund
may be subject to liability under certain circumstances as described in the
statement of additional information of the Trust relating to the Fund included
as Part B of the Registration Statement under the caption "Declaration of
Trust").
<PAGE>
CFS Investment Trust
June 19, 1997
Page two
We consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not admit that we are in the category
of persons whose consent is required under section 7 of the Act.
Very truly yours,
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and "Financial Highlights" and to the incorporation by reference of our report
dated May 16, 1997 in the Registration Statement (Form N-1A) of Calamos
Investment Trust and in the related Prospectus of the Calamos Family of Funds,
filed with the Securities and Exchange Commission in this Post-Effective
Amendment No. 18 to the Registration Statement under the Securities Act of 1933
(Registration No. 33-19228) and in this Amendment No. 21 to the Registration
Statement under the Investment Company Act of 1940 (Registration No. 811-5443).
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
June 19, 1997
<PAGE>
Exhibit 13.1
CFS INVESTMENT TRUST
Subscription Agreement
----------------------
1. Subscription for Shares. I agree to purchase from CFS Investment Trust
4,996 shares of beneficial interest of the series designated Kalliston
Convertible Total Return Fund and 4,997 shares of beneficial interest of the
series designated Kalliston Preferred Plus Fund for a price of $10 per share, on
the terms and conditions set forth herein and in the preliminary prospectus
described below, and agree to tender $99,930 in payment therefor at such time as
the board of directors or the president of the Trust determines.
I understand that the Trust filed a registration statement with the
Securities and Exchange Commission (No. 33-19228) on Form N-1A, which contains
the preliminary prospectuses describing the Trust, Kalliston Convertible Total
Return Fund, Kalliston Preferred Plus Fund and the shares. I acknowledge
receipt of copies of the preliminary prospectuses.
I recognize that the Trust will not be fully operational until it commences
a public offering of its shares. Accordingly, a number of features of the Trust
described in the preliminary prospectus, including, redemption of shares upon
request of shareholders, are not in existence at the present time and will not
be instituted until the Trust's registration statement becomes effective under
the Securities Act of 1933.
2. Representations and Warranties. I represent and warrant as follows:
------------------------------
(a) I am aware that no federal or state agency has made any finding or
determination as to the fairness for investment, nor any recommendation nor
endorsement, of the shares;
(b) I have such knowledge and experience of financial and business matters as
will enable me to utilize the information made available to me in
connection with the offering of the shares to evaluate the merits and risks
of the prospective investment and to make an informed investment decision;
(c) I recognize that the Trust has only recently been organized and has no
financial or operating history and, further, that investment in the Trust
involves certain risks, and I have taken full cognizance of and understand
all of the risks related to the purchase of the shares and I acknowledge
that I have suitable financial resources and anticipated income to bear the
economic risk of such an investment;
(d) I am purchasing the shares for my own account, for investment, and not with
any intention of redemption, distribution, or resale of the shares, either
in whole or in part;
(e) I will not sell the shares purchased by me without registration of them
under the Securities Act of 1933 or exemption therefrom;
<PAGE>
(f) I have been furnished with and have read this agreement, the preliminary
prospectus and such other documents relating to the Trust as I have
requested and as have been provided to me by the Trust;
(g) I have also had the opportunity to ask questions of, and receive answers
from, officers of the Trust concerning the Trust and the terms of the
offering.
3. Rejection of Subscriptions. I recognize that the Trust reserves the
right to reject or limit any subscription.
4. Taxpayer Identification. I certify under penalties of perjury that the
number shown on this form is my correct number and that I am not subject to
backup withholding as a result of a failure to report all interest and dividend
income to the Internal Revenue Service.
-----------------------------------------------
Taxpayer Identification Number
CALAMOS FINANCIAL SERVICES, INC. PROFIT SHARING
TRUST
Dated: July 5, 1988 By:
--------------------------------------------
(Signature)
Its:
---------------------------------------
2
<PAGE>
Exhibit 13.2
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 advisor for the Trust
pursuant to a separate agreement, agree:
1. Advancement of Expenses. CAM shall pay all of the organizational
expenses of the Trust, including but not limited to initial franchise taxes,
registration fees and fees services rendered prior to commencement of the
initial public offering of shares of the Trust, subject to the right to be
reimbursed pursuant to paragraph 2.
2. Reimbursement and Amortization of Expenses. The Trust shall amortize the
organizational expenses on a straight line basis over a period of five years
from the commencement of the initial public offering of shares of the Trust, 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 Trust during that month.
Dated: _____________________, 1988
CFS INVESTMENT TRUST
By:
-------------------------------------
President
CALAMOS ASSET MANAGEMENT, INC.
By:
-------------------------------------
President
<PAGE>
Exhibit 13.3
CFS INVESTMENT TRUST
Subscription Agreement
----------------------
1. Subscription for Shares. I agree to purchase from CFS Investment Trust
10 shares of beneficial interest of the series designated Calamos Growth Fund
and 10 shares of beneficial interest of the series designated Calamos Strategic
Income Fund, in each case for a price of $10 per share, on the terms and
conditions set forth herein and in the preliminary prospectus described below,
and agree to tender $200 in payment therefor at such time as the board of
trustees or the president of the Trust determines.
I understand that the Trust filed a post-effective amendment to its
registration statement with the Securities and Exchange Commission (No. 33-
39228) on Form N-1A, which contains the preliminary prospectus describing the
Trust, Calamos Growth Fund, Calamos Strategic Income Fund and the shares. I
acknowledge receipt of a copy of the preliminary prospectus.
2. Representations and Warranties. I represent and warrant as follows:
(a) I am aware that no federal or state agency has made any finding
or determination as to the fairness for investment, nor any
recommendation nor endorsement, of the shares;
(b) I have such knowledge and experience of financial and business
matters as will enable me to utilize the information made
available to me in connection with the offering of the shares to
evaluate the merits and risks of the prospective investment and
to make an informed investment decision;
(c) I recognize that the Funds have only recently been organized and
have no financial or operating history and, further, that
investment in the Fund involves certain risks, and I have taken
full cognizance of and understand all of the risks related to the
purchase of the shares and I acknowledge that I have suitable
financial resources and anticipated income to bear the economic
risk of such an investment;
(d) I am purchasing the shares for my own account, for investment,
and not with any intention of redemption, distribution, or resale
of the shares, either in whole or in part;
(e) I will not sell the shares purchased by me without registration
of them under the Securities Act of 1933 or exemption therefrom;
(f) I have been furnished with and have read this agreement, the
preliminary prospectus and such other documents relating to the
Funds and the Trust as I have requested and as have been provided
to me by the Trust;
<PAGE>
(g) I have also had the opportunity to ask questions of, and receive
answers from, officers of the Trust concerning the Trust and the
terms of the offering.
3. Rejection of Subscriptions. I recognize that the Trust reserves the
right to reject or limit any subscription.
4. Taxpayer Identification. I certify under penalties of perjury that the
number shown on this form is my correct number and that I am not subject to
backup withholding as a result of a failure to report all interest and dividend
income to the Internal Revenue Service.
36-3504755
Taxpayer Identification Number
CALAMOS FINANCIAL SERVICES, INC.
PROFIT SHARING TRUST
By:
------------------------------------
Signature
Its:
-----------------------------------
Dated: ______________, 1990
2
<PAGE>
Exhibit 13.4
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 advisor for the series
of the Trust designated Calamos Strategic Income Fund and Calamos Growth Fund
pursuant to a separate agreement, agree:
1. Advancement of Expenses. CAM shall pay all of the organizational
expenses of the Calamos Strategic Income Fund and Calamos Growth Fund series of
the Trust, 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 each such series, subject to the right to be reimbursed
pursuant to paragraph 2.
2. Reimbursement and Amortization of Expenses. As to each Fund, the
Trust shall amortize the organizational expenses on a straight line basis from
the time the Fund's total assets first reach $2.5 million until five years from
the commencement of the initial public offering of each Fund, 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 Trust during that month.
3. Limitation on Reimbursement. If the total assets of a Fund never
reach $2.5 million within five years after commencement of the initial public
offering of shares of the Fund, the Trust shall have no obligation to repay any
organizational expenses advanced by CAM. If a 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 not individually, and the obligations of
this agreement are binding only upon the assets and property of the series of
the Trust designated Calamos Growth 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: _____________, 1990
CFS INVESTMENT TRUST
By:
----------------------------
President
CALAMOS ASSET MANAGEMENT, INC.
By:
----------------------------
President
<PAGE>
EXHIBIT 14
CFS Investment Trust
__________________________
Individual Retirement Account
(IRA)
__________________________
First Bank, Custodian
CFS Investment Trust
410 North Michigan Avenue
Chicago, Illinois 60611
CFS Investment Trust
1111 East Warrenville Road
Naperville, IL 60563
Revised 8/06/96
<PAGE>
Table Of Contents
<TABLE>
<S> <C>
How to Open a CFS Investment Trust IRA Account............................. 2
General Information About the IRA Plan
Regular IRA........................................................... 3
Spousal IRA........................................................... 3
SEP-IRA............................................................... 3
Rollover IRA 3
Transfer From a Qualified Retirement Plan to a CFS Investment Trust IRA.... 4
Transfer To a CFS Investment Trust IRA from Another IRA.................... 4
Tax Benefits............................................................... 4
When Can an Account be Opened?............................................. 5
Do I Pay Tax on Dividends and Distributions?............................... 5
When May I Make Withdrawals?............................................... 5
What If I Make A Withdrawal Before Age 59-1/2?............................. 5
Minimum Contribution....................................................... 5
Custodian Fees............................................................. 6
Disclosure Statement....................................................... 7
IRA Custodial Agreement....................................................16
</TABLE>
How To Open A CFS Investment Trust IRA Account
Fill out the enclosed application and mail it, together with your check, to CFS
Investment Trust at the address shown on the application.
If you are establishing a Spousal Account with a non-working spouse (see page
3), two separate accounts will be required. Have your non-working spouse
complete an Application and return it along with yours to CFS Investment Trust.
An employed spouse is entitled to open his/her own IRA.
If you intend to make an IRA contribution for more than one year at this time,
please indicate the years and the amount for each year on your payment.
These materials are authorized for distribution only when preceded, or
accompanied by a current CFS Investment Trust prospectus.
2
<PAGE>
General Information About The IRA Plan
Regular IRA
Who qualifies? You qualify in any year when you have earnings from employment or
self-employment. You qualify even if you are also covered by a retirement
program of your employer or a Keogh or SEP plan. However, if you and/or your
spouse are active participants in such a plan, your deduction for your IRA
contribution may be reduced or eliminated depending on your income. See the
Disclosure Statement, Section (2), "Deductible Contributions" and "Nondeductible
Contributions."
You may contribute up to $2,000 or 100% of your earned income, whichever is
less. Alimony and separate maintenance payments are treated as earned income for
this purpose.
You may not contribute to your regular IRA for any year if you are over age
70-1/2 before the end of the year.
Spousal IRA
If your spouse has no earned income (or elects to be treated as having no earned
income) and you file a joint return, you may contribute up to the lesser of
$2,250 or 100% of your earned income. The contribution may be divided between
your IRA and your spouse's IRA in any way you decide, so long as the portion
allocated to either one does not exceed $2,000. Your spouse's election is made
by claiming a spousal IRA deduction on your tax return.
Sep-IRA
Your employer may set up a simplified employee pension plan (SEP) and contribute
to your IRA and the IRA of each other eligible employee up to $30,000 or 15% of
compensation, whichever is less. The employer contribution must be based on a
written formula, which cannot discriminate in favor of officers, shareholders or
self-employed or highly compensated individuals.
