<PAGE>
As filed with the Securities and Exchange Commission on July 29, 1998
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. 19 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 22 [X]
________________________________________________________________________________
CALAMOS INVESTMENT TRUST
(formerly named CFS Investment Trust)
(Registrant)
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Telephone number: 630/245-7200
________________________________________________________________________________
John P. Calamos Cameron S. Avery
Calamos Asset Management, Inc. Bell, Boyd & Lloyd
1111 East Warrenville Road 70 West Madison Street, Suite 3300
Naperville, Illinois 60563-1493 Chicago, Illinois 60602-4207
(Agents for service)
________________________________________________________________________________
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b) of rule 485
X on August 1, 1998 pursuant to paragraph (b) of rule 485
_____
_____ 60 days after filing pursuant to paragraph (a)(1) of rule 485
_____ on _____________ pursuant to paragraph (a)(1) of rule 485
_____ 75 days after filing pursuant to paragraph (a)(2) of rule 485
_____ on _____________ pursuant to paragraph (a)(2) of rule 485
_____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
________________________________________________________________________________
Amending Parts A, B and C and filing exhibits.
________________________________________________________________________________
<PAGE>
CALAMOS INVESTMENT TRUST
Cross-reference sheet pursuant to rule 495(a) of Regulation C
Item Location or caption*
- ---- ----------------------------------------
Part A (prospectus)
-------------------
1(a) & (b) Front cover
2(a) Expenses
(b) & (c) Key Features
3(a) Financial Highlights
(b) Not applicable
(c) Performance Information
(d) Financial Highlights
4(a)(i) The Trust and Its Shares
(a)(ii)&(b) Investment Objectives and Policies; Common Investment Practices;
Investment Restrictions
(c) Common Investment Practices; Risk of Investment
5(a) Management of the Funds -- The Trustees
(b) Management of the Funds -- The Adviser; rear cover
(c) Management of the Funds -- The Adviser
(d) Not applicable
(e) Rear cover
(f) Expenses; Management of the Funds -- The Adviser
(g) Portfolio Transactions
5A The information called for is contained in the registrant's
annual report to shareholders
6(a) The Trust and Its Shares -- Shares
(b) The Trust and Its Shares -- Certain Shareholders
(c) & (d) Not applicable
(e) The Trust and Its Shares -- Shareholder Inquiries
(f) Dividends and Distributions
(g) Taxes
- --------------------------
*References are to captions within the part of the registration statement to
which the particular item relates except as otherwise indicated.
2
<PAGE>
Item Location or caption*
- ---- ----------------------------------------
Part A (prospectus) continued
-----------------------------
7 How to Purchase Shares
(a) How to Purchase Shares; Management of the Funds -- The Adviser;
Rear Cover
(b) How to Purchase Shares
(c) How to Purchase Shares; Shareholder Services
(d) How to Purchase Shares
(e) & (f) Management of the Funds -- Distribution Plan
8(a)-(d) How to Redeem Shares
9 Not applicable
Part B (Statement of Additional Information)
-------------------------------------------
10(a) & (b) Front cover
11 Table of Contents
12 General Information
13(a)-(c) Investment Practices; Investment Restrictions
(d) Portfolio Transactions
14(a) & (b) Management
(c) Not applicable
15(a)-(c) Certain Shareholders
16(a) Management
(b) Management; Investment Advisory Services; Part A -
Management of the Funds -- The Adviser
(c) Distribution Plan
(d) & (e) Not applicable
(f) Distribution Plan
(g) Custodian
(h) Custodian; Independent Auditors
(i) Transfer Agent
17(a)-(c) Portfolio Transactions
(d) & (e) Not applicable
18 Not applicable
19(a) Purchasing and Redeeming Shares
(b) Purchasing and Redeeming Shares; Financial Statements
(c) Purchasing and Redeeming Shares
20 Taxation
3
<PAGE>
21(a)-(c) Distributor
22(a) Not applicable
(b) Performance Information
23 Financial Statements
Part C (Other Information)
--------------------------
24 Financial statements and exhibits
25 Persons controlled by or under common control with
registrant
26 Number of holders of securities
27 Indemnification
28 Business and other connections of investment adviser
29 Principal underwriters
30 Location of accounts and records
31 Management services
32 Undertakings
4
<PAGE>
SUPPLEMENT DATED AUGUST 1, 1998 TO PROSPECTUS OF SAME DATE
CALAMOS FAMILY OF FUNDS(R)
INSTITUTIONAL SHARES
MINIMUM INITIAL INVESTMENT: $5 MILLION
----------------
This prospectus, as supplemented, offers Class I shares ("Institutional
Shares") of each of Convertible Fund, Growth and Income Fund, Strategic Income
Fund, Growth Fund and Global Growth and Income Fund. Each of those Funds also
currently offers two other classes of shares, Class A and Class C, that have
substantially lower minimum investment requirements but bear certain expenses
not borne by the Institutional Shares.
Institutional Shares of each Fund are offered without any sales charge and are
not subject to any 12b-1 charges. As a result of the relatively lower expenses
for Institutional Shares, the level of income dividends per share (as a
percentage of net asset value) and, therefore, the overall investment return,
will be higher for Institutional Shares than for Class A or Class C shares.
All classes of shares of a Fund represent interests in the same portfolio of
investments of the Fund. The minimum initial investment in Institutional
Shares is $5 million. Shares are redeemable at net asset value, which may be
more or less than original cost.
EXPENSES
The following tables show certain information concerning shareholder
transaction expenses and projected annual fund operating expenses for
Institutional Shares of the Funds:
<TABLE>
<CAPTION>
Global
Growth Growth
and Strategic and
Convertible Income Income Growth Income
Fund Fund Fund Fund Fund
----------- ------ --------- ------ ------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases
(as a percentage of offering
price)........................... None None None None None
Maximum sales charge on reinvested
dividends........................ None None None None None
Deferred sales charge............. None None None None None
Exchange fee...................... None None None None None
Redemption fees (b)............... None None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management fees................... .75% .75% .75% 1.00% 1.00%
12b-1 fees........................ None None None None None
Other expenses (after expense re-
imbursement)..................... .15 .75 .75 .50 .50(a)
---- ---- ---- ---- ----
Total Fund operating expenses (af-
ter expense reimbursement)....... .90% 1.50% 1.50% 1.50% 1.50%
</TABLE>
<PAGE>
- ------------------------------
(a) The Adviser has voluntarily undertaken to limit the annual ordinary
operating expenses of Institutional Shares of each Fund, as a percentage
of the average net assets of the class, to 1.50% through August 31, 1999,
and the percentages shown for "Other expenses" take into account expected
expense reimbursements. Absent that limitation, the "Other expenses" and
"Total Fund operating expenses," respectively, for Institutional Shares
would be 1.70% and 2.70% 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 .09% of average
net assets.
(b) A service charge of $9 is deducted from proceeds of redemption paid by
wire.
EXAMPLES
You would pay the following expenses on a $1,000 investment, assuming (1) a 5%
annual return as required by the Securities and Exchange Commission for
purposes of this example and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
Convertible Fund......................................... 9 29 50 111
Growth and Income Fund................................... 15 49 82 179
Strategic Income Fund.................................... 15 49 82 179
Growth Fund.............................................. 15 49 82 179
Global Growth and Income Fund............................ 15 49 82 179
</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.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below reflect the results of the operations of Institutional Shares
of each Fund. Information in the tables was audited by Ernst & Young LLP,
independent auditors. These tables should be read in conjunction with each
Fund's financial statements and notes thereto. The Funds' annual report, which
may be obtained from the Trust upon request at no charge, contains additional
performance information.
<TABLE>
<CAPTION>
Global Growth
Convertible Growth and and Income
Fund Income Fund Growth Fund Fund
(6/25/97- (9/18/97- (6/25/97- (9/18/97-
3/31/98) 3/31/98) 3/31/98) 3/31/98)
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period.................. $15.88 $17.96 $24.32 $ 6.18
Net income from investment
operations:
Net investment income..... .37 .22 (.11) .07
Net realized and
unrealized gain on in-
vestments................ 2.49 2.14 1.07 .58
------ ------ ------ ------
Total from investment
operations............. 2.86 2.36 .96 .65
------ ------ ------ ------
Less distributions:
Dividends from net invest-
ment income.............. (.54) (.38) -- (.17)
Dividends from net real-
ized capital gains....... (.63) (1.33) (4.98) (.10)
Dividends in excess of net
realized capital gains... -- -- -- --
Distributions from paid in
capital.................. (.10) -- (.18) --
------ ------ ------ ------
Total distributions..... (1.27) (1.71) (5.16) (.27)
------ ------ ------ ------
Net asset value, end of pe-
riod....................... $17.47 $18.61 $20.12 $ 6.56
------ ------ ------ ------
Total return (a)............ 18.8% 14.4% 6.4% 10.9%
Ratios and supplemental da-
ta:
Net assets, end of period
(000).................... 35,951 $1,838 $1,508 $ 458
Ratio of expenses to aver-
age net assets........... 0.9%* 1.5%* 1.5%* 1.5%*(b)
Ratio of net investment
income to average net as-
sets..................... 2.9%* 2.4%* (1.1)%* 1.9%*(b)
<CAPTION>
Convertible Growth and Global Growth
Fund (Year Income Fund Growth Fund and Income
Ended (Year Ended (Year Ended Fund (Year
3/31/98) 3/31/98) 3/31/98) Ended 3/31/98)
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Portfolio turnover rate..... 76.0% 115.5% 206.1% 64%
Average commission rate per
share...................... $.0786 $.0773 $.0662 $.0945
</TABLE>
- ------------------------------
(a) Total return is not annualized.
(b) After reimbursement and waiver of expenses by the Adviser equivalent to
1.2%* of average net assets.
*Annualized
No financial information is presented for Institutional Shares of the
Strategic Income Fund since no Institutional Shares had been issued as of the
Fund's fiscal year end.
3
<PAGE>
SPECIAL FEATURES OF INSTITUTIONAL SHARES
OFFERING PRICE
Institutional Shares of each Fund are sold without any sales charge, with a
minimum initial investment of $5 million. When placing an order, you must
specify that your order is for Institutional Shares.
PURCHASES BY EXCHANGE
No sales charge is imposed on purchases of Institutional Shares by exchange of
Institutional Shares from another Fund or by exchange of Cash Account Shares,
provided the aggregate value of your Institutional Shares of all Funds is at
least $5 million. Exchanges are subject to the limitations set forth in the
prospectus under "How to Purchase Shares--Purchases by Exchange."
REDEMPTION OF SHARES
Each Fund reserves the right upon 30 days' written notice to involuntarily
redeem, at net asset value, the shares of any shareholder whose Institutional
Class Shares of all Funds have an aggregate value of less than $5 million,
unless the reduction in value to less than $5 million was the result of market
fluctuation. For further information on the redemption of shares, please refer
to the information in the prospectus under "How to Redeem Shares."
4
<PAGE>
Prospectus Enclosed
Calamos Family of Funds(R)
PROSPECTUS
August 1, 1998
[CALAMOS ARTWORK APPEARS HERE]
Convertible Fund
Growth and Income Fund
Strategic Income Fund
Growth Fund
Global Growth and Income Fund
[CALAMOS LOGO APPEARS HERE]
<PAGE>
<TABLE>
<S> <C>
TABLE OF CONTENTS
Key Features......................... 2
Expenses............................. 3
Financial Highlights................. 5
Investment Objectives and Policies... 12
Common Investment Practices.......... 13
Risk of Investment................... 20
Investment Restrictions.............. 21
How to Purchase Shares............... 21
How to Redeem Shares................. 25
Shareholder Services................. 26
Dividends and Distributions.......... 27
Taxes................................ 27
Management of the Funds.............. 28
Performance Information.............. 29
Portfolio Transactions............... 30
The Trust and Its Shares............. 30
Appendix--Description of Bond Rat-
ings................................ 31
</TABLE>
(Neither this Table of Contents nor
the outside cover are part of the
Prospectus.)
<PAGE>
PROSPECTUS
August 1, 1998
CALAMOS FAMILY OF FUNDS(R)
CLASS A SHARES AND CLASS C SHARES
<TABLE>
<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 INCOME FUND Seeks high long-term total return through capital
appreciation and current income derived from a globally
diversified portfolio of convertible, equity and fixed-
income securities.
</TABLE>
MINIMUM INITIAL INVESTMENT: $500
Subsequent investment: $50
INDIVIDUAL RETIREMENT ACCOUNT (IRA) PLAN AVAILABLE
----------------
ALTHOUGH EACH FUND IS PERMITTED TO INVEST WITHOUT LIMIT IN DEBT SECURITIES
RATED BELOW INVESTMENT GRADE, COMMONLY KNOWN AS "JUNK BONDS," ONLY STRATEGIC
INCOME FUND INTENDS TO INVEST AS MUCH AS 35% OR MORE OF ITS NET ASSETS IN SUCH
SECURITIES. Those securities entail greater risks, including default risks,
than those found in higher rated securities. Investors should carefully
consider those risks before investing. See "Debt Securities."
This prospectus contains information you should know before investing in the
funds. Please read it carefully and retain it for future reference. A
statement of additional information dated the date of this prospectus and
containing more detailed information about the funds has been filed with the
Securities and Exchange Commission and (together with any supplements thereto)
is incorporated herein by reference. The statement of additional information
and the most recent financial statements are available without charge by
calling the Trust at (800) 823-7386. You may also obtain the statement of
additional information and other information that has been electronically
filed from the SEC's web site (www.sec.gov).
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, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
KEY FEATURES
INVESTMENT OBJECTIVES
The investment objectives of the Funds are stated on the cover of this
prospectus. There can be no assurance that a Fund will achieve its investment
objective.
INVESTMENT RISKS
The Funds are designed for long-term investors who can accept the fluctuations
in portfolio value and other risks associated with seeking high current income
or long-term capital appreciation through investments in securities. The
Funds' investments in debt securities rated below investment grade, foreign
securities and options and futures, and use of short sales also present risks.
The Funds may have high portfolio turnover. See "Common Investment Practices"
and "Risk of Investment" for a more complete description of the risks of
investing in each of the Funds.
DIVIDENDS AND CAPITAL GAINS
Growth Fund pays income dividends annually. Each other Fund pays income
dividends quarterly. Capital gains, if any, are distributed by each Fund at
least annually. Distributions are automatically reinvested in additional
shares at net asset value unless payment in cash is requested. See "Dividends
and Distributions."
PURCHASES AND REDEMPTIONS
Class A shares of each Fund are offered with a front-end sales charge, and
Class C shares of each Fund are offered without a sales charge, as described
below:
CLASS A SHARES Offered at net asset value plus a maximum sales charge of 4.75%
of the offering price, with reduced sales charges on investments of $50,000
or more and no sales charge on purchases of $1 million or more or on
reinvestment of dividends. Class A shares are subject to an annual .25%
service fee and a .25% distribution fee.
CLASS C SHARES Offered at net asset value without an initial or contingent
deferred sales charge if held for at least one year, but subject to an
annual .25% service fee and a .75% distribution fee, and, in the case of
shares redeemed within one year, a 1% contingent deferred sales charge.
Each class of shares of a Fund represents interests in the same portfolio of
investments of the Fund. The minimum initial investment in Class A shares or
Class C shares of a Fund is $500 and subsequent investments in the Fund must
be at least $50. Shares are redeemable at net asset value, which may be more
or less than original cost; however, if Class C shares, or Class A shares for
which the initial purchase price was $1 million or more, on which no sales
charge was imposed, are redeemed within one year, a deferred sales charge of
1% will be imposed. See "How to Purchase Shares" and "How to Redeem Shares."
EXPENSES OF THE FUNDS
Each Fund pays a management fee to the Adviser and also compensates the
Distributor, as expenses allocable to the Class A shares and the Class C
shares, for shareholder servicing and for services in distributing those
shares. See "Management of the Funds."
INVESTMENT ADVISER
Calamos Asset Management, Inc.(R) ("CAM" or the "Adviser").
DISTRIBUTOR
Calamos Financial Services, Inc.(R) ("CFS" or the "Distributor")
2
<PAGE>
EXPENSES
The following tables show certain information concerning shareholder
transaction expenses and projected annual fund operating expenses for Class A
shares and Class C shares of the Funds:
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------------------
Global
Growth and Strategic Growth and
Convertible Income Income Growth Income
Fund Fund Fund Fund Fund
----------- ---------- --------- ------ ----------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales charge on
purchases (as a
percentage of 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 EX-
PENSES
(AS A PERCENTAGE OF AV-
ERAGE NET ASSETS)
Management fees.......... .75% .75% .75% 1.00% 1.00%
12b-1 fees (e)........... .50 .50 .50 .50 .50
Other expenses (after
expense reimbursement).. .15 .75 .85(a) .50(a) .50(a)
---- ---- ---- ---- ----
Total Fund operating
expenses (after expense
reimbursement).......... 1.40% 2.00% 2.10%(a) 2.00% 2.00%
<CAPTION>
Class C Shares
------------------------------------------------------
Global
Growth and Strategic Growth and
Convertible Income Income Growth Income
Fund Fund Fund Fund Fund
----------- ---------- --------- ------ ----------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales charge on
purchases (as a
percentage of offering
price).................. None None None None None
Maximum sales charge on
reinvested dividends.... None None None None None
Deferred sales charge
(c)..................... None None None None None
Exchange fee............. None None None None None
Redemption fees (d)...... None None None None None
ANNUAL FUND OPERATING EX-
PENSES
(AS A PERCENTAGE OF AV-
ERAGE NET ASSETS)
Management fees.......... .75% .75% .75% 1.00% 1.00%
12b-1 fees (e)........... 1.00 1.00 1.00 1.00 1.00
Other expenses (after
expense reimbursement).. .25 .75 .85(a) .50(a) .50(a)
---- ---- ---- ---- ----
Total Fund operating
expenses (after expense
reimbursement).......... 2.00% 2.50% 2.60%(a) 2.50% 2.50%
</TABLE>
3
<PAGE>
- ------------------------------
(a) The Adviser has voluntarily undertaken to limit the annual ordinary
operating expenses of each class of shares of each Fund, as a percentage
of the average net assets of the class, to 2.00% for Class A shares and
2.50% for Class C shares through August 31, 1999, 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 and Growth and Income Fund would be 4.96% and
6.21% for Strategic Income Fund; 0.81% and 2.31% for Growth Fund; and
1.52% and 3.02% for Global Growth and Income Fund. In the case of Class C
shares of the Funds other than Convertible Fund and Growth and Income
Fund, absent the expense limitation, the "Other expenses" and "Total Fund
operating expenses", respectively, would have been 4.97% and 6.72% for
Strategic Income Fund; 0.94% and 2.94% for Growth Fund; and 1.72% and
3.72% 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 0.09% 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 $9 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 $91 $120 $207
Growth and Income Fund................................... 68 110 152 269
Strategic Income Fund.................................... 69 113 157 279
Growth Fund.............................................. 68 110 152 269
Global Growth and Income Fund............................ 68 110 152 269
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Class C Shares
----------------------
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
Convertible Fund......................................... $20 $62 $104 $233
Growth and Income Fund................................... 25 78 130 284
Strategic Income Fund.................................... 26 81 135 298
Growth Fund.............................................. 25 78 130 284
Global Growth and Income Fund............................ 25 78 130 284
</TABLE>
The purpose of these tables and the examples is to assist you in understanding
the various costs and expenses that an investor in a Fund bears, directly or
indirectly. The examples assume that the percentage amounts listed under
Annual Fund Operating Expenses remain the same through each of the periods,
all income dividends and capital gains distributions are reinvested in
additional shares of the Funds, and each Fund's net assets remain constant.
The examples should not be considered a representation of past or future
expenses; the actual expenses of the Funds and the annual rates of return may
be greater or less than those shown. Although information such as that shown
in the example is useful in reviewing the expenses of the Funds and in
providing a basis for comparison of those expenses with the expenses of other
mutual funds, it should not be used for comparison with other investments
using different assumptions or time periods.
FINANCIAL HIGHLIGHTS
The following tables reflect the results of the operations of Class A shares
and Class C shares of each Fund, except for Strategic Income Fund which has no
Class C shares issued. Information in the tables was audited by Ernst & Young
LLP, independent auditors. These tables should be read in conjunction with
each Fund's financial statements and notes thereto. The Funds' annual report,
which may be obtained from the Trust upon request at no charge, contains
additional performance information.
5
<PAGE>
CONVERTIBLE FUND
<TABLE>
<CAPTION>
Class A Shares
- -------------------------------------------------------------------------------------------------------------------
Eleven
Months
Ended
Year Ended March 31, March 31, Year Ended April 30,
-----------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $ 14.68 $ 14.49 $ 12.41 $ 13.04 $ 13.96 $ 12.72 $ 11.39 $ 10.29 $ 10.73 $ 10.56
Income from investment
operations:
Net investment income .49 .36 .40 .38 .40 .42 .41 .49 .60 .59
Net realized and
unrealized gain (loss)
on investments 3.92 1.39 3.06 (.01) .53 1.32 1.43 1.25 (.32) .14
Total from investment
operations 4.41 1.75 3.46 .37 .93 1.74 1.84 1.74 .28 .73
Less distributions:
Dividends from net
investment income (.61) (.45) (.31) (.32) (.39) (.40) (.45) (.52) (.63) (.56)
Dividends from net re-
alized capital gains (.95) (1.11) (1.07) (.56) (1.46) (.10) - - - -
Dividends in excess of
net realized capital
gains - - - (.12) - - - - - -
Distributions from paid
in capital (.10) - - - - - (.06) (.12) (.09) -
-----------------------------------------------------------------------------------------
Total distributions (1.66) (1.56) (1.38) (1.00) (1.85) (.50) (.51) (.64) (.72) (.56)
-----------------------------------------------------------------------------------------
Net asset value, end of
period $ 17.43 $ 14.68 $ 14.49 $ 12.41 $ 13.04 $ 13.96 $ 12.72 $ 11.39 $ 10.29 $ 10.73
=========================================================================================
Total return (a) 31.4 % 12.9% 28.8% 3.2% 6.5% 14.0% 16.5% 17.7% 2.4% 7.2%
Ratios and supplemental
data:
Net assets, end of pe-
riod (000) $62,157 $35,950 $24,460 $16,646 $17,023 $17,213 $16,940 $13,953 $18,664 $21,270
Ratio of expenses to
average net assets 1.4% 1.5% 1.5% 1.6%* 1.6% 1.7% 1.2% 1.2% 1.1% 1.1%
Ratio of net investment
income to average net
assets 3.3% 2.8% 3.0% 3.3%* 2.8% 3.2% 3.4% 4.3% 5.5% 5.6%
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Class C Shares
- --------------------------------------
July 5,
Year 1996
Ended through
March 31, March 31,
1998 1997
-------------------
<S> <C> <C>
Net asset value,
beginning of pe-
riod $ 14.63 $13.87
Net income from
investment oper-
ations:
Net investment
income .40 .30
Net realized and
unrealized gain
on investments 3.92 1.21
------- ------
Total from in-
vestment opera-
tions 4.32 1.51
------- ------
Less distribu-
tions:
Dividends from
net investment
income (.52) (.25)
Dividends from
net realized
capital gains (.95) (.50)
Distributions
from paid in
capital (.10) -
------- ------
Total distribu-
tions (1.57) (.75)
------- ------
Net asset value,
end of period $ 17.38 $14.63
======= ======
Total return (a) 30.8% 11.1%
Ratios and sup-
plemental data:
Net assets, end
of period (000) $14,358 $3,094
Ratio of expenses
to average net
assets 2.0% 2.0%
Ratio of net in-
vestment income
to average net
assets 3.0% 2.7%
- --------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Eleven
Months
Ended
Year Ended March 31, March 31, Year Ended April 30,
---------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio turnover rate 76.0% 52.3% 65.2% 42.1% 73.1% 73.1% 83.8% 63.2% 93.4% 84.7%
Average brokerage com-
mission paid per share $.0786 $.0610 $.0633 $.0936 $.0952 $.1000 $.0966 N/A N/A N/A
</TABLE>
- ------------------------------
(a) Total return is not annualized and does not reflect the effect of sales
charges.
* Annualized.
7
<PAGE>
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Class A Shares
- -------------------------------------------------------------------------------------------------------------
Eleven Sept. 22,
Months 1988
Ended through
Year Ended March 31, March 31, Year Ended April 30, April 30,
------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 15.52 $15.62 $12.68 $12.97 $13.90 $13.57 $11.54 $10.46 $10.49 $10.00
Income from investment
operations:
Net investment income .34 .34 .37 .35 .31 .35 .29 .31 .33 .38
Net realized and
unrealized gain (loss)
on investments 5.14 1.52 3.70 (0.2) .34 1.97 2.02 1.09 .09 .49
<CAPTION>
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total from investment
operations 5.48 1.86 4.07 0.33 .65 2.32 2.31 1.40 .42 .87
<CAPTION>
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Less distributions:
Dividends from net
investment income (.41) (.28) (.42) (.32) (.29) (.36) (.28) (.32) (.28) (.38)
Dividends from net
realized
capital gains (2.00) (1.68) (.71) (.30) (1.29) (1.63) - - (.17) -
<CAPTION>
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total distributions (2.41) (1.96) (1.13) (.62) (1.58) (1.99) (.28) (.32) (.45) (.38)
<CAPTION>
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, end of
period $ 18.59 $15.52 $15.62 $12.68 $12.97 $13.90 $13.57 $11.54 $10.46 $10.49
<CAPTION>
====================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total return (b) 37.8% 12.9% 33.0% 2.8% 4.5% 18.8% 20.2% 13.4% 3.8% 9.0%
Ratios and supplemental
data:
Net assets, end of
period (000) $13,119 $8,408 $5,813 $3,853 $4,663 $3,655 $2,694 $1,821 $1,345 $ 732
Ratio of expenses to
average net assets (a) 2.0% 2.0% 2.0% 2.0%* 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%*
Ratio of net investment
income to average net
assets (a) 2.0% 2.4% 2.6% 3.0%* 2.3% 2.6% 2.3% 2.9% 3.0% 4.8%*
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
<S> <C> <C>
- -----------------------------------------------
<CAPTION>
August 5, 1996
Year Ended through
March 31, 1998 March 31, 1997
-----------------------------
<S> <C> <C>
Net asset value, begin-
ning of period $15.50 $14.52
Income from investment
operations:
Net investment income .26 .26
Net realized and
unrealized gain (loss)
on
investments 5.11 1.30
<CAPTION>
-----------------------------
<S> <C> <C>
Total from investment
operations 5.37 1.56
<CAPTION>
-----------------------------
<S> <C> <C>
Less distributions:
Dividends from net in-
vestment income (.39) (.25)
Dividends from net real-
ized capital gains (2.00) (.50)
<CAPTION>
-----------------------------
<S> <C> <C>
Total distributions (2.39) (.58)
<CAPTION>
-----------------------------
<S> <C> <C>
Net asset value, end of
period $18.48 $15.50
<CAPTION>
=============================
<S> <C> <C>
Total return (b) 37.1% 10.8%
Ratios and supplemental
data:
Net assets, end of
period (000) $1,379 $3,094
Ratio of expenses to av-
erage net assets (c) 2.5% 2.0%
Ratio of net investment
income to average
net assets (c) 1.5% 2.4%
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
<CAPTION>
Eleven Sept. 22,
Months 1988
Ended through
Year Ended March 31, March 31, Year Ended April 30, April 30,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio turnover rate 111.5% 91.5% 86.4% 84.7% 155.2% 132.2% 111.6% 103.6% 103.0% 85.0%*
Average brokerage com-
mission paid per share $.0773 $.0609 $.0604 $.0924 $.1002 $.1010 $.1004 N/A N/A N/A
</TABLE>
- ------------------------------
(a) After reimbursement and waiver of expenses by the Adviser equivalent to
0.0% 0.1%, 0.1%, 0.2%*, 0.1%, 0.5%, 0.5%, 1.7%, 2.3% and 8.4%* of average
net assets, respectively.
(b) Total return is not annualized and does not reflect the effect of sales
charges.
(c) After reimbursement and waiver of expenses by the Adviser equivalent to
0.0% and 0.6%* of average net assets, respectively.
* Annualized.
8
<PAGE>
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Class A Shares
- -----------------------------------------------------------------------------------------------
Eleven
Months September 4,
Ended 1990 through
Year Ended March 31, March 31, Year Ended April 30, April 30,
----------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $10.81 $11.07 $10.13 $10.71 $10.96 $10.58 $10.60 $ 10.00
Income from investment
operations:
Net investment income .50 .50 .53 .40 .36 .39 .59 .40
Net realized and
unrealized gain (loss)
on investments 1.19 .29 .83 (.43) .11 .79 .46 .61
<CAPTION>
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total from investment
operations 1.69 .79 1.36 (.03) .47 1.18 1.05 1.01
<CAPTION>
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less distributions:
Dividends from net in-
vestment income (.55) (.68) (.42) (.36) (.41) (.41) (.51) (.40)
Dividends from net re-
alized capital gains (.04) (.37) - (.19) (.31) (.39) (.56) (.01)
<CAPTION>
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total distributions (.59) (1.05) (.42) (.55) (.72) (.80) (1.07) (.41)
<CAPTION>
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, end of
period $11.91 $10.81 $11.07 $10.13 $10.71 $10.96 $10.58 $ 10.60
<CAPTION>
======================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total return (c) 15.7% 7.4% 13.6% (0.2%) 4.2% 11.5% 10.5% 10.2%
Ratios and supplemental
data:
Net assets, end of pe-
riod (000) $1,123 $1,317 $1,620 $2,211 $3,004 $2,522 $1,410 $ 595
Ratio of expenses to
average net assets
(a)(b) 2.1% 2.1% 2.2% 2.4%* 2.2% 2.3% 2.5% 2.6%*
Ratio of net investment
income to average net
assets (a) 3.9% 4.3% 4.6% 4.0%* 3.2% 3.9% 5.3% 6.6%*
Portfolio turnover rate 398.2% 152.5% 81.1% 59.9% 79.4% 73.8% 97.0% 108.9%*
Average brokerage com-
mission paid per share $.0813 $.0711 $.0636 $.0966 $.0977 $.1056 $.1200 N/A
</TABLE>
- ------------------------------
(a) After reimbursement and waiver of expenses by the Adviser equivalent to
4.1%, 3.0%, 1.6%, 1.1%*, 1.0%, 0.7%, 1.25% and 4.8%* of average net assets,
respectively.
(b) Includes 0.1%, 0.1%, 0.2%, 0.4%*, 0.2%, 0.3%, 0.5% and 0.6%*, respectively,
related to dividend expenses on short positions.
(c) Total return is not annualized and does not reflect the effect of sales
charges.
* Annualized.
9
<PAGE>
GROWTH FUND
<TABLE>
<CAPTION>
Class A Shares
- ------------------------ -----------------------------------------------------------------------
Eleven
Months September 4,
Ended 1990 through
Year Ended March 31, March 31, Year Ended April 30, April 30,
----------------------- --------- ---------------------- ------------
1998 1997 1996 1995 1994 1993 1992 1991
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $ 17.04 $15.74 $14.18 $14.57 $13.95 $14.04 $12.48 $10.00
Income from investment
operations:
Net investment income
(loss) (.01) (.09) (.09) .02 .01 (.02) (.01) .07
Net realized and
unrealized gain (loss)
on investments 8.53 3.14 4.69 (.28) 1.21 .20 1.60 2.50
<CAPTION>
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total from investment
operations 8.52 3.05 4.60 (.26) 1.22 .18 1.59 2.57
<CAPTION>
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less distributions:
Dividends from net in-
vestment income - - (.07) - (.01) - - (.08)
Dividends from net re-
alized capital gains (5.32) (1.75) (2.97) (.13) (.59) (.27) (.03) (.01)
Distributions from paid
in capital (.18) - - - - - - -
<CAPTION>
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total distributions 5.50 (1.75) (3.04) (.13) (.60) (.27) (.03) (.09)
<CAPTION>
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, end of
period $ 20.06 $17.04 $15.74 $14.18 $14.57 $13.95 $14.04 $12.48
<CAPTION>
=======================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total return (b) 54.0% 19.1% 35.2% (1.8%) 8.9% 1.4% 12.7% 25.8%
Ratios and supplemental
data:
Net assets, end of pe-
riod (000) $10.374 $6,635 $2,866 $1,791 $2,089 $1,861 $1,802 $ 862
Ratio of expenses to
average net assets (a) 2.0% 2.0% 2.0% 2.0%* 2.0% 2.0% 2.0% 2.0%*
Ratio of net investment
income to average net
assets (a) (1.5)% (1.3)% (.08)% 0.2%* 0.1% (0.1)% (0.1)% 0.8%*
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
- -------------------------------------- ----------------------------------------
Year Ended September 3, 1996 through
March 31, 1998 March 31, 1997
-------------- -------------------------
<S> <C> <C>
Net asset value, beginning of period $16.98 $ 17.63
Net income from investment operations:
Net investment income (.13) (.07)
Net realized and unrealized gain
(loss) on investments 8.50 1.07
<CAPTION>
----------------------------------------
<S> <C> <C>
Total from investment operations 8.37 1.00
<CAPTION>
----------------------------------------
<S> <C> <C>
Less distributions:
Dividends from net realized capital
gains (5.32) (1.65)
Distributions from paid in capital (.18) -
<CAPTION>
----------------------------------------
<S> <C> <C>
Total distributions (5.50) (1.65)
<CAPTION>
----------------------------------------
<S> <C> <C>
Net asset value, end of period $19.85 $ 16.98
<CAPTION>
========================================
<S> <C> <C>
Total return (b) 55.3% 5.4%
Ratios and supplemental data:
Net assets, end of period (000) $ 41 $ 8
Ratio of expenses to average net as-
sets (c) 2.5% 2.5%*
Ratio of net investment income to av-
erage net assets (c) (2.0)% (1.9)%*
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Eleven
Months September 4,
Ended 1990 through
Year Ended March 31, March 31, Year Ended April 30, April 30,
-------------------- --------- -------------------- ------------
1998 1997 1996 1995 1994 1993 1992 1991
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio turnover rate 206.1% 173.9% 252.4% 104.3% 87.3% 56.8% 47.3% 15.8%*
Average brokerage com-
mission paid per share $.0662 $.0614 $.0608 $.0910 $.0996 $.1011 $.1098 N/A
</TABLE>
- ------------------------------
(a) After reimbursement and waiver of expenses by the Adviser equivalent to
0.3%, 0.7%, 1.2%, 1.6%*, 1.1%, 0.7%, 0.8% and 4.5%* of average net assets,
respectively.
