<PAGE>
As filed with the Securities and Exchange Commission on January 3, 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. 16 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 19 [X]
________________________________________________________________________________
CFS INVESTMENT TRUST
(Registrant)
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Telephone number: 708/245-7200
________________________________________________________________________________
John P. Calamos Cameron S. Avery
Calamos Asset Management, Inc. Bell, Boyd & Lloyd
1111 East Warrenville Road 70 West Madison Street, Suite 3300
Naperville, Illinois 60563-1493 Chicago, Illinois 60602-4207
(Agents for service)
________________________________________________________________________________
It is proposed that this filing will become effective:
X immediately upon filing pursuant to paragraph (b) of rule 485
---
--- on ________________ pursuant to paragraph (b) of rule 485
--- 60 days after filing pursuant to paragraph (a)(1) of rule 485
--- on June 24, 1996 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 Strategic Income Fund,
Calamos Convertible Fund, Calamos Growth and 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, 1996 was filed on or about May 30, 1996.
________________________________________________________________________________
Amending Parts A and C and filing exhibit.
________________________________________________________________________________
<PAGE>
CFS INVESTMENT TRUST
CROSS-REFERENCE SHEET PURSUANT TO RULE 495(A) OF REGULATION C
<TABLE>
<CAPTION>
ITEM LOCATION OR CAPTION*
- ---- ---------------------------------
PART A (PROSPECTUS)
-------------------
<S> <C>
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
</TABLE>
- ----------------------
*References are to captions within the part of the registration statement to
which the particular item relates except as otherwise indicated.
<PAGE>
<TABLE>
<CAPTION>
ITEM LOCATION OR CAPTION*
- ---- --------------------------------
PART A (PROSPECTUS) CONTINUED
-----------------------------
<S> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
<PAGE>
CALAMOS GLOBAL GROWTH AND INCOME FUND/TM/
Supplement dated January 3, 1997 to Prospectus dated June 26, 1996
------------------------------------------------------------------
FINANCIAL HIGHLIGHTS OF GLOBAL GROWTH AND INCOME FUND
Calamos Global Growth and Income Fund commenced operations on September 9, 1996.
Class A shares of the Fund were first issued on that date, and Class C shares of
the Fund were fir issued on September 24, 1996. The tables below reflect the
results of the operations of the Fund on a per-share basis during the period
from the commencement of operations through September 30, 1996. These results
have not been audited by independent auditors.
<TABLE>
<CAPTION>
Class A Class C
--------------- ----------------
9/9/96 through 9/24/96 through
9/30/96 9/30/96
---------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 5.00 $ 5.00
Income from investment operations:
Net investment income .01 .01
Net realized and unrealized gain on investments .03 .03
-------- --------
Total from investment operations .04 .04
-------- --------
Less distributions:
Dividends from net investment income - -
-------- --------
Net asset value, end of period $ 5.04 $ 5.04
======== ========
Total return (b) .8% .8%
Ratios and supplemental data:
Net assets, end of period (000) $ 1,732 $ 11
Ratio of expenses to average net assets (a) 2.0%* 2.5%*
Ratio of net investment income to average net assets 1.7%* .3%*
9/9/96 through 9/30/96
----------------------
Portfolio turnover rate -
Average Commission .0770
</TABLE>
________________________
(a) After the reimbursement and waiver of expenses by the Adviser equivalent to
2.2%* of average net assets respectively.
(b) Total return is not annualized for periods that are less than a full year
and does not reflect the effect of sales charges.
* Annualized.
<PAGE>
PROSPECTUS JUNE 26, 1996
<TABLE>
<CAPTION>
CALAMOS FAMILY OF FUNDS/TM/
- ------------------------------------------------------------------------------------------------
| <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 appreciation|
| INCOME FUND | 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
CALAMOS CONVERTIBLE FUND/TM/ seeks current income. Growth is a secondary
objective that the Fund also considers when consistent with its objective of
current income.
CALAMOS GROWTH AND INCOME FUND/TM/ seeks high long-term total return through
capital appreciation and current income derived from a diversified portfolio of
convertible, equity and fixed-income securities.
CALAMOS STRATEGIC INCOME FUND/TM/ seeks high current income consistent with
stability of principal, primarily through investment in convertible securities
and employing short selling to enhance income and hedge against market risk.
CALAMOS GROWTH FUND/TM/ seeks long-term capital growth.
CALAMOS GLOBAL GROWTH AND INCOME FUND/TM/ 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.
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 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 charge if held for at value without an
initial least one year, but or contingent deferred subject to
an annual sales .25% service fee and a .75% distribution fee,
and, in the case of shares redeemed within one year, a 1%
contingent deferred sales charge.
2
<PAGE>
Each class of shares of a Fund represents interests in the same portfolio of
investments of the Fund. The minimum initial investment in a Fund is $500 and
investments in the Fund thereafter must be at least $50. Shares are redeemable
at net asset value, which may be more or less than original cost; however, if
Class C shares, or Class A shares for which the initial purchase price was $1
million or more, on which no sales charge was imposed, are redeemed within one
year, a deferred sales charge of 1% will be imposed. See "How to Purchase
Shares" and "How to Redeem Shares."
EXPENSES OF THE FUNDS
Each Fund pays a management fee to the investment adviser. Each Fund also
compensates the Distributor for shareholder servicing and for services in
distributing Fund shares. See "Management of the Funds."