If your employer chooses and certain conditions are satisfied, you can elect to
have your salary reduced by no more than an amount specified by law and to have
the reduction contributed to your SEP-IRA, too.
You can have a Regular IRA, even if you have a SEP-IRA, too.
Rollover IRA
If you receive a distribution from the qualified retirement plan of a former
employer, you may be eligible to rollover the distribution to an IRA free of
tax. You may under certain circumstances make a rollover again to the profit
sharing or pension plan of a new employer. If you want to have that right,
however, your rollover IRA derived from an employer's qualified plan must be
kept separate from any other IRA you may have. Qualified retirement plans are
required to withhold 20% of most distributions to you for payment of income
taxes unless your plan balance is transferred directly to an IRA or another
qualified plan. This means that a direct transfer may be preferable to a
rollover for moving your qualified plan balance to a CFS Investment Trust IRA.
See "Transfer From a Qualified Retirement Plan to a CFS Investment Trust IRA,"
below.
3
<PAGE>
You may also make a rollover from another IRA derived from your own yearly
contributions. However, a rollover of the same funds from one IRA to another may
be made no more than once during a 12-month period.
Any rollover must be made within 60 days after receipt of the distribution from
your employer's qualified plan or your previous IRA. Otherwise, the distribution
will be subject to tax for the year you receive it.
See Disclosure Statement. Section 1(c), "Rollover IRAs."
Transfer From A Qualified Retirement Plan To A CFS Investment Trust IRA
You may also make a direct transfer of funds from your employer's qualified
retirement plan to a CFS Investment Trust IRA. Retirement plans are required to
transfer distributions directly to an IRA if the employee directs, and are also
required to withhold 20% of the distribution for taxes if a distribution is not
transferred directly to an IRA or another plan. Generally speaking, these new
rules regarding direct transfers will apply to any distribution that could be
rolled over into an IRA.
The procedure for making a direct transfer from a retirement plan into a CFS
Investment Trust IRA is the same as the procedure for a direct transfer from
another IRA, discussed below.
Transfer To A CFS Investment Trust IRA From Another IRA
You may also make a direct transfer of funds from another IRA to a CFS
Investment Trust IRA. The 12-month restriction on IRA rollovers does not apply
to direct transfers. The transfer must be direct from your existing IRA to a CFS
Investment Trust IRA without your having physical contact with the funds
transferred. To make a transfer:
1) Follow the procedure for opening an account.
2) Complete the enclosed Transfer Form to instruct your present custodian
or trustee to transfer the assets of your present account to First Bank
as successor custodian. Have your signature guaranteed if required by
your present custodian.
3) Send the completed transfer form, along with the CFS Investment Trust
IRA application, to CFS Investment Trust.
4) First Bank and your present custodian or trustee will complete the
details of transferring your funds to your CFS Investment Trust IRA.
Tax Benefits
You may be able to deduct part or all of the yearly contributions to your IRA
from your gross income, depending on whether you and/or your spouse are active
participants in a retirement program of your employer or a Keogh or SEP plan,
and depending on your income. See the Disclosure Statement, Section (2),
"Deductible Contributions." You may claim such a deduction even if you do not
itemize your deductions. The CFS Investment Trust IRA is in the form of IRS Form
5305-A, which is automatically deemed acceptable by the Internal Revenue
Service. The approval by the IRS relates only to the form of the account and not
to the merits of using the account as a retirement plan.
4
<PAGE>
When Can An Account Be Opened?
You can open your account and make a contribution for any year at any time up to
the due date of your federal income tax return for that year (excluding
extensions). Rollovers and direct transfers from other IRAs or retirement plans
can be made at any time during the year, so long as a rollover contribution is
made within 60 days after the distribution from the other IRA or retirement plan
is received by you. A distribution from a qualified plan may be subject to
income tax and income tax withholding even if the distribution is rolled over to
an IRA. See "Rollover IRA" and "Transfer From a Qualified Plan to a CFS
Investment Trust IRA," above.
Do I Pay Tax On Dividends And Distributions?
No, all dividends and distributions accumulate tax-free. Tax is paid when you
(or your spouse if a spousal account is elected) withdraw your retirement
benefits. See the Disclosure Statement, Section (5) "Income and Penalty Taxes."
When May I Make Withdrawals?
Withdrawals can start after age 59-1/2, and must start by April 1 after the end
of the year in which you or your spouse, (in the case of a spousal account)
reach age 70-1/2. Withdrawals can be made in a lump sum or in installments. The
Internal Revenue Code imposes complex limits on the length of time over which
withdrawals from an IRA can be made. See the Disclosure Statement, Section (4),
"Distributions from your IRA." Withdrawals are subject to tax as ordinary
income, except for any portion rolled over to another IRA or considered to be a
return of nondeductible contributions. See Disclosure Statement, Section (5),
"Income and Penalty Taxes."
What If I Make A Withdrawal Before Age 59-1/2?
A withdrawal can be made without penalty before age 59-1/2 only in case of death
or permanent disability, or in the case of certain periodic payments. Otherwise,
a withdrawal before age 59-1/2 is a premature withdrawal and is subject to a
penalty tax of 10% of the portion that is included in your income, in addition
to the regular income tax. But neither the regular income tax nor the 10%
penalty tax applies to any portion rolled over to another IRA or considered as a
return of your nondeductible contributions.
Minimum Contribution
The initial contribution in any one investment option must be at least $500.
Subsequent investments in any one investment option must be at least $50.
However, you are not required to make a contribution ever year.
5
<PAGE>
Custodian Fees
<TABLE>
<S> <C>
Acceptance fee....................................................no charge
Transfer to Successor Trustee..................................... $10.00
Transfer From Prior Trustee.......................................no charge
Annual maintenance fee............................................ $10.00
Refund of Excess Contribution..................................... $10.00
Disbursement fee - lump sum....................................... $10.00
Disbursement periodic............................................. $10.00
per fund/per year
</TABLE>
(The fee for a periodic disbursement is incurred only at the time the periodic
distribution is established or if there is a change in the amount or frequency
of the payments.)
Note:
Each IRA account is subject to the above fees, including Spousal IRAs and each
of multiple accounts for the same participant. Fees are subject to change on
thirty (30) days notice to Depositor. Fees may be prepaid by the Depositor by
separate check payable to "CFS Investment Trust." Any fees due and unpaid by
December 31 of each calendar year will be deducted from the Account.
The CFS Investment Trust IRA Plan is sponsored by CFS Investment Trust. This
brief outline of the Plan is not intended as a full explanation of the
Individual Retirement Plan, but we hope that we have answered some of the
questions that occur to you.
WE URGE YOU TO READ THE ENCLOSED MATERIAL THOROUGHLY.
6
<PAGE>
CFS Investment Trust Individual Retirement Account
Disclosure Statement
This Disclosure Statement is being given to you to assure that you are informed
and understand the nature of an Individual Retirement Account ("IRA"). This
disclosure statement explains the rules governing IRAs.
Your Right to revoke this IRA. You may revoke this IRA at any time within seven
days after the later of the date you received this Disclosure Statement or the
day you established this IRA. For purposes of revocation, it will be assumed
that you received the Disclosure Statement no later than the date of your check
or transfer direction with which you opened your IRA. To revoke the IRA, you
must either mail or deliver a notice of revocation to the following address:
First Bank, National Association
Custodian, CFS Investment Trust IRA
410 North Michigan Avenue
Chicago, Illinois 60611
If a notice of revocation is mailed, it will be deemed mailed on the date of the
postmark (or if sent by certified or registered mail, the date of certification
or registration) if it is deposited in the mail in the United States, first
class postage prepaid and properly addressed. If you revoke your IRA, you are
entitled to a return of the entire amount contributed.
(1) Types Of Individual Retirement Accounts; Eligibility
In General. There are several types of IRAs. For example, there is a "Regular
IRA" to which you may make contributions for yourself. There is also a "Spousal
IRA" which you may be able to set up for your spouse. There is also a "Rollover
IRA" which you can set up to receive assets from a qualified plan, annuity or
another IRA. Finally, there is a SEP-IRA (which is also known as a Simplified
Employee Pension Plan) which your employer can establish for you. Following is a
general description of the rules which apply to each of these types of IRAs and
who is eligible to establish them.
(a) REGULAR IRA. You may contribute up to the lesser of $2,000 or 100% of your
compensation if you have not reached age 70-1/2 during the taxable year. You may
make this contribution even if you or your spouse is an active participant in a
qualified employer plan. However, as explained below, the amount of the
contribution which you may deduct may be limited. Compensation includes wages,
salary, commissions, bonuses, tips, etc. but does not include income from
interest, dividends or other earnings or profits from property, or amounts not
includible in your gross income.
(b) SPOUSAL IRA. You may contribute to your IRA and an IRA for your nonworkinq
spouse if: (1) you have received compensation during the taxable year and (2)
you file a joint income tax return for the year with your spouse. Under such an
arrangement, you may qualify for a total deduction equal to the lesser of $2,250
or 100% of your compensation for the taxable year. You can determine how to
divide the contribution between the two accounts but you cannot contribute more
than $2,000 annually into either one. While you cannot contribute to your IRA in
the taxable year in which you reach 70-1/2, you can still contribute to your
spouse's IRA if he or she has not reached 70-1/2. A Spousal IRA does not involve
the creation of a joint account. The account of each spouse is separately owned
and treated independently from the account of the other spouse.
A "non-working spouse" is one who had no earned income for the year, or elects
to be treated as having no earned income for this purpose. Your spouse's
election is made by claiming a spousal IRA deduction on your tax return.
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(c) ROLLOVER IRAs. All or a portion of certain distributions from qualified
retirement plans, annuities and other IRAs may be "rolled over" tax-free within
60 days after receipt of the distribution without regard to the limits on
deductible contributions, but no deduction is allowed with respect to such a
contribution. The amount rolled over cannot exceed the fair market value of all
property received, reduced by employee contributions (except voluntary
deductible employee contributions made pursuant to a qualified plan). If you
make a rollover from a qualified employer plan to an IRA, you may in turn, under
certain circumstances make a rollover from the IRA into the qualified pension or
profit-sharing plan, qualified annuity plan, or tax-sheltered annuity or
custodial account of a subsequent employer. To preserve that right, however, you
must keep the rollover IRA separate from any other IRA you may have, since you
cannot make a rollover to an employer plan from an IRA to which you have made
yearly contributions. You can also transfer assets you hold in one IRA to
another IRA by directing the current trustee or custodian to transfer those
assets directly to the new IRA. You may also direct the trustee or custodian of
any qualified retirement plan to transfer a distribution from the plan directly
to an IRA. You can direct such a so-called "trustee-to-trustee transfer" at any
time. However, you may make a rollover of the same assets from one IRA to
another IRA only once during a one-year period. A decision to make a rollover
from a qualified plan, as signified by checking the rollover box on the
Application, is irrevocable.
Rollover amounts you receive may not be deposited in your spouse's IRA, but if
you should die while still a participant in a qualified plan, in certain cases
your spouse may be allowed to make a tax-free rollover to an IRA of all or any
part of the assets distributed from the qualified plan, excluding any
contributions other than voluntary deductible employee contributions) made by
you to such plan. The amount of the death payout rolled over by a spouse into an
IRA may not subsequently be rolled over into another employer's qualified plan
or annuity.