(b) Total return is not annualized and does not reflect the effect of sales
charges.
(c) After reimbursement and waiver of expenses by the Adviser equivalent to
0.4% and 0.6% of average net assets, respectively.
* Annualized.
10
<PAGE>
GLOBAL GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Class A Shares Class C Shares
----------------------------------------------
Year September 9, Year September 24,
ended 1996 through ended 1996
March 31, March 31, March 31, through March
1998 1997 1998 31, 1997
----------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 5.39 $ 5.00 $5.37 $5.00
Net income from investment oper-
ations:
Net investment income .17 .04 .15 .03
Net realized and unrealized
gain (loss) on investments 1.42 .36 1.41 .35
<CAPTION>
----------------------------------------------
<S> <C> <C> <C> <C>
Total from investment opera-
tions 1.59 .40 1.56 .38
<CAPTION>
----------------------------------------------
<S> <C> <C> <C> <C>
Less distributions:
Dividends from net investment
income (.28) (.01) (.26) (.01)
Dividends from net realized
capital gains (.14) - (.14) -
<CAPTION>
----------------------------------------------
<S> <C> <C> <C> <C>
Total distributions (.42) (.01) (.40) (.01)
<CAPTION>
----------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, end of period $ 6.56 $ 5.39 $6.53 $5.37
<CAPTION>
==============================================
<S> <C> <C> <C> <C>
Total return (b) 30.3% 8.0% 29.8% 7.6%
Ratios and supplemental data:
Net assets, end of period (000) $5,678 $2,926 $ 671 $ 390
Ratio of expenses to average
net assets (a) 2.0% 2.0%* 2.5%* 2.5%*
Ratio of net investment income
to average net assets (a) 1.4% 1.8%* .9% 1.6%*
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
September 9, 1996
Year ended through
March 31, 1998 March 31, 1997
--------------------------------
<S> <C> <C>
Portfolio turnover rate 64% 160.4%*
Average brokerage commission paid per share $.0945 $.0758
</TABLE>
- ------------------------------
(a) After reimbursement and waiver of expenses by the Adviser equivalent to
1.0% and 1.82%* of average net assets, respectively, for Class A shares
and 1.2% and 1.8%, respectively, for Class C shares.
(b) Total return is not annualized and does not reflect the effect of sales
charges.
*Annualized
11
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has a different investment objective and may invest in different
securities. The Funds differ principally in (i) the relative importance each
places on growth potential and current income as considerations in selecting
investments, and (ii) the types of securities selected for investment.
The investment objectives of a Fund may not be changed without the approval of
a "majority of the outstanding" shares of that Fund, as defined in the
Investment Company Act of 1940. There can be no assurance that a Fund will
achieve its objectives.
CONVERTIBLE FUND
Convertible Fund seeks current income. Growth is a secondary objective that
the Fund also considers when consistent with its objective of current income.
The Fund invests in a diversified portfolio of convertible securities,
primarily convertible bonds and convertible preferred stocks. See "Common
Investment Practices--Convertible Securities."
A significant portion of the Fund's portfolio ordinarily is invested in a
number of long-term core positions, selected on the basis of the investment
adviser's assessment of the long-term value of an investment in that issuer.
The Fund's investments are concentrated in investment grade securities, and
the Fund expects to maintain, over the long-term, an average credit quality of
BBB or better. However, debt securities acquired by the Fund may be unrated or
may be rated below investment grade, which would present increased risk. See
"Common Investment Practices--Debt Securities" for more information, including
an analysis of the Fund's past investments in debt securities.
The Fund is substantially invested in convertible securities, including
synthetic convertible securities, under normal market conditions. See "Common
Investment Practices--Convertible Securities." At least 65% of the Fund's
assets ordinarily is invested in "true" convertibles. Any portion of the
Fund's assets not invested in convertible securities as described above may be
invested in non-convertible equity and fixed-income securities, and other
securities as described under "Common Investment Practices."
GROWTH AND INCOME FUND
Growth and Income Fund seeks high long-term total return through capital
appreciation and current income. Under normal market conditions the Fund
invests at least 65% of its total assets in a diversified portfolio of
convertible, equity and fixed-income securities, with equal emphasis on
capital appreciation and current income. See "Common Investment Practices--
Convertible Securities." The Fund's assets not invested in convertible
securities are invested in common stocks that, in the judgment of the
investment adviser, provide opportunities for long-term capital appreciation,
or in other securities as described under "Common Investment Practices."
The Fund generally invests in smaller and medium-sized companies, the
securities of which tend to be more volatile and less liquid than the
securities of larger companies. The debt securities of smaller and medium-
sized companies also are less likely to be rated investment grade, and so the
debt securities acquired by the Fund may be unrated or rated below investment
grade, which would present increased risk. See "Common Investment Practices--
Debt Securities" for more information, including an analysis of the Fund's
past investment in debt securities.
STRATEGIC INCOME FUND
Strategic Income Fund seeks high current income consistent with stability of
principal, primarily through investment in convertible securities and
employing short selling to enhance income and hedge against market risk. Under
normal market conditions, the Fund will invest at least 65% of its assets in
income-producing securities. In furtherance of its objective, the Fund may
also write covered call options and purchase put options and invest in other
types of securities. See "Common Investment Practices."
12
<PAGE>
Any assets of the Fund not invested in convertible securities, common stock
received upon conversion or exchange of convertible securities, or in short
sales with respect to portfolio securities may be invested in other securities
including non-convertible equity and debt securities, options, warrants,
securities of the U.S. Government, its agencies and instrumentalities,
repurchase agreements and money market instruments.
GROWTH FUND
Growth Fund seeks long-term capital growth.
In pursuing Growth Fund's investment objective, the Adviser seeks out
securities that, in its opinion, are undervalued and offer above-average
potential for earnings growth. The selection process emphasizes earnings
growth potential coupled with financial strength and stability. The Adviser
performs its own fundamental analysis, in addition to depending upon
recognized rating agencies and other sources. The portfolio may include
securities of well-established companies with large market capitalizations as
well as small, unseasoned companies. The Fund will not invest more than 5% of
its assets in the securities of unseasoned issuers.
The Adviser anticipates that common stocks will generally afford the best
opportunities for capital growth. However, the Fund may invest in securities
convertible into common stock, preferred stocks, and obligations such as
bonds, debentures and notes that, in the opinion of the Adviser, present
opportunities for capital appreciation. The percentages of Fund assets
invested in various types of securities will vary in accordance with the
judgment of the Adviser. There are no limitations on the amount of the Fund's
assets that may be allocated to the various types of securities, or on the
ratings of debt securities acquired by the Fund. The Fund may also hold cash
and cash equivalents and may invest in other types of securities as described
under "Common Investment Practices."
GLOBAL GROWTH AND INCOME FUND
Global Growth and Income Fund seeks high long-term total return through
capital appreciation and current income. Under normal market conditions the
Fund invests at least 65% of its total assets in a globally diversified
portfolio of convertible, equity and fixed-income securities with equal
emphasis on capital appreciation and current income. Normally the Fund invests
in the securities markets of at least three countries, which may include the
United States.
The Fund generally invests in securities of companies that are medium-sized
and larger relative to the securities markets of the countries in which those
securities are traded. A significant portion of its assets will be invested in
securities of foreign issuers, which may be more volatile and less liquid than
the securities of United States companies. See "Common Investment Practices--
Foreign Securities" for more information.
The Fund's convertible and fixed-income investments are concentrated in
investment grade securities, and the Fund expects to maintain, over the long
term, an average credit quality of BBB or better or, in the case of unrated
securities, of comparable quality as determined by the Adviser. The debt
securities of foreign issuers are less likely to be rated by United States
rating agencies.
COMMON INVESTMENT PRACTICES
GENERAL
In selecting portfolio securities for a Fund, including unrated securities,
the 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
13
<PAGE>
securities may be purchased on a when-issued or delayed-delivery basis.
DEBT SECURITIES
In pursuing its investment objectives, each Fund may invest in convertible and
non-convertible debt securities, including lower-rated securities (i.e.,
securities rated BB or lower by Standard & Poor's Corporation ("S&P") or Ba or
lower by Moody's Investor Services, Inc. ("Moody's"), commonly called "junk
bonds") and securities that are not rated. There are no restrictions as to the
ratings of debt securities acquired by a Fund or the portion of a Fund's
assets that may be invested in debt securities in a particular ratings
category, except that no Fund will acquire a security rated below C.
Securities rated BBB or Baa are considered to be medium grade and to have
speculative characteristics. Lower-rated debt securities, in which Strategic
Income Fund intends to invest as much as 35% or more of its assets, are
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal. Investment in medium- or lower-quality debt
securities involves greater investment risk, including the possibility of
issuer default or bankruptcy. An economic downturn could severely disrupt the
market for such securities and adversely affect the value of such securities.
In addition, lower-quality bonds are less sensitive to interest rate changes
than higher-quality instruments and generally are more sensitive to adverse
economic changes or individual corporate developments. During a period of
adverse economic changes, including a period of rising interest rates, issuers
of such bonds may experience difficulty in servicing their principal and
interest payment obligations.
Achievement by each Fund of its investment objectives will be more dependent
on the Adviser's credit analysis than would be the case if the Fund were
investing in higher-quality debt securities. Since the ratings of rating
services (which evaluate the safety of principal and interest payments, not
market risks) are used only as preliminary indicators of investment quality,
the Adviser employs its own credit research and analysis. These analyses may
take into consideration such quantitative factors as an issuer's present and
potential liquidity, profitability, internal capability to generate funds,
debt/equity ratio and debt servicing capabilities, and such qualitative
factors as an assessment of management, industry characteristics, accounting
methodology, and foreign business exposure.
Medium- and lower-quality debt securities may be less marketable than higher-
quality debt securities because the market for them is less broad. The market
for unrated debt securities is even narrower. During periods of thin trading
in these markets, the spread between bid and asked prices is likely to
increase significantly, and a Fund may have greater difficulty selling its
portfolio securities. See "Net Asset Value." The market value of these
securities and their liquidity may be affected by adverse publicity and
investor perceptions.
The table below shows the percentages of net assets (on a dollar-weighted
monthly average basis) invested in debt securities in each ratings category
during the year ended March 31, 1998 for each Fund other than Growth Fund,
which did not invest in debt securities rated below investment grade during
that period.
<TABLE>
<CAPTION>
Growth Global
and Strategic Growth and
Rating Convertible Income Income Income
Category Fund Fund Fund Fund
-------- ----------- ------ --------- ----------
<S> <C> <C> <C> <C>
U.S. Govt. 9% 12% 0% 7%
AAA 0 0 0 0
AA 2 0 0 0
A 8 4 5 7
BBB 17 16 8 12
BB 6 5 5 6
B 6 16 36 4
CCC 0 0 0 0
not rated 16 7 22 15
</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.
14
<PAGE>
CONVERTIBLE SECURITIES
Although each Fund may invest in convertible securities, only Convertible Fund
has a policy of investing at least 65% of its assets in convertible securities
under normal circumstances. Growth and Income Fund and Strategic Income Fund
expect that a significant portion of their respective assets will be invested
in convertible securities, but there is no minimum percentage of their assets
that will be so invested.
The Adviser believes that the characteristics of convertible securities make
them appropriate investments for the Funds. These characteristics include: the
potential for capital appreciation as the value of the underlying common stock
increases; the relatively high yield received from dividend or interest
payments as compared to common stock dividends; and decreased risks of decline
in value relative to the underlying common stock due to their fixed-income
nature. As a result of the conversion feature, however, the interest rate or
dividend preference on a convertible security is generally less than would be
the case if the securities were issued in non-convertible form.
Convertible securities include any corporate debt security or preferred stock
that may be converted into underlying shares of common stock. The common stock
underlying convertible securities may be issued by a different entity than the
issuer of the convertible securities. Convertible securities entitle the
holder to receive interest payments paid on corporate debt securities or the
dividend preference on a preferred stock until such time as the convertible
security matures or is redeemed or until the holder elects to exercise the
conversion privilege.
The value of convertible securities is influenced by both the yield of non-
convertible securities of comparable issuers and by the value of the
underlying common stock. The value of a convertible security viewed without
regard to its conversion feature (i.e., strictly on the basis of its yield) is
sometimes referred to as its "investment value." The investment value of the
convertible security will typically fluctuate inversely with changes in
prevailing interest rates. However, at the same time, the convertible security
will be influenced by its "conversion value," which is the market value of the
underlying common stock that would be obtained if the convertible security
were converted. Conversion value fluctuates directly with the price of the
underlying common stock.
If, because of a low price of the common stock, the conversion value is
substantially below the investment value of the convertible security, the
price of the convertible security is governed principally by its investment
value. If the conversion value of a convertible security increases to a point
that approximates or exceeds its investment value, the value of the security
will be principally influenced by its conversion value. A convertible security
will sell at a premium over its conversion value to the extent investors place
value on the right to acquire the underlying common stock while holding a
fixed income security.
Holders of convertible securities have a claim on the assets of the issuer
prior to the common stockholders but may be subordinated to holders of similar
non-convertible securities of the same issuer. A convertible security may be
subject to redemption at the option of the issuer at a price established in
the governing instrument pursuant to which the convertible security was
issued. If a convertible security held by a Fund is called for redemption, the
Fund will be required to redeem the security, convert it into the underlying
common stock or sell it to a third party. Certain convertible debt securities
may provide a put option to the holder which entitles the holder to cause the
security to be redeemed by the issuer at a premium over the stated principal
amount of the debt security.
"Synthetic" convertible securities, for purposes of this prospectus, are
created by combining separate securities which possess the two principal
characteristics of a true convertible security, i.e., fixed income ("fixed-
income component") and the right to acquire equity securities ("convertible
component"). The fixed-income component is achieved by investing in non-
convertible fixed-income securities such as non-convertible bonds, preferred
stocks and money market
15
<PAGE>
instruments. The convertible component is achieved by investing in warrants,
exchange or NASDAQ listed call options, or stock index call options granting
the holder the right to purchase a specified quantity of securities within a
specified period of time at a specified price or to receive cash in the case
of stock index options. Synthetic convertible securities are not considered
convertible securities for purposes of the policies of Convertible Fund and
Growth and Income Fund to normally invest at least 65% of total assets in
convertible securities.
The synthetic convertible security differs from the true convertible security
in several respects. Unlike a true convertible security, which is a single
security having a unitary market value, a synthetic convertible security is
composed of two or more separate securities, each with its own market value.
Therefore, the "market value" of a synthetic convertible security is the sum
of the values of its fixed-income component and its convertible component. For
this reason, the values of a synthetic convertible security and a true
convertible security will respond differently to market fluctuations.
More flexibility is possible in the assembly of a synthetic convertible
security than in the purchase of a convertible security. Although synthetic
convertible securities may be selected where the two components are issued by
a single issuer, thus making the synthetic convertible security similar to the
true convertible security, the character of a synthetic convertible security
allows the combination of components representing distinct issuers, when
management believes that such a combination would better promote a Fund's
investment objective. A synthetic convertible security also is a more flexible
investment in that its two components may be purchased separately. For
example, a Fund may purchase a warrant for inclusion in a synthetic
convertible security but temporarily hold short-term investments while
postponing the purchase of a corresponding bond pending development of more
favorable market conditions.
A holder of a synthetic convertible security faces the risk of a decline in
the price of the security or the level of the index involved in the
convertible component, causing a decline in the value of the call option or
warrant. Should the price of the stock fall below the exercise price and
remain there throughout the exercise period, the entire amount paid for the
call option or warrant would be lost. Since a synthetic convertible security
includes the fixed-income component as well, the holder of a synthetic
convertible security also faces the risk that interest rates will rise,
causing a decline in the value of the fixed-income instrument.
RULE 144A SECURITIES
Each Fund may purchase securities that have been privately placed but that are
eligible for purchase and sale under Rule 144A under the 1933 Act. That Rule
permits certain qualified institutional buyers to trade in privately placed
securities that have not been registered for sale under the 1933 Act. The
Adviser, under the supervision of the board of trustees, will consider whether
securities purchased under Rule 144A are illiquid and thus subject to the
Fund's restriction of investing no more than a specified percentage of its net
assets in illiquid securities. A determination of whether a Rule 144A security
is liquid or not is a question of fact. In making this determination, the
Adviser will consider the trading markets for the specific security, taking
into account the unregistered nature of a Rule 144A security. In addition, the
Adviser could consider the (1) frequency of trades and quotes, (2) number of
dealers and potential purchasers, (3) dealer undertakings to make a market and
(4) nature of a security and of marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
transfer). The liquidity of Rule 144A securities would be monitored and, if as
a result of changed conditions, it is determined that a Rule 144A security is
no longer liquid, the Fund's holdings of illiquid securities would be reviewed
to determine what, if any, steps are required to assure that the Fund does not
invest more than the specified percentage of its assets in illiquid
securities. Investing in Rule 144A securities could have the effect of
increasing the amount of a Fund's assets invested in illiquid securities if
qualified institutional buyers are unwilling to purchase such securities.
16
<PAGE>
FOREIGN SECURITIES
Global Growth and Income Fund may invest all of its assets, and each other
Fund may invest up to 25% of its net assets, in securities of foreign issuers
that are not publicly traded in the United States ("foreign securities"). For
this purpose, foreign securities do not include securities represented by
American Depository Receipts (ADRs) or securities guaranteed by a United
States person.
International investing allows you to achieve greater diversification and to
take advantage of changes in foreign economies and market conditions. Many
foreign economies have, from time to time, grown faster than the U.S. economy,
and the returns on investments in those countries have exceeded those of
similar U.S. investments, although there can be no assurance that these
conditions will continue.
You should understand and consider carefully the greater risks involved in
investing internationally. Investing in securities of non-U.S. issuers,
positions in which are generally denominated in foreign currencies, and
utilization of forward foreign currency exchange contracts involve both
opportunities and risks not typically associated with investing in U.S.
securities. These include: fluctuations in exchange rates of foreign
currencies; possible imposition of exchange control regulation or currency
restrictions that would prevent cash from being brought back to the United
States; less public information with respect to issuers of securities; less
governmental supervision of stock exchanges, securities brokers and issuers of
securities; different accounting, auditing and financial reporting standards;
different settlement periods and trading practices; less liquidity and
frequently greater price volatility in foreign markets than in the United
States; imposition of foreign taxes; and sometimes less advantageous legal,
operational and financial protections applicable to foreign subcustodial
arrangements.
Although the Funds try to invest in companies and governments of countries
having stable political environments, there is the possibility of restriction
of foreign investment, expropriation of assets, or confiscatory taxation,
seizure or nationalization of foreign bank deposits or other assets,
establishment of exchange controls, the adoption of foreign government
restrictions, or other adverse political, social or diplomatic developments
that could affect investment in those countries.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the U.S. and other major
markets. There also may be a lower level of monitoring and regulation of
emerging markets and the activities of investors in such markets, and
enforcement of existing regulations has been extremely limited. Economies in
individual emerging markets may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross domestic product, rates of
inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments positions. Many emerging market countries
have experienced high rates of inflation for many years, which has had and may
continue to have very negative effects on the economies and securities markets
of those countries.
Any Fund may invest in ADRs that are not sponsored by the issuer of the
underlying security. To the extent it does so, the Fund would probably bear
its proportionate share of the expenses of the depository and might have
greater difficulty in receiving copies of the issuer's shareholder
communications than would be the case with a sponsored ADR.
When a Fund enters into a contract for the purchase or sale of a foreign
portfolio security, it usually is required to settle the purchase transaction
in the relevant foreign currency or receive the proceeds of the sale in that
currency. In either event, the Fund is obliged to acquire or dispose of an
appropriate amount of foreign currency by selling or buying an equivalent
amount of U.S. dollars. The Fund may wish to "lock-in" the U.S. dollar value
of a transaction at or near the time of the purchase or sale of the foreign
portfolio security at the exchange rate or rates then prevailing between the
U.S. dollar and the currency in which the
17
<PAGE>
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, 1998, Convertible Fund and Global Growth and Income Fund had
invested 6% and 12% of their net assets, respectively, in foreign securities.
No other Fund had as much as 1% of its net assets so invested.
WARRANTS
Each Fund may invest up to 5% of the value of its net assets at the time of
purchase in warrants (not including those acquired in units or attached to
other securities), including up to 2% of its net assets in warrants the
underlying common stock of which is not listed on the New York or American
stock exchange or, in the case of Global Growth and Income Fund, a recognized
foreign exchange. A warrant is a right to purchase common stock at a specific
price (usually at a premium above the market value of the underlying common
stock at time of issuance) during a specified period of time. A warrant may
have a life ranging from less than a year to twenty years or longer, but a
warrant becomes worthless unless it is exercised or sold before expiration. In
addition, if the market price of the common stock does not exceed the
warrant's exercise price during the life of the warrant, the warrant will
expire worthless. Warrants have no voting rights, pay no dividends and have no
rights with respect to the assets of the corporation issuing them. The
percentage increase or decrease in the value of a warrant may tend to be
greater than the percentage increase or decrease in the value of the
underlying common stock.
OPTIONS AND FUTURES
Consistent with its objective, each Fund may purchase and write both call
options and put options on
18
<PAGE>
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.
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.
19
<PAGE>
Short sale transactions involve certain risks. In particular, the variable
degree of correlation between the price movements of the convertible
securities (or portion of the synthetic convertible) and the price movements
of the underlying common stock being sold short creates the possibility that
losses on the short sale hedge position may be greater than gains in the value
of the portfolio securities being hedged. In addition, to the extent that a
Fund pays a conversion premium for a convertible security, the Fund is
generally unable to protect against a loss of such premium by entering into a
short sale hedge. In determining the number of shares to be sold short against
the Fund's position in the convertible securities, the anticipated fluctuation
in the conversion premiums is considered. A Fund will also incur transaction
costs in connection with short sales. Certain provisions of the Internal
Revenue Code may limit the degree to which the Funds are able to enter into
short sales, which limitations might impair a Fund's ability to achieve its
investment objective. Please refer to the Statement of Additional Information
for a more complete explanation.
LENDING PORTFOLIO SECURITIES
In order to generate additional income, each Fund may from time to time lend
securities from its portfolio with a value not exceeding 33 1/3% of its total
assets to brokers, dealers and financial institutions such as banks and trust
companies for which it will receive collateral in cash, United States
Government securities or irrevocable letters of credit that will be maintained
in an amount equal to at least 100% of the current market value of the loaned
securities. Cash collateral will be invested in short-term securities, which
will increase the current income of the Fund. Such loans will be terminable at
any time. A Fund will have the right to regain record ownership of loaned
securities to exercise beneficial rights such as voting rights and rights to
interest or other distributions. A Fund may pay reasonable fees to persons
unaffiliated with the Fund for services in arranging such loans. The lending
of portfolio securities exposes a Fund to the risk of failure by the borrower
to return the securities involved in such transactions, in which event the
Fund may incur a loss. In an effort to reduce that risk, the Adviser will
monitor the creditworthiness of the firms to which the Funds lend portfolio
securities.
TEMPORARY INVESTMENTS
Each Fund may make temporary investments without limitation when the Adviser
determines that a defensive position is warranted. Such investments may be in
money market instruments, consisting of obligations of, or guaranteed as to
principal and interest by, the U.S. Government or its agencies or
instrumentalities; certificates of deposit, bankers' acceptances and other
obligations of domestic banks having total assets of at least $500 million and
which are regulated by the U.S. Government, its agencies or instrumentalities;
commercial paper rated in the highest category by a recognized rating agency;
and repurchase agreements. In a repurchase agreement, a Fund purchases a
security and the seller (a bank or securities dealer) simultaneously agrees to
repurchase the security at the same price plus an amount equal to an agreed-
upon interest rate, on a specified date. In the event of a bankruptcy or other
default of a seller of a repurchase agreement, a Fund could experience delays
in liquidating the underlying security and losses.
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."
20
<PAGE>
Although the Funds do not purchase securities with a view to rapid turnover,
there are no limitations on the length of time portfolio securities must be
held. The turnover rate may vary significantly from year to year. The
portfolio turnover rate of any Fund may be greater than 100%. The portfolio
turnover rate of Global Growth and Income Fund is not expected to exceed 100%
under normal circumstances. A higher rate of portfolio turnover may result in
higher transaction costs and the realization of capital gains and losses.
Please refer to the Statement of Additional Information for a more complete
explanation.
INVESTMENT RESTRICTIONS
In pursuing its investment objective, a Fund will not:
1. As to 75% of its assets, invest more than 5% of its total assets, taken at
market value at the time of a particular purchase, in the securities of any
one issuer, except that this restriction does not apply to securities
issued or guaranteed by the United States Government or its agencies or
instrumentalities;
2. Acquire more than 10%, taken at the time of a particular purchase, of the
outstanding voting securities of any issuer; or
3. Invest in a security if more than 25% of its total assets (taken at market
value at the time of a particular purchase) would be invested in the
securities of issuers in any particular industry, except that this
restriction does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities.
These are fundamental restrictions that cannot be changed as to a Fund without
the approval of a "majority of the outstanding" voting securities of that
Fund, as defined in the Investment Company Act of 1940. All investment
restrictions for the Funds are described in the Statement of Additional
Information.
HOW TO PURCHASE SHARES
Shares of the Funds are sold 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 as described below.
The minimum initial investment by a shareholder is $500 and $50 thereafter.
Each Fund reserves the right to reject any order for the purchase of its
shares in whole or in part, and to suspend the sale of its shares to the
public in response to conditions in the securities markets or otherwise. Each
purchase of shares is confirmed by a written statement mailed to the
shareholder, without issuance of share certificates.
OFFERING PRICE
Class A shares of each Fund are sold to investors at net asset value plus a
sales charge, which may be reduced or waived as described below. Class C
shares of each Fund are sold without an initial sales charge but are subject
to higher ongoing expenses than Class A shares of the same Fund. When placing
an order, you must specify whether the order is for Class A or Class C shares.
The differences between Class A shares and Class C shares lie primarily in
their initial and contingent deferred sales charge structures and in their
asset-based sales charges in the form of Rule 12b-1 distribution fees. These
differences are summarized in the table below. See also "Expenses" and "How to
Redeem Shares." Each class has distinct advantages and disadvantages for
different investors, and you may choose the class that best suits your
circumstances and objectives.
<TABLE>
<CAPTION>
Annual 12b-1 Fees
(as a % of
average daily net
Class Initial Sales Charge assets)* Other Information
- ----- -------------------- ----------------- -----------------
<S> <C> <C> <C>
Class Maximum initial sales .50% Initial sales charge waived or
A charge of reduced for certain purchases**
4.75% of offering price
Class None 1.00%*** 1% deferred sales charge on
C shares redeemed within one year
</TABLE>
21
<PAGE>
- ------------------------------
*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 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 BY WIRE
You may also purchase shares by wiring funds from your bank. To insure proper
credit to your account, please call the Funds at (800) 823-7386 before sending
your wire. The wire should be sent to United Missouri Bank KC, N.A.; ABA #10-
10-00695; for First Data Corp. Investor Services Group, bank account no.
98703719; FBO Calamos [fund name] Fund; [shareholder name and account number].
The applicable offering price for a purchase by wire is the offering price per
share next determined after receipt of the wired funds. Receipt of a wire
could be delayed by delays on the Federal Reserve wire system. After you have
wired funds, you must complete the application form and send it to CFS. A Fund
will not honor
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redemption requests until the completed application has been received, and
failure to submit a completed application may result in backup withholding as
required by the Internal Revenue Code.
PURCHASES BY MAIL
You may also purchase shares of a Fund by sending to the Trust's transfer
agent at its address shown on the back cover 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. A
subsequent investment may be made by detaching the stub from your account
statement and sending it with your check in the envelope provided with your
statement. All checks must be drawn on a U.S. bank in U.S. funds. A check
written by a third party will not be accepted. A charge ($20 minimum) may be
imposed if any check submitted for investment does not clear. If you purchase
shares by check, you will not be able to redeem the shares until the check has
been collected, which may take 15 days.
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, 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 the Trust's transfer agent. If you have a brokerage account with
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") that
holds shares of Summit Cash Reserves Fund, a series of Financial Institution
Series Trust (such shares are referred to as "Summit Fund Shares"), and the
Summit Fund Shares were purchased by exchange from a Fund, you may purchase
shares of a Fund through your Merrill Lynch broker by exchange of Summit Fund
Shares. See "How to Redeem Shares--Redemption by Exchange." YOU MAY NOT MAKE
MORE THAN FOUR EXCHANGES FROM ANY FUND DURING ANY CALENDAR YEAR. No sales
charge is imposed on purchases of Class A shares by exchange of Class A shares
from another Fund or by exchange of Cash Account Shares or Summit Fund Shares,
previously purchased through use of the exchange privilege. Please review the
information under "How to Redeem Shares--Redemption by Exchange."
SALES CHARGE WAIVER
Dividends and distributions paid by a Fund will be reinvested in shares of
that Fund at net asset value (without the payment of any sales charge) unless
you elect to receive dividends and distributions in cash. Proceeds of shares
redeemed by a Fund within the previous 60 days also may be reinvested in that
Fund's shares at net asset value without the payment of any sales charge. See
"Shareholder Services--Investment in Related Funds."
In addition, the following persons or entities may purchase Class A shares of
a Fund at net asset value without payment of any sales charge, upon written
assurance that the purchase is made for investment purposes and that the
shares will not be sold except through redemption by the Fund: (a) any
investor purchasing shares upon the recommendation of an investment consultant
to whom the investor pays a fee for services relating to investment selection;
(b) any investor purchasing shares through an investment advisory account with
the Adviser or through a brokerage account with CFS over which CFS has
investment discretion; (c) any investor purchasing shares in a non-
discretionary, non-advisory, asset-based-fee brokerage account of a broker
dealer having a selling group agreement with CFS; (d) any investor purchasing
shares by exchange of Cash Account Shares or Summit Fund Shares previously
purchased through use of the exchange privilege; (e) any employee benefit plan
having more than 200 eligible employees or a minimum of $1 million of plan
assets invested in the Funds; (f) any employee benefit plan purchasing shares
through an intermediary that has signed a participation agreement with CFS
specifying certain asset minimums and qualifications, and marketing, program
and trading restrictions; (g) any insurance company separate account used to
fund annuity contracts for employee benefit plans having in
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the aggregate more than 200 eligible employees or a minimum of $1 million of
plan assets invested in the Funds; (h) any employee or registered
representative of CFS, one of its affiliates or a broker-dealer with a selling
group agreement with CFS; (i) any trustee of the Trust; (j) any member of the
immediate family of a person qualifying under (h) or (i), including a spouse,
child, stepchild, sibling, parent, stepparent, grandchild and grandparent, in
each case including in-law and adoptive relationships; (k) any trust, pension,
profit sharing, or other benefit plan in which any person qualifying under (h)
is a participant; (l) 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 (h), (i) or (j)
makes voluntary contributions and has investment self-direction, provided the
purchase is for the account of such person; and (m) any company exchanging
shares with a Fund pursuant to a merger, acquisition or exchange offer. Please
note that, if you purchase or redeem shares through a broker or dealer, the
broker or dealer may charge a fee for effecting the transaction.