INVESTMENT ADVISER
Calamos Asset Management, Inc./TM/ ("CAM" or the "Adviser")
DISTRIBUTOR
Calamos Financial Services, Inc./TM/ ("CFS" or the "Distributor")
3
<PAGE>
EXPENSES
The following tables show all fees paid by shareholders or charged against the
assets of each Fund:
<TABLE>
<CAPTION>
Class A Shares
---------------------------------------------------------
Growth Global
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) (b)....... 4.75% 4.75% 4.75% 4.75% 4.75%
Maximum sales charge on reinvested
dividends..................................... None None None None None
Deferred sales charge (c)...................... None None None None None
Exchange fee................................... None None None None None
Redemption fees (d)............................ None None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees............................... .75% .75% .75% 1.00% 1.00%
12b-1 fees (e)................................ .50 .50 .50 .50 .50
Other expenses (after expense reimbursement).. .25 .75 (a) .95 (a) .50 (a) .50 (a)
----- ----- ----- ----- -----
Total Fund operating expenses
(after expense reimbursement)................ 1.50% 2.00% 2.20% (a) 2.00% 2.00%
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
---------------------------------------------------------
Growth Global
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) (b)....... None None None None None
Maximum sales charge on reinvested
dividends..................................... None None None None None
Deferred sales charge (c)...................... None None None None None
Exchange fee................................... None None None None None
Redemption fees (d)............................ None None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees............................... .75% .75% .75% 1.00% 1.00%
12b-1 fees (e)................................ 1.00 1.00 1.00 1.00 1.00
Other expenses (after expense reimbursement).. .25 (a) .75 (a) .95 (a) .50 (a) .50 (a)
----- ----- ----- ----- -----
Total Fund operating expenses
(after expense reimbursement)................ 2.00% 2.50% 2.70% (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
4
<PAGE>
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, 1997, and the percentages shown for
"Other expenses" take into account expected expense reimbursements. Absent
that limitation, the "Other expenses" and "Total Fund operating expenses,"
respectively, for Class A shares of the Funds other than Convertible Fund
would be .85% and 2.10% for Growth and Income Fund; 2.55% and 3.80% for
Strategic Income Fund; 1.70% and 3.20% for Growth Fund; and 2.80% and 4.30%
for Global Growth and Income Fund. In the case of Class C shares, absent
the expense limitation, the "Other expenses" would have been the same as
for the Class A shares, and "Total Fund operating expenses" would have been
2.00% for Convertible Fund; 2.60% for Growth and Income Fund; 4.30% for
Strategic Income Fund; 4.10% for Growth Fund; and 4.35% 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
.20% 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 69 113 160 289
Growth Fund 67 107 150 269
Global Growth and Income Fund 67 107 N/A N/A
</TABLE>
5
<PAGE>
<TABLE>
<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 27 84 143 303
Growth Fund 25 78 133 284
Global Growth and Income Fund 25 78 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.
6
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below reflect the results of the operations of Class A shares of each
Fund other than Global Growth and Income Fund on a per-share basis. Because
Class C shares of the Funds have not previously been issued, similar information
does not exist for them. Information in the tables for the fiscal years ended on
or after April 30, 1988 was audited by Ernst & Young LLP, independent auditors.
Information for Convertible Fund for prior periods was audited by other
auditors. These tables should be read in conjunction with each Fund's financial
statements and notes thereto. The Funds' annual report, which may be obtained
from the Trust upon request at no charge, contains additional performance
information.
CONVERTIBLE FUND
<TABLE>
Eleven
Year Months Year Ended April 30,
Ended Ended -------------------------------------------------------------------------------
3/31/96 3/31/95 1994 1993 1992 1991 1990 1989 1988(b) 1987
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 12.41 $ 13.04 $ 13.96 $ 12.72 $ 11.39 $ 10.29 $ 10.73 $ 10.56 $ 11.94 $ 11.99
Income from investment
operations:
Net investment income .40 .38 .40 .42 .41 .49 .60 .59 .62 .52
Net realized and
unrealized
gain (loss) on
investments 3.06 (.01) .53 1.32 1.43 1.25 (.32) .14 (1.24) .50
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations 3.46 .37 .93 1.74 1.84 1.74 .28 .73 (.62) 1.02
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (.31) (.32) (.39) (.40) (.45) (.52) (.63) (.56) (.66) (.54)
Dividends from
net realized
capital gains (1.07) (.56) (1.46) (.10) -- -- -- -- (.10) (.53)
Dividends in
excess of
net realized
capital gains -- (.12) -- -- -- -- -- -- -- --
Distributions from
paid in
capital -- -- -- -- (.06) (.12) (.09) -- -- --
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (1.38) (1.00) (1.85) (.50) (.51) (.64) (.72) (.56) (.76) (1.07)
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 14.49 $ 12.41 $ 13.04 $ 13.96 $ 12.72 $ 11.39 $ 10.29 $ 10.73 $ 10.56 $ 11.94
======== ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return (a) 28.8% 3.2% 6.5% 14.0% 16.5% 17.7% 2.4% 7.2% (5.1%) 9.5%
Ratios and supplemental
data:
Net assets, end
of period (000) $ 24,460 $16,646 $17,023 $17,213 $16,940 $13,953 $18,664 $21,270 $23,194 $23,632
Ratio of expenses to
average net assets 1.5% 1.6%* 1.6% 1.7% 1.2% 1.2% 1.1% 1.1% 1.2% 1.3%
Ratio of net
investment
income to average
net assets 3.0% 3.3%* 2.8% 3.2% 3.4% 4.3% 5.5% 5.6% 5.6% 4.6%
Portfolio turnover
rate 65.2% 42.1% 73.1% 73.1% 83.8% 63.2% 93.4% 84.7% 55.5% 45.0%
Average brokerage
commission paid per share $ .0633 $ .0936 $ .0952 $ .1000 $ .0966 N/A N/A N/A N/A N/A
</TABLE>
_______________
(a) Total return is not annualized for periods that are less than a full year
and does not reflect the effect of sales charges.
(b) Calamos Asset Management, Inc. became the Fund's investment adviser on
September 1, 1987.
*Annualized.
7
<PAGE>
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Eleven
Year Months Year Ended April 30, 9/22/88
Ended Ended -------------------------------------- to
3/31/96 3/31/95 1994 1993 1992 1991 1990 4/30/89
------- ------- ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.68 $12.97 $13.90 $13.57 $11.54 $10.46 $10.49 $10.00
Net income from investment operations:
Net investment income .37 .35 .31 .35 .29 .31 .33 .38
Net realized and unrealized
gain (loss) on investments 3.70 (.02) .34 1.97 2.02 1.09 .09 .49
------- ------- ------ ------ ------ ------ ------ -------
Total from investment operations 4.07 0.33 .65 2.32 2.31 1.40 .42 .87
------- ------- ------ ------ ------ ------ ------ -------
Less distributions:
Dividends from net investment
income (.42) (.32) (.29) (.36) (.28) (.32) (.28) (.38)
Dividends from net realized
capital gains (.71) (.30) (1.29) (1.63) - - (.17) -
------- ------- ------ ------ ------ ------ ------ -------
Total distributions (1.13) (.62) (1.58) (1.99) (.28) (.32) (.45) (.38)
------- ------- ------ ------ ------ ------ ------ -------
Net asset value, end of period $15.62 $12.68 $12.97 $13.90 $13.57 $11.54 $10.46 $10.49
======= ======= ====== ====== ====== ====== ====== =======
Total return (b) 33.0% 2.8% 4.5% 18.8% 20.2% 13.4% 3.8% 9.0%
Ratios and supplemental data:
Net assets, end of period (000) $ 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%*
Ratio of net investment
income to average net assets (a) 2.6% 3.0%* 2.3% 2.6% 2.3% 2.9% 3.0% 4.8%*
Portfolio turnover rate 86.4% 84.7% 155.2% 132.3% 111.6% 103.6% 103.0% 85.0%*
Average brokerage commission
paid per share $.0604 $.0924 $.1002 $.1010 $.1004 N/A N/A N/A
</TABLE>
_______________
(a) After the reimbursement and waiver of expenses by the Adviser equivalent to
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 for periods that are less than a full year
and does not reflect the effect of sales charges.