The Unemployment Compensation Amendments Act of 1992 (the "1992 Act") made
several changes to the tax treatment of rollovers and direct transfers from
qualified retirement plans, effective January 1, 1993:
First, the 1992 Act expanded the types of distributions that can be rolled over
into an IRA. Under the new law, any distribution from a plan can be rolled over
unless it is either:
1. one of a series of substantially equal periodic payments made at least
annually over (a) the life of the employee (or joint lives of the employee
and his or her designated beneficiary), (b) the life expectancy of the
employee (or joint life and last survivor expectancy of the employee and
his or her designated beneficiary), or (c) a specified period of at least
10 years;
2. required minimum distributions;
3. portions of a distribution not included in gross income, excluding net
unrealized appreciation of employer securities received in certain
distributions (for example, a return of the employee's after-tax
contributions);
4. returns of 401(k) elective deferrals in excess of the maximum allowed;
5. corrective distributions of 401(k) plan excess deferrals, including income
allocable to the corrections;
6. corrective distributions of excess 401(k) contributions and aggregate
contributions, including income allocable to the correction;
7. dividends paid on employer securities held by an ESOP;
8. the cost of life insurance coverage;
9. loans that are treated as distributions because they do not meet IRS
requirements or because they are in default are so-called "deemed
distributions."
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Second, if a distribution from a plan can be rolled over to an IRA, the plan is
required by law to transfer the distribution directly to an IRA, or another
employer's plan, if you so direct.
Finally, if you do not direct the distribution to be transferred directly to an
IRA or another plan, the plan making the distribution will be required to
withhold 20% of the distribution for the payment of income taxes.
Strict requirements must be met to qualify for tax-free rollover treatment. You
should consult your personal tax advisor in connection with rollovers to and
from your IRA.
(d) SIMPLIFIED EMPLOYEE PENSION PLAN (SEP-IRA). An employer may adopt a SEP-IRA
and contribute to your SEP-IRA even if you are covered by another retirement
plan. The Code permits an employer to contribute to your SEP-IRA up to 15% of
your compensation (computed without regard to the contribution or $30,000 or
such other amount as may be prescribed by the Secretary of the Treasury),
whichever is less. The contributions are deductible by the employer and are
generally not includable in your income until you receive distributions.
Employer contributions must be made under a written allocation formula which
cannot discriminate in favor of so-called "highly compensated employee" (as
defined in the Code). Employer contributions are considered discriminatory
unless they bear a uniform relationship to the first $150,000 of each
participant's compensation.
An employer must cover each employee who has attained age 21 and has performed
service for the employer during at least three of the immediately preceding five
calendar years, but employees who earn less than $300 in the year in question,
employees covered by certain collective bargaining agreements and certain
nonresident aliens may be excluded. "Leased employees," (i.e., those individuals
who are not the employer's employees, who are hired through a "leasing
organization" and who provide services of a nature normally performed by
employees in the employer's business on a substantially full-time basis for more
than a year) must be treated as regular employees for the purposes of making
SEP-IRA contributions, unless the leasing organization provides prescribed
minimum pension benefits to the leased employees. Any SEP-IRA contribution made
by the leasing organization attributable to services performed for the employer
may be used to reduce the employer's contribution to a leased employee's SEP-
IRA.
Generally, if the employer does not maintain an integrated plan at any time
during the taxable year, Old Age and Survivor Disability Insurance contributions
("OASDI") may be taken into account as contributions by the employer to the
employee's SEP-IRA but only if such OASDI contributions are taken into account
with respect to each employee maintaining a SEP-IRA. If the SEP-IRA is part of a
top-heavy plan as defined in the Code, the employer must make a minimum
contribution to each non-key employee's SEP-IRA for each year that the plan is
top-heavy. Generally, a plan is top-heavy if the aggregate of the accounts of
key employees as defined in Code Section 416 (i.e., certain officers, owners and
highly compensated individuals) exceeds 60% of the aggregate of the accounts of
all employees. If the employer maintains more than one plan, such plans may, or
under certain circumstances must, be aggregated for purposes of determining
whether the SEP-IRA is top-heavy. Generally, the minimum contribution required
to be made to the SEP-IRA of each non-key employee in a top-heavy year is 3% of
the employee's compensation.
If your employer chooses and if certain conditions are satisfied, you can elect
to have your salary reduced by up to $7,000 (or such higher amount as is
specified from time to time by the Secretary of the Treasury) and to contribute
the reduction to your SEP-IRA. If you reduce your salary under a salary
reduction agreement, your salary subject to federal income tax is reduced.
Salary reduction is permitted for a year only if your employer does not have
more than 25 employees at any time during the preceding year, all employees who
participate in the Plan are eligible for salary reduction and at least one-half
of the employees (including those not eligible for a SEP/IRA) choose to make
salary reduction contributions which may be made by highly compensated
individuals. There are also other rules which apply to salary reduction
contributions.
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The rules governing integrated and salary reduction SEP-IRAs are complex. We
suggest that you discuss them with your tax advisor.
You may contribute to a Regular IRA even if you participate in a SEP-IRA. Except
as otherwise noted, your SEP-IRA generally is subject to the rules governing a
Regular IRA. Your rights to withdraw amounts held in a SEP-IRA cannot be
restricted by your employer.
(2) Contributions
In General. As explained in this part, the amount of your IRA contributions
which you can deduct is subject to limits. All contributions and transfers to
your CFS Investment Trust IRA must be in cash, except that a rollover
contribution may be made either in cash or in shares of CFS Investment Trust.
Contributions to your Regular IRA or Spousal IRA may be made up to the due date
for filing your tax return for the taxable year (excluding extensions thereof)
even if you file before the due date. In making contributions, you must
indicate the tax year to which the contribution applies. If no tax year is
designated, the custodian will assume that the contribution is intended to apply
to the calendar year in which it is received. The time limit for designating the
applicable tax year is April 15.
Contributions made by an employer to your SEP-IRA for a calendar year may be
made no later than the due date of your employer's tax return (including
extensions). In making a SEP-IRA contribution, the tax year to which the
contribution relates must also be specified or it will be deemed to relate to
the calendar year in which it is received. In a SEP-IRA, this designation of the
tax year of a contribution must be made by the due date for contributions
described above.
Deductible Contributions. If you are single and are not an "active participant"
in a retirement plan maintained by your employer, you can deduct the full amount
of your IRA contribution up to the lesser of $2,000 or 100% of your compensation
for the year. If you are married, you can deduct the full amount of your IRA
contribution so long as neither you nor your spouse is an "active participant,"
in a retirement plan maintained by your respective employers. These plans
include qualified pension, profit-sharing, stock bonus or money purchase plans,
401(k) plans, SEP/IRAs, qualified annuity plans, tax-sheltered annuities and
custodial accounts and deferred compensation plans of governmental agencies. In
general, you are considered to be an active participant in a plan if an employer
contribution or forfeiture was credited to your account during the year in the
case of a defined contribution plan or, in the case of a defined benefit plan,
you are eligible to participate even if you choose not to. You are considered to
be an active participant in a plan if you make a contribution to the plan during
a year even if your employer does not. For active participation, it does not
matter whether any interest you have in a plan is vested or unvested.
If you or your spouse is an active participant in a plan, the amount of the
deduction you can claim for an IRA contribution is reduced or totally denied
depending upon the amount by which your adjusted gross income for the year
exceeds the "applicable dollar amount." The applicable dollar amount is $25,000
for single people and $40,000 for married individuals filing a joint tax return.
If you are married but are filing separate tax returns, your applicable dollar
amount is $0.
If your adjusted gross income exceeds your applicable dollar amount by more than
$10,000, you may not deduct any portion of your IRA contribution. However, if it
is between $0 and $10,000 more than your applicable dollar amount, you can claim
a tax deduction for your contribution. To determine the amount of the deduction,
follow these steps. First, determine the amount of the contribution you can
make. If, for example, you have compensation in excess of $2,000 you could make
a $2,000 contribution to your Regular IRA. Next, subtract the applicable dollar
amount from your adjusted gross income. If you are single and your adjusted
gross income is $30,000, the difference would be $5,000. Next, divide this
difference by $10,000. In the example $5,000/$10,000 equals 1/2. Finally,
subtract this fraction from one (1) to determine the deductible portion of your
contribution. Accordingly, you may deduct 1/2 of your contribution. If the
deduction limitation is not a multiple of $10, round the deduction to the next
$10. If
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your adjusted gross income does not exceed $35,000 and you are single and
$50,000 and you are married, you can deduct $200 regardless of how the
computation comes out.
Married persons who file separate returns are treated as unmarried for purposes
of these rules if they did not live together at any time during the year.
Non Deductible Contributions. Even though you may not be entitled to claim a
deduction for contributions to your IRA, you are still allowed to make the
contributions to the extent described in "Types of IRAs" above. To the extent
that the amount of your contribution exceeds the deduction limit, it is
considered a nondeductible contribution. Earnings on these contributions are not
taxed until distributed, just like the earnings on deductible contributions. It
may therefore be worthwhile making nondeductible contributions.
You are required to report the amount of your nondeductible contributions on
Form 8606 and attach it to your income tax return. If you overstate this amount,
you may be liable for a tax penalty of $100 per overstatement.
(3) Investment And Holding Of Contributions
The investment options available under the CFS Investment Trust are the Calamos
Convertible Fund/TM/, Calamos Growth and Income Fund/TM/, Calamos Strategic
Income Fund/TM/, Calamos Growth Fund/TM/, Money Market Portfolio, Government
Securities Portfolio (collectively "the Funds"). Contributions to your IRA, and
the earnings thereon, are invested in shares of one or more or a combination of
the Funds that may be offered under the CFS Investment Trust according to the
directions you give the Custodian.
The assets in your account are held in a custodial account exclusively for your
benefit and the benefit of such beneficiaries as you may designate in writing
delivered to the Custodian. The balance in your IRA represents a separate
account which is clearly identified as your property and generally may not be
combined for investment with the property of another individual. Your right to
the entire balance in your account is nonforfeitable. No part of the assets of
your account may be invested in life insurance contracts or in collectibles such
as works of art, antiques, coins, stamps, etc.
(4) Distributions From Your IRA
Distribution During Your Life. The law permits distributions to be made from an
IRA at any time after you attain age 59-1/2 without penalty, and requires that
distributions commence no later than April 1 following the calendar year in
which you attain age 70-1/2. Distributions may be in the form of a single
payment or, in accordance with regulations, in substantially equal monthly,
quarterly or annual payments over your life or the joint lives of you and your
designated beneficiary, or over a period certain not extending beyond your life
expectancy or the joint and last survivor life expectancy of you and your
designated beneficiary. However, if your beneficiary is not your spouse, the
law imposes an additional requirement called the minimum distribution incidental
benefit requirement. In general, this requirement puts a further limit on the
maximum payout period. This further limit is based on a table in the income tax
regulations, and if this limit applies to you, you should consult your tax
advisor to determine your minimum distribution.
If you direct distributions over your life or the joint lives of you and your
designated beneficiary, the Custodian will purchase an immediate annuity
contract from an insurance company you choose with your IRA and your payments
will be made under the annuity. You must provide a completed annuity application
from the insurance company of your choosing.
Any distribution instruction must specify the reason for the distribution.
Examples of such reasons are: premature distributions (i.e., distributions
before age 59-1/2), rollovers, disability, death, normal (59-1/2 or over),
excess contribution returns and other.
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Distributions After Your Death. If you die after distributions have begun to
you, the balance of your IRA must be distributed to your designated beneficiary
at least as rapidly as under the method of distribution in effect before your
death.
If you die before the distribution of your interest has begun, the entire
balance of the account must be distributed by December 31 of the year in which
the 5th anniversary of your death occurs. However, distribution need not be made
within this 5-year period if your beneficiary receives payments over a period
measured by his or her life or the life expectancy beginning no later than
December 31 of the year following the year in which you die. If the beneficiary
is your spouse, those installment payments don't have to begin until the later
of December 31 of the year following the year in which you die or December 31 of
the year in which you would have reached age 70-1/2. In addition, a distribution
need not be made within 5 years of your death if your spouse is your beneficiary
and he or she elects to treat the entire interest in the IRA (or the remaining
part of such interest if distribution has already begun) as his or her own IRA
subject to the regular IRA distribution requirements. In such a case, your
spouse will be considered to be the covered individual under the IRA. If you die
before the entire IRA has been distributed to you and your spouse is not your
beneficiary, no additional cash contributions or rollover contributions may be
accepted by the IRA.