Further, no sales charge will be imposed on the sale of Class A shares of a
Fund purchased and paid for with the proceeds of shares redeemed in the prior
12 months from a mutual fund on which an initial sales charge or contingent
deferred sales charge was paid, provided a waiver of the sales charge is
requested when the purchase order for Fund shares is placed, any requested
evidence of eligibility for the sales charge waiver is furnished; and 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, and CFS reserves the
right to redeem shares from your account if necessary to satisfy that
obligation. 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.
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NET ASSET VALUE
The net asset value of the shares of each Fund is determined as of the close
of regular session trading on the New York Stock Exchange, currently 3:00 p.m.
Chicago time, each day that exchange is open for trading by dividing the value
of all of the securities and other assets of the Fund, less its liabilities,
by the number of shares of the Fund outstanding. Net asset value applicable to
a purchase or redemption order is the net asset value next determined after
receipt of the order in good form.
Portfolio securities are valued on the basis of market valuation. Securities
and other assets for which market values are not readily available are valued
at a fair value as determined by a method the board of trustees believes
represents a fair value. For a more complete explanation, please refer to the
Statement of Additional Information.
HOW TO REDEEM SHARES
Shares of the Funds will be redeemed at the respective net asset value next
determined after receipt of a redemption request in good form on any day the
New York Stock Exchange is open for trading. Requests received after the time
for computation of a Fund's net asset value for that day will be processed the
next business day.
If Class C shares, or Class A shares for which the initial purchase price was
$1 million or more, on which no initial sales charge was imposed are redeemed
within one year after purchase (other than by reinvestment of dividends or
distributions), determined on a first-in, first-out basis, a contingent
deferred sales charge of 1% of the purchase price will be imposed.
REDEMPTION BY MAIL
A written request for redemption (and an endorsed share certificate, if
issued) must be received by the Trust's transfer agent at its address shown on
the back cover to constitute a valid redemption request.
Your redemption request must:
1. specify the Fund, your account number 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 the Trust's transfer agent. These firms may charge for their
services in connection with your redemption request but the Funds do not
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
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redemptions may be made under the general criteria set forth below). A $9
service charge for payment of redemption proceeds by wire will be deducted
from the proceeds.
REDEMPTION BY EXCHANGE
You may redeem all or any portion of your shares of a Fund and use the
proceeds to purchase shares of any of the other Funds or Cash Account Shares
(or Summit Fund Shares if your Fund shares are held in a brokerage account
with Merrill Lynch and Merrill Lynch has commenced offering the exchange
program for Summit Fund Shares) if your signed, properly completed application
is on file. AN EXCHANGE TRANSACTION IS A SALE AND PURCHASE OF SHARES FOR
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 through a
wire transfer of funds. 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 (sent to
the former address).
RETIREMENT PLANS
You may use the Funds as investments for your Individual Retirement Account
("IRA"), profit sharing or pension plan, Section 40l(k) plan, Section
403(b)(7) plan in the case of employees of public school systems and certain
non-profit organizations, and certain other qualified plans. A master IRA plan
and information regarding plan administration, fees, and other details are
available from CFS and authorized broker-dealers.
SYSTEMATIC WITHDRAWAL PLAN
You may request that a Fund periodically redeem shares having a specified
redemption value and send you a check for the proceeds. In order to initiate
the
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Systematic Withdrawal Plan, call (800) 823-7826 and request a Systematic
Withdrawal form. 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. You may modify or terminate your Systematic Withdrawal Plan
by written notice to the transfer agent at least seven business days prior to
the start of the month in which the change is to be effective.
AUTOMATIC BANK DRAFT PLAN
If you own shares of a Fund, you may purchase additional shares of that Fund
through the Automatic Bank Draft Plan. Under the Plan, the Trust will
automatically debit your bank checking account on a monthly or semi-monthly
basis in an amount ($50 or more) specified by you and invest the specified
amount in additional shares of the Fund. To obtain an Automatic Bank Draft
Plan form, call (800) 823-7386. The Plan is not available to clients of
service organizations that offer similar investment services.
EXCHANGE PRIVILEGE
You may exchange shares of any Fund for shares of another Fund or for Cash
Account Shares (or for Summit Fund Shares if your Fund shares are held in a
brokerage account with Merrill Lynch) or exchange Cash Account Shares or
Summit Fund Shares for shares of a Fund, without payment of any sales charge
as described above under "How to Purchase Shares--Purchase by Exchange" and
"How to Redeem Shares--Redemption by Exchange."
DIVIDENDS AND DISTRIBUTIONS
Shareholders may receive two kinds of distributions from a Fund: dividends and
capital gains distributions. All dividends and capital gains distributions are
paid in the form of additional shares of the same class credited to your
account at the net asset value per share next computed after the dividend or
distribution is payable to shareholders (without a sales charge) unless you
requested on the account application or in writing that distributions be made
in cash. Convertible Fund, Growth and Income Fund, Strategic Income Fund and
Global Growth and Income Fund declare and pay dividends from net investment
income quarterly; Growth Fund declares dividends annually. Net realized long-
term capital gains, if any, are paid to shareholders by each Fund at least
annually.
If two consecutive dividend checks from a Fund are returned as undeliverable,
undelivered dividends will be invested in additional shares of that Fund at
the current net asset value and the account will be designated as a dividend
reinvestment account.
TAXES
Each Fund intends to continue to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code, and thus not be subject to
federal income taxes on amounts it distributes to shareholders.
You may realize a capital gain or capital loss when you redeem (sell) shares.
The federal tax treatment will depend, of course, on how long you owned the
shares and on your individual tax position. You may be subject to state and
local taxes on your investment in a Fund, depending on the laws of your home
state and locality.
Dividends and distributions paid by a Fund are subject to taxation as of the
date of payment, except that distributions declared in October, November or
December to shareholders of record in one of those months will be treated as
received by shareholders on December 31 of the year in which they are
declared, provided they are paid prior to February 1 of the next year.
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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 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, 1998, CAM managed approximately $2.8
billion in assets of individuals and institutions. CAM is controlled by John
P. Calamos, who has been engaged in the investment advisory business since
1977. Mr. Calamos is also the controlling shareholder of CFS, the distributor
of the Funds.
Subject to the overall authority of the board of trustees, CAM furnishes
continuous investment supervision and management to each Fund under a
management agreement and also furnishes office space, equipment and management
personnel. For these services each Fund pays CAM a fee based on average daily
net assets that is accrued daily and paid monthly. The fee paid by Growth Fund
is at the annual rate of 1% of the first $150 million of average net assets
and .75% of average net assets in excess of $150 million. The fee paid by
Global Growth and Income Fund is at the annual rate of 1% of average net
assets. The fee paid by each other Fund is at the annual rate of .75% of the
first $150 million of average net assets and .50% of average net assets in
excess of $150 million.
CAM has voluntarily undertaken to limit the annual ordinary operating expenses
of shares of each Fund, as a percentage of the average net assets of the
particular class of shares, to 2.00% for Class A shares and 2.50% for Class C
shares through August 31, 1999. Subject to those expense limitations, each
Fund pays all of its operating expenses not specifically assumed by CAM.
John P. Calamos and Nick P. Calamos are responsible for managing the
portfolios of Convertible Fund, Growth and Income Fund and Global Growth and
Income Fund; John P. Calamos and John P. Calamos, Jr. are primarily
responsible for the day-to-day management of the portfolios of Strategic
Income Fund and Growth Fund. During the past five years, John P. Calamos has
been president and a trustee of the Trust and president of CAM and CFS; John
P. Calamos, Jr. has been an employee of CAM; and Nick P. Calamos has been vice
president of the Trust since 1992, a trustee of the Trust since 1997 and a
managing director of CAM and CFS.
DISTRIBUTION PLAN
The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment
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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 finance distribution of the shares of the other Funds.
YEAR 2000 COMPLIANCE
Like other investment companies, financial and business organizations and
individuals around the world, the Funds could be adversely affected if the
computer systems used by the Adviser and other service providers do not
properly process and calculate date-related information and data from and
after January 1, 2000. This is commonly known as the "Year 2000 Problem." The
Adviser is taking steps that it believes are reasonably designed to address
the Year 2000 Problem with respect to computer systems that it uses and to
obtain reasonable assurances that comparable steps are being taken by the
Funds' other major service providers. At this time, there can be no assurance
that these steps will be sufficient to avoid any adverse impact to the Fund.
PERFORMANCE INFORMATION
Information about the performance of each Fund is contained in the Funds'
annual report, which may be obtained from the Trust upon request at no charge.
Each Fund may provide information about the investment performance of its
classes of shares from time to time in advertisements, sales literature and
otherwise. Convertible Fund, Growth and Income Fund and Strategic Income Fund
may quote "yield," an annualized figure based on the amount of net investment
income per share (a hypothetical figure defined by SEC rules) earned during a
30-day period, divided by the public offering price per share on the last day
of the period. Each Fund may advertise its "Total Return" for each class of
shares. Total Return for a class of shares of a Fund for a period is the
percentage change in value during a period of an investment in those shares,
including the value of all shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" is
the average annual compounded rate of change in value represented by the Total
Return for the period. All of these calculations assume the reinvestment of
dividends and distributions in additional shares of the same class. Quotations
of Average Annual Total Return for Class A shares will take into account the
effect of the sales charge on the amount available for investment; quotations
of Total Return for Class A shares will indicate whether the effect of the
sales charge is included. Income taxes payable by a shareholder are not taken
into account. Please refer to the Statement of Additional Information for a
more complete explanation.
In advertising and sales literature, a Fund's performance may be compared with
that of market indices and other mutual funds, comparative performance as
computed in a ranking determined by Lipper Analytical Services, Inc., an
independent
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service that monitors the performance of over 1,000 mutual funds, or that of
another service.
Performance of a Fund will vary from time to time, and past results are not
necessarily indicative of future results. Performance information supplied by
a Fund may not provide a basis for comparison with other investments using
different reinvestment assumptions or time periods.
PORTFOLIO TRANSACTIONS
Consistent with the Trust's policy of obtaining best price and execution on
portfolio transactions, the trustees have determined that portfolio
transactions for a Fund may be executed through CFS if, in the judgment of the
Adviser, the use of CFS is likely to result in a combination of net price and
execution at least as favorable to the Fund as those available from other
qualified brokers and if, in such transactions, CFS charges the Fund
commission rates consistent with those charged by CFS to comparable
unaffiliated customers in similar transactions.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable combination
of net price and execution available and such other policies as the trustees
may determine, the Adviser may consider sales of shares of a Fund as a factor
in the selection of broker-dealers to execute portfolio transactions for that
Fund.
THE TRUST AND ITS SHARES
Each Fund is a series of Calamos Investment Trust (the "Trust"), which was
organized as a Massachusetts business trust on December 21, 1987 and is an
open-end diversified management investment company. Prior to June 23, 1997 the
name of the Trust was CFS Investment Trust. Growth and Income Fund was named
"Calamos Small/Mid Cap Convertible Fund" prior to April 29, 1994.
SHARES
Under the terms of the Agreement and Declaration of Trust, the trustees may
issue an unlimited number of shares of beneficial interest without par value
for each series of shares authorized by the trustees and the trustees may
divide the shares of any series into two or more classes of shares of that
series. Currently the Trust has five series in operation, and each series
offers three classes of shares (Class A, Class C and Class I). All shares
issued will be fully paid and non-assessable and will have no preemptive or
conversion rights.
Class I shares of the Funds, which are offered only with a minimum initial
investment of $5 million, do not bear any sales, marketing or distribution
expenses. In the future, the board of trustees may authorize the issuance of
shares of additional series and additional classes of shares of any series.
Different classes of shares of a single series may bear different sales
charges and other expenses which may affect their relative performance.
Information regarding other classes of shares may be obtained by calling the
Distributor at the telephone number shown on the back cover page of this
prospectus or from any institution that makes available shares of the Funds.
Each Fund's shares are entitled to participate pro rata in any dividends and
other distributions declared by the Trust's board of trustees with respect to
shares of the Fund. All shares of a Fund have equal rights in the event of
liquidation of the Fund.
Under Massachusetts law, the shareholders of the Trust may, under certain
circumstances, be held personally liable for the Trust's obligations. However,
the Trust's Declaration of Trust disclaims liability of the shareholders,
trustees, and officers of the Trust for acts or obligations of a Fund, which
are binding only on the assets and property of the Fund. The Declaration of
Trust requires that notice of such disclaimer be given in each agreement,
obligation, or contract entered into or executed by the Trust or the board of
trustees. The Declaration of Trust provides for indemnification out of a
Fund's assets of all losses and expenses of any Fund shareholder held
personally liable for the Fund's obligations. Thus, the risk of a shareholder
incurring
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financial loss on account of shareholder liability is remote, since it is
limited to circumstances in which the disclaimer is inoperative and the Fund
itself is unable to meet its obligations.
VOTING RIGHTS
Each share has one vote and fractional shares have fractional votes. As a
business trust, the Trust is not required to hold annual shareholder meetings.
However, special meetings may be called for purposes such as electing or
removing trustees, changing fundamental policies or approving an investment
advisory agreement. On any matters submitted to a vote of shareholders, shares
are voted by individual series or class and not in the aggregate, except when
voting in the aggregate is required by the 1940 Act or other applicable law.
Shares of a Fund are not entitled to vote on any matter not affecting that
Fund. All shares of the Trust vote together in the election of trustees.
CERTAIN SHAREHOLDERS
At June 30, 1998, John P. Calamos had the power to vote and dispose of 271,060
shares (43.30%) of Growth Fund. Of these shares, 70,824 shares (11.31%) were
held by CFS 401(k) Profit Sharing Plan and Trust, of which Mr. Calamos is
trustee and in which Mr. Calamos and other employees of Calamos Financial
Services, Inc. and Calamos Asset Management, Inc. are participants. No other
person is known to own beneficially 25% or more of any Fund. Under the 1940
Act, a holder of more than 25% of a Fund's outstanding shares is presumed to
control the Fund. The address of Mr. John Calamos is 1111 East Warrenville
Road, Naperville, Illinois 60563-1493.
SHAREHOLDER INQUIRIES
Inquiries regarding the Funds may be directed to the address or telephone
numbers on the cover of this prospectus.
APPENDIX--DESCRIPTION OF BOND RATINGS
A rating of a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of
an issuer. Consequently, the Funds' investment adviser believes that the
quality of debt securities in which a Fund invests should be continuously
reviewed. A rating is not a recommendation to purchase, sell or hold a
security, because it does not take into account market value or suitability
for a particular investor. When a security has received a rating from more
than one service, each rating should be evaluated independently. Ratings are
based on current information furnished by the issuer or obtained by the
ratings services from other sources which they consider reliable. Ratings may
be changed, suspended or withdrawn as a result of changes in or unavailability
of such information, or for other reasons.
The following is a description of the characteristics of ratings used by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation
("S&P").
MOODY'S RATINGS
AAA--Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt-
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. Although the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such bonds.
AA--Bonds rated Aa are judged to be high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements
31
<PAGE>
present which make the long term risk appear somewhat larger than in Aaa
bonds.
A--Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA--Bonds rated Baa are considered as medium-grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA--Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small.
CAA--Bonds rated Caa are of poor standing. Such bonds may be in default or
there may be present elements of danger with respect to principal or interest.
CA--Bonds rated Ca represent obligations which are speculative in a high
degree. Such bonds are often in default or have other marked shortcomings.
S&P RATINGS
AAA--Bonds rated AAA have the highest rating. Capacity to pay principal and
interest is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay principal and interest
and differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated
categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal 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.
32
<PAGE>
For shareholder assistance
24 hours
800.823.7386
To open an account or obtain information
800.823.7386
Visit our web-site
http://www.calamos.com
Investment Advisor
Calamos Asset Management, Inc.(R)
1111 E. Warrenville Road
Naperville, IL 60563-1493
Distributor
Calamos Financial Services, Inc. (R)
1111 E. Warrenville Road
Naperville, IL 60563-1493
Transfer Agent
First Data Corp.
Investor Services Group
P.O. Box 61503
King of Prussia, PA 19406-0903
Independent Auditors
Ernst & Young LLP
Chicago, IL
Legal Counsel
Bell, Boyd, & Lloyd
Chicago, IL
[CALAMOS LOGO APPEARS HERE]
Calamos Investment Trust(R)
- --------------------------------------------------------------------------------
No dealer, salesman or any other person is authorized, in connection with the
offer contained in this prospectus, to act as agent for Calamos Investment
Trust, nor is any person authorized to give any information or to make any
representations not contained in this prospectus or in supplementary information
or in supplemental sales material authorized by Calamos Investment Trust, and no
person is entitled to rely upon any information or representation not contained
herein or therein. This prospectus does not constitute an offering in any
jurisdiction in which such offering may not lawfully be made.
<PAGE>
Statement of Additional Information August 1, 1998
CALAMOS FAMILY OF FUNDS(R)
Convertible Fund
Growth and Income Fund
Strategic Income Fund
Growth Fund
Global Growth and Income Fund
================================================================================
1111 East Warrenville Road
Naperville, Illinois 60563-1493
(630) 245-7200
Toll Free: (800) 8-CFS-FUND (800/823-7386)
This Statement of Additional Information relates to Calamos Convertible
Fund(R), Calamos Growth and Income Fund(R), Calamos Strategic Income Fund(R),
Calamos Growth Fund(R) and Calamos Global Growth and Income Fund(R) (the
"Funds"), each of which is a series of Calamos Investment Trust (the "Trust"),
formerly named CFS Investment Trust. It is not a prospectus, but provides
information that should be read in conjunction with the Funds' prospectus dated
the same date as this Statement of Additional Information and any supplements
thereto. The prospectus may be obtained without charge by writing or
telephoning the Funds at the address or telephone numbers set forth above.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
Investment Objectives............................................ 2
Investment Practices............................................. 2
Investment Restrictions..........................................13
Management.......................................................15
Investment Advisory Services.....................................16
Distribution Plan................................................17
Purchasing and Redeeming Shares..................................19
Performance Information..........................................20
Distributor......................................................23
Portfolio Transactions...........................................24
Taxation.........................................................25
Allocation Among Funds...........................................26
Certain Shareholders.............................................26
Custodian........................................................28
Independent Auditors.............................................28
General Information..............................................28
Financial Statements.............................................28
</TABLE>
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INVESTMENT OBJECTIVES
Each Fund's investment objective is shown below:
Convertible Fund seeks current income. Growth is a secondary objective
that the Fund also considers when consistent with its objective of current
income.
Growth and Income Fund seeks high long-term total return through capital
appreciation and current income derived from a diversified portfolio of
convertible, equity and fixed-income securities.
Strategic Income Fund seeks high current income consistent with stability
of principal, primarily through investment in convertible securities and
employing short selling to enhance income and hedge against market risk.
Growth Fund seeks long-term capital growth.
Global Growth and Income Fund seeks high long-term total return through
capital appreciation and current income derived from a globally diversified
portfolio of convertible, equity and fixed-income securities.
The investment objective of each Fund is "fundamental," which means that a
Fund's objective cannot be changed without the approval of the holders of a
"majority of the outstanding voting securities" of that Fund, as defined in the
Investment Company Act of 1940.
INVESTMENT PRACTICES
In pursuing its investment objective, each Fund will invest as described
below and in the prospectus.
Foreign Securities
Global Growth and Income Fund may invest all of its assets, and each other
Fund may invest up to 25% of its net assets, in securities of foreign issuers.
For this purpose, foreign securities do not include American Depositary Receipts
(ADRs) or securities guaranteed by a United States person, but may include
foreign securities in the form of European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs) or other securities representing underlying shares of
foreign issuers. Positions in those securities are not necessarily denominated
in the same currency as the common stocks into which they may be converted. ADRs
are receipts typically issued by an American bank or trust company evidencing
ownership of the underlying securities. EDRs are European receipts listed on the
Luxembourg Stock Exchange evidencing a similar arrangement. GDRs are U.S.
dollar-denominated receipts evidencing ownership of foreign securities.
Generally, ADRs, in registered form, are designed for the U.S. securities
markets and EDRs and GDRs, in bearer form, are designed for use in foreign
securities markets. Each Fund may invest in sponsored or unsponsored ADRs. In
the case of an unsponsored ADR, the Fund is likely to bear its proportionate
share of the expenses of the depository and it may have greater difficulty in
receiving shareholder communications than it would have with a sponsored
ADR.
B-2
<PAGE>
To the extent positions in portfolio securities are denominated in foreign
currencies, a Fund's investment performance is affected by the strength or
weakness of the U.S. dollar against those currencies. For example, if the
dollar falls in value relative to the Japanese yen, the dollar value of a
Japanese stock held in the portfolio will rise even though the price of the
stock remains unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the Japanese stock will fall. (See discussion of
transaction hedging and portfolio hedging below under "Currency Exchange
Transactions.")
Investors should understand and consider carefully the risks involved in
foreign investing. Investing in foreign securities, which are generally
denominated in foreign currencies, and utilization of forward foreign currency
exchange contracts involve certain considerations comprising both risks and
opportunities not typically associated with investing in U.S. securities. These
considerations include: fluctuations in exchange rates of foreign currencies;
possible imposition of exchange control regulation or currency restrictions that
would prevent cash from being brought back to the United States; less public
information with respect to issuers of securities; less governmental supervision
of stock exchanges, securities brokers, and issuers of securities; lack of
uniform accounting, auditing and financial reporting standards; lack of uniform
settlement periods and trading practices; less liquidity and frequently greater
price volatility in foreign markets than in the United States; possible
imposition of foreign taxes; and sometimes less advantageous legal, operational
and financial protections applicable to foreign sub-custodial arrangements.
Although the Funds intend to invest in companies and governments of
countries having stable political environments, there is the possibility of
expropriation or confiscatory taxation, seizure or nationalization of foreign
bank deposits or other assets, establishment of exchange controls, the adoption
of foreign government restrictions, or other adverse political, social or
diplomatic developments that could affect investment in these nations. Each
Fund other than Global Growth and Income Fund expects that substantially all of
its investments will be in developed nations.
Currency Exchange Transactions. Currency exchange transactions may be
conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market or through forward
currency exchange contracts ("forward contracts"). Forward contracts are
contractual agreements to purchase or sell a specified currency at a specified
future date (or within a specified time period) and price set at the time of the
contract. Forward contracts are usually entered into with banks, foreign
exchange dealers and broker-dealers, are not exchange traded, and are usually
for less than one year, but may be renewed.
Forward currency exchange transactions may involve currencies of the
different countries in which the Funds may invest and serve as hedges against
possible variations in the exchange rate between these currencies. Currency
exchange transactions are limited to transaction hedging and portfolio hedging
involving either specific transactions or portfolio positions, except to the
extent described below under "Synthetic Foreign Money Market Positions."
Transaction hedging is the purchase or sale of forward contracts with respect to
specific receivables or payables of a Fund accruing in connection with the
purchase and sale of its portfolio securities or the receipt of dividends or
interest thereon. Portfolio hedging is the use of forward contracts with
respect to portfolio security positions denominated or quoted in a particular
foreign currency. Portfolio hedging allows the Fund to limit or reduce its
exposure in a foreign currency by entering into a forward contract to sell such
foreign currency (or another foreign currency that acts as a proxy for that
currency) at a future date for a price payable in U.S. dollars so that the value
of the foreign denominated portfolio securities can be approximately matched by
a foreign denominated liability. The Fund may not engage in portfolio hedging
with respect to the currency of a particular country to an extent greater than
the aggregate market value (at the time of making such sale) of the securities
held in its portfolio denominated or quoted in that particular currency, except
that the Fund may hedge all or part of its foreign currency exposure through the
use of a basket of currencies or a proxy currency where such currencies or
currency act as an effective proxy for other currencies. In such a case, the
Fund may enter into a forward contract where the amount of the foreign currency
to be sold exceeds the value of the securities denominated in such currency.
The use of this basket hedging
B-3
<PAGE>
technique may be more efficient and economical than entering into separate
forward contracts for each currency held in the Fund. The Fund may not engage in
"speculative" currency exchange transactions.
If a Fund enters into a forward contract, the Fund's custodian will
segregate liquid assets of the Fund having a value equal to the Fund's
commitment under such forward contract. At the maturity of the forward contract
to deliver a particular currency, the Fund may either sell the portfolio
security related to the contract and make delivery of the currency, or it may
retain the security and either acquire the currency on the spot market or
terminate its contractual obligation to deliver the currency by purchasing an
offsetting contract with the same currency trader obligating it to purchase on
the same maturity date the same amount of the currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a forward contract. Accordingly, it
may be necessary for a Fund to purchase additional currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the currency.
Conversely, it may be necessary to sell on the spot market some of the currency
received upon the sale of the portfolio security if its market value exceeds the
amount of currency the Fund is obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
currency. Should forward prices decline during the period between the Fund's
entering into a forward contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the price of
the currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the value of a portfolio security traded in that currency or
prevent a loss if the value of the security declines. Hedging transactions also
preclude the opportunity for gain if the value of the hedged currency should
rise. Moreover, it may not be possible for a Fund to hedge against a
devaluation that is so generally anticipated that the Fund is not able to
contract to sell the currency at a price above the devaluation level it
anticipates. The cost to a Fund of engaging in currency exchange transactions
varies with such factors as the currency involved, the length of the contract
period, and prevailing market conditions. Since currency exchange transactions
are usually conducted on a principal basis, no fees or commissions are involved.
Synthetic Foreign Money Market Positions. Each Fund may invest in money
market instruments denominated in foreign currencies. In addition to, or in
lieu of, such direct investment, a Fund may construct a synthetic foreign money
market position by (a) purchasing a money market instrument denominated in one
currency, generally U.S. dollars, and (b) concurrently entering into a forward
contract to deliver a corresponding amount of that currency in exchange for a
different currency on a future date and at a specified rate of exchange. For
example, a synthetic money market position in Japanese yen could be constructed
by purchasing a U.S. dollar money market instrument, and entering concurrently
into a forward contract to deliver a corresponding amount of U.S. dollars in
exchange for Japanese yen on a specified date and at a specified rate of
exchange. Because of the availability of a variety of highly liquid short-term
U.S. dollar money market instruments, a synthetic money market position
utilizing such U.S. dollar instruments may offer greater liquidity than direct
investment in foreign currency and a concurrent construction of a synthetic
position in such foreign currency, in terms of both income yield and gain or
loss from changes in currency exchange rates, in general should be similar, but
would not be identical because the components of the alternative investments
would not be identical.
B-4
<PAGE>
Lending of Portfolio Securities
Each Fund may lend its portfolio securities to broker-dealers and banks.
Any such loan must be continuously secured by collateral in cash or cash
equivalents maintained on a current basis in an amount at least equal to the
market value of the securities loaned by the Fund. The Fund would continue to
receive the equivalent of the interest or dividends paid by the issuer on the
securities loaned, and would also receive an additional return that may be in
the form of a fixed fee or a percentage of the collateral. The Fund would have
the right to call the loan and obtain the securities loaned at any time on
notice of not more than five business days. The Fund would not have the right
to vote the securities during the existence of the loan but would call the loan
to permit voting of the securities, if, in the Adviser's judgment, a material
event requiring a shareholder vote would otherwise occur before the loan was
repaid. In the event of bankruptcy or other default of the borrower, the Fund
could experience both delays in liquidating the loan collateral or recovering
the loaned securities and losses, including (a) possible decline in the value of
the collateral or in the value of the securities loaned during the period while
the Fund seeks to enforce its rights thereto, (b) possible subnormal levels of
income and lack of access to income during this period, and (c) expenses of
enforcing its rights.
Repurchase Agreements
Each Fund may invest in repurchase agreements, provided that Global Growth
and Income Fund may not invest more than 15%, and each other Fund may not invest
more than 10%, of its net assets in repurchase agreements maturing in more than
seven days and any other illiquid securities. A repurchase agreement is a sale
of securities to the Fund in which the seller agrees to repurchase the
securities at a higher price, which includes an amount representing interest on
the purchase price, within a specified time. In the event of bankruptcy of the
seller, the Fund could experience both losses and delays in liquidating its
collateral.
Options on Securities, Indexes and Currencies
Each Fund may purchase and sell put options and call options on securities,
indexes or foreign currencies in standardized contracts traded on recognized
securities exchanges, boards of trade, or similar entities, or quoted on NASDAQ.
A Fund may purchase agreements, sometimes called cash puts, that may accompany
the purchase of a new issue of bonds from a dealer.
An option on a security (or index) is a contract that gives the purchaser
(holder) of the option, in return for a premium, the right to buy from (call) or
sell to (put) the seller (writer) of the option the security underlying the
option (or the cash value of the index) at a specified exercise price at any
time during the term of the option (normally not exceeding nine months). The
writer of an option on an individual security or on a foreign currency has the
obligation upon exercise of the option to deliver the underlying security or
foreign currency upon payment of the exercise price or to pay the exercise price
upon delivery of the underlying security or foreign currency. Upon exercise,
the writer of an option on an index is obligated to pay the difference between
the cash value of the index and the exercise price multiplied by the specified
multiplier for the index option. (An index is designed to reflect specified
facets of a particular financial or securities market, a specific group of
financial instruments or securities, or certain economic indicators.)
A Fund will write call options and put options only if they are "covered."
For example, in the case of a call option on a security, the option is "covered"
if the Fund owns the security underlying the call or has an absolute and
immediate right to acquire that security without additional cash consideration
(or, if additional cash consideration is required, cash or cash equivalents in
such amount are held in a segregated account by its custodian) upon conversion
or exchange of other securities held in its portfolio.
If an option written by a Fund expires, the Fund realizes a capital gain
equal to the premium received at the time the option was written. If an option
purchased by the Fund expires, the Fund realizes a capital loss equal to the
premium paid.
Prior to the earlier of exercise or expiration, an option may be closed out
by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price and
B-5
<PAGE>
expiration). There can be no assurance, however, that a closing purchase or sale
transaction can be effected when the Fund desires.
A Fund will realize a capital gain from a closing purchase transaction if
the cost of the closing option is less than the premium received from writing
the option, or, if it is more, the Fund will realize a capital loss. If the
premium received from a closing sale transaction is more than the premium paid
to purchase the option, the Fund will realize a capital gain or, if it is less,
the Fund will realize a capital loss. The principal factors affecting the
market value of a put or a call option include supply and demand, interest
rates, the current market price of the underlying security or index in relation
to the exercise price of the option, the volatility of the underlying security
or index, and the time remaining until the expiration date.
A put or call option purchased by a Fund is an asset of the Fund, valued
initially at the premium paid for the option. The premium received for an
option written by the Fund is recorded as a deferred credit. The value of an
option purchased or written is marked-to-market daily and is valued at the
closing price on the exchange on which it is traded or, if not traded on an
exchange or no closing price is available, at the mean between the last bid and
asked prices.
Risks Associated with Options. There are several risks associated with
transactions in options. For example, there are significant differences between
the securities markets, the currency markets and the options markets that could
result in an imperfect correlation among these markets, causing a given
transaction not to achieve its objectives. A decision as to whether, when and
how to use options involves the exercise of skill and judgment, and even a well-
conceived transaction may be unsuccessful to some degree because of market
behavior or unexpected events.
There can be no assurance that a liquid market will exist when a Fund seeks
to close out an option position. If the Fund were unable to close out an option
that it has purchased on a security, it would have to exercise the option in
order to realize any profit or the option would expire and become worthless. If
the Fund were unable to close out a covered call option that it had written on a
security, it would not be able to sell the underlying security until the option
expired. As the writer of a covered call option on a security, the Fund
foregoes, during the option's life, the opportunity to profit from increases in
the market value of the security covering the call option above the sum of the
premium and the exercise price of the call. As the writer of a covered call
option on a foreign currency, the Fund foregoes, during the option's life, the
opportunity to profit from currency appreciation.
If trading were suspended in an option purchased or written by a Fund, the
Fund would not be able to close out the option. If restrictions on exercise
were imposed, the Fund might not be able to exercise an option it has purchased.
Futures Contracts and Options on Futures Contracts
Each Fund may use interest rate futures contracts, index futures contracts
and foreign currency futures contracts. An interest rate, index or foreign
currency futures contract provides for the future sale by one party and purchase
by another party of a specified quantity of a financial instrument or the cash
value of an index/1/ at a specified price and time. A public market exists in
futures contracts covering a number of indexes (including, but not limited to:
the Standard & Poor's 500 Index, the Russell 2000 Index, the Value Line
Composite Index, and the New York Stock Exchange Composite Index) as well as
financial instruments (including, but not limited to: U.S. Treasury bonds, U.S.
Treasury notes, Eurodollar
- ----------------------
/1/ A futures contract on an index is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last trading
day of the contract and the price at which the index contract was
originally written. Although the value of a securities index is a function
of the value of certain specified securities, no physical delivery of those
securities is made.