*Annualized.
8
<PAGE>
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Eleven
Year Months Year ended April 30, 9/4/90
Ended Ended ---------------------- to
3/31/96 3/31/95 1994 1993 1992 4/30/91
------- ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.13 $10.71 $10.96 $10.58 $10.60 $10.00
Income from investment operations:
Net investment income .53 .40 .36 .39 .59 .40
Net realized and unrealized
gain (loss) on investments .83 (.43) .11 .79 .46 .61
------ ------ ------ ------ ------ ------
Total from investment operations 1.36 (.03) .47 1.18 1.05 1.01
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (.42) (.36) (.41) (.41) (.51) (.40)
Dividends from net realized capital gains - (.19) (.31) (.39) (.56) (.01)
------ ------ ------ ------ ------ ------
Total distributions (.42) (.55) (.72) (.80) (1.07) (.41)
------ ------ ------ ------ ------ ------
Net asset value, end of period $11.07 $10.13 $10.71 $10.96 $10.58 $10.60
====== ====== ====== ====== ====== ======
Total return (c) 13.6% (0.2%) 4.2% 11.5% 10.5% 10.2%
Ratios and supplemental data:
Net assets, end of period (000) $1,620 $2,211 $3,004 $2,522 $1,410 $ 595
Ratio of expenses to average
net assets (a)(b) 2.2% 2.4%* 2.2% 2.3% 2.5% 2.6%*
Ratio of net investment income to average
net assets (a) 4.6% 4.0%* 3.2% 3.9% 5.3% 6.6%*
Portfolio turnover rate 81.1% 59.9% 79.4% 73.8% 97.0% 108.9%*
Average brokerage commission paid per share $.0636 $.0966 $.0977 $.1056 $.1200 N/A
</TABLE>
- -----------------
(a) After the reimbursement and waiver of expenses by the Adviser equivalent to
1.6%, 1.1%*, 1.0%, 0.7%, 1.25% and 4.8%* of average net assets,
respectively.
(b) Includes 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 for periods that are less than a full year
and does not reflect the effect of sales charges.
*Annualized.
9
<PAGE>
GROWTH FUND
<TABLE>
<CAPTION>
Eleven
Year Months Year ended April 30, 9/4/90
Ended Ended ---------------------------- to
3/31/96 3/31/95 1994 1993 1992 4/30/91
-------- ------- ------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.18 $ 14.57 $ 13.95 $ 14.04 $ 12.48 $ 10.00
Income from investment operations:
Net investment income (loss) (.09) .02 .01 (.02) (.01) .07
Net realized and unrealized
gain (loss) on investments 4.69 (.28) 1.21 .20 1.60 2.50
-------- ------- ------ ------ -------- -------
Total from investment operations 4.60 (.26) 1.22 .18 1.59 2.57
-------- ------- ------ ------ -------- -------
Less distributions:
Dividends from net investment income (.07) - (.01) - - (.08)
Dividends from net realized capital gains (2.97) (.13) (.59) (.27) (.03) (.01)
-------- ------- ------ ------ -------- -------
Total distributions (3.04) (.13) (.60) (.27) (.03) (.09)
-------- ------- ------ ------ -------- -------
Net asset value, end of period $ 15.74 $ 14.18 $14.57 $13.95 $ 14.04 $ 12.48
======== ======= ====== ====== ======== =======
Total return (b) 35.2% (1.8%) 8.9% 1.4% 12.7% 25.8%
Ratios and supplemental data:
Net assets, end of period (000) $ 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%*
Ratio of net investment income to average
net assets (a) (.08%) 0.2%* 0.1% (0.1%) (0.1%) 0.8%*
Portfolio turnover rate 252.4% 104.3% 87.3% 56.8% 47.3% 15.8%*
Average brokerage commission
paid per share $.0608 $.0910 $.0996 $.1011 $.1098 N/A
</TABLE>
_______________
(a) After the reimbursement and waiver of expenses by the Adviser equivalent to
1.2%, 1.6%*, 1.1%, 0.7%, 0.8% and 4.5%* of average net assets,
respectively.
(b) Total return is not annualized for periods that are less than a full year
and does not reflect the effect of sales charges.
*Annualized.
10
<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
11
<PAGE>
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.
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
12
<PAGE>
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 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
13
<PAGE>
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." he 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, 1996 for Strategic Income Fund, Convertible Fund
and Growth and Income Fund. Growth Fund invested less than 2% of its assets in
debt securities rated below investment grade during that period.
<TABLE>
<CAPTION>
Percentage
----------------------------------------
Rating Convertible Growth and Strategic
Category Fund Income Fund Income Fund
- --------------- ------------ ------------ ------------
<S> <C> <C> <C>
U.S. Govt. 7% 24% 0%
AAA 0 0 0
AA 6 5 0
A 11 6 10
BBB 13 8 23
BB 9 5 12
B 5 6 31
CCC 0 0 0
not rated 10 5 9
</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
14
<PAGE>
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
15
<PAGE>
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. 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
16
<PAGE>
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.
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
17
<PAGE>
"lock-in" the U.S. dollar value of a transaction at or near the time of the
purchase or sale of the foreign portfolio security at the exchange rate or rates
then prevailing between the U.S. dollar and the currency in which the security
is denominated. The Fund may accomplish such "transaction hedging" by
purchasing or selling such foreign currencies on a "spot" (i.e., cash) basis or
on a forward basis whereby the Fund purchases or sells a specific amount of
foreign currency, at a price set at the time of the contract, for receipt or
delivery at a specified date or at any time within a specified time period. In
so doing, the Fund will attempt to insulate itself against possible losses and
gains resulting from a change in the relationship between the U.S. dollar and
the foreign currency during the period between the date the security is
purchased or sold and the date on which payment is made or received. Similar
transactions may be entered into by using other currencies if the Fund seeks to
move investments denominated in one currency to investments denominated in
another.