If distributions are made from your IRA to your surviving spouse (or to a trust
of which your surviving spouse is the income beneficiary), the amount which your
surviving spouse or the trust is entitled to receive in each year must be at
least equal to the income of your IRA (or of the portion of your IRA which
benefits your surviving spouse or the trust) for that year.
(5) Income And Penalty Taxes
Income Tax Treatment. Income tax on deductible IRA contributions and earnings on
both deductible and nondeductible IRA contributions is generally deferred until
you receive distributions. If you have made both deductible and nondeductible
contributions to IRAs you maintain, a portion of each distribution you receive
from any IRA (whether or not it is the one to which you made nondeductible
contributions) will be considered to be a return of nondeductible contributions
and therefore not included in your income for tax purposes. The balance of each
distribution will be taxed as ordinary income regardless of its original source.
The amount of any distribution which is considered to be a return of
nondeductible contributions (and therefore not taxed) is determined by
multiplying the amount of the distribution by a fraction. The numerator of the
fraction is the aggregate amount of nondeductible contributions you have made to
all of your IRAs over the years and the denominator is the balance in all your
IRAs at the end of the year (after adding back any distributions you received
during the year). The aggregate amount which can be excluded from income for all
years cannot exceed the amount of nondeductible contributions that you made in
those years.
Taxable distributions from your account are taxed as ordinary income regardless
of their original source. They are not eligible for special tax treatment that
may apply to lump sum distributions from qualified employer plans. A
distribution from your account after you attain age 65 is eligible for the
retirement income credit.
Penalty Tax for Premature Distributions. Your IRA is intended to provide income
for you upon retirement. Accordingly, the law generally imposes a penalty on
premature distributions. If you receive a taxable distribution from the IRA
before reaching age 59-1/2, a nondeductible 10% penalty will be imposed on the
portion of the distribution which is included in your gross income. This penalty
is in addition to any income tax you must pay on the distribution itself. The
penalty does not apply to the extent that the distribution is considered a
return of nondeductible contributions or a return of an excess contribution
which is permitted tax-free (see below). The penalty also will not apply if the
distribution is made due to your permanent disability or death or if the
distribution is one of a series of substantially equal periodic
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payments made over your life (or life expectancy) or over the joint lives (or
life expectancies) of you and your beneficiary. Further, the penalty does not
apply in the case of a qualifying rollover distribution.
Penalty Tax for Excess Contributions. Contributions to an IRA above the
permissible limits are nondeductible and are subject to an annual nondeductible
excise tax of 6% of the amount of such excess contributions for each year that
the excess is not withdrawn or eliminated. The tax is paid by the person to whom
a deduction is allowed or in the case of a Rollover IRA, by the person for whose
benefit it is established. If the person who contributed the excess takes no
deduction for it and withdraws the excess amount plus the net earnings
attributable to such excess on or before the due date (including extensions) for
filing the Federal income tax return for the year for which the contribution was
made, the 6% excise tax will not be applied but the 10% tax and premature
distributions will be applied to the amount of net earnings. Generally, if the
excess is withdrawn after the due date (including extensions) for filing the tax
return for the year for which the contribution was made, not only will the
excess contribution be subject to the 6% excise tax, but the amount of such
excess and the net income attributable to it will also be includible in income;
and if you have not attained the age of 59-1/2, or are not disabled, you will
also be subject to the previously mentioned 10% penalty tax on premature
distributions. The law provides, however, that if an individual has made a
contribution to an IRA for a year which does not exceed $2,250 (excluding
rollover amounts), all or part of which is an excess contribution for which he
did not claim a deduction, and he does not correct the excess contribution
before the due date (including extensions) for filing his tax return for the
year, he nevertheless may withdraw the excess amount contributed (without the
net income attributable thereto) at any time without incurring the 10% penalty
tax on premature distributions or being required to include the amount withdrawn
in income. The 6% excise tax will be imposed even in this special situation for
the year of the excess contribution and each subsequent year until the excess is
withdrawn or eliminated.
The rules discussed above generally apply to SEP-IRAs as well. The law also
allows you to withdraw tax-free and without penalty an excess contribution,
regardless of the amount, made with respect to a rollover contribution
(including an attempted rollover contribution), if the excess contribution
occurred because you reasonably relied on erroneous information required to be
supplied by the plan, trust or institution making the distribution that was the
subject of the rollover.
As an alternative to withdrawing excess contributions made to an IRA, such
amounts may be eliminated by making reduced contributions; however, you will be
required to pay the 6% excise tax on the amount of the excess for the year of
the contribution and for each subsequent year until the amount of the excess is
deducted in a later year for which you have not contributed the maximum
deductible amount. If a contribution is made to your account in an amount less
than the permissible limit in order to correct an excess contribution for a
previous year for which you did not claim a deduction, you may, under certain
circumstances, taking into account the limits on contributions, be allowed to
treat the amount of the reduction in the current year's contribution as an
additional contribution for the current taxable year.
Penalty Tax for Under-Distribution. If after April 1 following the year in which
you attain age 70-1/2, the amount distributed is less than the minimum amount
required by law to be distributed, a 50% excise tax may be imposed on any such
deficiency. The minimum amount required by law to be distributed is generally
based on your life expectancy or the joint and survivor life expectancy of you
and your beneficiary. However, if your beneficiary is not your spouse, the law
imposes an additional requirement which is called the minimum distribution
incidental benefit requirement. In general, this requirement is designed to
prevent you from naming a beneficiary who is much younger than yourself in order
to extend your payout period. You should consult your tax advisor to determine
your maximum distribution.
The Internal Revenue Service may waive the penalty tax for under-distribution if
the deficiency was due to reasonable error and reasonable steps are being taken
to correct the deficiency.
Penalty Tax for Excess Distributions. Penalty tax of 15% (reduced by any payment
of the 10% early distribution penalty) is imposed on annual distributions from
retirement arrangements (including IRAs) to
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the extent that such distribution in a year are considered "excess
distributions." A distribution is an "excess distribution" if it exceeds
$155,000 (for 1996), or such other amount as adjusted for cost of living
increases. For certain distributions, excess is the amount over $155,500 (as
indexed) times five (5). You should discuss how this rule applies to you and how
you make this election with your tax advisor.
Prohibited Transactions and Pledging Account Assets. If during any taxable year
you engage in a so-called "prohibited transaction" with respect to your IRA, the
account will lose its tax-exempt status. In this event, the fair market value of
all account assets, valued as of the first day of such taxable year, will be
deemed distributed to you and includible in your gross income. These prohibited
transactions would include borrowing money from your account. If you pledge your
account or any portion thereof as security for a loan, such pledged portion will
be deemed distributed to you and, to the extent that it does not represent a
return of nondeductible contributions, includible in your gross income. If you
have not yet attained age 59-1/2, an additional tax equal to 10% of the amount
pledged will be imposed on such funds includible in gross income. If your spouse
engages in a prohibited transaction with respect to his or her account, the
results will be the same.
(6) Miscellaneous
Federal Income Tax Withholding. Distributions from an IRA to the covered
individual or to a beneficiary are subject to Federal income tax withholdinq
unless the covered individual or beneficiary elects to have no withholding
apply. The current withholding rate required by the Internal Revenue Code is 10%
on nonperiodic distributions. The current withholding rate for periodic
distributions is based on withholding allowances claimed on Form W-4P. If no
form, withhold as if married with three (3) withholding allowances. Additional
information concerning withholding and election forms will be available no later
than at the time a distribution is requested.
Federal Estate and Gift Taxes. Generally, your IRA will be included in your
estate for Federal estate tax purposes. If your spouse is your beneficiary, your
IRA may qualify for a deduction for purposes of that tax. An election under an
IRA to have a distribution payable to a beneficiary on the death of the covered
individual will not be treated as a gift subject to Federal gift tax.
Reports to the Internal Revenue Service. You are not required to file Form 5329
with the IRS unless you owe one of the IRA penalty taxes. These are the taxes on
excess contributions, premature distributions, prohibited transactions and under
distributions after age 70-1/2.
Financial Information. The growth in value of the mutual fund shares held in
your account can neither be guaranteed nor projected.
Plan Sponsor. CFS Investment Trust is the sponsor of the IRA.
Custodian fees. First Bank as the Custodian of your IRA currently charges an
annual maintenance fee of $10 per account, per fund in which you have an
investment. You should refer to the fee schedule for other fees which may be
applicable. Note that Spousal IRAs require separate accounts. Each spouse's
account is subject to the above fees.
The $10 annual maintenance fee will be deducted from your account if not paid
before December 31st.
The Custodian may change any of the above fees from time to time effective upon
thirty (30) days written notice to the Depositor.
IRS Approval Status. The CFS Investment Trust IRA is in the form of IRS Form
5305-A, which is automatically deemed acceptable by the IRS as to form. The
approval by the IRS relates only to the form of the account and not to the
merits of using the account as a retirement plan.
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Form 5305-A
(Rev. October,1992)
Department of the Treasury
Internal Revenue Service
CFS INVESTMENT TRUST INDIVIDUAL RETIREMENT
CUSTODIAL ACCOUNT
(Under Section 408(a) of the Internal Revenue Code)
Article I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled
with other property except in a common trust fund or common investment
fund (within the meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3) which provides an exception for certain gold and silver coins
and coins issued under the laws of any state.
Article IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall
be made in accordance with the following requirements and shall
otherwise comply with section 408(a)(6) and Proposed Regulations section
1.408-8, including the incidental death benefit provisions of Proposed
Regulations section 1.401(a)(9)-2, the provisions of which are
incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies
shall be recalculated annually. Such election shall be irrevocable as to
the Depositor and the surviving spouse and shall apply to all subsequent
years. The life expectancy of a nonspouse beneficiary may not be
recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date,
(April 1 following the calendar
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year end in which the Depositor reaches age 70-1/2). By that date, the
Depositor may elect, in a manner acceptable to the Custodian, to have
the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor
expectancy of the Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as
follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in
accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of
the Beneficiary or beneficiaries, either
(i) Be distributed by December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the year
of the Depositor's death. If, however, the beneficiary is the
Depositor's surviving spouse then this distribution is not required
to begin before December 31 of the year in which the Depositor would
have turned age 70-/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408((b)(3) and its related regulations has
irrevocably commenced distributions are treated as having begun on the
Depositor's required beginning date even though payments may actually
have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
16
<PAGE>
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual
payment for each year, divide the Depositor's entire interest in the
Custodial account as of the close of business on December 31 of the
preceding year by the life expectancy of the Depositor (or the joint
life and last survivor expectancy of the Depositor and the Depositor's
designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under
paragraph 3, determine the initial life expectancy (or joint life and
last survivor expectancy) using the attained ages of the Depositor and
designated beneficiary as of their birthdays in the year the Depositor
reaches age 70-1/2. In the case of a distribution in accordance with
paragraph 4(b)(ii), determine life expectancy using the attained age of
the designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to
satisfy the minimum distribution requirements described above. This
method permits an individual to satisfy these requirements by taking
from one individual retirement account the amount required to satisfy
the requirement for another.
Article V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i)
and Regulations section 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and related
regulations will be invalid.
Article VII
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear below.
Article VIII
1. Definitions. "Investment Company" shall mean an investment company as defined
in Internal Revenue Code Section 851(a), shares of which CFS Investment Trust
has agreed to offer for investment under this Account. "Investment Company
Shares" or "Shares" shall mean shares of beneficial interest or capital stock of
the Investment Company.