B-6
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certificates of deposit and foreign currencies). Other index and financial
instrument futures contracts are available and it is expected that additional
futures contracts will be developed and traded.
Each Fund may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities,
indexes and foreign currencies (discussed above). A futures option gives the
holder the right, in return for the premium paid, to assume a long position
(call) or short position (put) in a futures contract at a specified exercise
price at any time during the period of the option. Upon exercise of a call
option, the holder acquires a long position in the futures contract and the
writer is assigned the opposite short position. In the case of a put option,
the opposite is true. The Fund might, for example, use futures contracts to
hedge against or gain exposure to fluctuations in the general level of stock
prices, anticipated changes in interest rates or currency fluctuations that
might adversely affect either the value of the Fund's securities or the price of
the securities that the Fund intends to purchase. Although other techniques
could be used to reduce or increase the Fund's exposure to stock price, interest
rate and currency fluctuations, the Fund may be able to achieve its desired
exposure more effectively and perhaps at a lower cost by using futures contracts
and futures options.
A Fund will only enter into futures contracts and futures options that are
standardized and traded on an exchange, board of trade or similar entity, or
quoted on an automated quotation system.
The success of any futures transaction depends on the Adviser correctly
predicting changes in the level and direction of stock prices, interest rates,
currency exchange rates and other factors. Should those predictions be
incorrect, the Fund's return might have been better had the transaction not been
attempted; however, in the absence of the ability to use futures contracts, the
Adviser might have taken portfolio actions in anticipation of the same market
movements with similar investment results, but, presumably, at greater
transaction costs.
When a purchase or sale of a futures contract is made by a Fund, the Fund
is required to deposit with its custodian (or broker, if legally permitted) a
specified amount of cash or U.S. Government securities or other securities
acceptable to the broker ("initial margin"). The margin required for a futures
contract is set by the exchange on which the contract is traded and may be
modified during the term of the contract, although a Fund's broker may require
margin deposits in excess of the minimum required by the exchange. The initial
margin is in the nature of a performance bond or good faith deposit on the
futures contract, which is returned to the Fund upon termination of the
contract, assuming all contractual obligations have been satisfied. The Fund
expects to earn interest income on its initial margin deposits. A futures
contract held by the Fund is valued daily at the official settlement price of
the exchange on which it is traded. Each day the Fund pays or receives cash,
called "variation margin," equal to the daily change in value of the futures
contract. This process is known as "marking-to-market." Variation margin paid
or received by the Fund does not represent a borrowing or loan by the Fund but
is instead settlement between the Fund and the broker of the amount one would
owe the other if the futures contract had expired at the close of the previous
day. In computing daily net asset value, the Fund will mark-to-market its open
futures positions.
The Fund is also required to deposit and maintain margin with respect to
put and call options on futures contracts written by it. Such margin deposits
will vary depending on the nature of the underlying futures contract (and the
related initial margin requirements), the current market value of the option and
other futures positions held by the Fund.
Although some futures contracts call for making or taking delivery of the
underlying securities, usually these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Fund engaging in the
transaction realizes a capital gain, or if it is more, the Fund realizes a
capital loss. Conversely, if an offsetting sale price is more than the original
purchase price, the Fund engaging in the transaction realizes a capital gain, or
if it less, the Fund realizes a capital loss. The transaction costs must also
be included in these calculations.
B-7
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Risks Associated with Futures. There are several risks associated with the
use of futures contracts and futures options. A purchase or sale of a futures
contract may result in losses in excess of the amount invested in the futures
contract. In trying to increase or reduce market exposure, there can be no
guarantee that there will be a correlation between price movements in the
futures contract and in the portfolio exposure sought. In addition, there are
significant differences between the securities and futures markets that could
result in an imperfect correlation between the markets, causing a given
transaction not to achieve its objectives. The degree of imperfection of
correlation depends on circumstances such as: variations in speculative market
demand for futures, futures options and the related securities, including
technical influences in futures and futures options trading and differences
between the securities markets and the securities underlying the standard
contracts available for trading. For example, in the case of index futures
contracts, the composition of the index, including the issuers and the weighing
of each issue, may differ from the composition of the Fund's portfolio, and, in
the case of interest rate futures contracts, the interest rate levels,
maturities and creditworthiness of the issues underlying the futures contract
may differ from the financial instruments held in the Fund's portfolio. A
decision as to whether, when and how to use futures contracts involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected stock price
or interest rate trends.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because the
limit may work to prevent the liquidation of unfavorable positions. For
example, futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses. Stock index futures contracts are not normally subject to
such daily price change limitations.
There can be no assurance that a liquid market will exist at a time when a
Fund seeks to close out a futures or futures option position. The Fund would be
exposed to possible loss on the position during the interval of inability to
close, and would continue to be required to meet margin requirements until the
position is closed. In addition, many of the contracts discussed above are
relatively new instruments without a significant trading history. As a result,
there can be no assurance that an active secondary market will develop or
continue to exist.
Limitations on Options and Futures
If other options, futures contracts or futures options of types other than
those described herein are traded in the future, a Fund may also use those
investment vehicles, provided the board of trustees determines that their use is
consistent with the Fund's investment objective.
A Fund will not enter into a futures contract or purchase an option thereon
if, immediately thereafter, the initial margin deposits for futures contracts
held by the Fund plus premiums paid by it for open futures option positions,
less the amount by which any such positions are "in-the-money,"/2/ would exceed
5% of the Fund's total assets.
When purchasing a futures contract or writing a put option on a futures
contract, a Fund must maintain with its custodian (or broker, if legally
permitted) cash or cash equivalents (including any margin) equal to the market
value of such contract. When writing a call option on a futures contract, the
Fund
- ------------------------
/2/ A call option is "in-the-money" if the value of the futures contract that
is the subject of the option exceeds the exercise price. A put option is
"in-the-money" if the exercise price exceeds the value of the futures
contract that is the subject of the option.
B-8
<PAGE>
similarly will maintain with its custodian cash or cash equivalents (including
any margin) equal to the amount by which such option is in-the-money until the
option expires or is closed by the Fund.
A Fund may not maintain open short positions in futures contracts, call
options written on futures contracts or call options written on indexes if, in
the aggregate, the market value of all such open positions exceeds the current
value of the securities in its portfolio, plus or minus unrealized gains and
losses on the open positions, adjusted for the historical relative volatility of
the relationship between the portfolio and the positions. For this purpose, to
the extent the Fund has written call options on specific securities in its
portfolio, the value of those securities will be deducted from the current
market value of the securities portfolio.
In order to comply with Commodity Futures Trading Commission Regulation 4.5
and thereby avoid being deemed a "commodity pool operator," a Fund will use
commodity futures or commodity options contracts solely for bona fide hedging
purposes within the meaning and intent of Regulation 1.3(z), or, with respect to
positions in commodity futures and commodity options contracts that do not come
within the meaning and intent of 1.3(z), the aggregate initial margin and
premiums required to establish such positions will not exceed 5% of the fair
market value of the assets of the Fund, after taking into account unrealized
profits and unrealized losses on any such contracts it has entered into [in the
case of an option that is in-the-money at the time of purchase, the in-the-money
amount (as defined in Section 190.01(x) of the Commission Regulations) may be
excluded in computing such 5%].
As long as a Fund continues to sell its shares in certain states, the
Fund's options and futures transactions will also be subject to certain non-
fundamental investment restrictions set forth under "Investment Restrictions" in
this Statement of Additional Information.
Taxation of Options and Futures
If a Fund exercises a call or put option that it holds, the premium paid
for the option is added to the cost basis of the security purchased (call) or
deducted from the proceeds of the security sold (put). For cash settlement
options and futures options exercised by the Fund, the difference between the
cash received at exercise and the premium paid is a capital gain or loss.
If a call or put option written by a Fund is exercised, the premium is
included in the proceeds of the sale of the underlying security (call) or
reduces the cost basis of the security purchased (put). For cash settlement
options and futures options written by the Fund, the difference between the cash
paid at exercise and the premium received is a capital gain or loss.
Entry into a closing purchase transaction will result in capital gain or
loss. If an option written by a Fund was in-the-money at the time it was
written and the security covering the option was held for more than the long-
term holding period prior to the writing of the option, any loss realized as a
result of a closing purchase transaction will be long-term. The holding period
of the securities covering an in-the-money option will not include the period of
time the option is outstanding.
If a Fund writes an equity call option/3/ other than a "qualified covered
call option," as defined in the Internal Revenue Code, any loss on such option
transaction, to the extent it does not exceed the unrealized gains on the
securities covering the option, may be subject to deferral until the securities
covering the option have been sold.
- ----------------------
/3/ An equity option is defined to mean any option to buy or sell stock, and
any other option the value of which is determined by reference to an index
of stocks of the type that is ineligible to be traded on a commodity
futures exchange (e.g., an option contract on a sub-index based on the
price of nine hotel-casino stocks). The definition of equity option
excludes options on broad-based stock indexes (such as the Standard &
Poor's 500 index).
B-9
<PAGE>
A futures contract held until delivery results in capital gain or loss
equal to the difference between the price at which the futures contract was
entered into and the settlement price on the earlier of delivery notice date or
expiration date. If the Fund delivers securities under a futures contract, the
Fund also realizes a capital gain or loss on those securities.
For federal income tax purposes, a Fund generally is required to recognize
as income for each taxable year its net unrealized gains and losses as of the
end of the year on futures, futures options and non-equity options positions
("year-end mark-to-market"). Generally, any gain or loss recognized with
respect to such positions (either by year-end mark-to-market or by actual
closing of the positions) is considered to be 60% long-term and 40% short-term,
without regard to the holding periods of the contracts. However, in the case of
positions classified as part of a "mixed straddle," the recognition of losses on
certain positions (including options, futures and futures options positions, the
related securities and certain successor positions thereto) may be deferred to a
later taxable year. Sale of futures contracts or writing of call options (or
futures call options) or buying put options (or futures put options) that are
intended to hedge against a change in the value of securities held by the Fund:
(1) will affect the holding period of the hedged securities; and (2) may cause
unrealized gain or loss on such securities to be recognized upon entry into the
hedge.
If a Fund were to enter into a short index future, short index futures
option or short index option position and the Fund's portfolio were deemed to
"mimic" the performance of the index underlying such contract, the option or
futures contract position and the Fund's stock positions would be deemed to be
positions in a mixed straddle, subject to the above-mentioned loss deferral
rules.
In order for a Fund to continue to qualify for federal income tax treatment
as a regulated investment company, at least 90% of its gross income for a
taxable year must be derived from qualifying income; i.e., dividends, interest,
income derived from loans of securities and gains from the sale of securities or
foreign currencies, or other income (including but not limited to gains from
options, futures or forward contracts). Any net gain realized from futures (or
futures options) contracts will be considered gain from the sale of securities
and therefore be qualifying income for purposes of the 90% requirement.
Each Fund distributes to shareholders annually any net capital gains that
have been recognized for federal income tax purposes (including year-end mark-
to-market gains) on options and futures transactions. Such distributions are
combined with distributions of capital gains realized on the Fund's other
investments, and shareholders are advised of the nature of the payments.
Portfolio Turnover
Although the Funds do not purchase securities with a view to rapid
turnover, there are no limitations on the length of time that portfolio
securities must be held. Portfolio turnover can occur for a number of reasons,
including calls for redemption, general conditions in the securities markets,
more favorable investment opportunities in other securities, or other factors
relating to the desirability of holding or changing a portfolio investment. The
portfolio turnover rates may vary greatly from year to year. A high rate of
portfolio turnover in a Fund would result in increased transaction expense,
which must be borne by that Fund. High portfolio turnover may also result in
the realization of capital gains or losses and, to the extent net short-term
capital gains are realized, any distributions resulting from such gains will be
considered ordinary income for federal income tax purposes. See "Risk of
Investment" and "Dividends and Distributions" in the Prospectus.
Short Sales
Each Fund may attempt to hedge against market risk and to enhance income by
selling short "against the box," that is: (1) entering into short sales of
securities that it currently has the right to acquire through the conversion or
exchange of other securities that it owns, or to a lesser extent, entering into
short sales of securities that it currently owns; and (2) entering into
arrangements with the broker-dealers through which such securities are sold
short to receive income with respect to the proceeds of short sales during the
period the Fund's short positions remain open. Each Fund other than Strategic
Income Fund
B-10
<PAGE>
may make short sales of securities only if at all times when a short position is
open the Fund owns an equal amount of such securities or securities convertible
into or exchangeable for, without payment of any further consideration,
securities of the same issue as, and equal in amount to, the securities sold
short.
In addition to selling short against the box, Strategic Income Fund may
sell short securities that it currently has the right to acquire upon payment of
additional consideration, for instance, upon exercise of a warrant or option.
This technique would be used by Strategic Income Fund to hedge against market
risk in connection with a synthetic convertible security in the same way selling
short against the box hedges against market risk in connection with a true
convertible security.
In a short sale against the box, a Fund does not deliver from its portfolio
the securities sold and does not receive immediately the proceeds from the short
sale. Instead, the Fund borrows the securities sold short from a broker-dealer
through which the short sale is executed, and the broker-dealer delivers such
securities, on behalf of the Fund, to the purchaser of such securities. Such
broker-dealer is entitled to retain the proceeds from the short sale until the
Fund delivers to such broker-dealer the securities sold short. In addition, the
Fund is required to pay to the broker-dealer the amount of any dividends paid on
shares sold short. Finally, to secure its obligation to deliver to such broker-
dealer the securities sold short, the Fund must deposit and continuously
maintain in a separate account with the Fund's custodian an equivalent amount of
the securities sold short or securities convertible into or exchangeable for
such securities without the payment of additional consideration. The Fund is
said to have a short position in the securities sold until it delivers to the
broker-dealer the securities sold, at which time the Fund receives the proceeds
of the sale. Because the Fund ordinarily will want to continue to hold
securities in its portfolio that are sold short, the Fund will normally close
out a short position by purchasing on the open market and delivering to the
broker-dealer an equal amount of the securities sold short, rather than by
delivering portfolio securities.
A short sale works the same way, except that the Fund places in the
segregated account cash or U.S. government securities equal in value to the
difference between (i) the market value of the securities sold short at the time
they were sold short and (ii) any cash or U.S. government securities required to
be deposited with the broker as collateral. In addition, so long as the short
position is open, the Fund must daily adjust the value of the segregated account
so that the amount deposited in it, plus any amount deposited with the broker as
collateral, will equal the current market value of the security sold short.
However, the value of the segregated account may not be reduced below the point
at which the segregated account, plus any amount deposited with the broker, is
equal to the market value of the securities sold short at the time they were
sold short.
Short sales may protect a Fund against the risk of losses in the value of
its portfolio securities because any unrealized losses with respect to such
portfolio securities should be wholly or partially offset by a corresponding
gain in the short position. However, any potential gains in such portfolio
securities should be wholly or partially offset by a corresponding loss in the
short position. The extent to which such gains or losses are offset will depend
upon the amount of securities sold short relative to the amount the Fund owns,
either directly or indirectly, and, in the case where the Fund owns convertible
securities, changes in the conversion premium.
Short sale transactions of a Fund involve certain risks. In particular,
the imperfect correlation between the price movements of the convertible
securities and the price movements of the underlying common stock being sold
short creates the possibility that losses on the short sale hedge position may
be greater than gains in the value of the portfolio securities being hedged. In
addition, to the extent that a Fund pays a conversion premium for a convertible
security, the Fund is generally unable to protect against a loss of such premium
pursuant to a short sale hedge. In determining the number of shares to be sold
short against a Fund's position in the convertible securities, the anticipated
fluctuation in the conversion premiums is considered. A Fund will also incur
transaction costs in connection with short sales. Certain provisions of the
Internal Revenue Code may limit the degree to which the Fund is able to enter
into short sales, which limitations might impair the Fund's ability to achieve
its investment objective. See "Taxation."
B-11
<PAGE>
In addition to enabling a Fund to hedge against market risk, short sales
may afford a Fund an opportunity to earn additional current income to the extent
the Fund is able to enter into arrangements with broker-dealers through which
the short sales are executed to receive income with respect to the proceeds of
the short sales during the period the Fund's short positions remain open.
Unseasoned Issuers
Each Fund may invest up to 5% of its total assets in the securities of
unseasoned issuers, that is, issuers that, together with predecessors, have been
in operation less than three years. The Adviser believes that investment in
securities of unseasoned issuers may provide opportunities for long-term capital
growth, although the risks of investing in such securities are greater than with
common stocks of more established companies because unseasoned issuers have only
a brief operating history and may have more limited markets and financial
resources. No Fund other than Global Growth and Income Fund and Growth Fund
currently intends to invest in securities of unseasoned issuers.
"When-Issued" and Delayed Delivery Securities and Reverse Repurchase Agreements
Each Fund may purchase securities on a when-issued or delayed-delivery
basis. Although the payment and interest terms of these securities are
established at the time the Fund enters into the commitment, the securities may
be delivered and paid for a month or more after the date of purchase, when their
value may have changed. The Fund makes such commitments only with the intention
of actually acquiring the securities, but may sell the securities before
settlement date if the Adviser deems it advisable for investment reasons. The
Fund may utilize spot and forward foreign currency exchange transactions to
reduce the risk inherent in fluctuations in the exchange rate between one
currency and another when securities are purchased or sold on a when-issued or
delayed-delivery basis.
Each Fund may enter into reverse repurchase agreements with banks and
securities dealers. A reverse repurchase agreement is a repurchase agreement in
which the Fund is the seller of, rather than the investor in, securities and
agrees to repurchase them at an agreed-upon time and price. Use of a reverse
repurchase agreement may be preferable to a regular sale and later repurchase of
securities because it avoids certain market risks and transaction costs.
At the time when a Fund enters into a binding obligation to purchase
securities on a when-issued basis or enters into a reverse repurchase agreement,
liquid assets (cash, U.S. Government securities or other "high-grade" debt
obligations) of the Fund having a value at least as great as the purchase price
of the securities to be purchased will be segregated on the books of the Fund
and held by the custodian throughout the period of the obligation. The use of
these investment strategies, as well as borrowing under a line of credit as
described below, may increase net asset value fluctuation.
Illiquid Securities
Global Growth and Income Fund may invest up to 15% of its total assets, and
each other Fund may invest up to 10% of its total assets, taken at market value,
in illiquid securities, including any securities that are not readily marketable
either because they are restricted securities or for other reasons. Restricted
securities are securities that are subject to restrictions on resale because
they have not been registered for sale under the Securities Act of 1933. A
position in restricted securities might adversely affect the liquidity and
marketability of a portion of the Fund's portfolio, and the Fund might not be
able to dispose of its holdings in such securities promptly or at reasonable
prices. In those instances where a Fund is required to have restricted
securities held by it registered prior to sale by the Fund and the Fund does not
have a contractual commitment from the issuer or seller to pay the costs of such
registration, the gross proceeds from the sale of securities would be reduced by
the registration costs and underwriting discounts. Any such registration costs
are not included in the percentage limitation on a Fund's investment in
restricted securities. The Funds do not intend to invest in illiquid securities
during the next fiscal year, except that the Funds may invest in options traded
on the NASDAQ National Market System.
B-12
<PAGE>
Repurchase Agreements
As part of its strategy for the temporary investment of cash, each Fund may
enter into "repurchase agreements" pertaining to U.S. Government securities with
member banks of the Federal Reserve System or primary dealers (as designated by
the Federal Reserve Bank of New York) in such securities. A repurchase
agreement arises when a Fund purchases a security and simultaneously agrees to
resell it to the vendor at an agreed upon future date. The resale price is
greater than the purchase price, reflecting an agreed upon market rate of return
that is effective for the period of time the Fund holds the security and that is
not related to the coupon rate on the purchased security. Such agreements
generally have maturities of no more than seven days and could be used to permit
a Fund to earn interest on assets awaiting long term investment. The Funds
require continuous maintenance by the custodian for the Fund's account in the
Federal Reserve/Treasury Book Entry System of collateral in an amount equal to,
or in excess of, the market value of the securities that are the subject of a
repurchase agreement. Repurchase agreements maturing in more than seven days
are considered illiquid securities. In the event of a bankruptcy or other
default of a seller of a repurchase agreement, the Fund could experience both
delays in liquidating the underlying security and losses, including: (a)
possible decline in the value of the underlying security during the period while
the Fund seeks to enforce its rights thereto; (b) possible subnormal levels of
income and lack of access to income during this period; and (c) expenses of
enforcing its rights.
INVESTMENT RESTRICTIONS
Each Fund operates under the following investment restrictions. A Fund may
not (except as indicated):
(i) as to 75% of its assets, invest more than 5% of its total assets, taken at
market value at the time of a particular purchase, in the securities of
any one issuer, except that this restriction does not apply to securities
issued or guaranteed by the United States Government or its agencies or
instrumentalities;
(ii) acquire more than 10%, taken at the time of a particular purchase, of the
outstanding voting securities of any one issuer;
(iii) act as an underwriter of securities, except insofar as it may be deemed
an underwriter for purposes of the Securities Act of 1933 on disposition
of securities acquired subject to legal or contractual restrictions on
resale;
(iv) purchase or sell real estate (although it may purchase securities secured
by real estate or interests therein, or securities issued by companies
which invest in real estate or interests therein), commodities or
commodity contracts;
(v) make loans, but this restriction shall not prevent the Fund from (a)
investing in debt obligations, (b) investing in repurchase agreements or
(c) lending portfolio securities;
(vi) invest more than 10% (or 15% in the case of Global Growth and Income Fund)
of the Fund's net assets (taken at market value at the time of each
purchase) in illiquid securities, including repurchase agreements maturing
in more than seven days;
(vii) borrow, except that the Fund may (a) borrow up to 10% of its total
assets, taken at market value at the time of such borrowing, as a
temporary measure for extraordinary or emergency purposes, but not to
increase portfolio income (the total of reverse repurchase agreements/4/
and such
- ----------------------
/4/ No Fund currently intends to enter into reverse repurchase agreements.
B-13
<PAGE>
borrowings will not exceed 10% of total assets, and the Fund will not
purchase securities when its borrowings exceed 5% of total assets) and
(b) enter into transactions in options;
(viii) invest in a security if more than 25% of its total assets (taken at
market value at the time of a particular purchase) would be invested in
the securities of issuers in any particular industry, except that this
restriction does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities; or
(ix) issue any senior security, except that Strategic Income Fund may sell
securities short.
The above restrictions are fundamental policies and may not be changed with
respect to a Fund without the approval of a "majority" of the outstanding shares
of that Fund, which for this purpose means the approval of the lesser of (a)
more than 50% of the outstanding voting securities of that Fund or (b) 67% or
more of the outstanding shares if the holders of more than 50% of the
outstanding shares of that Fund are present or represented at the meeting by
proxy.
In addition to the fundamental restrictions listed above, no Fund may:
(a) invest in any of the following: (i) interests in oil, gas, or other
mineral exploration or development programs; (ii) puts, calls, straddles,
spreads, or any combination thereof (except that each Fund may enter into
transactions in options, futures and options on futures); and (iii) shares of
other open-end investment companies (except in connection with a plan of merger
or reorganization);
(b) invest in companies for the purpose of exercising control or
management;
(c) purchase securities on margin (except for use of such short-term
credits as are necessary for the clearance of transactions, including
transactions in options, futures and options on futures), or participate on a
joint or a joint and several basis in any trading account in securities, except
in connection with transactions in options, futures and options on futures;
(d) make short sales of securities, except that a Fund may make short sales
of securities (i) if the Fund owns an equal amount of such securities, or owns
securities that are convertible or exchangeable, without payment of further
consideration, into an equal amount of such securities and (ii) Strategic Income
Fund may make short sales of securities other than those described in clause
(i), provided that no more than 10% of its net assets would, when added
together, be deposited with brokers as collateral or allocated to segregated
accounts in connection with short sales other than those described in clause
(i);
(e) invest more than 5% of the Fund's net assets (valued at time of
purchase) in warrants, nor more than 2% of its net assets in warrants that are
not listed on the New York or American stock exchange or a recognized foreign
exchange;
(f) write an option on a security unless the option is issued by the
Options Clearing Corporation, an exchange or similar entity;
(g) buy or sell an option on a security, a futures contract or an option on
a futures contract, unless the option, the futures contract or the option on the
futures contract is offered through the facilities of a recognized securities
association or listed on a recognized exchange or similar entity;
(h) purchase a put or call option if the aggregate premiums paid for all
put and call options exceed 20% of its net assets (less the amount by which any
such positions are in-the-money), excluding put and call options purchased as
closing transactions;
(i) invest more than 25% of its net assets (valued at time of purchase) in
securities of foreign issuers (other than securities represented by American
Depositary Receipts and securities guaranteed by
B-14
<PAGE>
a U.S. person), except that Global Growth and Income Fund may invest all of its
assets in securities of foreign issuers.
Restrictions (a) through (i) may be changed by the board of trustees
without shareholder approval.
Notwithstanding the foregoing investment restrictions, a Fund may purchase
securities pursuant to the exercise of subscription rights, subject to the
condition that such purchase will not result in the Fund's ceasing to be a
diversified investment company. Far Eastern and European corporations frequently
issue additional capital stock by means of subscription rights offerings to
existing shareholders at a price substantially below the market price of the
shares. The failure to exercise such rights would result in the Fund's interest
in the issuing company being diluted. The market for such rights is not well
developed in all cases and, accordingly, the Fund may not always realize full
value on the sale of rights. The exception applies in cases where the limits set
forth in the investment restrictions would otherwise be exceeded by exercising
rights or would have already been exceeded as a result of fluctuations in the
market value of the Fund's portfolio securities with the result that the Fund
would be forced either to sell securities at a time when it might not otherwise
have done so, to forego exercising the rights.
MANAGEMENT
Trustees and Officers
Set forth below is information about the trustees and officers of the
Trust.
<TABLE>
<CAPTION>
Name, Position(s) with Trust
and Age at March 31, 1998 Principal Occupation(s) During Past Five Years
- ---------------------------- ----------------------------------------------
<S> <C>
John P. Calamos (1) President, Calamos Asset Management, Inc.
Trustee and President, 57 ("CAM"), an investment adviser and the Funds'
investment adviser; President, Calamos
Financial Services, Inc. ("CFS"), a broker-
dealer and the Funds' distributor.
Nick P. Calamos (1) Managing Director, CAM and CFS.
Trustee and Vice President, 38
Richard J. Dowen (2) Professor of Finance, Northern Illinois
Trustee, 53 University.
Robert Frost (2) Management Consultant, ECOM Consultants, Inc.
Trustee, 58
William A. Kaun (2) Principal, W.A. Kaun Co. (investment adviser
Trustee, 70 and publisher).
John P. Salmon Vice President - Mutual Fund Operations, CAM,
Treasurer and Assistant since 1997; Manager and Assistant Vice
Secretary, 52 President, Collective Investment Fund
Accounting Group, First National Bank of
Chicago, prior thereto.
James S. Hamman, Jr. Vice President and General Counsel, CAM, since
Secretary, 28 1998; Vice President and Associate Counsel,
Scudder Kemper Investments, Inc. (investment
manager), 1996 - 1998; attorney, Vedder,
Price, Kaufman & Kammholz, prior thereto.
</TABLE>
B-15
<PAGE>
______________________
(1) John P. Calamos and Nick P. Calamos are trustees who are "interested
persons" of the Trust as defined in the Investment Company Act of 1940 (the
"1940 Act") and are members of the executive committee of the board of
trustees, which has authority during intervals between meetings of the
board of trustees to exercise the powers of the board.
(2) Messrs. Dowen, Frost and Kaun are members of the audit committee of the
board of trustees, which makes recommendations regarding the selection of
the Trust's independent auditors and meets with representatives of the
independent auditors to determine the scope and review the results of each
audit.
The address of Mr. Dowen is Department of Finance, Northern Illinois
University, DeKalb, Illinois 60115; that of Mr. Frost is 53 Ward Drive, New
Rochelle, New York 10804; and that of Mr. Kaun is 1750 Grandstand Place, Elgin,
Illinois 60123. The address of the officers of the Trust is 1111 East
Warrenville Road, Naperville, Illinois 60563-1493. Nick Calamos is a nephew of
John Calamos.
The following table shows the compensation paid by the Trust for the year
ended March 31, 1998 to each trustee who was not an "interested person" of the
Trust:
Aggregate
Compensation
Name of Trustee from the Trust*
--------------- ---------------
Richard J. Dowen $7,500
Robert Frost $7,500
William A. Kaun $7,500
______________________
*The Trust is not part of a fund complex.
Trustees who are "interested" persons of the Trust, as well as officers of the
Trust, are compensated by the Adviser and not by the Trust. The Trust does not
provide any pension or retirement benefits to its trustees.
INVESTMENT ADVISORY SERVICES
Investment management and administrative services are provided to the Funds
by Calamos Asset Management, Inc. (the "Adviser") pursuant to an Investment
Management Agreement (the "Agreement") dated July 5, 1988. See the prospectus -
"Management of the Funds -- The Adviser." Each Fund pays the Adviser a fee
accrued daily and paid monthly. Growth Fund pays a fee at the annual rate of 1%
of the first $150 million of the Fund's average daily net assets and .75% of
average daily net assets in excess of $150 million. Global Growth and Income
Fund pays a fee at the annual rate of 1% of average net assets. Each other Fund
pays a fee at the annual rate of .75% of the first $150 million of average net
assets and .50% of average net assets in excess of $150 million.
During the periods shown below, the Funds paid total advisory fees and were
reimbursed by the Adviser for expenses in excess of applicable expense
limitations as follows:
B-16
<PAGE>
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
3/31/98 3/31/97 3/31/96
-------- -------- --------
<S> <C> <C> <C>
Convertible Fund $579,633 $230,573 $148,187
Growth and Income Fund
Advisory fee $ 92,242 $ 54,520 $ 32,870
Waiver or reimbursement 0 7,042 4,132
-------- -------- --------
Net fee $ 92,242 $ 47,478 $ 28,738
Strategic Income Fund
Advisory fee $ 9,079 $ 11,203 $ 14,092
Waiver or reimbursement 49,904 45,456 29,705
-------- -------- --------
Net fee $(40,825) $(34,253) $(15,613)
Growth Fund
Advisory fee $ 92,400 $ 47,557 $ 23,290
Waiver or reimbursement 28,816 33,966 27,383
-------- -------- --------
Net fee $ 63,584 $ 13,591 $ (4,093)
Global Growth and Income Fund*
Advisory Fee $ 49,105 $ 13,646 $ --
Waiver or reimbursement 51,658 24,597 --
-------- -------- --------
Net Fee $ (2,553) $(10,951) $ --
</TABLE>
-------------------------
* Global Growth and Income Fund commenced operations on September 9,
1996.
The Agreement will remain in effect with respect to each Fund until July 5,
1999, and from year to year thereafter so long as such continuation is approved
at least annually by (1) the board of trustees or the vote of a majority of the
outstanding voting securities of the Fund, and (2) a majority of the trustees
who are not interested persons of any party to the Agreement, cast in person at
a meeting called for the purpose of voting on such approval. The Agreement may
be terminated as to a Fund at any time, without penalty, by either the Trust or
the Adviser upon 60 days' written notice, and is automatically terminated in the
event of its assignment as defined in the 1940 Act.
The use of the name "Calamos" in the name of the Trust and in the names of
the Funds are pursuant to licenses granted by the Adviser, and the Trust has
agreed to change the names to remove those references if the Adviser ceases to
act as investment adviser to the Funds.
Expenses
Subject to the expense limitations described below, the Funds pay all their
own operating expenses that are not specifically assumed by the Adviser,
including (i) fees of the investment adviser; (ii) interest, taxes and any
governmental filing fees; (iii) compensation and expenses of the trustees, other
than those who are interested persons of the Trust, the investment adviser or
the distributor; (iv) legal, audit, custodial and transfer agency fees and
expenses; (v) fees and expenses related to the organization of the Funds and
registration and qualification of the Funds and their shares under federal and
state securities laws; (vi) expenses of printing and mailing reports, notices
and proxy material to shareholders, and expenses incidental to meetings of
shareholders; (vii) expenses of preparing prospectuses and of printing and
distributing them to existing shareholders; (viii) insurance premiums; (ix)
litigation and indemnification expenses and other extraordinary expenses not
incurred in the normal course of the business of the Trust; (x) distribution
expenses pursuant to the Funds' Distribution Plans; and (xi) brokerage
commissions and other transaction-related costs.
The Adviser has voluntarily undertaken to reimburse each class of shares
for any annual operating expenses through August 31, 1999 in excess of certain
limits as described in the prospectus under "Management of the Funds -- The
Adviser."