When a Fund invests in foreign securities, in addition to the risk of change in
the market value of portfolio securities, the value of the portfolio in U.S.
dollars is subject to fluctuations in the exchange rate between the foreign
currencies and the U.S. dollar. When, in the opinion of the Adviser, it is
desirable to limit or reduce exposure in a foreign currency in order to moderate
potential changes in the U.S. dollar value of the portfolio, the Fund may enter
into a forward currency exchange contract to sell or buy such foreign currency
(or another foreign currency that acts as a proxy for that currency) by which
the U.S. dollar value of certain underlying foreign portfolio securities can be
approximately matched by an equivalent U.S. dollar liability. This technique is
known as "currency hedging" and, by locking in a rate of exchange, is intended
to moderate or reduce the risk of change in the U.S. dollar value of the Fund's
portfolio only during the period of the forward contract. Forward contracts are
usually entered into with banks and broker-dealers, are not exchange traded, and
are usually for less than one year, but may be renewed. A default on the
contract would deprive the Fund of unrealized profits or force the Fund to cover
its commitments for purchase or sale of currency, if any, at the current market
price.
Neither type of foreign currency transaction will eliminate fluctuations in the
prices of the Fund's portfolio securities or prevent loss if the price of such
securities should decline. In addition, such forward foreign currency exchange
contracts will diminish the benefit of the appreciation in the U.S. dollar value
of that foreign currency. For further information on forward foreign currency
exchange transactions, see the Statement of Additional Information.
At March 31, 1996, Convertible Fund had invested 12% of its net assets in
foreign securities.
WARRANTS
Each Fund may invest up to 5% of the value of its net assets at the time of
purchase in warrants (not including those acquired in units or attached to other
securities), including up to 2% of its net assets in warrants the underlying
common stock of which is not listed on the New York or American stock exchange
or, in the case of Global Growth and Income Fund, a recognized foreign exchange.
A warrant is a right to purchase common stock at a specific
18
<PAGE>
price (usually at a premium above the market value of the underlying common
stock at time of issuance) during a specified period of time. A warrant may
have a life ranging from less than a year to twenty years or longer, but a
warrant becomes worthless unless it is exercised or sold before expiration. In
addition, if the market price of the common stock does not exceed the warrant's
exercise price during the life of the warrant, the warrant will expire
worthless. Warrants have no voting rights, pay no dividends and have no rights
with respect to the assets of the corporation issuing them. The percentage
increase or decrease in the value of a warrant may tend to be greater than the
percentage increase or decrease in the value of the underlying common stock.
OPTIONS AND FUTURES
Consistent with its objective, each Fund may purchase and write both call
options and put options on securities and on indexes, and may enter into
interest rate and index futures contracts and options on such futures contracts
("derivative products") in order to provide additional revenue, or to hedge
against changes in security prices or interest rates. Each Fund will limit its
use of futures contracts and options on futures contracts to hedging
transactions to the extent required to do so by regulatory agencies.
An option on a security (or index) is a contract that gives the holder, in
return for a premium, the right to buy (call) from or sell (put) to the option
seller (writer) the security (or the cash value of the index) underlying the
option at a designated price during the term of the option. Prior to exercise
or expiration, an option may be closed out by an offsetting purchase or sale of
an option of the same series. A Fund may write a call or put option only if the
option is covered.
There are several risks associated with the use of derivative products. As the
writer of a covered call option, a Fund foregoes, during the option's life, the
opportunity to profit from increases in market value of the security covering
the call option above the call price. Because of low margin deposits required,
the use of futures contracts involves a high degree of leverage and may result
in losses in excess of the amount of the margin deposit. Since there can be no
assurance that a liquid market will exist when a Fund seeks to close out a
derivative product position, these risks may become magnified. Because of these
and other risks, successful use of derivative products depends on the Adviser's
ability to predict correctly changes in the level and the direction of stock
prices, interest rates and other market factors, but even a well-conceived
transaction may be unsuccessful because of an imperfect correlation between the
securities and derivative product markets. For a more complete explanation,
please refer to the Statement of Additional Information.
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.
19
<PAGE>
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
20
<PAGE>
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.
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.
21
<PAGE>
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 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.
22
<PAGE>
<TABLE>
<CAPTION>
Annual 12b-1 Fees
(as a % of average
Class Initial Sales Charge daily net assets)* Other Information
- ----- -------------------- ----------------- -----------------
<S> <C> <C> <C>
Class A Maximum initial sales .50% Initial sales charge waived
charge of 4.75% of or reduced for certain
offering price purchases**
Class C None 1.00%*** 1% deferred sales charge
on 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.
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
23
<PAGE>
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.
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
24
<PAGE>
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 who purchases shares of a Fund by exchange of Cash Account Shares or
Summit Fund Shares previously purchased through use of the exchange privilege;
(c) any employee benefit plan having more than 200 eligible employees or a
minimum of $1 million of plan assets invested in the Funds; (d) any employee
benefit plan through an intermediary that has signed a participation agreement
with CFS specifying certain asset minimums and qualifications, and marketing,
program and trading restrictions; (e) any insurance company separate account
used to fund annuity contracts for employee benefit plans that in the aggregate
have more than 200 eligible employees or a minimum of $1 million in plan assets
invested in the Funds; (f) any employee or registered representative of CFS, one
of its affiliates or a broker-dealer with a selling group agreement with CFS;
(g) any trustee of the Trust; (h) any member of the immediate family of a person
qualifying under (f) or (g), including a spouse, child, stepchild, sibling,
parent, stepparent, grandchild and grandparent, in each case including in-law
and adoptive relationships; (i) any trust, pension, profit sharing, or other
benefit plan in which any person qualifying under (f) is a participant; (j) any
401(k) plan (cash or deferred arrangement intended to qualify under section
401(k) of the Internal Revenue Code) or other qualified retirement plan to which
a person qualifying under (f), (g) or (h) makes voluntary contributions and has
investment self-direction, provided the purchase is for the account of such
person; (k) any company exchanging shares with a Fund pursuant to a merger,
acquisition or exchange offer; and (l) any investment advisory client of the
Adviser or brokerage customer of CFS who has, in writing, given investment
discretion to CFS, to the extent the investment is from the account managed by
the Adviser or CFS.
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
25
<PAGE>
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 value as determined by a method the board of trustees believes represents
a fair value. For
26
<PAGE>
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
27
<PAGE>
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 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.
28
<PAGE>
RETIREMENT PLANS
You may use the Funds as investments for your Individual Retirement Account
("IRA"), profit sharing or pension plan, Section 40l(k) plan, Section 403(b)(7)
plan in the case of employees of public school systems and certain non-profit
organizations, and certain other qualified plans. A master IRA plan and
information regarding plan administration, fees, and other details are available
from CFS and authorized broker-dealers.