2. Investment of Account Assets.
(a) Each contribution forwarded by the Depositor to the Custodian shall
identify the Depositor's account number and be accompanied by a statement
signed by the
17
<PAGE>
Depositor identifying the Investment Company Shares in which that
contribution is to be invested. The Custodian may return to the Depositor,
without liability for interest thereon, any contributions which are not
accompanied by adequate account identification or an appropriate signed
statement directing investment of those contributions.
(b) Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner in which such shares are then
being publicly offered by the Investment Company. All distributions
received on Investment Company Shares held in the Custodial Account shall
be reinvested in like Shares and credited to such Account. If any
distribution of Investment Company Shares may be received at the election
of the shareholder in additional like Shares or in cash or other property,
the Custodian shall elect to receive such distribution in additional like
Investment Company Shares.
(c) All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its registered nominee. The
Depositor shall be the beneficial owner of all Investment Company Shares
held in the Custodial Account and the Custodian shall not vote any of such
shares, except upon written direction of the Depositor. The Custodian
agrees to forward to every Depositor a then current prospectus, reports,
notices, proxies and related proxy soliciting materials applicable to
Investment Company Shares received by the Custodian.
(d) The Depositor may at any time, by a manually signed direction delivered
to the Custodian, redeem any number of Investment Company Shares held for
his account and reinvest the proceeds in the Shares of any other Investment
Company.
3. Amendment and Termination
(a) The Custodian may, with the written approval of each Investment
Company, amend the Custodial Account in whole or in part (including
retroactive amendments) by delivering to the Depositor written notice of
such amendment setting forth the substance and effective date of the
amendment. The Depositor shall be deemed to have consented to any such
amendments not objected to in writing by the Depositor within thirty (30)
days of receipt of the notice, provided that no amendment shall cause or
permit any part of the assets of the Custodial Account to be diverted to
purposes other than for the exclusive benefit of the Depositor or his
beneficiaries, nor shall any amendment be made except in accordance with
the applicable law and regulations affecting this Custodial Account.
(b) The Depositor may at any time terminate the Custodial Account by
delivering to the Custodian a written notice of such termination setting
forth the effective date thereof, together with any required withholding
information.
(c) The Custodial Account created by this Agreement shall automatically
terminate upon distribution to the Depositor or the beneficiary designated
under Paragraph 6 of Article VII hereof of the entire balance in the
Custodial Account.
(d) The Custodian may be removed by the Depositor at any time upon thirty
(30) days written notice to the Custodian. The Custodian may elect to
terminate the Custodial Account upon thirty (30) days written notice to the
Depositor.
18
<PAGE>
4. Taxes and Custodial Fees. Any income taxes or other taxes of any kind
whatsoever that may be levied or assessed upon or in respect of the assets of
the Custodial Account, or the income arising therefrom, any transfer taxes
incurred, all other administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian, and the Custodian's compensation, shall be paid from the Custodial
Account. Unusual administrative responsibilities not contemplated by the fee
schedule will result in such additional charges as will reasonably compensate
the Custodian for the services performed.
The custodian fee listed in the fee schedule will be deducted by the Custodian
from the initial contribution received from the Depositor. Any fees due and
unpaid by December 15 of each year will be deducted from the account and enough
fund shares will be redeemed to cover this fee. Fees as listed on the fee
schedule will be deducted from the refund or redemption proceeds at the time of
distribution or redemption and the remaining balance will be remitted to the
Depositor in the case of distribution, or will be reinvested in accordance with
the Depositors' instructions.
5. Reports and Notices.
(a) The Custodian shall keep adequate records of transactions it is
required to perform hereunder. No later than sixty (60) days after the
close of each calendar year, or after the Custodian's resignation or
removal pursuant to Article VIII, Paragraph 3, the Custodian shall render
to Depositor a written report or reports reflecting the transactions
effected by it during such period and the assets and liabilities of the
Custodial Account at the close of the period.
(b) All communications or notices required or permitted to be given herein
shall be deemed to be given upon receipt by the Custodian at First Bank,
National Association, 410 N. Michigan, Chicago, Illinois 60611, the
Investment Company and CFS Investment Trust at 1111 East Warrenville,
Naperville, IL 60563, or the Depositor at his most recent address shown in
the Custodian's records. The Depositor agrees to advise the Custodian
promptly, in writing of any chance of address.
6. Designation of Beneficiary. The Depositor shall have the right, by written
notice to the Custodian, to designate a beneficiary or beneficiaries, primary
and contingent, to receive any benefit to which such Depositor may be entitled
in the event of his death prior to the complete distribution of such benefit. In
the event the Depositor has not designated any beneficiaries, or if all
beneficiaries shall predecease the Depositor, the following persons shall take
in the order named:
(a) Spouse of the Depositor;
(b) If the spouse shall predecease the Depositor, then in equal shares to
any children surviving the Depositor and to the descendants then living of
a deceased child, by the right of representation, or
(c) If the Depositor shall leave neither spouse nor descendants surviving,
then to the personal representative of the Depositor's estate.
7. Inalienability of Benefits. The benefits provided hereunder shall not be
subject to alienation, assignment, garnishment, attachment, execution or levy of
any kind of any attempt to cause such benefits to be so subjected shall not be
recognized except to the extent as may be required by law.
8. Rollover Contributions. The Custodian may receive rollover contributions as
described in section 408(d)(3) or any other applicable provisions of the Code,
and regulations promulgated thereunder. If any
19
<PAGE>
property is transferred to the Custodian as a rollover contribution, such
property shall be sold by the Custodian and the proceeds reinvested as provided
in section 2 of this Article VIII. The custodian reserves the right to refuse to
accept any contributions which are not in the form of cash.
9. Conflict in Provisions. To the extent that any of the provisions of Article
VIII shall conflict with the provisions of Articles IV, V, or VII, the
provisions of Article VIII shall prevail.
10. Status of Depositors. Neither the Depositor nor any other person shall have
any legal or equitable right against the Custodian or the Investment Company
except as provided herein. The Depositor agrees to indemnify and hold the
Custodian harmless from and against any liability that the Custodian may incur
in the administration of the Account unless arising from the Custodian's own
negligence or misconduct.
11. Loss of Exemption. If the Custodian receives notice that the Depositor's
Account has lost its tax-exempt status under section 408 of the Code for any
reason, including by reason of a transaction prohibited by section 4975 of the
Code, the Custodian shall distribute to the Depositor the entire balance in the
Account, in cash or in kind, in the sole discretion of the Custodian no later
than 90 days after the date the Custodian receives such notice.
12. Applicable State Law. This Custodial Account shall be construed,
administered and enforced according to the laws of the State of Illinois except
to the extent Federal law supersedes Illinois law.
13. Distributions To Surviving Spouse. If distributions from the Custodial
Account are to be made to the Depositor's surviving spouse, or to a trust of
which the Depositor's surviving spouse is the income beneficiary, the amount
which the surviving spouse (or such trust is entitled to receive in each year
shall not be less than the income of the Custodial Account (or of the portion of
the Custodial Account with respect to which the surviving spouse or such trust
is the beneficiary) for such year, as determined under section 2056(b)(7) of the
Code.
20
<PAGE>
EXHIBIT 16
Calamos Growth Fund-A Shares
Schedule of Computation
of Performance Quotations
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return % Years Ttl Return %
- ---------------------------------------------------------------------------------------------------------------------------------
With Load
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 9/4/90 1,000.00 10.50 95.238 138.297 17.04 2,356.58 1,356.58 135.66% 6.58 13.92%
3/31/97 3/31/92 1,000.00 15.23 65.660 94.398 17.04 1,608.54 608.54 60.85% 5.00 9.97%
3/31/97 3/31/94 1,000.00 14.85 67.340 91.022 17.04 1,551.01 551.01 55.10% 3.00 15.74%
3/31/97 3/31/96 1,000.00 16.52 60.533 66.584 17.04 1,134.59 134.59 13.46% 1.00 13.46%
3/31/97 12/31/96 1,000.00 19.03 52.549 52.549 17.04 895.43 -104.57 -10.46% 0.25 -36.10%
</TABLE>
<PAGE>
Calamos Growth Fund-A Shares
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return % Years Ttl Return %
- ---------------------------------------------------------------------------------------------------------------------------------
Without Load
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 9/4/90 1,000.00 10.00 100.000 145.212 17.04 2,474.41 1,474.41 147.44% 6.58 14.77%
3/31/97 3/31/92 1,000.00 14.51 68.918 99.081 17.04 1,688.34 688.34 68.83% 5.00 11.04%
3/31/97 3/31/94 1,000.00 14.14 70.721 95.592 17.04 1,628.89 628.89 62.89% 3.00 17.64%
3/31/97 3/31/96 1,000.00 15.74 63.532 69.883 17.04 1,190.81 190.81 19.08% 1.00 19.08%
3/31/97 12/31/96 1,000.00 18.13 55.157 55.157 17.04 939.88 -60.12 -6.01% 0.25 -22.23%
</TABLE>
<PAGE>
Calamos Growth Fund-C Shares
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return % Years Ttl Return %
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 9/4/96 1,000.00 17.63 56.721 62.042 16.98 1,053.47 53.47 5.35 0.57 9.52%
3/31/97 12/31/96 1,000.00 18.09 55.279 55.279 16.98 938.64 -61.36 -6.14 0.25 -22.65%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Calamos Convertible Fund- A Shares
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return % Years Ttl Return %
- ----------------------------------------------------------------------------------------------------------------------------------
With Load
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 6/21/85 1,000.00 10.50 95.238 225.862 14.68 3,315.65 2,315.65 231.57% 11.78 10.71%
3/31/97 3/31/87 1,000.00 12.82 78.003 165.049 14.68 2,422.92 1,422.92 142.29% 10.01 9.25%
3/31/97 3/31/92 1,000.00 13.51 74.019 116.827 14.68 1,715.02 715.02 71.50% 5.00 11.39%
3/31/97 3/31/94 1,000.00 13.87 72.098 96.130 14.68 1,411.19 411.19 41.12% 3.00 12.15%
3/31/97 3/31/96 1,000.00 15.21 65.746 73.290 14.68 1,075.90 75.90 7.59% 1.00 7.59%
3/31/97 12/31/96 1,000.00 15.13 66.094 66.094 14.68 970.26 -29.74 -2.97% 0.25 -11.52%
3/31/97 9/30/96 1,000.00 14.70 68.027 71.246 14.68 1,045.89 45.89 4.59% 0.50 9.42%
3/31/97 12/31/96 1,000.00 15.13 66.094 66.094 14.68 970.26 -29.74 -2.97% 0.25 -11.52%
</TABLE>
<PAGE>
Calamos Convertible Fund- A Shares
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return % Years Ttl Return %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Without Load
3/31/97 6/21/85 1,000.00 10.00 100.000 237.155 14.68 3,481.44 2,481.44 248.14% 11.78 11.17%
3/31/97 3/31/87 1,000.00 12.21 81.900 173.294 14.68 2,543.96 1,543.96 154.40% 10.01 9.78%
3/31/97 3/31/92 1,000.00 12.87 77.700 122.637 14.68 1,800.31 800.31 80.03% 5.00 12.47%
3/31/97 3/31/94 1,000.00 13.21 75.700 100.932 14.68 1,481.68 481.68 48.17% 3.00 13.99%
3/31/97 3/31/96 1,000.00 14.49 69.013 76.932 14.68 1,129.36 129.36 12.94% 1.00 12.94%
3/31/97 12/31/96 1,000.00 14.41 69.396 69.396 14.68 1,018.73 18.73 1.87% 0.25 7.82%
3/31/97 9/30/96 1,000.00 14.00 71.429 74.809 14.68 1,098.20 98.20 9.82% 0.50 20.67%
3/31/97 12/31/96 1,000.00 14.41 69.396 69.396 14.68 1,018.73 18.73 1.87% 0.25 7.82%
</TABLE>
<PAGE>
Calamos Convertible Fund- C Shares
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return % Years Ttl Return %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 7/5/96 1,000.00 13.87 72.098 75.953 14.63 1,111.19 111.19 11.12% 0.74 15.38%