B-17
<PAGE>
DISTRIBUTION PLAN
The Trust has adopted a plan pursuant to rule 12b-1 under the Investment
Company Act of 1940 (the "Plans"), whereby Class A shares and Class C shares of
each Fund pay to Calamos Financial Services, Inc., the Funds' distributor
("CFS"), service and distribution fees as described in the prospectus under
"Management of the Funds -- Distribution Plan."
The board of trustees of the Trust has determined that a continuous cash
flow resulting from the sale of new Class A shares and Class C shares is
necessary and appropriate to meet redemptions and to take advantage of buying
opportunities without having to make unwarranted liquidations of portfolio
securities. The board also considered that continuing growth in the size of the
Funds would be in the best interests of shareholders because increased size
would allow the Funds to realize certain economies of scale in their operations
and would likely reduce the proportionate share of expenses borne by each
shareholder. The board of trustees therefore determined that it would benefit
each of the Funds to have monies available for the direct distribution and
service activities of CFS, as the Funds' distributor, in promoting the
continuous sale of the Funds' shares. The board of trustees, including the non-
interested trustees, concluded, in the exercise of their reasonable business
judgment and in light of their fiduciary duties, that there is a reasonable
likelihood that the Plans will benefit the Funds and their shareholders.
The Plan has been approved by the board of trustees, including all of the
trustees who are non-interested persons as defined in the 1940 Act. The
substance of the Plan has also been approved by the vote of a majority of the
outstanding shares of each of the Funds. The Plan must be reviewed annually and
may be continued from year to year by vote of the board of trustees, including a
majority of the trustees who are non-interested persons of the Funds and who
have no direct or indirect financial interest in the operation of the Plan
("non-interested trustees"), cast in person at a meeting called for that
purpose. It is also required that the selection and nomination of non-interested
trustees be done by non-interested trustees. The Plan and any distribution or
service agreement may be terminated at any time, without any penalty, by such
trustees, by any act that terminates the distribution agreement between the
Trust and CFS, or, as to any Fund, by vote of a majority of that Fund's
outstanding shares. Any agreement related to the Plan, including any
distribution or service agreement, may be terminated in the same manner, except
that termination by a majority of the outstanding shares must be on not more
than 60 days' written notice to any other party to such agreement. Any
distributor, dealer or institution may also terminate its distribution or
service agreement at any time upon written notice.
Neither the Plan nor any distribution or service agreement may be amended
to increase materially the amount spent for distribution or service expenses or
in any other material way without approval by a majority of the outstanding
shares of the affected Fund, and all such material amendments to the Plan or any
distribution or service agreement must also be approved by the non-interested
trustees, in person, at a meeting called for the purpose of voting on any such
amendment.
CFS is required to report in writing to the board of trustees at least
quarterly on the amounts and purpose of any payments made under the Plan and any
distribution or service agreement, as well as to furnish the board with such
other information as may reasonably be requested in order to enable the board to
make an informed determination of whether the Plan should be continued. Payments
by a Fund pursuant to the Plan are not intended to finance distribution of
shares of the other Funds.
During the year ended March 31, 1998, each of the Funds made payments to
CFS pursuant to the Plan in the following amounts:
<TABLE>
<CAPTION>
Global
Convertible Growth and Strategic Growth and
Fund Income Fund Income Fund Growth Fund Income Fund
---- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$306,657 $60,669 $6,053 $42,406 $26,116
</TABLE>
B-18
<PAGE>
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the Funds' prospectus under the
headings "How to Purchase Shares" and "How to Redeem Shares." All of that
information is incorporated herein by reference.
Net Asset Value
In computing the net asset value of each Fund, portfolio securities,
including options, that are traded on a national securities exchange and
securities reported on the NASDAQ National Market System are valued at the last
reported sales price. Securities traded in the over-the-counter market and
listed securities for which no sales were reported are valued at the mean of the
most recently quoted bid and asked prices. Each outstanding futures contract is
valued at the official settlement price for the contract on the exchange on
which the contract is traded, except that if the market price of the contract
has increased or decreased by the maximum amount permitted on the valuation date
("up or down the limit"), the contract is valued at a fair value as described
below. Short-term obligations with maturities of 60 days or less are valued at
amortized cost.
When market quotations are not readily available for a Fund's securities,
such securities are valued at a fair value following procedures approved by the
board of trustees. These procedures include determining fair value on the basis
of valuations furnished by pricing services approved by the board of trustees,
which include market transactions for comparable securities and various
relationships between securities which are generally recognized by institutional
traders, as well as on the basis of appraisals received from a pricing service
using a computerized matrix system, or appraisals derived from information
concerning the securities or similar securities received from recognized dealers
in those securities.
Each Fund's net asset value is determined only on days on which the New
York Stock Exchange (the "NYSE") is open for trading. That Exchange is regularly
closed on Saturdays and Sundays and on New Year's Day, the third Mondays in
January and February, Good Friday, the last Monday in May, Independence Day,
Labor Day, Thanksgiving and Christmas. If one of these holidays falls on a
Saturday or Sunday, the NYSE will be closed on the preceding Friday or the
following Monday, respectively.
Securities that are principally traded in a foreign market are valued as of
the close of the appropriate exchange or other designated time. Trading in
securities on European and Far Eastern securities exchanges and over-the-counter
markets is normally completed at various times before the close of business on
each day on which the NYSE is open. Trading of these securities may not take
place on every NYSE business day. In addition, trading may take place in various
foreign markets on Saturdays or on other days when the NYSE is not open and on
which the Fund's net asset value is not calculated. Therefore, such calculation
does not take place contemporaneously with the determination of the prices of
many of the portfolio securities used in such calculation and the value of the
Fund's portfolio may be significantly affected on days when shares of the Fund
may not be purchased or redeemed.
Redemption in Kind
The Funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940 pursuant to which they are obligated to redeem shares solely
in cash up to the lesser of $250,000 or 1% of the net asset value of a Fund
during any 90-day period for any one shareholder. Redemptions in excess of these
amounts will normally be paid in cash, but may be paid wholly or partly by a
distribution in kind of securities.
B-19
<PAGE>
PERFORMANCE INFORMATION
Total Return
From time to time the Funds may quote total return figures. "Total Return"
for a period is the percentage change in value during a period of an investment
in Fund shares, including the value of shares acquired through reinvestment of
all dividends and capital gains distributions. "Average Annual Total Return" is
the average annual compounded rate of change in value represented by the Total
Return for the period.
Average Annual Total Return will be computed as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ERV = P(1+T)n
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1,000 investment made at the beginning of
the period, at the end of the period (or
fractional portion thereof)
</TABLE>
Total Return (taking into account the effect of the sales charge) and
Average Annual Total Return for each of the Funds was as shown below for the
following periods ended March 31, 1998.
<TABLE>
<CAPTION>
Average Annual
Total Return Total Return
------------------------- -------------------------
Class A Class C Class I Class A Class C Class I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Convertible Fund
One year.................................... 25.21 30.84 N/A 25.21 30.84 N/A
Five years.................................. 99.32 N/A N/A 14.78 N/A N/A
Ten years................................... 245.42 N/A N/A 13.19 N/A N/A
Life of Class (A Shares, 6/21/85;
C Shares, 7/5/96; I Shares, 6/25/97)... 335.79 45.39 18.84 12.20 24.04 25.33
Growth and Income Fund
One year.................................... 31.31 37.13 N/A 31.31 37.13 N/A
Five years.................................. 109.69 N/A N/A 15.95 N/A N/A
Life of Class (A Shares, 9/22/88;
C Shares, 7/5/96; I Shares, 6/25/97)... 289.25 51.97 14.39 15.33 28.83 28.79
Strategic Income Fund
One year.................................... 10.24 N/A N/A 10.24 N/A N/A
Five years.................................. 40.26 N/A N/A 7.00 N/A N/A
Life of Class............................... 89.53 N/A N/A 8.81 N/A N/A
Growth Fund
One year.................................... 46.72 53.29 N/A 46.72 53.29 N/A
Five years.................................. 138.85 N/A N/A 19.01 N/A N/A
Life of Class (A Shares, 9/4/90;
C Shares, 9/3/96; I Shares, 9/18/97)... 263.02 61.48 6.40 18.55 35.63 12.38
</TABLE>
B-20
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Global Growth and Income Fund
One Year.................................... 24.10 29.80 N/A 24.10 29.80 N/A
Life of Class (A Shares, 9/9/96;
C Shares, 9/24/96; I Shares, 9/18/97).. 34.09 39.71 10.85 20.74 24.70 21.39
</TABLE>
- ----------------------
*Not annualized
Yield
Each Fund other than Growth Fund may also quote yield figures. The yield of
a Fund is calculated by dividing its net investment income per share (a
hypothetical figure as defined in SEC rules) during a 30-day period by the net
asset value per share on the last day of the period. The yield formula provides
for semiannual compounding, which assumes that net investment income is earned
and reinvested at a constant rate and annualized at the end of a six-month
period. The yield is not based on actual dividends paid.
Yield will be computed as follows:
YIELD = 2[((a-b/cd)+1)/6/-1]
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period
The annualized yield of Class A shares of Strategic Income Fund for the 30
days ended March 31, 1998 was 3.54%. No Class C shares or Class I shares of
that Fund were outstanding.
The figures quoted assume reinvestment of all dividends and distributions.
Quotations of Average Annual Total Return take into account the effect of any
sales charge on the amount available for investment or redemption; quotations of
Total Return will indicate whether or not the effect of the sales charge is
included. Income taxes are not taken into account. The figures will not
necessarily be indicative of future performance. The performance of a Fund is a
result of conditions in the securities markets, portfolio management, and
operating expenses. Although information such as yield and total return is
useful in reviewing a Fund's performance and in providing some basis for
comparison with other investment alternatives, it should not be used for
comparison with other investments using different reinvestment assumptions or
time periods.
In advertising and sales literature, the performance of a Fund may be
compared with that of other mutual funds, indexes or averages of other mutual
funds, indexes of related financial assets or data, other accounts or
partnerships managed by Calamos Asset Management, Inc., and other competing
investment and deposit products available from or through other financial
institutions. The composition of these indexes, averages or accounts differs
from that of the Funds. Comparison of a Fund to an alternative investment
should consider differences in features and expected performance.
B-21
<PAGE>
All of the indexes and averages noted below will be obtained from the
indicated sources or reporting services, which the Funds generally believe to be
accurate. A Fund may also note its mention (including performance or other
comparative rankings) in newspapers, magazines, or other media from time to
time. However, the Funds assume no responsibility for the accuracy of such
data. Newspapers and magazines which might mention the Funds include, but are
not limited to, the following:
Barron's Money
Business Week Mutual Fund Letter
Changing Times Mutual Fund Values (Morningstar)
Chicago Tribune Newsweek
Chicago Sun-Times The New York Times
Crain's Chicago Business Pensions and Investments
Consumer Reports Personal Investor
Consumer Digest Stanger Reports
Financial World Time
Forbes USA Today
Fortune U.S. News and World Report
Investor's Daily The Wall Street Journal
Los Angeles Times
Each Fund may compare its performance to the Consumer Price Index (All
Urban), a widely recognized measure of inflation.
The performance of a Fund may be compared to the following indexes or
averages: Convertible Fund and Growth and Income Fund - Standard & Poor's 400
MidCap Index, Value Line Index, Lipper Balanced Fund Index, Lipper Convertible
Fund Index, Lipper Growth and Income Index, Lehman Brothers Government/Corporate
Index; Strategic Income Fund - Lipper Long-Term Income Fund Index, Lehman
Brothers Corporate/Government Index, 30-day Treasury Bills; Growth Fund -
Standard & Poor's 500 Stock Index, Value Line Index, Lipper Growth Fund Average;
Global Growth and Income Fund - Morgan Stanley Capital International World
Index. The performance of a Fund may also be compared to the Russell 2000
Index, the Wilshire Small Growth Index, and the Fisher Small-Cap Growth Index,
all supplied by the Carmack Group. All three of these indexes represent equity
investments in smaller-capitalization stocks.
The Lipper averages are unweighted averages of total return performance of
mutual funds as classified, calculated and published by Lipper Analytical
Services, Inc. ("Lipper"), an independent service that monitors the performance
of more than 1,000 funds. The Funds may also use comparative performance as
computed in a ranking by Lipper or category averages and rankings provided by
another independent service. Should Lipper or another service reclassify a Fund
to a different category or develop (and place a Fund into) a new category, that
Fund may compare its performance or ranking against other funds in the newly
assigned category, as published by the service. Moreover, each Fund may compare
its performance or ranking against all funds tracked by Lipper or another
independent service.
To illustrate the historical returns on various types of financial assets,
the Portfolios may use historical data provided by Ibbotson Associates, Inc.
("Ibbotson"), a Chicago-based investment firm. Ibbotson constructs (or obtains)
very long-term (since 1926) total return data (including, for example, total
return indexes, total return percentages, average annual total returns and
standard deviations of such returns) for common stocks, small company stocks,
long-term corporate bonds, long-term government bonds, intermediate-term
government bonds, U.S. Treasury bills and Consumer Price Index.
B-22
<PAGE>
DISTRIBUTOR
Calamos Financial Services, Inc. ("CFS"), a broker-dealer whose sole
shareholder and principal officer is John P. Calamos, serves as distributor for
the Funds, subject to change by a majority of the "non-interested" trustees at
any time. CFS is located at 1111 East Warrenville Road, Naperville, Illinois
60563-1493. CFS is responsible for all purchases, sales, redemptions and other
transfers of shares of the Funds without any charge to the Funds except the fees
paid to CFS under the Distribution Plans. CFS is also responsible for all
expenses incurred in connection with its performance of services for the Funds,
including, but not limited to, personnel, office space and equipment, telephone,
postage and stationery expenses. CFS receives commissions from sales of shares
of the Funds that are not expenses of the Funds but represent sales commissions
added to the net asset value of shares purchased from the Funds. See "How to
Purchase Shares -- Offering Price" in the prospectus. CFS also receives
brokerage commissions for executing portfolio transactions for the Funds. See
"Portfolio Transactions." CFS received and retained commissions on the sale of
shares of the Funds as shown below during the indicated periods:
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
3/31/98 3/31/97 3/31/96
------- ------- -------
<S> <C> <C> <C>
Convertible Fund
Commissions received $282,787 $ 98,409 $150,460
Commissions retained 49,045 40,972 25,675
Growth and Income Fund
Commissions received 9,268 6,485 15,718
Commissions retained 1,951 4,980 2,741
Strategic Income Fund
Commissions received 1,071 -- 1,605
Commissions retained -- -- 394
Growth Fund
Commissions received 1,203 759 706
Commissions retained 756 401 706
Global Growth and Income Fund*
Commissions received 1,490 76 N/A
Commissions retained 250 36 N/A
</TABLE>
- ----------------------
* Global Growth and Income Fund commenced operation on September 9, 1996.
CFS has the exclusive right to distribute shares of the Funds through
affiliated and unaffiliated dealers. The obligation of CFS is an agency or
"best efforts" arrangement, which does not obligate CFS to sell any stated
number of shares.
In connection with the exchange privilege, CFS acts as a service
organization for the Money Market Portfolio, which is a portfolio of Cash
Account Trust. For its services it receives from the portfolios or their
affiliates fees at a rate of .60% of the average annual net assets of each
account in the portfolio established through the exchange plan.
CFS from its own resources may pay additional compensation to persons who
sell Fund shares or provide subaccounting and shareholder servicing. Such
additional compensation may amount to as much as .25% of the offering price,
depending on the volume of sales or anticipated volume of sales attributable to
the recipient of the commission, and up to .10% of the annual average value of
shares held in such accounts.
B-23
<PAGE>
PORTFOLIO TRANSACTIONS
See "Management of the Funds -- The Adviser" and "Portfolio Transactions"
in the prospectus.
Portfolio transactions on behalf of the Funds effected on stock exchanges
involve the payment of negotiated brokerage commissions. There is generally no
stated commission in the case of securities traded in the over-the-counter
markets, but the price paid by the Funds usually includes an undisclosed dealer
commission or mark-up. In underwritten offerings, the price paid by the Funds
includes a disclosed, fixed commission or discount retained by the underwriter
or dealer.
In executing portfolio transactions, the Adviser uses its best efforts to
obtain for the Funds the most favorable price and execution available. In
seeking the most favorable price and execution, the Adviser considers all
factors it deems relevant, including price, the size of the transaction, the
nature of the market for the security, the amount of commission, the timing of
the transaction taking into account market prices and trends, the execution
capability of the broker-dealer and the quality of service rendered by the
broker-dealer in other transactions.
The trustees have determined that portfolio transactions for the Funds may
be executed through CFS if, in the judgment of the Adviser, the use of CFS is
likely to result in prices and execution at least as favorable to the Funds as
those available from other qualified brokers and if, in such transactions, CFS
charges the Funds commission rates consistent with those charged by CFS to
comparable unaffiliated customers in similar transactions. The board of
trustees, including a majority of the trustees who are not "interested"
trustees, has adopted procedures that are reasonably designed to provide that
any commissions, fees or other remuneration paid to CFS are consistent with the
foregoing standard. The Funds will not effect principal transactions with CFS.
In allocating the Funds' portfolio brokerage transactions to unaffiliated
broker-dealers, the Adviser may take into consideration the research,
analytical, statistical and other information and services provided by the
broker-dealer, such as general economic reports and information, reports or
analyses of particular companies or industry groups, market timing and technical
information, and the availability of the brokerage firm's analysts for
consultation. Although the Adviser believes these services have substantial
value, they are considered supplemental to the Adviser's own efforts in the
performance of its duties under the management agreement. As permitted by
Section 28(e) of the Securities Exchange Act of 1934 ("1934 Act"), the Adviser
may pay a broker-dealer that provides brokerage and research services an amount
of commission for effecting a securities transaction for a Fund in excess of the
commission that another broker-dealer would have charged for effecting that
transaction if the amount is believed by the Adviser to be reasonable in
relation to the value of the overall quality of the brokerage and research
services provided. Other clients of the Adviser may indirectly benefit from the
availability of these services to the Adviser, and the Funds may indirectly
benefit from services available to the Adviser as a result of transactions for
other clients.
The following table shows for each Fund for the past three fiscal years:
(i) the aggregate principal amount of all portfolio transactions; (ii) the
percentage of the aggregate principal amount of all portfolio transactions
executed by CFS as agent; (iii) the aggregate principal amount of all
transactions executed on an agency basis, as to which the Fund paid brokerage
commissions; (iv) the percentage of the aggregate principal amount of such
transactions executed through CFS; (v) the aggregate brokerage commissions
(excluding the gross underwriting spread on securities purchased in underwritten
public offerings) paid to all brokers; (vi) the aggregate brokerage commissions
paid to CFS; and (vii) the percentage of aggregate brokerage commissions paid to
CFS.
B-24
<PAGE>
<TABLE>
<CAPTION>
(i) (ii) (iii) (iv) (v) (vi) (vii)
------------- --------- ------------- ---------- ------------ ------------ ------
% of (i) % of (iii)
Amount Executed Amount Executed Commissions (vi)
of All through of Agency through Aggregate Paid as %
Transactions CFS Transactions CFS Commissions to CFS of (v)
------------- --------- ------------- ---------- ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Convertible Fund
Year ended 3/31/98 $161,650,678 12% $40,998,753 48% $65,900 $37,442 57%
Year ended 3/31/97 42,848,432 29 16,460,059 76 38,540 30,227 78
Year ended 3/31/96 27,314,393 36 12,402,558 80 21,060 14,829 70
Growth and Income Fund
Year ended 3/31/98 31,113,883 21 9,700,909 68 19,770 14,334 73
Year ended 3/31/97 14,964,889 32 5,344,755 91 12,005 11,414 95
Year ended 3/31/96 7,311,519 45 3,615,330 91 7,032 6,735 96
Strategic Income Fund
Year ended 3/31/98 11,244,554 7 2,057,079 38 5,168 2,958 57
Year ended 3/31/97 5,870,089 24 1,639,136 85 3,897 3,521 90
Year ended 3/31/96 5,325,874 36 1,877,281 100 3,999 3,999 100
Growth Fund
Year ended 3/31/9 37,327,107 44 33,389,620 49 69,831 28,916 41
Year ended 3/31/97 18,832,387 90 18,516,353 91 41,099 37,360 91
Year ended 3/31/96 11,228,653 98 10,920,952 100 23,240 23,240 100
Global Growth and Income Fund
Year ended 3/31/98 8,159,394 19 1,837,679 84 4,195 3,657 87
Year ended 3/31/97 7,350,637 13 1,557,089 63 3,477 2,429 70
</TABLE>
Of the aggregate brokerage commissions paid during the year ended March 31,
1998, Convertible Fund, Growth and Income Fund, Strategic Income Fund, Growth
Fund and Global Growth and Income Fund paid commissions of $13,419, $2,526,
$1,200, $40,915 and $291, respectively, to brokers who furnished research
services. Neither Strategic Income Fund nor Growth Fund paid any commissions to
brokers furnishing research.
TAXATION
The following is only a summary of certain tax considerations affecting the
Funds and their shareholders. No attempt is made to present a detailed
explanation of the tax treatment of the Funds or their shareholders, and the
discussion here is not intended as a substitute for careful tax planning.
Investors are urged to consult their tax advisers with specific reference to
their own tax situations.
Qualification as a Regulated Investment Company
Each Fund intends to continue to qualify and elect to be treated as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") so as to be relieved of from federal income tax on
its net investment income and capital gains that it currently distributes to
shareholders.
At the time of your purchase, a Fund's net asset value may reflect
undistributed income, capital gains, or net unrealized appreciation of
securities held by that Fund. A subsequent distribution to you of such amounts,
although constituting a return of your investment, would be taxable either as a
dividend or capital gain distribution.
Foreign currency gains and losses, including the portion of gain or loss on
the sale of debt securities attributable to foreign exchange rate fluctuations,
are taxable as ordinary income. If the net
B-25
<PAGE>
effect to a Fund of those transactions is a gain, the income dividend paid by
the Fund will be increased; if the result is a loss, the income dividend paid
will be decreased.
Income received by a Fund from sources within various foreign countries
will be subject to foreign income taxes withheld at the source. Under the
Internal Revenue Code, if more than 50% of the value of a Fund's total assets at
the close of its taxable year comprises securities issued by foreign
corporations, the Fund may file an election with the Internal Revenue Service to
"pass through" to its shareholders the amount of foreign income taxes paid by
that fund. Pursuant to that election, shareholders would be required to: (i)
include in gross income, even though not actually received, their respective pro
rata share of foreign taxes paid by the fund; (ii) treat their pro rata share of
foreign taxes as paid by them; and (iii) either deduct their pro rata share of
foreign taxes in computing their taxable income, or use it as a foreign tax
credit against U.S. income taxes (but not both). No deduction for foreign taxes
may be claimed by a shareholder who does not itemize deductions.
ALLOCATION AMONG FUNDS
The assets received by the Trust from the sale of shares of each Fund, and
all income, earnings, profits and proceeds thereof, subject only to the rights
of creditors, are specifically allocated to that Fund, and constitute the
underlying assets of that Fund. The underlying assets of each Fund are required
to be segregated on the books of account, and are to be charged with the expense
in respect to that Fund and with a share of the general expenses of the Trust.
Any general expenses of the Trust not readily identifiable as belonging to a
particular Fund shall be allocated by or under the direction of the trustees in
such manner as the trustees determine to be fair and equitable. Each share of
each Fund represents an equal proportionate interest in that Fund with each
other share and is entitled to such dividends and distributions out of the
income belonging to that Fund as are declared by the trustees. Upon any
liquidation of a Fund, shareholders thereof are entitled to share pro rata in
the net assets belonging to that Fund available for distribution.
CERTAIN SHAREHOLDERS
The only persons known to own beneficially (as determined in accordance
with rule 13d-3 under the 1934 Act) 5% or more of the outstanding shares of any
Fund at June 30, 1998 were:
<TABLE>
<CAPTION>
Percentage of
Number of Outstanding Shares
Shareholder Shares of the Funds
----------- --------- ------------------
<S> <C> <C>
STRATEGIC INCOME FUND
Lincoln Trust Company
Custodian Donald E. Lindley 12,558 11.01%
P.O. Box 5831
Denver, Colorado 80217
</TABLE>
B-26
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Number of Outstanding Shares
Shareholder Shares of the Funds
----------- --------- ------------------
<S> <C> <C>
Prudential Securities FBO Marjorie K. 10,149 8.90%
Flannery, Trustee of Marjorie K. Flannery
Revocable Trust dtd 3/28/84
1365 Elmhurst Drive, N.E.
Cedar Rapids, Iowa 52402-4771
Bernice Slotky and Brian E. Slotky, JT TEN 8,893 7.80
671 South Hollybrook Drive, #109
Pembroke Pines, Florida 33025
Lincoln Trust Company
Custodian Ralph E. Lassa 6,848 6.01
P.O. Box 5831
Denver, Colorado 80217
Florence Azot 6,050 5.31
7 Tanglewood Court
Indian Head Park, Illinois 60525
GROWTH AND INCOME FUND
Merrill Lynch & Co., Inc. 101,883 10.44
Global Headquarters
World Financial Center
North Tower
250 Verey Street
New York, New York 10281
John P. Calamos* 128,984 13.22
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Nick P. Calamos* 104,395 10.70
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Calamos Financial Services, Inc. 99,087 10.15
401(k) Profit Sharing Plan and Trust*
1111 East Warrenville Road
Naperville, Illinois 60563-1493
GROWTH FUND
John P. Calamos* 271,060 43.30
1111 East Warrenville Road
Naperville, Illinois 60563-1463
Nick P. Calamos* 105,691 16.88
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Calamos Financial Services, Inc. 70,824 11.31
401(k) Profit Sharing Plan and Trust*
Calamos Financial Services, Inc.* 39,708 6.34
1111 East Warrenville Road
Naperville, Illinois 60563-1493
GLOBAL GROWTH AND INCOME FUND
John P. Calamos* 99,344 8.79
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Nick P. Calamos* 79,490 7.03
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Calamos Financial Services, Inc. 70,446 6.23
401(k) Profit Sharing Plan and Trust*
1111 East Warrenville Road
Naperville, Illinois 60563-1493
</TABLE>
B-27
<PAGE>
__________________
* John P. Calamos and Nick P. Calamos are the trustees of the Calamos
Financial Services, Inc. 401(k) Profit Sharing Plan and Trust and the
Calamos Financial Services, Inc. 401(k) Employee Profit Sharing Plan
and Trust. The shares owned beneficially by Messrs. John Calamos and
Nick Calamos include the shares owned by the Calamos Financial
Services, Inc. 401(k) Profit Sharing Plan and Trust and the Calamos
Financial Services, Inc. 401(k) Employee Profit Sharing Plan and Trust.
The shares shown as owned beneficially by Mr. John Calamos also include
the shares shown as owned by Calamos Financial Services, Inc.
At June 30, 1998 the trustees and officers of the Trust as a group owned
beneficially shares of the Funds as follows: 21,199 shares (.30%) of Convertible
Fund; 234,162 shares (23.99%) of Growth and Income Fund; 643 shares (.56%) of
Strategic Income Fund; 376,782 shares (60.19%) of Growth Fund; and 179,351
shares (15.87%) of Global Growth and Income Fund.
CUSTODIAN
The Bank of New York, 48 Wall Street, New York, New York 10286, is the
custodian for the assets of each Fund other than Strategic Income Fund, for whom
Prudential Securities, Inc., One New York Plaza, New York, New York 10292, is
the custodian. The custodian is responsible for holding all cash and securities
of the Funds, directly or through a book entry system, delivering and receiving
payment for securities sold by the Funds, receiving and paying for securities
purchased by the Funds, collecting income from investments of the Funds and
performing other duties, all as directed by authorized persons of the Trust.
The custodian does not exercise any supervisory functions in such matters as the
purchase and sale of securities by a Fund, payment of dividends or payment of
expenses of a Fund.
INDEPENDENT AUDITORS
Ernst & Young LLP, Sears Tower, 233 South Wacker Drive, Chicago, Illinois
60606, audits and reports on the Funds' annual financial statements, reviews
certain regulatory reports and the Funds' federal income tax returns, and
performs other professional accounting, tax and advisory services when engaged
to do so by the Funds.
GENERAL INFORMATION
Each Fund is a series of Calamos Investment Trust (formerly named CFS
Investment Trust). Calamos Growth and Income Fund was named Calamos Small/Mid
Cap Convertible Fund prior to April 30, 1994. As of March 18, 1996 all shares
of each Fund then outstanding were re-designated as Class A shares of that Fund.
FINANCIAL STATEMENTS
The 1998 annual report of the Trust, a copy of which accompanies this
Statement of Additional Information, contains financial statements, notes
thereto, supplementary information entitled "Financial Highlights" for each of
the Funds and a report of independent auditors, all of which (but no other part
of the annual report) is incorporated herein by reference.
B-28
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial statements:
--------------------
(i) Financial statements included in Part A of this registration
statement:
Financial Highlights
(ii) Financial statements included in Part B of this registration
statement:
The following schedule and statements of each of Calamos
Convertible Fund, Calamos Strategic Income Fund, Calamos
Growth and Income Fund, Calamos Growth Fund and Calamos Global
Growth and Income Fund:
Schedule of investments - March 31, 1998
Statement of assets and liabilities - March 31, 1998
Statement of operations - year ended March 31, 1998
Statement of changes in net assets - years ended March 31,
1998 and March 31, 1997
as well as the report of independent auditors and notes to
financial statements, all of which are incorporated by
reference to registrant's annual report to shareholders for
the year ended March 31, 1998. (A copy of that annual report
was filed with the Commission but, except for those portions
incorporated by reference, is not deemed to be filed as part
of this registration statement.)
Schedule I for each Fund has been omitted as the required
information is presented in the schedules of investments at
March 31, 1998. Schedules II-V for each Fund are omitted as
the required information is not present.
(iii) Financial Statements included in Part C of this amendment:
None
(b) Exhibits:
--------
As used herein, the term "Registration Statement" means the
registration statement of registrant on form N-1A under the
Securities Act of 1933, registration No. 33-19228, and the terms
"Pre-effective Amendment" and "Post-effective Amendment" refer to
a pre-effective and post-effective amendment to the Registration
Statement.
1 Amended and Restated Agreement and Declaration of Trust (exhibit
1 to Post-effective Amendment no. 18*)
2 Bylaws, as amended through March 25, 1997 (exhibit 2 to Post-
effective Amendment no. 18*)
3 None
4 None
C-1
<PAGE>
5.1 Management agreement with Calamos Asset Management, Inc. dated
July 5, 1988 - Calamos Growth and Income Fund (exhibit 5.1 to
Post-effective Amendment no. 18*)
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 5.2 to
Post-effective Amendment no. 18*)
5.3 Notification dated April 30, 1992 pursuant to section 1(b) of
management agreement for series designated Calamos Convertible
Fund (exhibit 5.3 to Post-effective Amendment no. 18*)
5.4 Form of notification pursuant to section 1(b) of management
agreement for series designated Calamos Global Growth and Income
Fund (exhibit 5.4 to Post-effective Amendment no. 13*)
6.1 Form of distribution agreement with Calamos Financial Services,
Inc. dated June 19, 1996 (exhibit 6.1 to Post-effective
Amendment no. 13*)
6.2 Form of selling group agreement, revised 1996 (exhibit 6.2 to
Post-effective Amendment no. 13*)
7 None
8.1 Custody agreement (for all series except Calamos Strategic Income
Fund) with Bank of New York dated October 16, 1997
8.2 First amendment to custody agreement with Bank of New York dated
October 16, 1997
8.3 Custody agreement (for Calamos Strategic Income Fund) with
Prudential-Bache Securities, Inc. dated April 20, 1990 (exhibit 8
to Post-effective Amendment no. 18*)
9.1 Investment company services agreement with FPS Services, Inc.
(now named First Data Corp. Investor Services Group) dated
October 1, 1997
9.2 Use of name agreement dated August 23, 1990 (exhibit 9.5 to
Post-effective Amendment no. 18*)
10.1 Opinion of Goodwin, Procter & Hoar dated April 2, 1996 (exhibit
10 to Post-effective Amendment no. 13*)
10.2 Opinion of Bell, Boyd & Lloyd dated June 19, 1997 (exhibit 10.2
to Post-effective Amendment no. 18*)
11 Consent of independent auditors
12 None
13.1 Subscription agreement - Calamos Growth and Income Fund (exhibit
13.1 to Post-effective Amendment no. 18*)
13.2 Organizational expenses agreement - Calamos Growth and Income
Fund (exhibit 13.2 to Post-effective Amendment no. 18*)
C-2
<PAGE>
13.3 Form of subscription agreement - Calamos Strategic Income Fund
and Calamos Growth Fund (exhibit 13.3 to Post-effective Amendment
no. 18*)
13.4 Form of organizational expenses agreement - Calamos Strategic
Income Fund and Calamos Growth Fund (exhibit 13.4 to Post-
effective Amendment no. 18*)
13.5 Form of organizational expenses agreement dated June __, 1996 -
Calamos Global Growth and Income Fund (exhibit 13.5 to Post-
effective Amendment no. 13*)
14 CFS Investment Trust Individual Retirement Account Prototype
Plan, disclosure statement and application (exhibit 14 to Post-
effective Amendment no. 18*)
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. 18*)
17 Financial data schedule
18.1 Application form for Class A and Class C shares (exhibit 18.1 to
Post-effective Amendment no. 18*)
18.2 Application form for Class I shares (exhibit 18.2 to Post-
effective Amendment no. 18*)
18.3 Form of automatic investment plan application (exhibit 18.3 to
Post-effective Amendment no. 18*)
18.4 Form of systematic withdrawal application (exhibit 18.4 to Post-
effective Amendment no. 18*)
____________________
* Incorporated by reference.