SYSTEMATIC WITHDRAWAL PLAN
You may request that a Fund periodically redeem shares having a specified
redemption value and send you a check for the proceeds. In order to initiate
the Systematic Withdrawal Plan, your account must have a share balance of
$25,000 or more. Withdrawal proceeds are likely to exceed dividends and
distributions paid on shares in your account and therefore may deplete and
eventually exhaust your account. The periodic payments are proceeds of
redemption and are taxable as such. Because a sales charge is imposed on
purchases of shares of the Funds, you should not purchase shares while
participating in the Systematic Withdrawal Plan.
EXCHANGE PRIVILEGE
You may exchange shares of any Fund for shares of another Fund or for Cash
Account Shares (or for Summit Fund Shares if your Fund shares are held in a
brokerage account with Merrill Lynch) or exchange Cash Account Shares or Summit
Fund Shares for shares of a Fund, without payment of any sales charge as
described above under "How to Purchase Shares - Purchase by Exchange" and "How
to Redeem Shares - Redemption by Exchange."
DIVIDENDS AND DISTRIBUTIONS
Shareholders may receive two kinds of distributions from a Fund: dividends and
capital gains distributions. All dividends and capital gains distributions are
paid in the form of additional shares of the same class credited to your account
at the net asset value per share next computed after the dividend or
distribution is payable to shareholders (without a sales charge) unless you
requested on the account application or in writing that distributions be made in
cash. 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
29
<PAGE>
long you owned the shares and on your individual tax position. You may be
subject to state and local taxes on your investment in a Fund, depending on the
laws of your home state and locality.
Dividends and distributions paid by a Fund are subject to taxation as of the
date of payment, except that distributions declared in October, November or
December to shareholders of record in one of those months will be treated as
received by shareholders on December 31 of the year in which they are declared,
provided they are paid prior to February 1 of the next year.
Dividends from net investment income and capital gains distributions may be
taxed to shareholders at different rates depending on their individual tax
situations. You will be advised annually as to the source of your distributions
for tax purposes. If you are not subject to income taxation, you will not be
required to pay tax on amounts distributed to you.
Each Fund is required by law to withhold federal income tax from reportable
payments (which may include redemptions, capital gains distributions and other
taxable distributions, if any) paid to any non-exempt shareholder who has failed
to certify to the Fund that the social security or taxpayer identification
number provided to the Fund is correct and that the shareholder is not subject
to backup withholding.
Please refer to the Statement of Additional Information for a more complete
explanation.
MANAGEMENT OF THE FUNDS
THE TRUSTEES
The board of trustees of CFS Investment Trust has overall responsibility for the
conduct of the affairs of the Trust. The trustees serve indefinite terms of
unlimited duration. The trustees appoint their own successors, provided that at
least two-thirds of the trustees, after any such appointment, have been elected
by the shareholders. Shareholders may remove a trustee, with or without cause,
upon the declaration in writing or vote of two-thirds of the Trust's outstanding
shares. A trustee may be removed with or without cause upon the written
declaration of a majority of the trustees.
THE ADVISER
Each Fund's investments are managed by its investment adviser, Calamos Asset
Management, Inc. ("CAM"). At March 31, 1996, CAM managed approximately $1.6
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
30
<PAGE>
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 each class of shares of each Fund, as a percentage of the
average net assets of that class, to 2.00% for Class A shares and 2.50% for
Class C shares through August 31, 1997. Subject to those expense limitations,
each Fund pays all of its operating expenses not specifically assumed by CAM.
John P. Calamos and 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 trustee of
the Trust and president of CAM and CFS; John P. Calamos, Jr. has been an
employee of CAM; and Nick P. Calamos has been vice president of the Trust since
1992 and managing director of CAM and CFS.
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 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
31
<PAGE>
finance distribution of the shares of the other Funds.
PERFORMANCE INFORMATION
Information about the performance of each Fund is contained in the Funds' annual
report, which may be obtained from the Trust upon request at no charge.
Each Fund may provide information about its investment performance from time to
time in advertisements, sales literature and otherwise. 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." Total Return for a period is the percentage
change in value during a period of an investment in Fund shares, including the
value of all shares acquired through reinvestment of all dividends and capital
gains distributions. "Average Annual Total Return" is the average annual
compounded rate of change in value represented by the Total Return for the
period. All of these calculations assume the reinvestment of dividends and
distributions in additional shares of the Fund. Quotations of Average Annual
Total Return will take into account the effect of the sales charge on the amount
available for investment; quotations of Total Return will indicate whether the
effect of the sales charge is included. Income taxes payable by a shareholder
are not taken into account. Please refer to the Statement of Additional
Information for a more complete explanation.
In advertising and sales literature, a Fund's performance may be compared with
that of market indices and other mutual funds, comparative performance as
computed in a ranking determined by Lipper Analytical Services, Inc., an
independent service that monitors the performance of over 1,000 mutual funds, or
that of another service.
Performance of a Fund will vary from time to time, and past results are not
necessarily indicative of future results. Performance information supplied by a
Fund may not provide a basis for comparison with other investments using
different reinvestment assumptions or time periods.
[Performance graphs will be inserted here.]
Growth of a $10,000 Investment over Time (Based on a hypothetical investment
made in the Calamos Convertible Fund from 6/21/85 through 3/31/96. Returns are
adjusted for load. Past performance is not an indication of future results.)
<TABLE>
<CAPTION>
CONVERTIBLE FUND LB G/C S&P 500 INDEX
Beginning Balance 9,525 10,000 10,000
<S> <C> <C> <C> <C>
Sep-85 9,335 10,200 9,586
Dec-85 1985 10,197 10,973 11,232
Dec-85 11,593 11,909 12,811
Jun-86 12,005 12,066 13,541
Sep-86 11,534 12,310 12,600
Dec-86 1986 11,842 12,687 13,278
Mar-87 13,034 12,875 16,108
Jun-87 13,019 12,631 16,939
Sep-87 13,394 12,264 18,059
Dec-87 1987 11,312 12,979 13,966
Mar-88 12,023 13,443 14,770
Jun-88 12,526 13,576 15,735
Sep-88 12,074 13,830 15,794
Dec-88 1988 12,028 13,963 16,271
Mar-89 12,543 14,117 17,413
Jun-89 13,247 15,252 18,945
Sep-89 14,262 15,395 20,963
Dec-89 1989 14,022 15,951 21,386
Mar-90 13,677 15,767 20,732
Jun-90 14,158 16,335 22,038
Sep-90 12,728 16,435 18,997
Dec-90 1990 13,523 17,271 20,703
Mar-91 15,642 17,737 23,717
Jun-91 15,623 18,005 23,667
Sep-91 16,715 19,041 24,940
Dec-91 1991 18,492 20,057 27,025
Mar-92 18,562 19,756 26,336
Jun-92 18,174 20,557 26,855
Sep-92 18,872 21,562 27,688
Dec-92 1992 19,901 21,579 29,102
Mar-93 20,987 22,582 30,357
Jun-93 21,671 23,260 30,506
Sep-93 22,807 24,030 31,286
Dec-93 1993 23,395 23,960 32,009
Mar-94 22,555 23,210 30,790
Jun-94 21,610 22,922 30,910
Sep-94 22,470 23,037 32,434
Dec-94 1994 21,749 23,274 32,434
Mar-95 22,984 24,274 35,590
Jun-95 25,281 25,849 38,981
Sep-95 26,941 26,343 42,096
Dec-95 1995 28,112 27,570 44,596
Mar-96 29,359 26,925 47,027
</TABLE>
Growth of a $10,000 Investment over Time. (Based on a hypothetical investment
made in the Calamos Growth and Income Fund from 9/22/88 through 3/31/96. Returns
are adjusted for load. Past performance is not an indication of future results.)