3/31/97 12/31/96 1,000.00 14.37 69.589 69.589 14.63 1,018.09 18.09 1.81% 0.25 7.54%
</TABLE>
<PAGE>
Calamos Strategic Income Fund
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return % Years Ttl Return %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
With Load
3/31/97 9/4/90 1,000.00 10.50 95.238 151.485 10.81 1,637.55 637.55 63.76% 6.58 7.79%
3/31/97 3/31/92 1,000.00 11.06 90.416 125.043 10.81 1,351.71 351.71 35.17% 5.00 6.21%
3/31/97 3/31/94 1,000.00 11.53 86.730 104.660 10.81 1,131.37 131.37 13.14% 3.00 4.20%
3/31/97 3/31/96 1,000.00 11.62 86.059 94.671 10.81 1,023.39 23.39 2.34% 1.00 2.34%
3/31/97 12/31/96 1,000.00 11.29 88.574 89.720 10.81 969.87 -30.13 -3.01% 0.25 -11.67%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Calamos Strategic Income Fund
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return% Years Total Return%
- ----------------------------------------------------------------------------------------------------------------------------------
Without Load
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 9/4/90 1,000.00 10.00 100.000 159.059 10.81 1,719.43 719.43 71.94% 6.58 8.59%
3/31/97 3/31/92 1,000.00 10.53 94.967 131.337 10.81 1,419.75 419.75 41.98% 5.00 7.26%
3/31/97 3/31/94 1,000.00 10.98 91.075 109.903 10.81 1,188.05 188.05 18.81% 3.00 5.91%
3/31/97 3/31/96 1,000.00 11.07 90.334 99.374 10.81 1,074.23 74.23 7.42% 1.00 7.42%
3/31/97 12/31/96 1,000.00 10.75 93.023 94.227 10.81 1,018.59 18.59 1.86% 0.25 7.76%
</TABLE>
<PAGE>
Calamos Growth and Income Fund- A Shares
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return % Years Ttl Return %
- ---------------------------------------------------------------------------------------------------------------------------------
With Load
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 9/22/88 1,000.00 10.50 95.238 181.966 15.52 2,824.11 1,824.11 182.41% 8.53 12.95%
3/31/97 3/31/92 1,000.00 14.57 68.634 114.860 15.52 1,782.63 782.63 78.26% 5.00 12.25%
3/31/97 3/31/94 1,000.00 13.81 72.411 93.339 15.52 1,448.62 448.62 44.86% 3.00 13.14%
3/31/97 3/31/96 1,000.00 16.40 60.976 69.261 15.52 1,074.93 74.93 7.49% 1.00 7.49%
3/31/97 12/31/96 1,000.00 16.23 61.614 61.926 15.52 961.09 -38.91 -3.89% 0.25 -14.87%
</TABLE>
<PAGE>
Calamos Growth and Income Fund- A Shares
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return % Years Ttl Return %
- ---------------------------------------------------------------------------------------------------------------------------------
Without Load
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 9/22/88 1,000.00 10.00 100.000 191.064 15.52 2,965.31 1,965.31 196.53% 8.53 13.60%
3/31/97 3/31/92 1,000.00 13.88 72.046 120.570 15.52 1,871.25 871.25 87.12% 5.00 13.34%
3/31/97 3/31/94 1,000.00 13.15 76.046 98.024 15.52 1,521.33 521.33 52.13% 3.00 15.00%
3/31/97 3/31/96 1,000.00 15.62 64.020 72.718 15.52 1,128.58 128.58 12.86% 1.00 12.86%
3/31/97 12/31/96 1,000.00 15.46 64.683 65.011 15.52 1,008.97 8.97 0.90% 0.25 3.69%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Calamos Growth and Income Fund-C Shares
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return% Years Ttl Return%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 8/5/96 1,000.00 14.52 68.871 71.500 15.50 1,108.25 108.25 10.83% 0.65 17.07%
3/31/97 12/31/96 1,000.00 15.44 64.767 65.096 15.50 1,008.99 8.99 0.90% 0.25 3.70%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Calamos Global Growth & Income Fund-A Shares
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return% Years Ttl Return%
- ----------------------------------------------------------------------------------------------------------------------------------
With Load
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 9/9/96 1,000.00 5.25 190.476 190.898 5.39 1,028.94 28.94 2.89% 0.56 5.26%
3/31/97 12/31/96 1,000.00 5.52 181.159 181.159 5.39 976.45 -23.55 -2.36% 0.25 -9.21%
Without Load
3/31/97 9/9/96 1,000.00 5.00 200.000 200.443 5.39 1,080.39 80.39 8.04% 0.56 14.92%
3/31/97 12/31/96 1,000.00 5.26 190.114 190.114 5.39 1,024.71 24.71 2.47% 0.25 10.41%
</TABLE>
<PAGE>
Calamos Global Growth and Income Fund- C Shares
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
Initial Ending Average
Period End Investment Invested Initial Initial Ending Ending Redeemable Total Total Annual
Date Date Principal Price Shares Shares Price Value Return Return % Years Ttl Return %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 9/24/96 1,000.00 5.00 200.000 200.443 5.37 1,076.38 76.38 7.64% 0.52 15.36%
3/31/97 12/31/96 1,000.00 5.26 190.114 190.114 5.37 1,020.91 20.91 2.09% 0.25 8.76%
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Calamos Convertible Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 34,744,076
<INVESTMENTS-AT-VALUE> 38,222,459
<RECEIVABLES> 474,005
<ASSETS-OTHER> 426,200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 39,122,664
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 78,037
<TOTAL-LIABILITIES> 78,037
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 34,214,503
<SHARES-COMMON-STOCK> 2,660,365
<SHARES-COMMON-PRIOR> 1,687,595
<ACCUMULATED-NII-CURRENT> 367,208
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 984,533
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,478,383
<NET-ASSETS> 39,044,627
<DIVIDEND-INCOME> 320,539
<INTEREST-INCOME> 1,016,876
<OTHER-INCOME> 0
<EXPENSES-NET> 469,974
<NET-INVESTMENT-INCOME> 867,441
<REALIZED-GAINS-CURRENT> 2,052,088
<APPREC-INCREASE-CURRENT> 813,678
<NET-CHANGE-FROM-OPS> 3,733,207
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 906,544
<DISTRIBUTIONS-OF-GAINS> 2,199,711
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,043,347
<NUMBER-OF-SHARES-REDEEMED> 227,841
<SHARES-REINVESTED> 157,264
<NET-CHANGE-IN-ASSETS> 14,584,575
<ACCUMULATED-NII-PRIOR> 399,745
<ACCUMULATED-GAINS-PRIOR> 1,138,722
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 230,573
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 469,974
<AVERAGE-NET-ASSETS> 29,653,784
<PER-SHARE-NAV-BEGIN> 14.49
<PER-SHARE-NII> 0.36
<PER-SHARE-GAIN-APPREC> 1.39
<PER-SHARE-DIVIDEND> 0.45
<PER-SHARE-DISTRIBUTIONS> 1.11
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.68
<EXPENSE-RATIO> 1.5
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Calamos Growth & Income Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 7,696,136
<INVESTMENTS-AT-VALUE> 8,296,518
<RECEIVABLES> 284,337
<ASSETS-OTHER> 187,910
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,768,765
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,189
<TOTAL-LIABILITIES> 30,189
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,688,651
<SHARES-COMMON-STOCK> 562,914
<SHARES-COMMON-PRIOR> 372,098
<ACCUMULATED-NII-CURRENT> 43,395
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 406,148
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 600,382
<NET-ASSETS> 8,738,576
<DIVIDEND-INCOME> 60,695
<INTEREST-INCOME> 261,845
<OTHER-INCOME> 0
<EXPENSES-NET> 145,794
<NET-INVESTMENT-INCOME> 176,746
<REALIZED-GAINS-CURRENT> 575,881
<APPREC-INCREASE-CURRENT> 87,888
<NET-CHANGE-FROM-OPS> 840,515
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 140,367
<DISTRIBUTIONS-OF-GAINS> 704,715
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 198,887
<NUMBER-OF-SHARES-REDEEMED> 57,322
<SHARES-REINVESTED> 49,251
<NET-CHANGE-IN-ASSETS> 2,925,711
<ACCUMULATED-NII-PRIOR> 7,016
<ACCUMULATED-GAINS-PRIOR> 534,982
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 54,520
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 152,836
<AVERAGE-NET-ASSETS> 7,202,592
<PER-SHARE-NAV-BEGIN> 15.62
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 1.52
<PER-SHARE-DIVIDEND> 0.28
<PER-SHARE-DISTRIBUTIONS> 1.68
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.52
<EXPENSE-RATIO> 2.0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> Calamos Strategic Income Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 1,254,682
<INVESTMENTS-AT-VALUE> 1,276,652
<RECEIVABLES> 73,037
<ASSETS-OTHER> 385,549
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,735,238
<PAYABLE-FOR-SECURITIES> 34,675
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 383,584
<TOTAL-LIABILITIES> 418,259
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,313,030
<SHARES-COMMON-STOCK> 121,865
<SHARES-COMMON-PRIOR> 146,388
<ACCUMULATED-NII-CURRENT> 4,168
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,723)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,504
<NET-ASSETS> 1,316,979
<DIVIDEND-INCOME> 5,121
<INTEREST-INCOME> 90,133
<OTHER-INCOME> 0
<EXPENSES-NET> 31,211
<NET-INVESTMENT-INCOME> 64,043
<REALIZED-GAINS-CURRENT> 108,232
<APPREC-INCREASE-CURRENT> (65,087)
<NET-CHANGE-FROM-OPS> 107,188
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 90,304
<DISTRIBUTIONS-OF-GAINS> 49,735
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,500
<NUMBER-OF-SHARES-REDEEMED> 35,798
<SHARES-REINVESTED> 9,775
<NET-CHANGE-IN-ASSETS> (302,927)
<ACCUMULATED-NII-PRIOR> 8,916
<ACCUMULATED-GAINS-PRIOR> (60,884)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,203
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 76,667
<AVERAGE-NET-ASSETS> 1,493,480
<PER-SHARE-NAV-BEGIN> 11.07
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> 0.29
<PER-SHARE-DIVIDEND> 0.68
<PER-SHARE-DISTRIBUTIONS> 0.37
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.81
<EXPENSE-RATIO> 2.1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> Calamos Growth Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 6,008,207
<INVESTMENTS-AT-VALUE> 6,407,323
<RECEIVABLES> 48,483
<ASSETS-OTHER> 216,433
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,672,239
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28,408
<TOTAL-LIABILITIES> 28,408
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,106,339
<SHARES-COMMON-STOCK> 389,944
<SHARES-COMMON-PRIOR> 182,062
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 138,376
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 399,116
<NET-ASSETS> 6,643,831
<DIVIDEND-INCOME> 19,315
<INTEREST-INCOME> 11,945
<OTHER-INCOME> 0
<EXPENSES-NET> 95,123
<NET-INVESTMENT-INCOME> (63,863)
<REALIZED-GAINS-CURRENT> 609,730
<APPREC-INCREASE-CURRENT> (71,043)
<NET-CHANGE-FROM-OPS> 474,824
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 425,142
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 218,169
<NUMBER-OF-SHARES-REDEEMED> 34,203
<SHARES-REINVESTED> 23,916
<NET-CHANGE-IN-ASSETS> 3,778,157
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 37,501
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 47,557
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 129,089
<AVERAGE-NET-ASSETS> 4,756,986
<PER-SHARE-NAV-BEGIN> 15.74
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> 3.14
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.75
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.04
<EXPENSE-RATIO> 2.0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> Calamos Global Growth & Income Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 3,203,812
<INVESTMENTS-AT-VALUE> 3,259,819
<RECEIVABLES> 43,435
<ASSETS-OTHER> 110,631
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,413,885
<PAYABLE-FOR-SECURITIES> 69,664
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28,400
<TOTAL-LIABILITIES> 98,064
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,147,189
<SHARES-COMMON-STOCK> 615,599
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 92,862
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21,623
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 54,147
<NET-ASSETS> 3,315,821
<DIVIDEND-INCOME> 19,466
<INTEREST-INCOME> 32,524
<OTHER-INCOME> 0
<EXPENSES-NET> 27,851
<NET-INVESTMENT-INCOME> 24,139
<REALIZED-GAINS-CURRENT> 95,919
<APPREC-INCREASE-CURRENT> 54,147
<NET-CHANGE-FROM-OPS> 174,205
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,573
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 650,317
<NUMBER-OF-SHARES-REDEEMED> 35,724
<SHARES-REINVESTED> 1,006
<NET-CHANGE-IN-ASSETS> 3,315,821
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,646
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 52,448
<AVERAGE-NET-ASSETS> 2,236,813
<PER-SHARE-NAV-BEGIN> 5.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.36
<PER-SHARE-DIVIDEND> 0.01
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.39
<EXPENSE-RATIO> 2.0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 18.1
<TABLE>
<CAPTION>
<S> <C>
Calamos Family of Funds(R)
Application Form
Calamos Financial Services, Inc./(R)/ --------------------------------------
1111 Each Warrenville Road FOR OFFICE USE ONLY
Naperville, IL 60563-1493 Account #:
--------------------------
Account Exec:
-----------------------
--------------------------------------
(Print or Type)
- -----------------------------------------------------------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE OF ACCOUNT Choose only one type of account and complete the information requested.