Item 25. Persons Controlled By or Under Common Control with Registrant
-------------------------------------------------------------
The information in the prospectuses under the captions "Management of
the Funds - Adviser" and "The Trust and Its Shares - Certain Shareholders" and
in the Statement of Additional Information under the caption "Management" and
"Certain Shareholders" is incorporated by reference.
Item 26. Number of Holders of Securities
-------------------------------
As of June 30, 1998 the respective series of registrant had the
following numbers of record holders:
<TABLE>
<CAPTION>
Series Record Holders
------ --------------
<S> <C>
Calamos Convertible Fund 969
Calamos Growth and Income Fund 353
Calamos Strategic Income Fund 53
Calamos Growth Fund 178
Calamos Global Growth and Income Fund 192
</TABLE>
C-3
<PAGE>
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 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.
C-4
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
The information in the prospectus in the first two paragraphs under
the caption "Management of the Funds -- The Adviser" is incorporated by
reference.
Item 29. Principal Underwriters
----------------------
(a) Not applicable
(b) The information in the statement of additional information under
the caption "Management -- Trustees and Officers" is incorporated
by reference.
(c) Not applicable
Item 30. Location of Accounts and Records
--------------------------------
John P. Calamos, President
Calamos Investment Trust
1111 East Warrenville Road
Naperville, Illinois 60563-1493
Item 31. Management Services
-------------------
None
Item 32. Undertakings
------------
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish to each person to whom a
prospectus is delivered, upon request and without charge, a copy
of its latest annual report to shareholders.
(d) Registrant undertakes, if required to do so by the holders of at
least 10% of the Registrant's outstanding shares, to call a
meeting of shareholders for the purpose of voting upon the
question of removal of a director or directors and to assist in
communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant certifies that it meets all of the
requirements for effectiveness of this amendment to the registration statement
pursuant to rule 485(b) under the Securities Act of 1933 and has duly caused
this amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Naperville, Illinois on July 29,
1998.
CALAMOS INVESTMENT TRUST
By /s/ John P. Calamos
--------------------------
John P. Calamos, President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ John P. Calamos Trustee and President )
- ---------------------- (principal executive officer) )
John P. Calamos )
)
)
)
/s/ Nick P. Calamos Trustee )
- ---------------------- )
Nick P. Calamos )
)
)
)
/s/ Richard J. Dowen Trustee )
- ---------------------- )
Richard J. Dowen )
)
) July 29, 1998
)
/s/ Robert Frost Trustee )
- ---------------------- )
Robert Frost )
)
)
)
/s/ William A. Kaun Trustee )
- ---------------------- )
William A. Kaun )
)
)
)
/s/ John P. Salmon Treasurer (principal financial )
- ---------------------- and accounting officer) )
John P. Salmon )
</TABLE>
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit
- -------
<C> <S>
8.1 Custody agreement (for all series except Calamos Strategic Income Fund)
with Bank of New York dated October 16, 1997
8.2 First amendment to custody agreement with Bank of New York dated
October 16, 1997
9.1 Investment company services agreement with FPS Services, Inc. dated
October 1, 1998
11 Consent of independent auditors
17 Financial data schedule
</TABLE>
<PAGE>
Exhibit 8.1
CUSTODY AGREEMENT
Agreement made as of this day of , 1997, between CALAMOS
FAMILY OF FUNDS, a Massachusetts business trust organized and existing under
the laws of the Commonwealth of Massachusetts, having its principal office and
place of business at 1111 - East Warrenville Road, Naperville, Illinois 60563-
1493 (hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New York
corporation authorized to do a banking business, having its principal office and
place of business at 48 Wall Street, New York, New York 10286 (hereinafter
called the "Custodian").
W I T N E S S E T H :
WHEREAS, the Fund represents that pursuant to an Investment Company
Services Agreement (as hereinafter defined) between FPS Services, Inc. ("FPS")
and the Fund, FPS (a) has agreed to perform certain administrative functions
which may include the functions of administrator, transfer agent and accounting
services agent and (b) has been appointed by the Fund to act as its agent in
respect of certain transactions contemplated in this Agreement; and
WHEREAS, the Fund represents that (a) FPS has agreed to act as Fund's agent
in respect of certain transactions contemplated in this Agreement and (b) the
Custodian is authorized and directed to rely upon and follow Certificates and
Instructions given by FPS, the Fund's agent, in respect of transactions
contemplated in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Administrator" shall mean FPS and such successors or permitted
assigns as may succeed and perform its duties under the Investment Company
Services Agreement.
<PAGE>
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
3. "Call Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof the
specified underlying Securities.
4. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian which is actually received by the Custodian and signed on behalf of
the Fund by any two Officers, and the term Certificate shall also include
Instructions communicated to the Custodian by the Administrator.
5. "Clearing Member" shall mean a registered broker-dealer which is a
clearing member under the rules of O.C.C. and a member of a national securities
exchange qualified to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such a clearing member.
6. "Collateral Account" shall mean a segregated account so denominated
which is specifically allocated to a Series and pledged to the Custodian as
security for, and in consideration of, the Custodian's issuance of (a) any Put
Option guarantee letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII herein.
7. "Composite Currency Unit" shall mean the European Currency Unit or any
other composite unit consisting of the aggregate of specified amounts of
specified Currencies as such unit may be constituted from time to time.
8. "Covered Call Option" shall mean an exchange traded option entitling
the holder, upon timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified underlying Securities
(excluding Futures Contracts) which are owned by the writer thereof and subject
to appropriate restrictions.
9. "Currency" shall mean money denominated in a lawful currency of any
country or the European Currency Unit.
10. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository"
shall further mean and
- 2 -
<PAGE>
include any other person authorized to act as a depository under the Investment
Company Act of 1940, its successor or successors and its nominee or nominees,
specifically identified in a certified copy of a resolution of the Fund's Board
of Trustees specifically approving deposits therein by the Custodian.
11. "Financial Futures Contract" shall mean the firm commitment to buy or
sell fixed income securities including, without limitation, U.S. Treasury Bills,
U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of deposit,
and Eurodollar certificates of deposit, during a specified month at an agreed
upon price.
12. "Futures Contract" shall mean a Financial Futures Contract and/or
Stock Index Futures Contracts.
13. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
14. "FX Transaction" shall mean any transaction for the purchase by one
party of an agreed amount in one Currency against the sale by it to the other
party of an agreed amount in another Currency.
15. "Instructions" shall mean instructions communications transmitted by
electronic or telecommunications media including S.W.I.F.T., computer-to-
computer interface, dedicated transmission line, facsimile transmission (which
may be signed by an Officer or unsigned) and tested telex.
16. "Investment Company Services Agreement" shall mean that certain
separate agreement so entitled dated as of _______________, 199 between the Fund
and the FPS.
17. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting
an appropriate entry in its books and records.
18. "Money Market Security" shall be deemed to include, without
limitation, certain Reverse Repurchase Agreements,
- 3 -
<PAGE>
debt obligations issued or guaranteed as to interest and principal by the
government of the United States or agencies or instrumentalities thereof, any
tax, bond or revenue anticipation note issued by any state or municipal
government or public authority, commercial paper, certificates of deposit and
bankers' acceptances, repurchase agreements with respect to the same and bank
time deposits, where the purchase and sale of such securities normally requires
settlement in federal funds on the same day as such purchase or sale.
19. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
20. "Officers" shall be deemed to include the President, any Vice
President, the Secretary, the Clerk, the Treasurer, the Controller, any
Assistant Secretary, any Assistant Clerk, any Assistant Treasurer, and any other
person or persons, including officers or employees of the Administrator,
whether or not any such other person is an officer of the Fund, duly authorized
by the Board of Trustees of the Fund to execute any Certificate, instruction,
notice or other instrument on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be received by the
Custodian from time to time.
21. "Option" shall mean a Call Option, Covered Call Option, Stock Index
Option and/or a Put Option.
22. "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from an Officer or from a person reasonably believed by the
Custodian to be an Officer.
23. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
24. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
25. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract Options, Financial Futures
Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements,
common stocks and other securities having characteristics similar to common
stocks, preferred stocks, debt obligations issued by state or municipal
governments and by public
- 4 -
<PAGE>
authorities, (including, without limitation, general obligation bonds, revenue
bonds, industrial bonds and industrial development bonds), bonds, debentures,
notes, mortgages or other obligations, and any certificates, receipts, warrants
or other instruments representing rights to receive, purchase, sell or subscribe
for the same, or evidencing or representing any other rights or interest
therein, or any property or assets.
26. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such transactions
as the Fund may from time to time determine.
27. "Series" shall mean the various portfolios, if any, of the Fund as
described from time to time in the current and effective prospectus for the Fund
and listed on Appendix B hereto as amended from time to time.
28. "Shares" shall mean the shares of beneficial interest of the Fund,
each of which is, in the case of a Fund having Series, allocated to a
particular Series.
29. "Stock Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the value
of a particular stock index at the close of the last business day of the
contract and the price at which the futures contract is originally struck.
30. "Stock Index Option" shall mean an exchange traded option entitling
the holder, upon timely exercise, to receive an amount of cash determined by
reference to the difference between the exercise price and the value of the
index on the date of exercise.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian of
the Securities and money at any time owned by the Fund during the period of this
Agreement.
- 5 -
<PAGE>
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, the Fund will deliver or cause to be delivered to the Custodian
all Securities and all money owned by it, at any time during the period of this
Agreement, and shall specify with respect to such Securities and money the
Series to which the same are specifically allocated. The Custodian shall
segregate, keep and maintain the assets of the Series separate and apart. The
Custodian will not be responsible for any Securities and money not actually
received by it. The Custodian will be entitled to reverse any credits made on
the Fund's behalf where such credits have been previously made and money is not
finally collected. The Fund shall deliver to the Custodian a certified
resolution of the Board of Trustees of the Fund, substantially in the form of
Exhibit A hereto, approving, authorizing and instructing the Custodian on a
continuous and on-going basis to deposit in the Book-Entry System all Securities
eligible for deposit therein, regardless of the Series to which the same are
specifically allocated and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities and deliveries and returns of Securities collateral. Prior
to a deposit of Securities specifically allocated to a Series in the Depository,
the Fund shall deliver to the Custodian a certified resolution of the Board of
Trustees of the Fund, substantially in the form of Exhibit B hereto, approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities specifically allocated to
such Series eligible for deposit therein, and to utilize the Depository to the
extent possible with respect to such Securities in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and money deposited
in either the Book-Entry System or the Depository will be represented in
accounts which include only assets held by the Custodian for customers,
including, but not limited to, accounts in which the Custodian acts in a
fiduciary or representative capacity and will be specifically allocated on the
Custodian's books to the separate account for the applicable Series. Prior to
the Custodian's accepting, utilizing and acting with
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respect to Clearing Member confirmations for Options and transactions in Options
for a Series as provided in this Agreement, the Custodian shall have received a
certified resolution of the Fund's Board of Trustees, substantially in the form
of Exhibit C hereto, approving, authorizing and instructing the Custodian on a
continuous and on-going basis, until instructed to the contrary by a Certificate
actually received by the Custodian, to accept, utilize and act in accordance
with such confirmations as provided in this Agreement with respect to such
Series.
2. The Custodian shall establish and maintain separate accounts, in the
name of each Series, and shall credit to the separate account for each Series
all money received by it for the account of the Fund with respect to such
Series. Money credited to a separate account for a Series shall be disbursed by
the Custodian only:
(a) as hereinafter provided;
(b) pursuant to Certificates setting forth the name and address of
the person to whom the payment is to be made, the Series account from which
payment is to be made and the purpose for which payment is to be made; or
(c) in payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day, the Custodian shall
furnish the Administrator with confirmations and a summary, on a per Series
basis, of all transfers to or from the account of the Fund for a Series, either
hereunder or with any co-custodian or sub-custodian appointed in accordance
with this Agreement during said day. Where Securities are transferred to the
account of the Fund for a Series, the Custodian shall also by book-entry or
otherwise identify as belonging to such Series a quantity of Securities in a
fungible bulk of Securities registered in the name of the Custodian (or its
nominee) or shown on the Custodian's account on the books of the Book-Entry
System or the Depository. At least monthly and from time to time, the Custodian
shall furnish the Administrator with a detailed statement, on a per Series
basis, of the Securities and money held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held by the Custodian hereunder, which are issued
or issuable only in bearer form, except such Securities as are held in the Book-
Entry System, shall be held by the Custodian in that form; all other Securities
held hereunder may be registered in the name of the Fund, in the name of any
duly appointed registered nominee of
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the Custodian as the Custodian may from time to time determine, or in the name
of the Book-Entry System or the Depository or their successor or successors, or
their nominee or nominees. The Fund agrees to furnish or cause to be furnished
to the Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository any
Securities which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such Securities
specifically allocated to a Series which are not held in the Book-Entry System
or in the Depository in a separate account in the name of such Series physically
segregated at all times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to Securities
held hereunder and therein deposited, shall with respect to all Securities held
for the Fund hereunder in accordance with preceding paragraph 4:
(a) collect all income due or payable;
(b) present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended
at any time by the Custodian without the prior notification or consent of the
Fund;
(c) present for payment and collect the amount payable upon all
Securities which mature;
(d) surrender Securities in temporary form for definitive Securities;
(e) execute, as custodian, any necessary declarations or certificates
of ownership under the Federal Income Tax Laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
(f) hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of a Series, all
rights and similar securities issued with respect to any Securities held by the
Custodian for such Series hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
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(a) execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities held by the
Custodian hereunder for the Series specified in such Certificate may be
exercised;
(b) deliver any Securities held by the Custodian hereunder for the
Series specified in such Certificate in exchange for other Securities or cash
issued or paid in connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or the exercise of
any conversion privilege and receive and hold hereunder specifically allocated
to such Series any cash or other Securities received in exchange;
(c) deliver any Securities held by the Custodian hereunder for the
Series specified in such Certificate to any protective committee, reorganization
committee or other person in connection with the reorganization, refinancing,
merger, consolidation, recapitalization or sale of assets of any corporation,
and receive and hold hereunder specifically allocated to such Series such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
(d) make such transfers or exchanges of the assets of the Series
specified in such Certificate, and take such other steps as shall be stated in
such Certificate to be for the purpose of effectuating any duly authorized plan
of liquidation, reorganization, merger, consolidation or recapitalization of the
Fund; and
(e) present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this Article which may
be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or certificates
are available. The Fund shall deliver to the Custodian such a Certificate no
later than the business day preceding the availability of any such instrument or
certificate. Prior to such availability, the Custodian shall comply with Section
17(f) of the Investment Company Act of 1940, as amended, in connection with the
purchase, sale, settlement, closing out or writing of Futures Contracts,
Options, or Futures Contract Options by making payments or deliveries specified
in Certificates received by the Custodian in connection with any such purchase,
sale, writing, settlement or closing
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out upon its receipt from a broker, dealer, or futures commission merchant of a
statement or confirmation reasonably believed by the Custodian to be in the
form customarily used by brokers, dealers, or future commission merchants with
respect to such Futures Contracts, Options, or Futures Contract Options, as the
case may be, confirming that such Security is held by such broker, dealer or
futures commission merchant, in book-entry form or otherwise, in the name of the
Custodian (or any nominee of the Custodian) as custodian for the Fund, provided,
however, that notwithstanding the foregoing, payments to or deliveries from the
Margin Account and payments with respect to Securities to which a Margin Account
relates, shall be made in accordance with the terms and conditions of the Margin
Account Agreement. Whenever any such instruments or certificates are available,
the Custodian shall, notwithstanding any provision in this Agreement to the
contrary, make payment for any Futures Contract, Option, or Futures Contract
Option for which such instruments or such certificates are available only
against the delivery to the Custodian of such instrument or such certificate,
and deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt by the
Custodian of payment therefor. Any such instrument or certificate delivered to
the Custodian shall be held by the Custodian hereunder in accordance with, and
subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other than a
purchase of an Option, a Futures Contract, or a Futures Contract Option, the
Fund shall deliver or cause the Administrator to deliver to the Custodian (i)
with respect to each purchase of Securities which are not Money Market
Securities, a Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate or Oral Instructions, specifying with respect
to each such purchase: (a) the Series to which such Securities are to be
specifically allocated; (b) the name of the issuer and the title of the
Securities; (c) the number of shares or the principal amount purchased and
accrued interest, if any; (d) the date of purchase and settlement; (e) the
purchase price per unit; (f) the total amount payable upon such purchase; (g)
the name of the person from whom or the broker through whom the purchase was
made, and the name of the clearing broker, if any; and (h) the name of the
broker to whom payment is to be made. The Custodian shall, upon receipt of
Securities purchased by or for the Fund, pay to the broker specified in the
Certificate out of
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the money held for the account of such Series the total amount payable upon such
purchase, provided that the same conforms to the total amount payable as set
forth in such Certificate or Oral Instructions.
2. Promptly after each sale of Securities by the Fund, other than a sale
of any Option, Futures Contract, Futures Contract Option, or any Reverse
Repurchase Agreement, the Fund shall deliver or cause the Administrator to
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, a Certificate, and (ii) with respect to each sale
of Money Market Securities, a Certificate or Oral Instructions, specifying with
respect to each such sale: (a) the Series to which such Securities were
specifically allocated; (b) the name of the issuer and the title of the
Security; (c) the number of shares or principal amount sold, and accrued
interest, if any; (d) the date of sale; (e) the sale price per unit; (f) the
total amount payable to the Fund upon such sale; (g) the name of the broker
through whom or the person to whom the sale was made, and the name of the
clearing broker, if any; and (h) the name of the broker to whom the Securities
are to be delivered. The Custodian shall deliver the Securities specifically
allocated to such Series to the broker specified in the Certificate against
payment upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in
such Certificate or Oral Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying with respect to each Option purchased: (a) the Series to which such
Option is specifically allocated; (b) the type of Option (put or call); (c) the
name of the issuer and the title and number of shares subject to such Option or,
in the case of a Stock Index Option, the stock index to which such Option
relates and the number of Stock Index Options purchased; (d) the expiration
date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the
total amount payable by the Fund in connection with such purchase; (h) the name
of the Clearing Member through whom such Option was purchased; and (i) the name
of the broker to whom payment is to be made. The Custodian shall pay, upon
receipt of a Clearing Member's statement con-firming the purchase of such Option
held by such Clearing Mem-ber for the account of the Custodian (or any duly
appointed and registered nominee of the Custodian) as custodian for the Fund,
out of money held for the account of the Series to which such Option is to be
specifically allocated, the total amount
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payable upon such purchase to the Clearing Member through whom the purchase was
made, provided that the same conforms to the total amount payable as set forth
in such Certificate.
2. Promptly after the sale of any Option purchased by the Fund pursuant
to paragraph 1 hereof, the Fund shall deliver or cause the Administrator to
deliver to the Custodian a Certificate specifying with respect to each such
sale: (a) the Series to which such Option was specifically allocated; (b) the
type of Option (put or call); (c) the name of the issuer and the title and
number of shares subject to such Option or, in the case of a Stock Index Option,
the stock index to which such Option relates and the number of Stock Index
Options sold; (d) the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund upon such sale; and (h) the
name of the Clearing Member through whom the sale was made. The Custodian shall
consent to the delivery of the Option sold by the Clearing Member which
previously supplied the confirmation described in preceding paragraph 1 of this
Article with respect to such Option against payment to the Custodian of the
total amount payable to the Fund, provided that the same conforms to the total
amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying with respect
to such Call Option: (a) the Series to which such Call Option was specifically
allocated; (b) the name of the issuer and the title and number of shares subject
to the Call Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total amount to be paid by
the Fund upon such exercise; and (g) the name of the Clearing Member through
whom such Call Option was exercised. The Custodian shall, upon receipt of the
Securities underlying the Call Option which was exercised, pay out of the money
held for the account of the Series to which such Call Option was specifically
allocated the total amount payable to the Clearing Member through whom the Call
Option was exercised, provided that the same conforms to the total amount
payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying with respect
to such Put Option: (a) the Series to which such Put Option was specifically
allocated; (b) the name of the issuer and the title and number of shares subject
to the Put Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total amount to be paid to
the Fund upon such exercise; and (g) the name of the Clearing
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Member through whom such Put Option was exercised. The Custodian shall, upon
receipt of the amount payable upon the exercise of the Put Option, deliver or
direct the Depository to deliver the Securities specifically allocated to such
Series, provided the same conforms to the amount payable to the Fund as set
forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series to which such Stock
Index Option was specifically allocated; (b) the type of Stock Index Option (put
or call); (c) the number of Options being exercised; (d) the stock index to
which such Option relates; (e) the expiration date; (f) the exercise price; (g)
the total amount to be received by the Fund in connection with such exercise;
and (h) the Clearing Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall deliver
or cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Covered Call Option: (a) the Series for which such Covered
Call Option was written; (b) the name of the issuer and the title and number of
shares for which the Covered Call Option was written and which underlie the
same; (c) the expiration date; (d) the exercise price; (e) the premium to be
received by the Fund; (f) the date such Covered Call Option was written; and
(g) the name of the Clearing Member through whom the premium is to be received.
The Custodian shall deliver or cause to be delivered, in exchange for receipt of
the premium specified in the Certificate with respect to such Covered Call
Option, such receipts as are required in accordance with the customs prevailing
among Clearing Members dealing in Covered Call Options and shall impose, or
direct the Depository to impose, upon the underlying Securities specified in the
Certificate specifically allocated to such Series such restrictions as may be
required by such receipts. Notwithstanding the foregoing, the Custodian has the
right, upon prior written notification to the Fund, at any time to refuse to
issue any receipts for Securities in the possession of the Custodian and not
deposited with the Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate instructing
the Custodian to deliver, or to direct the Depository to deliver, the
Securities subject to such Covered Call Option and specifying: (a) the Series
for which such Covered Call Option was written; (b) the name of the issuer and
the title and number of shares subject to the Covered Call Option; (c) the
Clearing Member to
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whom the underlying Securities are to be delivered; and (d) the total amount
payable to the Fund upon such delivery. Upon the return and/or cancellation of
any receipts delivered pursuant to paragraph 6 of this Article, the Custodian
shall deliver, or direct the Depository to deliver, the underlying Securities
as specified in the Certificate against payment of the amount to be received as
set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall deliver or cause
the Administrator to deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series for which such Put Option was
written; (b) the name of the issuer and the title and number of shares for which
the Put Option is written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the Fund; (f) the date
such Put Option is written; (g) the name of the Clearing Member through whom
the premium is to be received and to whom a Put Option guarantee letter is to be
delivered; (h) the amount of cash, and/or the amount and kind of Securities, if
any, specifically allocated to such Series to be deposited in the Senior
Security Account for such Series; and (i) the amount of cash and/or the amount
and kind of Securities specifically allocated to such Series to be deposited
into the Collateral Account for such Series. The Custodian shall, after making
the deposits into the Collateral Account specified in the Certificate, issue a
Put Option guarantee letter substantially in the form utilized by the Custodian
on the date hereof, and deliver the same to the Clearing Member specified in the
Certificate against receipt of the premium specified in said Certificate.
Notwithstanding the foregoing, the Custodian shall be under no obligation to
issue any Put Option guarantee letter or similar document if it is unable to
make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying: (a) the
Series to which such Put Option was written; (b) the name of the issuer and
title and number of shares subject to the Put Option; (c) the Clearing Member
from whom the underlying Securities are to be received; (d) the total amount
payable by the Fund upon such delivery; (e) the amount of cash and/or the amount
and kind of Securities specifically allocated to such Series to be withdrawn
from the Collateral Account for such Series and (f) the amount of cash and/or
the amount and kind of Securities, specifically allocated to such Series, if
any, to be withdrawn from the Senior Security Account. Upon the return and/or
cancellation of any Put Option guarantee letter or similar document issued by
the Custodian in connection with such Put Option, the Custodian shall pay out of
the money held for the
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account of the Series to which such Put Option was specifically allocated the
total amount payable to the Clearing Member specified in the Certificate as set
forth in such Certificate against delivery of such Securities, and shall make
the withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund shall deliver
or cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series for which such Stock
Index Option was written; (b) whether such Stock Index Option is a put or a
call; (c) the number of options written; (d) the stock index to which such
Option relates; (e) the expiration date; (f) the exercise price; (g) the
Clearing Member through whom such Option was written; (h) the premium to be
received by the Fund; (i) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be deposited in the
Senior Security Account for such Series; (j) the amount of cash and/or the
amount and kind of Securities, if any, specifically allocated to such Series to
be deposited in the Collateral Account for such Series; and (k) the amount of
cash and/or the amount and kind of Securities, if any, specifically allocated
to such Series to be deposited in a Margin Account, and the name in which such
account is to be or has been established. The Custodian shall, upon receipt of
the premium specified in the Certificate, make the deposits, if any, into the
Senior Security Account specified in the Certificate, and either (1) deliver
such receipts, if any, which the Custodian has specifically agreed to issue,
which are in accordance with the customs prevailing among Clearing Members in
Stock Index Options and make the deposits into the Collateral Account specified
in the Certificate, or (2) make the deposits into the Margin Account specified
in the Certificate.
11. Whenever a Stock Index Option written by the Fund and described in the
preceding paragraph of this Article is exercised, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series for which such Stock
Index Option was written; (b) such information as may be necessary to identify
the Stock Index Option being exercised; (c) the Clearing Member through whom
such Stock Index Option is being exercised; (d) the total amount payable upon
such exercise, and whether such amount is to be paid by or to the Fund; (e) the
amount of cash and/or amount and kind of Securities, if any, to be withdrawn
from the Margin Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Senior Security Account for such
Series; and the amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Collateral Account for such Series. Upon the return
and/or cancellation of the receipt, if any, delivered pursuant to the preceding
paragraph of this Article, the Custodian shall pay
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out of the money held for the account of the Series to which such Stock Index
Option was specifically allocated to the Clearing Member specified in the
Certificate the total amount payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to a previously
written Option described in paragraphs, 6, 8 or 10 of this Article in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to the Option being purchased: (a) that the transaction is a
Closing Purchase Transaction; (b) the Series for which the Option was written;
(c) the name of the issuer and the title and number of shares subject to the
Option, or, in the case of a Stock Index Option, the stock index to which such
Option relates and the number of Options held; (d) the exercise price; (e) the
premium to be paid by the Fund; (f) the expiration date; (g) the type of Option
(put or call); (h) the date of such purchase; (i) the name of the Clearing
Member to whom the premium is to be paid; and (j) the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from the Collateral
Account, a specified Margin Account, or the Senior Security Account for such
Series. Upon the Custodian's payment of the premium and the return and/or
cancellation of any receipt issued pursuant to paragraphs 6, 8 or 10 of this
Article with respect to the Option being liquidated through the Closing
Purchase Transaction, the Custodian shall remove, or direct the Depository to
remove, the previously imposed restrictions on the Securities underlying the
Call Option.
13. Upon the expiration, exercise or consummation of a Closing Purchase
Transaction with respect to any Option purchased or written by the Fund and
described in this Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein,
and upon the return and/or cancellation of any receipts issued by the
Custodian, shall make such withdrawals from the Collateral Account, and the
Margin Account and/or the Senior Security Account as may be specified in a
Certificate received in connection with such expiration, exercise, or
consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying with respect to such Futures Contract, (or with respect to any number
of
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identical Futures Contract(s)): (a) the Series for which the Futures Contract is
being entered; (b) the category of Futures Contract (the name of the underlying
stock index or financial instrument); (c) the number of identical Futures
Contracts entered into; (d) the delivery or settlement date of the Futures
Contract(s); (e) the date the Futures Contract(s) was (were) entered into and
the maturity date; (f) whether the Fund is buying (going long) or selling (going
short) on such Futures Contract(s); (g) the amount of cash and/or the amount and
kind of Securities, if any, to be deposited in the Senior Security Account for
such Series; (h) the name of the broker, dealer, or futures commission merchant
through whom the Futures Contract was entered into; and (i) the amount of fee
or commission, if any, to be paid and the name of the broker, dealer, or futures
commission merchant to whom such amount is to be paid. The Custodian shall make
the deposits, if any, to the Margin Account in accordance with the terms and
conditions of the Margin Account Agreement. The Custodian shall make payment out
of the money specifically allocated to such Series of the fee or commission, if
any, specified in the Certificate and deposit in the Senior Security Account for
such Series the amount of cash and/or the amount and kind of Securities
specified in said Certificate.
2. (a) Any variation margin payment or similar payment required to be
made by the Fund to a broker, dealer, or futures commission merchant with
respect to an outstanding Futures Contract, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from a broker,
dealer, or futures commission merchant to the Fund with respect to an
outstanding Futures Contract, shall be received and dealt with by the Custodian
in accordance with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver or cause the Administrator to deliver to the
Custodian a Certificate specifying: (a) the Futures Contract and the Series to
which the same relates; (b) with respect to a Stock Index Futures Contract, the
total cash settlement amount to be paid or received, and with respect to a
Financial Futures Contract, the Securities and/or amount of cash to be delivered
or received; (c) the broker, dealer, or futures commission merchant to or from
whom payment or delivery is to be made or received; and (d) the amount of cash
and/or Securities to be withdrawn from the Senior Security Account for such
Series. The Custodian shall make the payment or delivery specified in the
Certificate, and delete such Futures Contract from the statements delivered to
the Fund pursuant to paragraph 3 of Article III herein.