<TABLE>
<CAPTION>
GROWTH & INCOME LB G/C INT S&P 500 INDEX
Sep-88 Beginning Balance 9,525 10,000 10,000
<S> <C> <C> <C> <C>
Dec-88 1988 9,611 10,096 10,302
Mar-89 10,025 10,207 11,025
Jun-89 10,540 11,028 11,995
Sep-89 11,544 11,131 13,273
Dec-89 1989 11,188 11,533 13,541
Mar-90 10,933 11,401 13,127
Jun-90 11,639 11,811 13,954
Sep-90 10,225 11,883 12,028
Dec-90 1990 10,801 12,488 13,108
Mar-91 12,389 12,825 15,017
Jun-91 12,292 13,019 14,985
Sep-91 13,650 13,767 15,791
Dec-91 1991 15,193 14,502 17,112
Mar-92 15,094 14,285 16,675
Jun-92 14,671 14,863 17,004
Sep-92 15,427 15,590 17,531
Dec-92 1992 16,729 15,603 18,427
Mar-93 17,682 16,328 19,221
Jun-93 18,275 16,818 19,315
Sep-93 19,474 17,375 19,809
Dec-93 1993 19,201 17,324 20,267
Mar-94 18,563 16,782 19,495
Jun-94 17,626 16,574 19,571
Sep-94 18,372 16,657 20,534
Dec-94 1994 18,182 16,719 20,536
Mar-95 18,817 17,551 22,534
Jun-95 20,418 18,690 24,682
Sep-95 22,130 19,047 26,654
Dec-95 1995 23,480 19,935 28,237
Mar-96 25,023 19,468 29,776
</TABLE>
* The Lehman Brothers Government/Corporate Bond Index is an unmanaged index
comprising Intermediate and long-term government and investment-grade
corporate debt securities. Source: Frank Russell Company.
** The S&P 500 Stock Index is an unmanaged index generally considered
representative of the U.S. stock market. Source: Frank Russell Company.
Returns are rounded to the nearest $100.
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 3/31/96. Returns
are adjusted for load. Past performance is not an indication of future results.)
<TABLE>
<CAPTION>
STRG FND 30-DAY TBILLS LB G/C INT
<S> <C> <C> <C> <C>
Beginning Balance 9525.00 10,000 10,000
Dec-90 1990 9782.18 10,162 10,509
Mar-91 10403.34 10,302 10,793
Jun-91 10540.67 10,432 10,956
Sep-91 10751.48 10,572 11,586
Dec-91 1991 11149.29 10,684 12,204
Mar-92 11512.75 10,784 12,021
Jun-92 11633.64 10,876 12,508
Sep-92 12031.51 10,956 13,120
Dec-92 1992 12483.89 12,030 13,130
Mar-93 12842.18 11,105 13,741
Jun-93 13172.22 11,184 14,153
Sep-93 13751.80 11,261 14,622
Dec-93 1993 13997.96 11,345 14,579
Mar-94 13757.19 11,429 14,123
Jun-94 13140.87 11,531 13,948
Sep-94 13306.45 11,651 14,017
Dec-94 1994 12959.15 11,778 14,069
Mar-95 13391.98 11,917 14,770
Jun-95 14105.78 12,084 15,729
Sep-95 14493.83 12,247 16,029
Dec-95 1995 14833.27 12,410 16,776
Mar-96 15244.00 12,551 16,383
</TABLE>
Growth of a $10,000 Investment over Time. (Based on a hypothetical investment
made in the Calamos Growth Fund from 9/4/90 through 3/31/96. Returns are
adjusted for load. Past performance is not an indication of future results.)
<TABLE>
<CAPTION>
GROWTH FND S&P 500
9525.00 10,000
<S> <C> <C> <C>
Dec-90 1990 10477.50 10,898
Mar-91 12371.83 12,485
Jun-91 11927.68 12,459
Sep-91 12937.96 13,129
Dec-91 1991 14689.76 14,226
Mar-92 14331.33 13,864
Jun-92 13386.89 14,137
Sep-92 13990.64 14,575
Dec-92 1992 14877.65 15,320
Mar-93 14856.82 15,980
Jun-93 14727.57 16,058
Sep-93 15169.39 16,469
Dec-93 1993 15524.36 16,850
Mar-94 14850.60 16,208
Jun-94 14774.86 16,271
Sep-94 15356.99 17,072
Dec-94 1994 14635.21 17,073
Mar-95 15018.65 18,735
Jun-95 16585.10 20,520
Sep-95 18915.31 22,160
Dec-95 1995 18648.60 23,476
Mar-96 19790.00 24,755
</TABLE>
* The 30-Day Treasury Bill Index is an unmanaged index generally considered
representative of the performance of short-term money instruments. U.S. Treasury
bills are backed by the full faith and credit of the U.S. government and offer a
guarantee as to the repayment of principal and interest at maturity. Source:
Frank Russell Company.
** The Lehman Brothers Government/Corporate Bond Index is an unmanaged index
comprising intermediate and long-term government and investment-grade corporate
debt securities. Source: Frank Russell Company.
*** The S&P 500 Stock Index is an unmanaged index generally considered
representative of the U.S. stock market. Source: Frank Russell Company.
Returns are rounded to the nearest $100.
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
32
<PAGE>
factor in the selection of broker-dealers to execute portfolio transactions for
that Fund.