[_] Individual | | | | - | | | - | | | | |
or Joint -------------------------------------------------------------------------- ------------------------------------
Owners: First Name Middle Initial Last Name Social Security Number
| | | | - | | | - | | | | |
-------------------------------------------------------------------------- ------------------------------------
Joint Owners: First Name Middle Initial Last Name Social Security Number
Unless otherwise indicated, each account with multiple owners is deemed to be held in joint tenancy with right of
survivorship except where this form of ownership is not recognized under applicable law.
[_] Gift/Transfer
To Minor -------------------------------------------------------------------------- (Only one person allowed by law)
Custodian's: First Name Middle Initial Last Name
as Custodian for: | | | | - | | | - | | | | |
-------------------------------------------------------------------------- ------------------------------------
Minor's: First Name Middle Initial Last Name Social Security Number
under the Uniform Gifts/Transfers to Minors Act
---------------------------------------------
State Where Minor, Donor or Custodian Resides
[_] TRUST -------------------------------------------------------------------------- -----------------------------------
Name of Trust Agreement Tax Identification Number
-------------------------------------------------------------------------- -----------------------------------
Trustee(s) Date of Trust Agreement
[_] CORPORATION -------------------------------------------------------------------------- -----------------------------------
OR Name of Corporation or Other Entity Tax Identification Number
OTHER ENTITY TYPE: [_] Corporation [_] Partnership [_] Other: (please specify)
-----------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
- -----------------------------------------------------------------------------------------------------------------------------------
ADDRESS: -------------------------------------------------------------------------- ------------------------------------
Street Business Telephone
-------------------------------------------------------------------------- ------------------------------------
City State Zip Home Telephone
CITIZENSHIP: [_] United States [_] Resident Alien [_] Non-Resident - Country: ------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
3 INITIAL INVESTMENT
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT: Please indicate your choice of Fund(s) and the amount of initial investment: Minimum Initial Investment: $500
Subsequent Investments: $50
[_] CALAMOS Convertible Fund(R) A shares $__________ [_] CALAMOS Strategic Income Fund(R) A shares $ _____________
[_] CALAMOS Convertible Fund(R) C shares $__________ [_] CALAMOS Strategic Income Fund(R) C shares $ _____________
[_] CALAMOS Growth and Income Fund(R) A shares $__________ [_] CALAMOS Growth Fund(R) A shares $ _____________
[_] CALAMOS Growth and Income Fund(R) C shares $__________ [_] CALAMOS Growth Fund(R) C shares $ _____________
[_] CALAMOS Global Growth and Income Fund(R) A shares $________ [_] Cash Account Trust (CAT):
[_] CALAMOS Global Growth and Income Fund(R) C shares $________ [_] Money Market Portfolio* $ _____________
Government Securities Portfolio* $ _____________
Tax-Exempt Portfolio* $ _____________
*CAT minimum initial investment: $1000 Subsequent investments: $100
PURCHASE BY: 1. Check for $_____________________________ made payable to "CALAMOS Funds"
OR 2. Wire/Journal $____________________________ on __________________________ from _________________________
WIRE INSTRUCTIONS: Call 1-800-823-7386 for wire Instructions.
- -----------------------------------------------------------------------------------------------------------------------------------
4 DIVIDEND AND CAPITAL GAINS
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS: All distributions will be reinvested in additional shares unless the appropriate box(es) is completed below.
[_] Please mail a check in the amount of each dividend.
[_] Please mail a check in the amount of each capital gain distribution.
Backup Withholding Exemption: The following trusts and organizations are exempt from backup withholding:
corporations, financial institutions, 501(a) exempt organizations or an IRA, U.S. or foreign governments or
agencies, state or political subdivisions, international organizations, U.S. registered securities or
commodities dealers, real estate investment trusts, entities registered under the Investment Company Act
of 1940, common trust fund (operated by a bank), and exempt charitable remainder trusts or non-exempt
4947(a)(1) trusts. Individuals, joint tenants and minors are not exempt; however, they are not necessarily
required to elect backup witholding.
[_] If you are exempt, check this box.
- -----------------------------------------------------------------------------------------------------------------------------------
5 REDUCED SALES CHARGE (Class A Shares Only)
- -----------------------------------------------------------------------------------------------------------------------------------
LETTER OF [_] I agree to the Statement of Intention and Escrow Agreement set forth in Section 8 of this application.
INTENT: Although I am not obligated to do so, it is my intention to invest over a 13-month period from the date
of original purchase of shares in the CALAMOS Strategic Income Fund(R), CALAMOS Convertible Fund(R),
CALAMOS Growth and Income Fund(R), CALAMOS Growth Fund(R), and/or the CALAMOS Global Growth and Income
Fund(R) (cross through the Funds that are not applicable) in an aggregate amount at least equal to:
[_] $50,000 [_] $100,000 [_] $250,000 [_] $500,000 [_]$1,000,000
RIGHTS OF [_] I qualify for the cumulative quantity discount as outlined in the prospectus. My other accounts within
ACCUMULATION the CALAMOS Family of Funds(R) are as follows: Shareholder Registration Account #
CALAMOS Convertible Fund(R) ________________________ ___________________
CALAMOS Growth and Income Fund(R) ________________________ ___________________
CALAMOS Strategic Income Fund(R) ________________________ ___________________
CALAMOS Growth Fund(R) ________________________ ___________________
CALAMOS Global Growth Income Fund(R) ________________________ ___________________
</TABLE>
<PAGE>
6 DEALER/INVESTMENT ADVISER
<TABLE>
If your purchase of the Fund(s) was recommended by a dealer/adviser, please complete the following information. Note: Accurate
completion of this section will expedite dealer concession.
<S> <C> <C>
DEALER/ADVISER _________________________________________________________________ _____________________________________
INFORMATION: Dealer/Adviser Dealer Number
_________________________________________________________________ _____________________________________
Branch Branch Number
_________________________________________________________________ _____________________________________
Representative (First and Last Name) Rep. Number
_________________________________________________________________ _____________________________________
Address Suite/Floor/Department
_________________________________________________________________ _____________________________________
City State Zip Branch Phone Number (Important)
NAV Sale:
(Non-Qualified Plan) [_] Yes [_] No If yes, please complete NAV Authorization Form and submit with this application.
</TABLE>
7 SIGNATURE AND CERTIFICATION
<TABLE>
<S> <C>
Notes: Signature and Certification must be signed exactly as name(s) appear under Account Registration. If your
account is the account of an individual, the individual should sign; if joint owners, all should sign; if a
custodian for a minor, the custodian should sign; if a corporation or other organization, an officer should
sign (indicating corporate office or title); if a trust or other fiduciary, the trustee or fiduciaries should
sign (including capacity).
Certification: I affirm that I have received a current prospectus of the Fund applied for and I agree to be bound by its
terms. I certify that I have full authority and legal capacity to purchase shares of the Fund and to establish
and use any related Privileges. I certify, under penalties of perjury, that (a) all information and
certifications on the application are true and correct, including the Social Security or other tax
identification number under Account Registration or, if none is shown, I certify that I have not been issued a
number but have applied for one and (b) I am not subject to backup withholding as a result of a failure to
report all interest or dividend income to the IRS. (Note: you must draw a line through clause (b) of the
preceding sentence if the IRS has notified you that you are subject to backup withholding due to your failure
to report such income.) I agree that the Fund and its transfer agent may redeem shares and retain the proceeds
from any of my account(s) with the Fund up to a total of (a) any IRS penalties attributable to my failure to
provide either the Fund or its transfer agent with correct and complete information requested by them and (b)
any tax not withheld from distributions to me which should have been withheld by them.
</TABLE>
<TABLE>
<S> <C> <C>
SIGNATURE(S): _________________________________________________________________ _____________________________________
Individual Owner Date
_________________________________________________________________ _____________________________________
Joint Owner Date
_________________________________________________________________ _____________________________________
Custodian Date
_________________________________________________________________ _____________________________________
Officer, Trustee, etc. Date
_________________________________________________________________
Title of Officer, Trustee, etc.
</TABLE>
8 LETTER OF INTENT PROVISIONS
LETTER OF INTENTION AND ESCROW AGREEMENT
<TABLE>
<S> <C>
ESCROW Out of the Shareholder's initial purchase (or subsequent purchases if necessary), five percent (5%) of the
PROVISIONS: specified dollar amount of the Letter will be held in escrow by the Agent in the Shareholder's Account. All
dividends and capital gains distributions on the escrowed shares will be paid directly to the Shareholder or
credited to his or her Account.
COMPLETION: When the Shareholder's total purchases made at offering prices pursuant to this Letter plus his or her
Accumulation Credit equal the amount specified on the face of this Letter, the escrowed shares will be
released.
RETROACTIVE If the Shareholder's total purchases through the Dealer pursuant to this Letter plus his or her Accumulation
PRICE Credit exceed the specified amount of this Letter and an equal amount which would qualify for a further
ADJUSTMENT: quantity discount, a retroactive price adjustment will be made as of the expiration date of this Letter by the
Distributor and the Dealer for all purchases made pursuant to this Letter to reflect such further quantity
discount. The resulting difference in offering price will be applied to the purchase of additional shares for
the Shareholder's Account at the offering price then applicable to a single purchase of the dollar amount of
his or her total purchases hereunder. As part of such adjustment, the Dealer shall return to the Distributor
the excess of commission previously allowed or paid to the Dealer over that which would be applicable to the
actual amount of the Shareholder's aggregate purchases. Such adjustment does not apply to the sales charge
applicable to the shares valued in the Shareholder's Accumulation Credit. If at the time of such adjustment a
broker/dealer other than the Dealer is purchasing shares for the Shareholder's Account, the adjustment will be
made only with respect to those shares purchased through such broker/dealer.