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4. Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying:
(a) the items of information required in a Certificate described in paragraph 1
of this Article, and (b) the Futures Contract being offset. The Custodian shall
make payment out of the money specifically allocated to such Series of the fee
or commission, if any, specified in the Certificate and delete the Futures
Contract being offset from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein, and make such withdrawals from the Senior
Security Account for such Series as may be specified in such Certificate. The
withdrawals, if any, to be made from the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
5. Notwithstanding any other provision in this Agreement to the contrary,
the Custodian shall deliver cash and Securities to a future commission merchant
upon receipt of a Certificate from the Fund or the Administrator specifying: (a)
the name of the future commission merchant; (b) the specific cash and Securities
to be delivered; (c) the date of such delivery; and (d) the date of the
agreement between the Fund and such future commission merchant entered pursuant
to Rule 17f-6 under the Investment Company Act 1940, as amended. Each delivery
of such a Certificate by the Fund shall constitute (x) a representation and
warranty by the Fund that the Rule 17f-6 agreement has been duly authorized,
executed and delivered by the Fund and the future commission merchant and
complies with Rule 17f-6, and (y) an agreement by the Fund that the Custodian
shall not be liable for the acts or omissions of any such future commission
merchant.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the
Fund, the Fund shall deliver or cause the Administrator to deliver to the
Custodian a Certificate specifying with respect to such Futures Contract Option:
(a) the Series to which such Option is specifically allocated; (b) the type of
Futures Contract Option (put or call); (c) the type of Futures Contract and
such other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option purchased; (d) the expiration date; (e)
the exercise price; (f) the dates of purchase and settlement; (g) the amount of
premium to be paid by the Fund upon such purchase; (h) the name of the broker or
futures commission merchant through whom such option was purchased; and (i) the
name of the broker, or futures commission merchant, to whom payment is
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to be made. The Custodian shall pay out of the money specifically allocated to
such Series, the total amount to be paid upon such purchase to the broker or
futures commissions merchant through whom the purchase was made, provided that
the same conforms to the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying with respect
to each such sale: (a) Series to which such Futures Contract Option was
specifically allocated; (b) the type of Future Contract Option (put or call);
(c) the type of Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Contract Option; (d) the
date of sale; (e) the sale price; (f) the date of settlement; (g) the total
amount payable to the Fund upon such sale; and (h) the name of the broker of
futures commission merchant through whom the sale was made. The Custodian shall
consent to the cancellation of the Futures Contract Option being closed against
payment to the Custodian of the total amount payable to the Fund, provided the
same conforms to the total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying: (a) the
Series to which such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option (put or call) being exercised; (c) the type
of Futures Contract underlying the Futures Contract Option; (d) the date of
exercise; (e) the name of the broker or futures commission merchant through whom
the Futures Contract Option is exercised; (f) the net total amount, if any,
payable by the Fund; (g) the amount, if any, to be received by the Fund; and (h)
the amount of cash and/or the amount and kind of Securities to be deposited in
the Senior Security Account for such Series. The Custodian shall make, out of
the money and Securities specifically allocated to such Series, the payments, if
any, and the deposits, if any, into the Senior Security Account as specified in
the Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a) the Series for
which such Futures Contract Option was written; (b) the type of Futures Contract
Option (put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract underlying the
Futures Contract Option; (d) the expiration date; (e) the exercise price; (f)
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the premium to be received by the Fund; (g) the name of the broker or futures
commission merchant through whom the premium is to be received; and (h) the
amount of cash and/or the amount and kind of Securities, if any, to be deposited
in the Senior Security Account for such Series. The Custodian shall, upon
receipt of the premium specified in the Certificate, make out of the money and
Securities specifically allocated to such Series the deposits into the Senior
Security Account, if any, as specified in the Certificate. The deposits, if any,
to be made to the Margin Account shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is a call
is exercised, the Fund shall deliver or cause the Administrator to deliver to
the Custodian a Certificate specifying: (a) the Series to which such Futures
Contract Option was specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying the Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount of
cash and/or the amount and kind of Securities to be deposited in the Senior
Security Account for such Series. The Custodian shall, upon its receipt of the
net total amount payable to the Fund, if any, specified in such Certificate make
the payments, if any, and the deposits, if any, into the Senior Security Account
as specified in the Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund and
which is a put is exercised, the Fund shall deliver or cause the Administrator
to deliver to the Custodian a Certificate specifying: (a) the Series to which
such Option was specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying such Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount and
kind of Securities and/or cash to be withdrawn from or deposited in, the Senior
Security Account for such Series, if any. The Custodian shall, upon its receipt
of the net total amount payable to the Fund, if any, specified in the
Certificate, make out of the money and Securities specifically allocated to
such Series, the payments, if any, and the deposits, if any, into the Senior
Security Account as specified in the Certificate. The deposits to and/or
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withdrawals from the Margin Account, if any, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical to a
previously written Futures Contract Option described in this Article in order
to liquidate its position as a writer of such Futures Contract Option, the Fund
shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to the Futures Contract Option being
purchased: (a) the Series to which such Option is specifically allocated; (b)
that the transaction is a closing transaction; (c) the type of Future Contract
and such other information as may be necessary to identify the Futures Contract
underlying the Futures Option Contract; (d) the exercise price; (e) the premium
to be paid by the Fund; (f) the expiration date; (g) the name of the broker or
futures commission merchant to whom the premium is to be paid; and (h) the
amount of cash and/or the amount and kind of Securities, if any, to be withdrawn
from the Senior Security Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or purchased
by the Fund and described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in
the case of an exercise such deposits into the Senior Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals from the Margin
Account, if any, shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a
Futures Contract Option described in this Article shall be subject to Article
VI hereof.
10. Notwithstanding any other provision in this Agreement to the contrary,
the Custodian shall deliver cash and Securities to a future commission merchant
upon receipt of a Certificate from the Fund or the Administrator specifying: (a)
the name of the future commission merchant; (b) the specific cash and Securities
to be delivered; (c) the date of such delivery; and (d) the date of the
agreement between the Fund and such future commission merchant entered pursuant
to Rule 17f-6 under the Investment Company Act 1940, as amended. Each delivery
of such a Certificate by the Fund shall constitute (x) a representation and
warranty by the Fund that the Rule 17f-6 agreement has been duly authorized,
executed
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and delivered by the Fund and the future commission merchant and complies with
Rule 17f-6, and (y) an agreement by the Fund that the Custodian shall not be
liable for the acts or omissions of any such future commission merchant.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the Fund
shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying: (a) the Series for which such short sale was made; (b)
the name of the issuer and the title of the Security; (c) the number of shares
or principal amount sold, and accrued interest or dividends, if any; (d) the
dates of the sale and settlement; (e) the sale price per unit; (f) the total
amount credited to the Fund upon such sale, if any, (g) the amount of cash
and/or the amount and kind of Securities, if any, which are to be deposited in a
Margin Account and the name in which such Margin Account has been or is to be
established; (h) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in a Senior Security Account, and (i) the name of the
broker through whom such short sale was made. The Custodian shall upon its
receipt of a statement from such broker confirming such sale and that the total
amount credited to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of the Custodian (or any
nominee of the Custodian) as custodian of the Fund, issue a receipt or make the
deposits into the Margin Account and the Senior Security Account specified in
the Certificate.
2. In connection with the closing-out of any short sale, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying with respect to each such closing out: (a) the Series for which such
transaction is being made; (b) the name of the issuer and the title of the
Security; (c) the number of shares or the principal amount, and accrued
interest or dividends, if any, required to effect such closing-out to be
delivered to the broker; (d) the dates of closing-out and settlement; (e) the
purchase price per unit; (f) the net total amount payable to the Fund upon such
closing-out; (g) the net total amount payable to the broker upon such closing-
out; (h) the amount of cash and the amount and kind of Securities to be
withdrawn, if any, from the Margin Account; (i) the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from the Senior Security
Account; and (j) the name of the broker through whom the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount payable
to the Fund upon such closing-out, and the return and/or cancellation of the
receipts, if any, issued by the Custodian with
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respect to the short sale being closed-out, pay out of the money held for the
account of the Fund to the broker the net total amount payable to the broker,
and make the withdrawals from the Margin Account and the Senior Security
Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate,
or in the event such Reverse Repurchase Agreement is a Money Market Security, a
Certificate or Oral Instructions specifying: (a) the Series for which the
Reverse Repurchase Agreement is entered; (b) the total amount payable to the
Fund in connection with such Reverse Repurchase Agreement and specifically
allocated to such Series; (c) the broker or dealer through or with whom the
Reverse Repurchase Agreement is entered; (d) the amount and kind of Securities
to be delivered by the Fund to such broker or dealer; (e) the date of such
Reverse Repurchase Agreement; and (f) the amount of cash and/or the amount and
kind of Securities, if any, specifically allocated to such Series to be
deposited in a Senior Security Account for such Series in connection with such
Reverse Repurchase Agreement. The Custodian shall, upon receipt of the total
amount payable to the Fund specified in the Certificate or Oral Instructions
make the delivery to the broker or dealer, and the deposits, if any, to the
Senior Security Account, specified in such Certificate or Oral Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
preceding paragraph 1 of this Article, the Fund shall deliver or cause the
Administrator to deliver a Certificate or, in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate or Oral Instructions to the
Custodian specifying: (a) the Reverse Repurchase Agreement being terminated and
the Series for which same was entered; (b) the total amount payable by the Fund
in connection with such termination; (c) the amount and kind of Securities to be
received by the Fund and specifically allocated to such Series in connection
with such termination; (d) the date of termination; (e) the name of the broker
or dealer with or through whom the Reverse Repurchase Agreement is to be
terminated; and (f) the amount of cash and/or the amount and kind of Securities
to be withdrawn from the Senior Securities Account for such Series. The
Custodian shall, upon receipt of the amount and kind of Securities to be
received by the Fund specified in the Certificate or Oral Instructions, make the
payment to the broker or dealer, and the withdrawals,
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if any, from the Senior Security Account, specified in such Certificate or Oral
Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to each such loan: (a) the Series to which the loaned Securities
are specifically allocated; (b) the name of the issuer and the title of the
Securities, (c) the number of shares or the principal amount loaned, (d) the
date of loan and delivery, (e) the total amount to be delivered to the Custodian
against the loan of the Securities, including the amount of cash collateral and
the premium, if any, separately identified, and (f) the name of the broker,
dealer, or financial institution to which the loan was made. The Custodian shall
deliver the Securities thus designated to the broker, dealer or financial
institution to which the loan was made upon receipt of the total amount
designated as to be delivered against the loan of Securities. The Custodian may
accept payment in connection with a delivery otherwise than through the Book-
Entry System or Depository only in the form of a certified or bank cashier's
check payable to the order of the Fund or the Custodian drawn on New York
Clearing House funds and may deliver Securities in accordance with the customs
prevail-ing among dealers in securities.
2. Promptly after each termination of the loan of Securities by the Fund,
the Fund shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities to be
returned, (c) the number of shares or the principal amount to be returned, (d)
the date of termination, (e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the money held for the account of the Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.
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ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Senior Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the Series for which
such deposit or withdrawal is to be made and the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to be
deposited in, or withdrawn from, such Senior Security Account for such Series.
In the event the Certificate fails to specify the Series, the name of the
issuer, the title and the number of shares or the principal amount of any
particular Securities to be deposited by the Custodian into, or withdrawn from,
a Senior Securities Account, the Custodian shall be under no obligation to make
any such deposit or withdrawal and shall so notify the Administrator.
2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer, futures commission merchant or Clearing Member in whose
name, or for whose benefit, the account was established as specified in the
Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may enforce
its lien and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer,
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or futures commission merchant specified in the name of a Margin Account a copy
of the statement furnished the Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account for any Series,
the Custodian shall furnish the Administrator with a statement with respect to
such Collateral Account specifying the amount of cash and/or the amount and
kind of Securities held therein. No later than the close of business next
succeeding the delivery to the Fund of such statement, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
the then market value of the Securities described in such statement. In the
event such then market value is indicated to be less than the Custodian's
obligation with respect to any outstanding Put Option guarantee letter or
similar document, the Fund shall promptly specify or cause the Administrator to
promptly specify in a Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall deliver or cause the Administrator to deliver to the
Custodian a copy of the resolution of the Board of Trustees of the Fund,
certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant
Clerk, either (i) setting forth with respect to the Series specified therein the
date of the declaration of a dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the shareholders of
record as of that date and the total amount payable to the Dividend Agent and
any sub-dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein the declaration of
dividends and distributions on a daily basis and authorizing the Custodian to
rely on Oral Instructions or a Certificate setting forth the date of the
declaration of such dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall be determined,
the amount payable per Share of such Series to the shareholders of record as of
that date and the total amount payable to the Dividend Agent on the payment
date.
2. Upon the payment date specified in such resolution, Oral Instructions
or Certificate, as the case may be, the Custodian shall pay out of the money
held for the account of each Series the total amount payable to the Dividend
Agent and any
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sub-dividend agent or co-dividend agent of the Fund with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver or cause the
Administrator to deliver to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and price; and
(b) The amount of money to be received by the Custodian for the sale
of such Shares and specifically allocated to the separate account in the name of
such Series.
2. Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account in the name of the Series for
which such money was received.
3. Upon issuance of any Shares of any Series described in the foregoing
provisions of this Article, the Custodian shall pay, out of the money held for
the account of such Series, all original issue or other taxes required to be
paid by the Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder in
connection with a redemption of any Shares, it shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the
Series and number of Shares received by the Transfer Agent for redemption and
that such Shares are in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the money held in the separate account in
the name of the Series the total amount specified in the Certificate delivered
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time
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to time be offered by the Fund, the Custodian, unless otherwise instructed by a
Certificate, shall, upon receipt of an advice from the Fund or its agent setting
forth that the redemption is in good form for redemption in accordance with the
check redemption procedure, honor the check presented as part of such check
redemption privilege out of the money held in the separate account of the Series
of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the money held by
the Custodian in the separate account for such Series shall be insufficient to
pay the total amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate or Oral Instructions, or
which results in an overdraft in the separate account of such Series for some
other reason, or if the Fund is for any other reason indebted to the Custodian
with respect to a Series, including any indebtedness to The Bank of New York
under the Fund's Cash Management and Related Services Agreement, (except a
borrowing for investment or for temporary or emergency purposes using Securities
as collateral pursuant to a separate agreement and subject to the provisions of
paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Fund for such Series payable on demand
and shall bear interest from the date incurred at a rate per annum (based on a
360-day year for the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from time to time, such rate
to be adjusted on the effective date of any change in such prime commercial
lending rate but in no event to be less than 6% per annum, or at such other rate
per annum, if any, as the Fund and the Custodian may agree upon in writing from
time to time. In addition, the Fund hereby agrees that the Custodian shall have
a continuing lien and security interest in and to any property specifically
allocated to such Series at any time held by it for the benefit of such Series
or in which the Fund may have an interest which is then in the Custodian's
possession or control or in possession or control of any third party acting in
the Custodian's behalf. The Fund authorizes the Custodian, in its sole
discretion, at any time to charge any such overdraft or indebtedness together
with interest due thereon against any balance of account standing to such
Series' credit on the Custodian's books. In addition, the Fund hereby covenants
that on each Business Day on which either it intends to enter a Reverse
Repurchase Agreement and/or otherwise borrow from a third party, or which next
succeeds a Business Day on which at the
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close of business the Fund had outstanding a Reverse Repurchase Agreement or
such a borrowing, it shall prior to 9 a.m., New York City time, advise the
Custodian, in writing, of each such borrowing, shall specify the Series to which
the same relates, and shall not incur any indebtedness not so specified other
than from the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or other loan
agreement, (d) the time and date, if known, on which the loan is to be entered
into, (e) the date on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan
is in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate the Series,
the name of the issuer, the title and number of shares or the principal amount
of any particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities.
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ARTICLE XV
INSTRUCTIONS
1. With respect to any software provided by the Custodian to the
Administrator in order for the Administrator to transmit Instructions to the
Custodian (the "Software"), the Custodian grants to the Administrator a
personal, nontransferable and nonexclusive license to use the Software solely
for the purpose of transmitting Instructions on behalf of the Fund to, and
receiving communications from, the Custodian in connection with its account(s).
The Administrator agrees not to sell, reproduce, lease or otherwise provide,
directly or indirectly, the Software or any portion thereof to any third party
without the prior written consent of the Custodian.
2. The Administrator shall obtain and maintain at its own cost and
expense all equipment and services, including but not limited to communications
services, necessary for it to utilize the Software and transmit Instructions to
the Custodian. The Custodian shall not be responsible for the reliability,
compatibility with the Software or availability of any such equipment or
services or the performance or nonperformance by any nonparty to this Custody
Agreement.
3. The Administrator acknowledges for itself and the Fund that the
Software, all data bases made available to the Administrator by utilizing the
Software (other than data bases relating solely to the assets of the Fund and
transactions with respect thereto), and any proprietary data, processes,
information and documentation (other than which are or become part of the public
domain or are legally required to be made available to the public)
(collectively, the "Information"), are the exclusive and confidential property
of the Custodian. The Administrator shall keep the Information confidential by
using the same care and discretion that the Administrator uses with respect to
its own confidential property and trade secrets and shall neither make nor
permit any disclosure without the prior written consent of the Custodian. Upon
termination of this Agreement or the Software license granted hereunder for any
reason, the Fund shall return to the Custodian all copies of the Information
which are in its possession or under its control or which the Fund distributed
to third parties.
4. The Custodian reserves the right to modify the Software from time to
time upon reasonable prior notice and the Administrator shall install new
releases of the Software as the Custodian may direct. The Administrator agrees
not to modify or attempt to modify the Software without the Custodian's prior
written consent. The Administrator acknowledges that any modifications to the
Software, whether by the Administrator or the Custodian and whether with or
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without the Custodian's consent, shall become the property of the Custodian.
5. The Custodian makes no warranties or representations of any kind with
regard to the Software or the method(s) by which the Administrator may transmit
Instructions to the Custodian, express or implied, including but not limited to
any implied warranties or merchantability or fitness for a particular purpose.
6. Where the method for transmitting Instructions by the Administrator on
behalf of the Fund involves an automatic systems acknowledgment by the Custodian
of its receipt of such Instructions, then in the absence of such acknowledgment
the Custodian shall not be liable for any failure to act pursuant to such
Instructions, neither the Administrator nor the Fund may claim that such
Instructions were received by the Custodian, and the Administrator or the Fund
shall deliver a Certificate by some other means.
7. (a) The Administrator and the Fund agree that where the Administrator
delivers to the Custodian Instructions hereunder, it shall be the
Administrator's sole responsibility to ensure that only persons duly authorized
by the Administrator transmit such Instructions to the Custodian. The
Administrator will cause all persons transmitting Instructions to the Custodian
to treat applicable user and authorization codes, passwords and authentication
keys with extreme care, and irrevocably authorizes the Custodian to act in
accordance with and rely upon Instructions received by it pursuant hereto.
(b) The Administrator hereby represents, acknowledges and agrees that
it is fully informed of the protections and risks associated with the various
methods of transmitting Instructions to the Custodian and that there may be more
secure methods of transmitting instructions to the Custodian than the method(s)
selected by the Administrator on behalf of the Fund. The Fund hereby agree that
the security procedures (if any) to be followed in connection with the Fund's
transmission of Instructions provide a commercially reasonable degree of
protection in light of its particular needs and circumstances.
8. The Administrator and the Fund hereby represent, warrant and covenant
to the Custodian that this Agreement has been duly approved by a resolution of
the Fund's Board of Trustees, and that its transmission of Instructions pursuant
hereto shall at all times comply with the Investment Company Act of 1940, as
amended.
9. The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, its ability to send
Instructions as promptly as practicable,
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and in any event within 24 hours after the earliest of (i) discovery thereof,
(ii) the Business Day on which discovery should have occurred through the
exercise of reasonable care and (iii) in the case of any error, the date of
actual receipt of the earliest notice which reflects such error, it being agreed
that discovery and receipt of notice may only occur on a business day. The
Custodian shall promptly advise the Administrator whenever the Custodian learns
of any errors, omissions or interruption in, or delay or unavailability of, the
Fund's ability to send Instructions.
ARTICLE XVI
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1. The Custodian is authorized and instructed to employ, as sub-custodian
for each Series' Foreign Securities (as such term is defined in paragraph (c)(1)
of Rule 17f-5 under the Investment Company Act of 1940, as amended) and other
assets, the foreign banking institutions and foreign securities depositories and
clearing agencies designated on Schedule I hereto ("Foreign Sub-Custodians") to
carry out their respective responsibilities in accordance with the terms of the
sub-custodian agreement between each such Foreign Sub-Custodian and the
Custodian, copies of which have been previously delivered to the Fund and
receipt of which is hereby acknowledged (each such agreement, a "Foreign Sub-
Custodian Agreement"). Upon receipt of a Certificate, together with a certified
resolution substantially in the form attached as Exhibit E of the Fund's Board
of Trustees, the Fund may designate any additional foreign sub-custodian with
which the Custodian has an agreement for such entity to act as the Custodian's
agent, as its sub-custodian and any such additional foreign sub-custodian shall
be deemed added to Schedule I. Upon receipt of a Certificate from the Fund, the
Custodian shall cease the employment of any one or more Foreign Sub-Custodians
for maintaining custody of the Fund's assets and such Foreign Sub-Custodian
shall be deemed deleted from Schedule I.
2. Each Foreign Sub-Custodian Agreement shall be substantially in the
form previously delivered to the Fund and will not be amended in a way that
materially adversely affects the Fund without the Fund's prior written consent.
3. The Custodian shall identify on its books as belonging to each Series
of the Fund the Foreign Securities of such Series held by each Foreign Sub-
Custodian. At the election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claims by the Fund or any Series
against a Foreign Sub-Custodian as a
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consequence of any loss, damage, cost, expense, liability or claim sustained or
incurred by the Fund or any Series if and to the extent that the Fund or such
Series has not been made whole for any such loss, damage, cost, expense,
liability or claim.
4. Upon request of the Fund, the Custodian will, consistent with the
terms of the applicable Foreign Sub-Custodian Agreement, use reasonable efforts
to arrange for the independent accountants of the Fund to be afforded access to
the books and records of any Foreign Sub-Custodian insofar as such books and
records relate to the performance of such Foreign Sub-Custodian under its
agreement with the Custodian on behalf of the Fund.
5. The Custodian will supply to the Fund from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of each
Series held by Foreign Sub-Custodians, including but not limited to, an
identification of entities having possession of each Series' Foreign Securities
and other assets, and advices or notifications of any transfers of Foreign
Securities to or from each custodial account maintained by a Foreign Sub-
Custodian for the Custodian on behalf of the Series.
6. The Custodian shall transmit promptly to the Fund all notices, reports
or other written information received pertaining to the Fund's Foreign
Securities, including without limitation, notices of corporate action, proxies
and proxy solicitation materials.
7. Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for securities received for the account of any Series and
delivery of securities maintained for the account of such Series may be effected
in accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later payment for
such securities from such purchaser or dealer.
8. Notwithstanding any other provision in this Agreement to the contrary,
with respect to any losses or damages arising out of or relating to any actions
or omissions of any Foreign Sub-Custodian the sole responsibility and liability
of the Custodian shall be to take appropriate action at the Fund's expense to
recover such loss or damage from the Foreign Sub-Custodian. It is expressly
understood and agreed that the Custodian's sole responsibility and liability
shall be limited to amounts so recovered from the Foreign Sub-Custodian.
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ARTICLE XVII
FX TRANSACTIONS
1. Whenever the Fund shall enter into an FX Transaction, the Fund shall
promptly deliver or cause the Administrator to deliver to the Custodian a
Certificate or Oral Instructions specifying with respect to such FX Transaction:
(c) the Series to which such FX Transaction is specifically allocated; (b) the
type and amount of Currency to be purchased by the Fund; (c) the type and amount
of Currency to be sold by the Fund; (d) the date on which the Currency to be
purchased is to be delivered; (e) the date on which the Currency to be sold is
to be delivered; and (f) the name of the person from whom or through whom such
currencies are to be purchased and sold. Unless otherwise instructed by a
Certificate or Oral Instructions, the Custodian shall deliver, or shall instruct
a Foreign Sub-Custodian to deliver, the Currency to be sold on the date on which
such delivery is to be made, as set forth in the Certificate, and shall receive,
or instruct a Foreign Sub-Custodian to receive, the Currency to be purchased on
the date as set forth in the Certificate.
2. Where the Currency to be sold is to be delivered on the same day as
the Currency to be purchased, as specified in the Certificate or Oral
Instructions, the Custodian or a Foreign Sub-Custodian may arrange for such
deliveries and receipts to be made in accordance with the customs prevailing
from time to time among brokers or dealers in Currencies, and such receipt and
delivery may not be completed simultaneously. The Fund assumes all
responsibility and liability for all credit risks involved in connection with
such receipts and deliveries, which responsibility and liability shall continue
until the Currency to be received by the Fund has been received in full.
3. Any FX Transaction effected by the Custodian in connection with this
Agreement may be entered with the Custodian, any office, branch or subsidiary of
The Bank of New York Company, Inc., or any Foreign Sub-Custodian acting as
principal or otherwise through customary banking channels. The Fund may issue a
standing Certificate with respect to FX Transaction but the Custodian may
establish rules or limitations concerning any foreign exchange facility made
available to the Fund. The Fund shall bear all risks of investing in Securities
or holding Currency. Without limiting the foregoing, the Fund shall bear the
risks that rules or procedures imposed by a Foreign Sub-Custodian or foreign
depositories, exchange controls, asset freezes or other laws, rules, regulations
or orders shall prohibit or impose burdens or costs on the transfer to, by or
for the account of the Fund of Securities or any cash held outside the Fund's
jurisdiction or denominated in Currency other than its home jurisdiction or the
conversion of cash from one Currency into another
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currency. The Custodian shall not be obligated to substitute another Currency
for a Currency (including a Currency that is a component of a Composite Currency
Unit) whose transferability, convertibility or availability has been affected by
such law, regulation, rule or procedure. Neither the Custodian nor any Foreign
Sub-Custodian shall be liable to the Fund for any loss resulting from any of the
foregoing events.
ARTICLE XVIII
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or as provided in Article XVI neither
the Custodian nor its nominee shall be liable for any loss or damage, including
reasonable counsel fees, resulting from its action or omission to act or
otherwise, either hereunder or under any Margin Account Agreement, except for
any such loss or damage arising out of its own negligence or willful misconduct.
The Custodian agrees to indemnify and hold harmless the Trust and Trust's
Trustees and officers to the extent described below against any loss as a result
of any breach or violation of this Agreement by the Custodian or its officers,
employees and agents or its nominees, resulting from their negligence or willful
misconduct. The Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for and obtain the advice
and opinion of counsel to the Fund or of its own counsel, at the expense of the
Fund, and shall be fully protected with respect to anything done or omitted by
it in good faith in conformity with such advice or opinion. The Custodian shall
be liable to the Fund for any loss or damage resulting from the use of the Book-
Entry System or any Depository arising by reason of any negligence or willful
misconduct on the part of the Custodian or any of its employees or agents.
Notwithstanding the foregoing, or any other provision contained in this
Agreement, in no event shall the Custodian be liable to the Trust, its Trustees
or officers, or any third party, for special, indirect or consequential damages,
or lost profits or loss of business, arising under or in connection with this
Agreement, even if previously informed of the possibility of such damages and
regardless of the form of action.
2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold, or
written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount paid or received therefor;
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(b) The legality of the sale or redemption of any Shares, or the
propriety of the amount to be received or paid therefor;
(c) The legality of the declaration or payment of any dividend by the
Fund;
(d) The legality of any borrowing by the Fund using Securities as
collateral;
(e) The legality of any loan of portfolio Securities, nor shall the
Custodian be under any duty or obligation to see to it that any cash collateral
delivered to it by a broker, dealer, or financial institution or held by it at
any time as a result of such loan of portfolio Securities of the Fund is
adequate collateral for the Fund against any loss it might sustain as a result
of such loan. The Custodian specifically, but not by way of limitation, shall
not be under any duty or obligation periodically to check or notify the Fund
that the amount of such cash collateral held by it for the Fund is sufficient
collateral for the Fund, but such duty or obligation shall be the sole
responsibility of the Fund. In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer or financial institution to which
portfolio Securities of the Fund are lent pursuant to Article XIV of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due; or
(f) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or Collateral
Account in connection with transactions by the Fund. In addition, the Custodian
shall be under no duty or obligation to see that any broker, dealer, futures
commission merchant or Clearing Member makes payment to the Fund of any
variation margin payment or similar payment which the Fund may be entitled to
receive from such broker, dealer, futures commission merchant or Clearing
Member, to see that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the Custodian's receipt or non-
receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by
the final crediting of the account representing the Fund's interest at the Book-
Entry System or the Depository.
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4. The Custodian shall have no responsibility and shall not be liable for
ascertaining or acting upon any calls, conversions, exchange offers, tenders,
interest rate changes or similar matters relating to Securities held in the
Depository, unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any responsibility or
liability for the failure of the Depository to collect, or for the late
collection or late crediting by the Depository of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed, retired,
called or otherwise become payable. However, upon receipt of a Certificate from
the Fund of an overdue amount on Securities held in the Depository the Custodian
shall make a claim against the Depository on behalf of the Fund, except that the
Custodian shall not be under any obligation to appear in, prosecute or defend
any action suit or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Transfer Agent of
the Fund nor to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount if the Securities upon which such amount is
payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement
of its costs and expenses in connection with any such action.
7. The Custodian may in addition to the employment of Foreign Sub-
Custodians pursuant to Article XVI appoint one or more banking institutions as
Depository or Depositories, as Sub-Custodian or Sub-Custodians, or as Co-
Custodian or Co-Custodians including, but not limited to, banking institutions
located in foreign countries, of Securities and money at any time owned by the
Fund, upon such terms and conditions as may be approved in a Certificate or
contained in an agreement executed by the Custodian, the Fund and the appointed
institution.
8. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it or by
any Foreign Sub-Custodian, for the account of the Fund and specifically
allocated to a Series are such as properly may be held by the Fund or such
Series under the provisions of its then current prospectus, or (b) to
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ascertain whether any transactions by the Fund, whether or not involving the
Custodian, are such transactions as may properly be engaged in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The Fund
represents that the Administrator has agreed to pay such compensation and
expenses promptly upon receipt of statements therefor, and hereby directs the
Custodian to (i) send all statements for compensation to its attention care of
FPS at the following address: FPS Services, Inc., 3200 Horizon Drive, King of
Prussia, PA 19406-0903, Attention: Mr. Elmer Gardner, Senior Vice President, and
(ii) accept all payments made by FPS in the Fund's name as if such payments were
made directly by the Fund. The Fund shall pay to FPS fees for services
(including custodian services provided by the Custodian) in accordance with the
Investment Company Services Agreement. The Custodian's compensation for services
rendered hereunder is set forth in a separate agreement between the Custodian
and FPS. Should FPS fail to pay or remit such compensation to the Custodian
within 20 days of the date the same is due and payable, Custodian shall notify
the Fund. If such payment or remittance is not received from FPS within 15 days
of such notice, then the Custodian will be entitled to debit the Custody Account
directly for such compensation. The Custodian may charge compensation with
respect to which it has properly sent a notice to the Fund, as provided in the
preceding sentence, and any expenses with respect to a Series incurred by the
Custodian in the performance of its duties pursuant to such agreement against
any money specifically allocated to such Series. Unless and until the Fund or
the Administrator instructs the Custodian by a Certificate to apportion any
loss, damage, liability or expense among the Series in a specified manner, the
Custodian shall also be entitled to charge against any money held by it for the
account of a Series such Series' pro rata share (based on such Series net asset
value at the time of the charge to the aggregate net asset value of all Series
at that time) of the amount of any loss, damage, liability or expense, including
counsel fees, for which it shall be entitled to reimbursement under the
provisions of this Agreement. The expenses for which the Custodian shall be
entitled to reimbursement hereunder shall include, but are not limited to, the
expenses of sub-custodians and foreign branches of the Custodian incurred in
settling outside of New York City transactions involving the purchase and sale
of Securities of the Fund.
10. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably believed
by the Custodian to be a Certificate. The Custodian shall be entitled to rely
upon any Oral Instructions actually received by the Custodian. The
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Fund agrees to forward or cause the Administrator to forward to the Custodian a
Certificate or facsimile thereof confirming such Oral Instructions in such
manner so that such Certificate or facsimile thereof is received by the
Custodian, whether by hand delivery, telecopier or other similar device, or
otherwise, by the close of business of the same day that such Oral Instructions
are given to the Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions provided such instructions reasonably
appear to have been received from an Officer.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian its expenses of
providing such copies. Upon reasonable request of the Fund, the Custodian shall
provide in hard copy or on micro-film, whichever the Custodian elects, any
records included in any such delivery which are maintained by the Custodian on
a computer disc, or are similarly maintained, and the Fund shall reimburse the
Custodian for its expenses of providing such hard copy or micro-film.
13. The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System,
the Depository or O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
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14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with this Agreement, including the Custodian's payment or non-payment
of checks pursuant to paragraph 6 of Article XIII as part of any check
redemption privilege program of the Fund, except for any such liability, claim,
loss and demand arising out of the Custodian's own negligence or willful
misconduct. For any legal proceeding giving rise to the indemnification set
forth above in this paragraph, the Fund shall be entitled to defend or prosecute
any claim in the name of the Custodian at its own expense and through counsel of
its own choosing reasonably acceptable to the Custodian if it gives written
notice to the Custodian within ten (10) Business days of receiving notice of
such claim. Notwithstanding the foregoing, the Custodian may participate in the
litigation at its own expense and with counsel of its own choosing.
15. Subject to the foregoing provisions of this Agreement, including,
without limitation, those contained in Article XVI the Custodian may deliver
and receive Securities, and receipts with respect to such Securities, and
arrange for payments to be made and received by the Custodian in accordance
with the customs prevailing from time to time among brokers or dealers in such
Securities. When the Custodian is instructed to deliver Securities against
payment, delivery of such Securities and receipt of payment therefor may not be
completed simultaneously. The Fund assumes all responsibility and liability for
all credit risks involved in connection with the Custodian's delivery of
Securities pursuant to Certificates or instructions of the Fund or the
Administrator which responsibility and liability shall continue until final
payment in full has been received by the Custodian.
16. In the event the Custodian is advised by the Fund that the Fund is no
longer utilizing the services of the Administrator, then the Custodian shall
furnish or give to the Fund the statements or notices described above as to be
furnished or given to the Administrator.
17. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian. Without limiting the generality of the foregoing, the
Custodian shall have no duties or responsibilities by reason of any terms or
provisions in the Investment Company Services Agreement, and if such Investment
Company Services Agreement shall cease to be in effect the Custodian shall have
no additional duties hereunder.