THE TRUST AND ITS SHARES
Each Fund is a series of CFS Investment Trust (the "Trust"), which was organized
as a Massachusetts business trust on December 21, 1987 and is an open-end
diversified management investment company. Growth and Income Fund was named
"Calamos Small/Mid Cap Convertible Fund" from May 1, 1992 through April 29,
1994, "Calamos Convertible Total Return Fund" from September 1, 1990 through
April 30, 1992, and "Kalliston Convertible Total Return Fund" prior to September
1, 1990. Convertible Fund, which became a series of the Trust on April 30,
1992, was named Calamos Convertible Income Fund before that date and was a
series of Calamos Investment Trust (named Noddings-Calamos Convertible Income
Fund and Noddings-Calamos Investment Trust, respectively, before September 1,
1987).
SHARES
Under the terms of the Agreement and Declaration of Trust, the trustees may
issue an unlimited number of shares of beneficial interest without par value for
each series of shares authorized by the trustees and the trustees may divide the
shares of any series into two or more classes of shares of that series.
Currently each Fund offers two classes of shares (Class A and Class C). All
shares issued will be fully paid and non-assessable and will have no preemptive
or conversion rights.
Each Fund's shares are entitled to participate pro rata in any dividends and
other distributions declared by the Trust's board of trustees with respect to
shares of the Fund. All shares of a Fund have equal rights in the event of
liquidation of the Fund.
Under Massachusetts law, the shareholders of the Trust may, under certain
circumstances, be held personally liable for the Trust's obligations. However,
the Trust's Declaration of Trust disclaims liability of the shareholders,
trustees, and officers of the Trust for acts or obligations of a Fund, which are
binding only on the assets and property of the Fund. The Declaration of Trust
requires that notice of such disclaimer be given in each agreement, obligation,
or contract entered into or executed by the Trust or the board of trustees. The
Declaration of Trust provides for indemnification out of a Fund's assets of all
losses and expenses of any Fund shareholder held personally liable for the
Fund's obligations. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is remote, since it is limited to circumstances
in which the disclaimer is inoperative and the Fund itself is unable to meet its
obligations.
VOTING RIGHTS
Each share has one vote and fractional shares have fractional votes. As a
business trust, the Trust is not required to hold annual shareholder meetings.
However, special meetings may be called for purposes such as electing or
removing trustees, changing fundamental policies or approving an investment
advisory agreement. On any matters submitted to a vote of shareholders, shares
are voted by individual series or class and not in the aggregate, except when
voting in the aggregate is required by the 1940 Act or other applicable law.
Shares of a Fund are not entitled to vote on any matter not affecting that Fund.
All shares of the Trust vote together in the election of trustees.
33
<PAGE>
CERTAIN SHAREHOLDERS
At May 31, 1996, the Calamos Financial Services, Inc. 401(k) Profit Sharing Plan
and Trust, of which John P. Calamos and Nick P. Calamos are the trustees, owned
107,565 Class A shares (27.1%) of Growth and Income Fund and 75,927 Class A
shares (34.5%) of Growth Fund. Messrs. John Calamos and Nick Calamos owned
beneficially an additional 44,731 Class A shares (11.3%) and 393 Class A shares
(0.1%), respectively, of Growth and Income Fund, and John P. Calamos owned
beneficially an additional 63,426 Class A shares (27.8%) of Growth Fund. No
other person is known to own beneficially 25% or more of any Fund. Under the
1940 Act, a holder of more than 25% of a Fund's outstanding shares is presumed
to control the Fund. The address of Messrs. John Calamos and Nick Calamos is
1111 East Warrenville Road, Naperville, Illinois 60563-1493.
SHAREHOLDER INQUIRIES
Inquiries regarding the Funds may be directed to the address or telephone
numbers on the cover of this prospectus.
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.
34
<PAGE>
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 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.
35
<PAGE>
TABLE OF CONTENTS
Page
----
Key Features............................2
Expenses................................4
Financial Highlights....................7
Investment Objectives and Policies.....11
Common Investment Practices............13
Risk of Investment.....................21
Investment Restrictions................22
How to Purchase Shares.................22
How to Redeem Shares...................27
Shareholder Services...................28
Dividends and Distributions............29
Taxes..................................29
Management of the Funds................30
Performance Information................32
Portfolio Transactions.................32
The Trust and Its Shares...............33
Appendix--Description of Bond Ratings..34
INVESTMENT ADVISER AND
TRANSFER AGENT:
Calamos Asset Management, Inc./TM/
1111 East Warrenville Road
Naperville, Illinois 60563-1493
DISTRIBUTOR:
Calamos Financial Services, Inc./TM/
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 CFS INVESTMENT TRUST,
NOR IS ANY PERSON AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN SUPPLEMENTARY INFORMATION
OR IN SUPPLEMENTAL SALES MATERIAL AUTHORIZED BY CFS INVESTMENT TRUST, AND NO
PERSON IS ENTITLED TO RELY UPON ANY INFORMATION OR REPRESENTATION NOT CONTAINED
HEREIN OR THEREIN. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
CALAMOS FAMILY OF FUNDS/TM/
CONVERTIBLE FUND
GROWTH AND INCOME FUND
STRATEGIC INCOME FUND
GROWTH FUND
GLOBAL GROWTH AND INCOME FUND
Prospectus
JUNE 26, 1996
1111 East Warrenville Road
Naperville, Illinois 60563-1493
(708) 245-7200
(800) 823-7386
<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--Calamos Global Growth and Income Fund.
(ii) Financial statements included in Part B of this registration
statement:
The following unaudited schedule and statements of Calamos
Global Growth and Income Fund:
Schedule of investments - September 30, 1996
Statement of assets and liabilities - September 30, 1996
Statement of operations - period ended September 30, 1996
Statement of changes in net assets - period ended September
30,1996
as well as the notes to financial statements relating to that
Fund, all of which are incorporated by reference to registrant's
semiannual report to shareholders for the six-month period ended
September 30, 1996. (A copy of that 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.)
(iii) Financial Statements included in Part C of this amendment:
None
Note: Schedule I for Calamos Global Growth and Income Fund is omitted as the
required information is presented in the schedule of investments.
Schedules II, III, IV, V, VI and VII are omitted as the required
information is not present.
(B) EXHIBITS:
--------
As used herein, the term "Registration Statement" means the
registration statement of registrant on form N-1A under the
Securities Act of 1933, registration No. 33-19228, and the terms
"Pre-effective Amendment" and "Post-effective Amendment" refer to
a pre-effective and post-effective amendment to the Registration
Statement.