NON-COMPLETION: If total purchases pursuant to this Letter plus the Accumulation Credit are less than the specified amount of
this Letter, the Shareholder agrees to remit to the Distributor an amount equal to the difference in the
dollar amount of the sales charge actually paid and the amount of the sales charge which he or she would have
paid on his or her aggregate purchases if the total of such purchases had been made at a single time. If the
Shareholder does not pay such difference in the sales charge within 20 days after written request by the
Dealer or by the Distributor, the Agent, upon instructions from the Distributor, will cause to be repurchased
an appropriate number of the escrowed shares in order to realize such difference. Any escrowed shares
remaining after remittance by the Shareholder or repurchased as provided in this Paragraph, together with any
excess cash proceeds of the repurchased shares, will be credited to the Shareholder's Account.
ATTORNEY: The Shareholder hereby irrevocably constitutes and appoints the Agent his or her agent and attorney to
surrender for repurchase any of all escrowed shares with full power of substitution in the premises.
ACCEPTANCE: This Letter is not effective until accepted by the Fund distributor.
</TABLE>
<PAGE>
EXHIBIT 18.2
<TABLE>
<CAPTION>
CALAMOS Family of Funds(R) APPLICATION FORM
CALAMOS FINANCIAL SERVICES -------------------
1111 East Warrenville Road FOR OFFICE USE ONLY
Naperville, Illinois 60563
Account #:
---------
<S> <C> <C>
Account Exec:
------
-------------------
(Print or Type)
- ------------------------------------------------------------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION
- ------------------------------------------------------------------------------------------------------------------------------------
TYPE OF ACCOUNT Choose only one type of account and complete the information requested.
[_] INDIVIDUAL OR ------------------------------------------------------------------ |_|_|_|-|_|_|-|_|_|_|_|
JOINT Owner's: First Name Middle Initial Last Name Social Security Number
------------------------------------------------------------------ |_|_|_|-|_|_|-|_|_|_|_|
JOINT OWNERS: First Name Middle Initial Last Name Social Security Number
Unless otherwise indicated, each account with multiple owners is deemed to be held in joint tenancy with
right of survivorship except where this form of ownership is not recognized under applicable law.
(Only one person allowed by law)
[_] GIFT/TRANSFER ------------------------------------------------------------------
TO MINOR Custodian's: First Name Middle Initial Last Name
as Custodian for:
------------------------------------------------------------------ |_|_|_|-|_|_|-|_|_|_|_|
Minor's: First Name Middle Initial Last Name Minor's Social Security Number
Under the Uniform Gifts/Transfers to Minors Act
---------------------------------------------
State Where Minor, Donor or Custodian Resides
[_] TRUST ------------------------------------------------------------------ ------------------------------
Name of Trust Agreement Tax Identification Number
------------------------------------------------------------------ ------------------------------
Trustee(s) Date of Trust Agreement
[_] CORPORATION OR ------------------------------------------------------------------ -------------------------------
OTHER ENTITY Name of Corporation or Other Entity Tax Identification Number
TYPE: [_] Corporation [_] Partnership [_] Other: (please specify) __________________
- ------------------------------------------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
ADDRESS:
------------------------------------------------------------------ -------------------------------
Street Business Telephone
CITIZENSHIP: ------------------------------------------------------------------ -------------------------------
City State Zip Home Telephone
[_] United States [_] Resident Alien [_] Non-Resident Alien - Country:
-------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
3 INITIAL INVESTMENT
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT: Please indicate your choice of Fund(s) and the amount of initial investment: Minimum Initial Investment:
$5,000,000
[_] CALAMOS Convertible Fund(R) I shares $_________ [_] CALAMOS Strategic Income Fund(R) A shares $_________________
[_] CALAMOS Growth and Income Fund(R) I shares $_________ [_] CALAMOS Growth Fund(R) A shares $_________________
[_] CALAMOS Global Growth and Income Fund(R) I shares $_____ [_] Cash Account Trust (CAT): ______________
Money Market Portfolio* $ ______________
Government Securities Portfolio* $ ______________
Tax-Exempt Portfolio* $
*CAT minimum initial investment: $1000 Subsequent investment: $100
PURCHASE BY: 1. Check for $___________________________________made payable to "CALAMOS Funds"
OR 2. Wire/Journal $______________on__________________from__________________________________________________
Date Name of Bank
WIRE INSTRUCTIONS: Call 1-800-823-7386 for wire instructions.
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<PAGE>
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4 DIVIDEND AND CAPITAL GAINS
<S> <C>
DISTRIBUTIONS: All distributions will be reinvested in additional shares unless the appropriate box(es) is completed below.
[_] Please mail a check in the amount of each dividend.
[_] Please mail a check in the amount of each capital gain distribution.
Backup Withholding Exemption: The following trusts and organizations are exempt from backup withholding:
corporations, financial institutions, 501(a) exempt organizations or an IRA, U.S. or foreign governments or
agencies, state or political subdivisions, international organizations, U.S. registered securities or
commodities dealers, real estate investment trusts, entities registered under the Investment Company Act of
1940, common trust fund (operated by a bank), and exempt charitable remainder trusts or non-exempt 4947(a)(1)
trusts. Individuals, joint tenants and minors are not exempt; however, they are not necessarily required to
elect backup withholding.
[_] If you are exempt, check this box.
5 SIGNATURE AND CERTIFICATION
NOTES: Signature and Certification must be signed exactly as name(s) appear under Account Registration. If your
account is the account of an individual, the individual should sign; if joint owners, all should sign; if a
custodian for a minor, the custodian should sign; if a corporation or other organization, an officer should
sign (indicating corporate office or title); if a trust or other fiduciary, the trustee or fiduciaries should
sign (including capacity).
CERTIFICATION: I affirm that I have received a current prospectus of the Fund applied for and I agree to be bound by its
terms. I certify that I have full authority and legal capacity to purchase shares of the Fund and to establish
and use any related Privileges. I certify, under penalties of perjury, that (a) all information and
certifications on the application are true and correct, including the Social Security or other tax
identification number under Account Registration or, if none is shown, I certify that I have not been issued a
number but have applied for one and (b) I am not subject to backup withholding as a result of a failure to
report all interest or dividend income to the IRS. (Note: you must draw a line through clause (b) of the
preceding sentence if the IRS has notified you that you are subject to backup withholding due to your failure
to report such income.) I agree that the Fund and its transfer agent may redeem shares and retain the proceeds
from any of my account(s) with the Fund up to a total of (a) any IRS penalties attributable to my failure to
provide either the Fund or its transfer agent with correct and complete information requested by them and (b)
any tax not withheld from distributions to me which should have been withheld by them.
SIGNATURE(S): _______________________________________________________________ ________________________________________
Individual Owner Date
_______________________________________________________________ ________________________________________
Joint Owner Date
_______________________________________________________________ ________________________________________
Custodian Date
_______________________________________________________________ ________________________________________
Officer, Trustee, etc. Date
_______________________________________________________________
Title of Officer, Trustee, etc.
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<PAGE>
Exhibit 18.3
Calamos Family of Funds(R) Automatic Bank Draft Plan
Calamos Financial Services, Inc.(R) . 1111 East Warrenville Road .
Naperville, Illinois 60563
- -------------------------------------------------------------------------------
The Automatic Bank Draft Plan is a service available to shareholders of the
Calamos Family of Funds(R), making possible regular monthly purchases of Fund
shares to allow dollar-cost averaging. Each month, the Fund's transfer agent
can arrange for an amount of money selected by you to be deducted from your
checking account and used to purchase shares of a specified Calamos Fund. You
will receive a confirmation from the Fund's transfer agent reflecting each
purchase, and your bank statement will reflect the amount of the draft.
Please withdraw $_____________________from my checking account (named below) on
or about the [ ]10th, [ ]25th, or [ ]10th and [ ]25th of each month for
investment as indicated below. (If no option is selected, your account will be
drafted on or near the 10th of the month.)
Calamos Convertible Fund(R) A Shares $ ______________
C Shares $ ______________
Calamos Growth and Income Fund(R) A Shares $ ______________
C Shares $ ______________
Calamos Strategic Income Fund(R) A Shares $ ______________
C Shares $ ______________
Calamos Growth Fund(R) A Shares $ ______________
C Shares $ ______________
Calamos Global Growth and Income Fund(R) A Shares $ ______________
C Shares $ ______________
Cash Account Trust (CAT):
Money Market Portfolio $ ______________
Government Securities Portfolio $ ______________
Tax-Exempt Portfolio $ ______________
================================================================================
Checking
Account
Draft:
[Graphic]
- ------------------------------------------------------------------------------
JOHN DOE 0000
123 Main St.
Anywhere, USA 12345
____________________________________$ [ ]
____________________________________________________
Please attach voided check here.
_________________________ _________________________
- ------------------------------------------------------------------------------
===============================================================================
Bank _____________________________________ _____________________
Information: Bank Name ABA Number
_____________________________________
Bank Address
_____________________________________ _____________________
City State Zip Code
_____________________________________ _____________________
Account Name Account Number
_____________________________________ _____________________
FORM D (6/97) Authorized Signature(s) Date
<PAGE>
Exhibit 18.4
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<CAPTION>
Calamos Family of Funds(R) Systematic Withdrawal
Please complete this form and return to: Calamos Financial Services, Inc.(R)
1111 East Warrenville Road
Naperville, IL 60563 Account Number: ____________
Telephone: 800.823.7386
- ------------------------------------------------------------------------------------------------------------------------------------
To initiate the Systematic Withdrawal Plan, your account must have a minimum share balance of $25,000. For more information, please
refer to the "Shareholder Services" section in the Calamos Funds' prospectus.
Interval: The deduction shall be made: (select one) [_]Monthly [_]Quarterly [_]Annually [_]Other (Specify below)
Monthly: Please process the deduction on or about the [_] 10th, [_] 25th, or [_] 10th and 25th of each month.
Quarterly: Please process the deduction at the: [_] Beginning [_] End of each quarter.
Annually: Please process the deduction on: ___________________________________________________________________________
Date
Other: Please specify: ____________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
Amount: Please indicate below the Fund(s) from which the payment is to be made and the amount of payment (in dollars or
shares).
<S> <C> <C>
[_]Calamos Convertible Fund(R) A Shares $ ___________________ or __________________ Shares
C Shares $ ___________________ or __________________ Shares
[_]Calamos Growth and Income Fund(R) A Shares $ ___________________ or __________________ Shares
C Shares $ ___________________ or __________________ Shares
[_]Calamos Strategic Income Fund(R) A Shares $ ___________________ or __________________ Shares
C Shares $ ___________________ or __________________ Shares
[_]Calamos Growth Fund(R) A Shares $ ___________________ or __________________ Shares
C Shares $ ___________________ or __________________ Shares
[_]Calamos Global Growth and Income Fund(R) A Shares $ ___________________ or __________________ Shares
C Shares $ ___________________ or __________________ Shares
[_]Cash Account Trust (CAT):
Money Market Portfolio $ ___________________ or __________________ Shares
Government Securities Portfolio $ ___________________ or __________________ Shares
Tax-Exempt Portfolio $ ___________________ or __________________ Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Address: Proceeds will be mailed on the above requested date(s) to:
_____________________________________________________________________________________________
Name
_____________________________________________________________________________________________
Street
_____________________________________________________________________________________________
City State Zip Code
- ------------------------------------------------------------------------------------------------------------------------------------
Signature(s): ____________________________________________________________________________________________
Owner
____________________________________________________________________________________________
Joint Owner (if joint account, both owners' signatures are required)
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