1.1 Agreement and Declaration of Trust (exhibit 1 to Registration
Statement*)
1.2 Amendment no. 1 to Agreement and Declaration of Trust (exhibit
1.2 to Pre-effective Amendment No. 3*)
1.3 Amendment no. 2 to Agreement and Declaration of Trust (exhibit
1.3 to Post-effective Amendment No. 4*)
1.4 Amendment no. 3 to Agreement and Declaration of Trust (exhibit
1.4 to Post-effective Amendment No. 8*)
C-1
<PAGE>
1.5 Amendment no. 4 to Agreement and Declaration of Trust (exhibit
1.5 to Post-effective Amendment No. 13*)
1.6 Amendment no. 5 to Agreement and Declaration of Trust (exhibit
1.6 to Post-effective Amendment No. 13*)
1.7 Amendment no. 6 to Agreement and Declaration of Trust (exhibit
1.7 to Post-effective Amendment No. 13*)
2 Bylaws (exhibit 2 to Registration Statement*)
3 None
4 None
5.1 Form of management agreement with Calamos Asset Management, Inc.
dated July 5, 1988 - Calamos Growth and Income Fund (exhibit 5 to
Pre-effective Amendment No. 3*)
5.2 Notification dated August 22, 1990 pursuant to section 1(b) of
management agreement for series designated Calamos Strategic
Income Fund and Calamos Growth Fund (exhibit 5.1 to Post-
effective Amendment No. 5*)
5.3 Form of notification pursuant to section 1(b) of management
agreement for series designated Calamos Convertible Fund (exhibit
5.2 to Post-effective Amendment No. 8*)
5.4 Form of notification pursuant to section 1(b) of management
agreement for series designated Calamos Global Growth and Income
Fund (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. 15*)
7 None
8 Custody agreement with Prudential-Bache Securities, Inc. dated
April 20, 1990 (exhibit 8 to Post-Effective Amendment No. 4*)
9.1 Form of transfer agency agreement with Calamos Asset Management,
Inc. (exhibit 9 to Registration Statement*)
9.2 Form of appointment of transfer agent - Calamos Strategic Income
Fund and Calamos Growth Fund (exhibit 9.1 to Post-effective
Amendment No. 4*)
9.3 Form of appointment of transfer agent - Calamos Convertible Fund
(exhibit 9.3 to Post-effective Amendment No. 8*)
9.4 Form of appointment of transfer agent dated June 19, 1996 -
Calamos Global Growth and Income Fund (exhibit 9.4 to Post-
effective Amendment No. 13*)
C-2
<PAGE>
9.5 Use of name agreement dated August 23, 1990 (exhibit 9.2 to Post-
effective Amendment No. 5*)
10 Opinion of Goodwin, Procter & Hoar dated April 12, 1996 (exhibit
10 to Post-effective Amendment No. 13*)
11 Consent of independent auditors
12 None
13.1 Subscription agreement - Calamos Growth and Income Fund (exhibit
13.1 to Pre-effective Amendment No. 3*)
13.2 Organizational expense agreement - Calamos Growth and Income Fund
(exhibit 13.2 to Pre-effective Amendment No. 2*)
13.3 Form of subscription agreement - Calamos Strategic Income Fund
and Calamos Growth Fund (exhibit 13.3 to Post-effective Amendment
No. 4*)
13.4 Form of organizational expense agreement - Calamos Strategic
Income Fund and Calamos Growth Fund (exhibit 13.4 to Post-
effective Amendment No. 4*)
13.5 Form of subscription agreement - Calamos Global Growth and Income
Fund (exhibit 13.5 to Post-effective Amendment No. 4*)
13.6 Form of organizational expense 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 (exhibit 14 to Post-
effective Amendment No. 8*)
15 Form of distribution plan dated June 24, 1996 (exhibit 15 to
Post-effective Amendment No. 13*)
16 Schedule of computation of performance quotations (exhibit 16 to
Post-effective Amendment No. 8*)
17 Not applicable
18.1 Application forms and redemption request (exhibit 17 to Post-
effective Amendment No. 8*)
18.2 Form of automatic investment plan application (exhibit 17.1 to
Post-effective Amendment No. 4*)
18.3 Form of systematic withdrawal application (exhibit 17.2 to Post-
effective Amendment No. 4*)
18.4 Form of redemption request (exhibit 17.3 to Post-effective
Amendment No. 4*)
____________________
* Incorporated by reference.
C-3
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
-------------------------------------------------------------
The information in the prospectuses under the captions "Management of
the Funds - Adviser" and "The Trust and Its Shares - Certain Shareholders" and
in the Statement of Additional Information under the caption "Management" and
"Certain Shareholders" is incorporated by reference.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
-------------------------------
As of November 30, 1996 the respective series of registrant had the
following numbers of record holders:
<TABLE>
<CAPTION>
Series Record Holders
- ------ --------------
<S> <C>
Calamos Strategic Income Fund 60
Calamos Convertible Fund 735
Calamos Growth and Income Fund 231
Calamos Growth Fund 116
Calamos Global Growth and Income Fund 76
</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 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
C-4
<PAGE>
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.
(b) The information in the statement of additional information under
the caption "Management -- Trustees and Officers" is incorporated
by reference.
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------
John P. Calamos, President
CFS Investment Trust
1111 East Warrenville Road
Naperville, Illinois 60563-1493
ITEM 31. MANAGEMENT SERVICES
-------------------
None
ITEM 32. UNDERTAKINGS
------------
(a) Not applicable
(b) 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.
C-5
<PAGE>
(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-6
<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 December 26,
1996.
CFS INVESTMENT TRUST
By /s/ John P. Calamos
--------------------------
John P. Calamos, President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ John P. Calamos Trustee and President )
- ------------------------- (principal executive )
John P. Calamos officer) )
)
)
/s/ Richard J. Dowen Trustee )
- ------------------------- )
Richard J. Dowen )
)
)
/s/ Robert Frost Trustee )
- ------------------------- )
Robert Frost )
)
) December 26, 1996
/s/ William A. Kaun Trustee )
- ------------------------- )
William A. Kaun )
)
)
/s/ Dennis A. Wallestad Trustee )
- ------------------------- )
Dennis A. Wallestad )
)
)
/s/ Richard A. Haas Treasurer (principal )
- ------------------------- financial and accounting )
Richard A. Haas officer) )
C-7
<PAGE>
Exhibit Index
-------------
Exhibit
- -------
11 Consent of independent auditors
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Financial Highlights"
and to the incorporation by reference of our report dated May 10, 1996 in the
Registration Statement (Form N-1A) and in the related Prospectus of CFS
Investment Trust, filed with the Securities and Exchange Commission in this
Post-Effective Amendment No. 16 to the Registration Statement under the
Securities Act of 1933 (Registration No. 33-19228) and in this Amendment No. 19
to the Registration Statement under the Investment Company Act of 1940
(Registration No. 811-5443).
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
December 26, 1996