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ARTICLE XIX
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which shall be not less than ninety (90) days after the date of giving of such
notice, provided, however, that if such notice is sent by the Fund and recites
that it is being given contemporaneously with a termination of the Investment
Company Services Agreement with FPS, such notice may specify any date of
termination selected by the Fund. In the event such notice is given by the Fund,
it shall be accompanied by a copy of a resolution of the Board of Trustees of
the Fund, certified by the Secretary, the Clerk, any Assistant Secretary or any
Assistant Clerk, electing to terminate this Agreement and designating a
successor custodian or custodians, each of which shall be a bank or trust
company having not less than $2,000,000 aggregate capital, surplus and undivided
profits. In the event such notice is given by the Custodian, the Fund shall, on
or before the termination date, deliver to the Custodian a copy of a resolution
of the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any
Assistant Secretary or any Assistant Clerk, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon
the date set forth in such notice this Agreement shall terminate, and the
Custodian shall upon receipt of a notice of acceptance by the successor
custodian on that date deliver directly to the successor custodian all
Securities and money then owned by the Fund and held by it as Custodian, after
deducting all fees, expenses and other amounts for the payment or reimbursement
of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and money then owned by
the Fund be deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book Entry System which
cannot be delivered to the Fund to hold such Securities hereunder in accordance
with this Agreement.
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ARTICLE XX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its seal, setting forth the names and the
signatures of the present Officers. The Fund agrees to furnish to the Custodian
a new Certificate in similar form in the event that any such present Officer
ceases to be an Officer or in the event that other or additional Officers are
elected or appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement upon Oral Instructions or signatures of the present Officers as set
forth in the last delivered Certificate.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10286, or at such other place as the
Custodian may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund may from time to
time designate in writing, and any notice or other instrument in writing
authorized or required to be given to the Administrator shall be sufficiently
given if addressed to the Administrator at such address as the Administrator may
from time to time designate in writing.
4. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality as this
Agreement and approved by a resolution of the Board of Trustees of the Fund.
5. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of the Fund's Board of Trustees.
6. This Agreement shall be construed in accordance with the laws of the
State of New York without giving effect to conflict of laws principles thereof.
Each party hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute
- 42 -
<PAGE>
arising hereunder and hereby waives its right to trial by jury.
7. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
8. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of The State of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Board of Trustees of the Fund as
Trustees and not individually and that the obligations of this instrument are
not binding upon any of the Trustees or shareholders individually but are
binding only upon the assets and property of the Fund; provided, however, that
the Declaration of Trust of the Fund provides that the assets of a particular
Series of the Fund shall under no circumstances be charged with liabilities
attributable to any other Series of the Fund and that all persons extending
credit to, or contracting with or having any claim against a particular Series
of the Fund shall look only to the assets of that particular Series for payment
of such credit, contract or claim.
- 43 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective Officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
CALAMOS FAMILY OF FUNDS
[SEAL] By:_______________________
Attest:
_______________________
THE BANK OF NEW YORK
[SEAL] By:_______________________
Attest:
_______________________
<PAGE>
APPENDIX A
I, , President and I,
, of CALAMOS FAMILY OF FUNDS, a
Massachusetts business trust (the "Fund"), do hereby certify that:
The following individuals including officers and employees of the
Administrator have been duly authorized by the Board of Trustees of the Fund in
conformity with the Fund's Declaration of Trust and By-Laws to give Certificates
or Oral Instructions on behalf of the Fund, and the signatures set forth
opposite their respective names are their true and correct signatures:
Name Signature
_____________________ _________________________
<PAGE>
APPENDIX B
SCHEDULE
CALAMOS CONVERTIBLE FUND
CALAMOS GROWTH AND INCOME FUND
CALAMOS STRATEGIC INCOME FUND
CALAMOS GROWTH FUND
CALAMOS GLOBAL GROWTH AND INCOME FUND
<PAGE>
APPENDIX C
I, Vincent Blazewicz, a Vice President with THE BANK OF NEW YORK do hereby
designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, , hereby certifies that he
or she is the duly elected and acting of CALAMOS FAMILY OF FUNDS,
a Massachusetts business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of the Fund at a
meeting duly held on , 199 , at which a quorum was at all
times present and that such resolution has not been modified or rescinded and is
in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as of
, 199 , (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis to deposit in the Book-Entry
System, as defined in the Custody Agreement, all securities eligible for
deposit therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Book-Entry System to the extent
possible in connection with its performance thereunder, including,
without limitation, in connection with settlements of purchases and sales
of securities, loans of securities, and deliveries and returns of
securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of CALAMOS
FAMILY OF FUNDS, as of the day of , 199 .
[SEAL]
<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned, , hereby certifies that he
or she is the duly elected and acting of CALAMOS FAMILY
OF FUNDS, a Massachusetts business trust (the "Fund"), and further certifies
that the following resolution was adopted by the Board of Trustees of the Fund
at a meeting duly held on , 199 , at which a quorum was at all
times present and that such resolution has not been modified or rescinded and is
in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as of
, 199 , (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis until such time as it receives
a Certificate, as defined in the Custody Agreement, to the contrary to
deposit in the Depository, as defined in the Custody Agreement, all
securities eligible for deposit therein, regardless of the Series to which
the same are specifically allocated, and to utilize the Depository to the
extent possible in connection with its performance thereunder, including,
without limitation, in connection with settlements of purchases and sales
of securities, loans of securities, and deliveries and returns of
securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of CALAMOS
FAMILY OF FUNDS, as of the day of , 199 .
[SEAL]
<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, , hereby certifies that he or she is
the duly elected and acting of CALAMOS FAMILY OF FUNDS, a
Massachusetts business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of the Fund at a
meeting duly held on , 199 , at which a quorum was at all times present
and that such resolution has not been modified or rescinded and is in full force
and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as of
, 199 , (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis until such time as it receives
a Certificate, as defined in the Custody Agreement, to the contrary to
deposit in the Participants Trust Company as Depository, as defined in the
Custody Agreement, all securities eligible for deposit therein, regardless
of the Series to which the same are specifically allocated, and to utilize
the Participants Trust Company to the extent possible in connection with
its performance thereunder, including, without limitation, in connection
with settlements of purchases and sales of securities, loans of securities,
and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of CALAMOS
FAMILY OF FUNDS, as of the day of , 199 .
[SEAL]
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, , hereby certifies that he or
she is the duly elected and acting of CALAMOS FAMILY OF
FUNDS, a Massachusetts business trust (the "Fund"), and further certifies that
the following resolution was adopted by the Board of Trustees of the Fund at a
meeting duly held on , 199 , at which a quorum was at all times
present and that such resolution has not been modified or rescinded and is in
full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as of
, 199 , (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agreement, to the
contrary, to accept, utilize and act with respect to Clearing Member
confirmations for Options and transaction in Options, regardless of the
Series to which the same are specifically allocated, as such terms are
defined in the Custody Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of CALAMOS
FAMILY OF FUNDS, as of the day of , 199 .
[SEAL]
<PAGE>
EXHIBIT D
The undersigned, , hereby certifies that he or
she is the duly elected and acting President of CALAMOS FAMILY OF FUNDS, a
Massachusetts business trust (the "Fund"), further certifies that the following
resolutions were adopted by the Board of Trustees of the Fund at a meeting duly
held on , 1997, at which a quorum was at all times present and that
such resolutions have not been modified or rescinded and are in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to the
Custody Agreement between The Bank of New York and the Fund dated as of
, 1997 (the "Custody Agreement") is authorized and instructed
on a continuous and ongoing basis to act in accordance with, and to rely on
Instructions (as defined in the Custody Agreement).
RESOLVED, that the Fund shall establish access codes and grant use of
such access codes only to Officers of the Fund as defined in the Custody
Agreement, shall establish internal safekeeping procedures to safeguard and
protect the confidentiality and availability of user and access codes,
passwords and authentication keys, and shall use Instructions only in a
manner that does not contravene the Investment Company Act of 1940, as
amended, or the rules and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of CALAMOS
FAMILY OF FUNDS, as of the day of , 1997.
[SEAL]
<PAGE>
EXHIBIT E
The undersigned, , hereby certifies that he or
she is the duly elected and acting of CALAMOS FAMILY OF
FUNDS, a Massachusetts business trust (the "Fund"), further certifies that the
following resolutions were adopted by the Board of Trustees of the Fund at a
meeting duly held on , 199 , at which a quorum was at all times
present and that such resolutions have not been modified or rescinded and are in
full force and effect as of the date hereof.
RESOLVED, that the maintenance of the Fund's assets in each country listed
in Schedule I hereto be, and hereby is, approved by the Board of Trustees as
consistent with the best interests of the Fund and its shareholders; and further
RESOLVED, that the maintenance of the Fund's assets with the foreign
branches of The Bank of New York (the "Bank") listed in Schedule I located in
the countries specified therein, and with the foreign sub-custodians and
depositories listed in Schedule I located in the countries specified therein be,
and hereby is, approved by the Board of Trustees as consistent with the best
interest of the Fund and its shareholders; and further
RESOLVED, that the Sub-custodian Agreements presented to this meeting
between the Bank and each of the foreign sub-custodians and depositories listed
in Schedule I providing for the maintenance of the Fund's assets with the
applicable entity, be and hereby are, approved by the Board of Trustees as
consistent with the best interests of the Fund and its shareholders; and further
RESOLVED, that the appropriate officers of the Fund are hereby authorized
to place assets of the Fund with the aforementioned foreign branches and foreign
sub-custodians and depositories as hereinabove provided; and further
RESOLVED, that the appropriate officers of the Fund, or any of them, are
authorized to do any and all other acts, in the name of the Fund and on its
behalf, as they, or any of them, may determine to be necessary or desirable and
proper in connection with or in furtherance of the foregoing resolutions.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of CALAMOS FAMILY
OF FUNDS, as of the day of , 199 .
[SEAL]
<PAGE>
Exhibit 8.2
FIRST AMENDMENT TO CUSTODY AGREEMENT
This amendment is made as of the day of July, 1998 between Calamos
Investment Trust, a Massachusetts business trust (the "Trust"), and The Bank of
New York, a New York corporation (the "Custodian").
WITNESSETH:
WHEREAS, the Trust and the Custodian are parties to a custody agreement
dated October 16, 1997 (the "Agreement"); and
WHEREAS, the parties desire to amend the agreement in certain respects as
set forth below.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and set forth in the Agreement, the Trust and the Custodian agree that the
agreement is amended as follows:
1. Definition of Certificate. Paragraph 4 of Article I is amended to read
as follows:
4. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian which is actually received by the Custodian and
signed on behalf of the Trust by (a) any two Officers or (b) in the
case of a Certificate referred to in article IV, V, VIII, IX or X, any
one Officer, and the term certificate shall include Instructions
communicated to the Custodian by the Administrator.
2. Appendix B. Appendix B is amended to read as set for the in Exhibit B
attached to this amendment.
<PAGE>
IN WITNESS WHEREOF, parties have caused this amendment to be executed by
their respective officers thereunto duly authorized and their respective seals
to be hereto affixed, as of the day and year first above written.
CALAMOS INVESTMENT TRUST
[SEAL] By
----------------------
Attest:
- ---------------------
THE BANK OF NEW YORK
[SEAL] By
----------------------
Attest:
- ---------------------
<PAGE>
APPENDIX B
(Article I, (S)27)
CALAMOS CONVERTIBLE FUND
CALAMOS GROWTH AND INCOME FUND
CALAMOS GROWTH FUND
CALAMOS GLOBAL GROWTH AND INCOME FUND
<PAGE>
Exhibit 9.1
Investment Company Services Agreement
This Agreement, dated as of the ________ day of ________________________,
1997, made by and between Calamos Investment Trust, (the "Trust"), a business
trust operating as an open-end, management investment company registered under
the Investment Company Act of 1940, as amended (the "Act"), duly organized and
existing under the laws of the Commonwealth of Massachusetts, and FPS Services,
Inc. ("FPS"), a corporation duly organized under the laws of the State of
Delaware (collectively, the "Parties").
Witnesseth That:
Whereas, the Trust is authorized by its Trust Instrument to issue separate
series of shares representing interests in separate investment portfolios which
are identified on Schedule "C" attached hereto, and which Schedule "C" may be
amended from time to time by mutual agreement of the Trust and FPS; and
Whereas, the Parties desire to enter into an agreement whereby FPS will
provide the services to the Trust as specified herein and set forth in
particular in Schedule "A" which is attached hereto and made a part hereof.
Now Therefore, in consideration of the premises and mutual covenants
contained herein, and in exchange of good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
General Provisions
Section 1. Appointment. The Trust hereby appoints FPS as servicing agent
and FPS hereby accepts such appointment. In order that FPS may perform its
duties under the terms of this Agreement, the Board of Trustees of the Trust
shall direct the officers, investment adviser, legal counsel, independent
accountants and custodian of the Trust to cooperate fully with FPS and, upon
request of FPS, to provide such information, documents and advice relating to
the Trust which FPS requires to execute its responsibilities hereunder. In
connection with its duties, FPS shall be entitled to rely, and will be held
harmless by the Trust when acting in reasonable reliance, upon any instruction,
advice or document relating to the Trust as provided to FPS by any of the
aforementioned persons on behalf of the Trust. All fees charged by any such
persons acting on behalf of the Trust will be deemed an expense of the Trust.
Any services performed by FPS under this Agreement will conform to the
requirements of:
(a) the provisions of the Act and the Securities Act of 1933, as amended,
and any rules
Page 1 of 12
<PAGE>
or regulations in force thereunder;
(b) any other applicable provision of state and federal law;
(c) the provisions of the Trust Instrument and the By-Laws as amended from
time to time and delivered to FPS;
(d) any policies and determinations of the Board of Trustees of the Trust
which are communicated to FPS; and
(e) the policies of the Trust as reflected in the Trust' s registration
statement as filed with the U.S. Securities and Exchange Commission.
Nothing in this Agreement will prevent FPS or any officer thereof from
providing the same or comparable services for or with any other person, firm or
corporation. While the services supplied to the Trust may be different than
those supplied to other persons, firms or corporations, FPS will provide the
Trust equitable treatment in supplying services. The Trust recognizes that it
will not receive preferential treatment from FPS as compared with the treatment
provided to other FPS clients.
Section 2. Duties and Obligations of FPS.
Subject to the provisions of this Agreement, FPS will provide to the Trust
the specific services as set forth in Schedule "A" attached hereto.
Section 3. Definitions. For purposes of this Agreement:
"Certificate" will mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement. To be effective, such
Certificate shall be given to and received by the custodian and shall be signed
on behalf of the Trust by any two of its designated officers, and the term
Certificate shall also include instructions communicated to the custodian by
FPS.
"Custodian" will refer to that agent which provides safekeeping of the
assets of the Trust.
"Instructions" will mean communications containing instructions transmitted
by electronic or telecommunications media including, but not limited to,
Industry Standardization for Institutional Trade Communications ("I.S.I.T.C."),
computer-to-computer interface, dedicated transmission line, facsimile
transmission (which may be signed by an officer or unsigned) and tested telex.
"Oral Instruction" will mean an authorization, instruction, approval, item
or set of data, or information of any kind transmitted to FPS in person or by
telephone, telegram, telecopy or other mechanical or documentary means lacking
original signature, by a person or persons reasonably
Page 2 of 12
<PAGE>
identified to FPS to be a person or persons so authorized by a resolution of the
Board of Trustees of the Trust to give Oral Instructions to FPS on behalf of the
Trust.
"Shareholders" will mean the registered owners of the shares of the Trust
in accordance with the share registry records maintained by FPS for the Trust.
"Shares" will mean the issued and outstanding shares of the Trust.
"Signature Guarantee" will mean the guarantee of signatures by an "eligible
guarantor institution" as defined in Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Eligible guarantor institutions
include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
Broker-dealers guaranteeing signatures must be members of a clearing corporation
or maintain net capital of at least $100,000. Signature guarantees will be
accepted from any eligible guarantor institution which participates in a
signature guarantee program.
"Written Instruction" will mean an authorization, instruction, approval,
item or set of data or information of any kind transmitted to FPS in an original
writing containing an original signature or a copy of such document transmitted
by telecopy including transmission of such signature reasonably identified to
FPS to be the signature of a person or persons so authorized by a resolution of
the Board of Trustees of the Trust, or so identified by the Trust to give
Written Instructions to FPS on behalf of the Trust.
Concerning Oral and Written Instructions. For all purposes under this
Agreement, FPS is authorized to act upon receipt of the first of any
Written or Oral Instruction it receives from the Trust or its agents. In
cases where the first instruction is an Oral Instruction that is not in the
form of a document or written record, a confirmatory Written Instruction or
Oral Instruction in the form of a document or written record shall be
delivered. In cases where FPS receives an Instruction, whether Written or
Oral, to enter a portfolio transaction onto the Trust' records, the Trust
shall cause the broker/dealer executing such transaction to send a written
confirmation to the Custodian.
FPS shall be entitled to rely on the first Instruction received. For any
act or omission undertaken by FPS in compliance therewith, it shall be free
of liability and fully indemnified and held harmless by the Trust, provided
however, that in the event a Written or Oral Instruction received by FPS is
countermanded by a subsequent Written or Oral Instruction received prior to
acting upon such countermanded Instruction, FPS shall act upon such
subsequent Written or Oral Instruction. The sole obligation of FPS with
respect to any follow-up or confirmatory Written
Page 3 of 12
<PAGE>
Instruction, Oral Instruction in documentary or written form shall be to
make reasonable efforts to detect any such discrepancy between the original
Instruction and such confirmation and to report such discrepancy to the
Trust. The Trust shall be responsible and bear the expense of its taking
any action, including any reprocessing, necessary to correct any such
discrepancy or error. To the extent such action requires FPS to act, the
Trust shall give FPS specific Written Instruction as to the action
required.
The Trust will file with FPS a certified copy of each resolution of the
Trust's Board of Trustees authorizing execution of Written Instructions or the
transmittal of Oral Instructions as provided above.
Section 4. Indemnification.
(a) FPS, its directors, officers, employees, shareholders, and agents will
be liable for any loss suffered by the Trust resulting from the willful
misfeasance, bad faith, negligence or reckless disregard on the part of FPS in
the performance of its obligations and duties under this Agreement.
(b) Any director, officer, employee, shareholder or agent of FPS, who may
be or become an officer, director, employee or agent of the Trust, will be
deemed, when rendering services to the Trust, or acting on any business of the
Trust (other than services or business in connection with FPS' duties
hereunder), to be rendering such services to or acting solely for the Trust and
not as a director, officer, employee, shareholder or agent of, or under the
control or direction of FPS even though such person may be receiving
compensation from FPS.
(c) The Trust agree to indemnify and hold FPS harmless, together with its
directors, officers, employees, shareholders and agents from and against any and
all claims, demands, expenses and liabilities (whether with or without basis in
fact or law) of any and every nature which FPS may sustain or incur or which may
be asserted against FPS by any person by reason of, or as a result of:
(i) any action taken or omitted to be taken by FPS in reliance upon
any Certificate, instrument, order or stock certificate or other document
reasonably believed by FPS to be genuine and signed, countersigned or executed
by any duly authorized person, upon the Oral Instructions or Written
Instructions of an authorized person of the Trust, or upon the written opinion
of legal counsel for the Trust or FPS; or
(ii) the offer or sale of shares of the Trust to any person, natural
or otherwise, which is in violation of any state or federal law (unless such
violation was caused by the negligence or
Page 4 of 12
<PAGE>
misconduct of FPS or its' employees or agents).
(d) If a claim is made against FPS as to which FPS may seek indemnity under
this Section, FPS will notify the Trust promptly after receipt of any written
assertion of such claim threatening to institute an action or proceeding with
respect thereto and will notify the Trust promptly of any action commenced
against FPS within ten (10) days after FPS has been served with a summons or
other legal process. Failure to notify the Trust will not, however, relieve the
Trust from any liability which it may have on account of the indemnity under
this Section so long as the Trust has not been prejudiced in any material
respect by such failure.
(e) The Trust and FPS will cooperate in the control of the defense of any
action, suit or proceeding in which FPS is involved and for which indemnity is
being provided by the Trust to FPS. The Trust may negotiate the settlement of
any action, suit or proceeding subject to FPS' approval, which will not be
unreasonably withheld. FPS reserves the right, but not the obligation, to
participate in the defense or settlement of a claim, action or proceeding with
its own counsel. Reasonable costs or expenses incurred by FPS in connection
with, or as a result of, such participation will be borne solely by the Trust
if:
(i) FPS has received an opinion of counsel from counsel to the Trust
stating that the use of counsel to the Trust by FPS would present an
impermissible conflict of interest;
(ii) the defendants in, or targets of, any such action or proceeding
include both FPS and the Trust, and legal counsel to FPS has reasonably
concluded that there are legal defenses available to it which are different from
or additional to those available to the Trust or which may be adverse to or
inconsistent with defenses available to the Trust (in which case the Trust will
not have the right to direct the defense of such action on behalf of FPS); or
(iii) the Trust authorize FPS to employ separate counsel at the
expense of the Trust.
(f) The terms of this Section will survive the termination of this
Agreement.
Section 5. Representations and Warranties.
(a) FPS represents and warrants that:
(i) it is a corporation duly organized and existing and in good
standing under the laws of Delaware;
(ii) it is empowered under applicable laws and by its Certificate of
Incorporation and By-Laws to enter into and perform this Agreement;
Page 5 of 12
<PAGE>
(iii) all requisite corporate proceedings have been taken to authorize
FPS to enter into and perform this Agreement;
(iv) it has and will continue to have, access to the facilities,
personnel and equipment required to fully perform its duties and obligations
hereunder;
(v) no legal or administrative proceeding have been instituted or
threatened which would impair FPS's ability to perform its duties and
obligations under this Agreement;
(vi) its entrance into this Agreement shall not cause a material
breach of, or be in material conflict with, any other agreement or obligation of
FPS or any law or regulation applicable to it;
(vii) it is registered as a transfer agent under Section 17A(c)(2) of
the Exchange Act;
(viii) this Agreement has been duly authorized by FPS, and when
executed and delivered, will constitute the valid, legal and binding obligation
of FPS, enforceable in accordance with its terms.
(b) The Trust represents and warrants that:
(i) it is a business trust duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(ii) it is empowered under applicable laws and by its Trust Instrument
and By-Laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize the
Trust to enter into and perform this Agreement;
(iv) no legal or administrative proceedings have been instituted or
threatened which would impair the Trust's ability to perform its duties and
obligations under this Agreement;
(v) the Trust's entrance into this Agreement shall not cause a
material breach of, or be in material conflict with, any other agreement or
obligations of the Trust, or any law or regulation applicable to either;
(vi) the Shares are properly registered or otherwise authorized for
issuance and sale;
(vii) this Agreement has been duly authorized by the Trust and, when
executed and delivered, will constitute the valid, legal and binding obligation
of the Trust, enforceable in accordance with its terms.
(c) Delivery of Documents
Page 6 of 12
<PAGE>
The Trust will furnish or cause to be furnished to FPS the following
documents;
(i) current Prospectus and Statement of Additional Information;
(ii) most recent Annual Report;
(iii) most recent Semi-Annual Report for registered investment
companies on Form N-SAR;
(iv) certified copies of resolutions of the Trust's Board of Trustees
authorizing the execution of Written Instructions or the transmittal of Oral
Instructions and those persons authorized to give those Instructions.
(d) Record Keeping and Other Information
FPS will create and maintain all records required of it pursuant to its
duties hereunder and as set forth in Schedule "A" in accordance with all
applicable laws, rules and regulations, including records required by Section
31(a) of the Act. All such records will be the property of the Trust and will be
available during regular business hours for inspection, copying and use by the
Trust. Where applicable, such records will be maintained by FPS for the periods
and in the places required by Rule 31a-2 under the Act. Upon termination of
this Agreement, FPS will deliver all such records (in machine-readable form if
maintained in that form) to the Trust or such person as the Trust may designate.
In case of any request or demand for the inspection of the Share records of
the Trust, FPS shall notify the Trust and secure instructions as to permitting
or refusing such inspection. FPS may, however, exhibit such records to any
person in any case where it is advised by its counsel that it may be held liable
for failure to do so.
Section 6. Compensation. The Trust agrees to pay FPS compensation for
its services, and to reimburse it for expenses, at the rates, times, manner and
amounts as set forth in Schedule "B" attached hereto and incorporated herein by
reference, and as will be set forth in any amendments to such Schedule "B"
agreed upon in writing by the Parties. Upon receipt of an invoice therefor, FPS
is authorized to collect such fees by debiting the Trust's custody account. In
addition, the Trust agrees to reimburse FPS for any out-of-pocket expenses paid
by FPS on behalf of the Trust within the ten (10) calendar days of the Trust's
receipt of an invoice therefor.
For the purpose of determining fees payable to FPS, the value of the
Trust's net assets will be computed at the times and in the manner specified in
the Trust's Prospectuses and Statements of Additional Information then in
effect.
Page 7 of 12
<PAGE>
During the term of this Agreement, should the Trust seek services or
functions in addition to those outlined below or in Schedule "A" attached
hereto, a written amendment to this Agreement specifying the additional services
and corresponding compensation will be executed by the Parties.
Section 7. Days of Operation. Nothing contained in this Agreement is
intended to or will require FPS, in any capacity hereunder, to perform any
functions or duties on any day on which the New York Stock Exchange ("NYSE") is
closed for regular session trading. Functions or duties normally scheduled to
be performed on such days will be performed on, and as of, the next succeeding
business day on which the NYSE is open. Notwithstanding the foregoing, FPS will
compute the net asset value of the Trust on each day required pursuant to Rule
22c-1 promulgated under the Act.
Section 8. Acts of God, etc. FPS will not be liable or responsible for
delays or errors caused by acts of God or by reason of circumstances beyond its
control, including acts of civil or military authority, national emergencies,
labor difficulties, mechanical breakdown, insurrection, war, riots, or failure
or unavailability of transportation, communication or power supply, fire, flood
or other catastrophe.
In the event of equipment failures beyond FPS' control, FPS will, at no
additional expense to the Trust, take reasonable steps to minimize service
interruptions but will have no liability with respect thereto. The foregoing
obligation will not extend to computer terminals located outside of premises
maintained by FPS. FPS has entered into and maintains in effect agreements
making reasonable provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
Section 9. Inspection and Ownership of Records. In the event that any
request or demand for the inspection of the records of the Trust, FPS will use
its best efforts to notify the Trust and to secure instructions as to permitting
or refusing such inspection. FPS may, however, make such records available for
inspection to any person in any case where it is advised in writing by its
counsel that it may be held liable for failure to do so after notice to the
Trust.
FPS recognizes that the records it maintains for the Trust are the property
of the Trust and will be surrendered to the Trust upon written notice to FPS as
outlined under Section 10(c) below and the payment in advance of any fees owed
to FPS. FPS agrees to maintain the records and all other information of the
Trust in a confidential manner and will not use such information for any purpose
other than the performance of FPS' duties under this Agreement.
Page 8 of 12
<PAGE>
Section 10. Duration and Termination.
(a) The initial term of this Agreement will be for the period of five (5)
years, commencing on the date hereinabove first written (the "Effective Date")
and will continue thereafter subject to termination by either Party as set forth
in subsection (c) below.
(b) The fee schedules set forth in Schedule "B" attached hereto will be
fixed for five (5) years commencing on the Effective Date of this Agreement and
will continue thereafter subject to their review and any adjustment.
(c) A Party may give written notice to the other (the day on which the
notice is received by the Party against which the notice is made shall be the
"Notice Date") of a date on or after the expiration of the initial term of this
Agreement on which this Agreement shall be terminated ("Termination Date"). The
Termination Date shall be set on a day not less than one hundred eighty (180)
days after the Notice Date. The period of time between the Notice Date and the
Termination Date is hereby identified as the "Notice Period". Any time up to,
but not later than ninety (90) days prior to the Termination Date, the Trust
will pay to FPS such compensation as may be due as of the Termination Date and
will likewise reimburse FPS for any out-of-pocket expenses and disbursements
reasonably incurred or expected to by incurred by FPS up to and including the
Termination Date.
(d) In connection with the termination of this Agreement, if a successor to
any of FPS' duties or responsibilities under this Agreement is designated by the
Trust by written notice to FPS, FPS will promptly, on the Termination Date and
upon receipt by FPS of any payments owed to it as set forth in Section 10.(c)
above, transfer to the successor, at the Trust' expense, all records which
belong to the Trust and will provide appropriate, reasonable and professional
cooperation in transferring such records to the named successor.
(e) Should the Trust desire to move any of the services outlined in this
Agreement to a successor service provider prior to the Termination Date, FPS
shall make a good faith effort to facilitate the conversion on such prior date,
however, there can be no guarantee that FPS will be able to facilitate a
conversion of services prior to the end of the Notice Period. Should services
be converted to a successor service provider prior to the end of the Notice
Period, or if the Trust is liquidated or all of its assets merged or purchased
or the like with another entity, payment of fees to FPS shall be accelerated to
a date prior to the conversion or termination of services and calculated as if
the services had remained at FPS until the expiration of the Notice Period and
calculated at the
Page 9 of 12
<PAGE>
asset levels on the Notice Date.
(f) Notwithstanding the foregoing, this Agreement may be terminated at any
time by either Party in the event of a material breach by the other Party
provided that such breach shall have remained unremedied for sixty (60) days or
more after receipt of written specification thereof.
Section 11. Rights of Ownership. All computer programs and procedures
developed to perform services required to be provided by FPS under this
Agreement are the property of FPS. All records and other data except such
computer programs and procedures are the exclusive property of the Trust and all
such other records and data will be furnished to the Trust in appropriate form
as soon as practicable after termination of this Agreement for any reason.
Section 12. Amendments to Documents. The Trust will furnish FPS written
copies of any amendments to, or changes in, the Trust Instrument or By-Laws, and
the Prospectus or Statement of Additional Information in a reasonable time prior
to such amendments or changes becoming effective. In addition, the Trust agrees
that no amendments will be made to the Prospectus or Statement of Additional
Information of the Trust which might have the effect of changing the procedures
employed by FPS in providing the services agreed to hereunder or which amendment
might affect the duties of FPS hereunder unless the Trust first obtains FPS'
approval of such amendments or changes.
Section 13. Confidentiality. Both Parties hereto agree that any non-
public information obtained hereunder concerning the other Party is confidential
and may not be disclosed to any other person without the consent of the other
Party, except as may be required by applicable law or at the request of the U.S.
Securities and Exchange Commission or other governmental agency. FPS agrees
that it will not use any non-public information for any purpose other than
performance of its duties or obligations hereunder. The obligations of the
Parties under this Section will survive the termination of this Agreement. The
Parties further agree that a breach of this Section would irreparably damage the
other Party and accordingly agree that each of them is entitled, without bond or
other security, to an injunction or injunctions to prevent breaches of this
provision.
Section 14. Notices. Except as otherwise provided in this Agreement, any
notice or other communication required by or permitted to be given in connection
with this Agreement will be in writing, and will be delivered in person or sent
by first class mail, postage prepaid or by prepaid overnight delivery service to
the respective parties as follows:
If to the Trust: If to FPS:
---------------- ----------
Page 10 of 12
<PAGE>
Calamos Investment Trust FPS Services, Inc.
1111 East Warrenville Road 3200 Horizon Drive
Naperville, IL 60563-1493 King of Prussia, PA 19406-0903
Attention: John P. Calamos Attention: Kenneth J. Kempf
President President
Section 15. Amendment. No provision of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized and
executed by FPS and the Trust. This Agreement may be amended from time to time
by supplemental agreement executed by the Trust and FPS and the compensation
stated in Schedule "B" attached hereto may be adjusted accordingly as mutually
agreed upon.
Section 16. Authorization. The Parties represent and warrant to each
other that the execution and delivery of this Agreement by the undersigned
officer of each Party has been duly and validly authorized; and when duly
executed, this Agreement will constitute a valid and legally binding enforceable
obligation of each Party.
Section 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed will be deemed to be an original,
but such counterparts will together constitute but one and the same instrument.
Section 18. Assignment. This Agreement will extend to and be binding upon
the Parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Trust without the
written consent of FPS or by FPS without the written consent of the Trust, which
consent be authorized or approved by a resolution by its respective Boards of
Trustees.
Section 19. Governing Law. This Agreement will be governed by the laws of
the Commonwealth of Massachusetts and the exclusive venue of any action arising
under this Agreement will be Montgomery County, Commonwealth of Pennsylvania.
Section 20. Severability. If any part, term or provision of this
Agreement is held by any court to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions will be considered
severable and not be affected and the rights and obligations of the parties will
be construed and enforced as if the Agreement did not contain the particular
part, term or provision held to be illegal or invalid, provided that the basic
agreement is not thereby materially impaired.
In Witness Whereof, the Parties hereto have caused this Agreement
consisting of twelve (12) typewritten pages, together with Schedules "A," "B"
and "C", to be signed by their duly
Page 11 of 12
<PAGE>
authorized officers as of the day and year first above written.
Calamos Investment Trust
- ------------------------ FPS Services, Inc.
------------------
By: _______________________________
John P. Calamos, President By: __________________________________
Kenneth J. Kempf, President
Page 12 of 12
<PAGE>
Schedule "A"
============
Services to be Provided by FPS Services, Inc.
---------------------------------------------
FPS Services, Inc. ("FPS") will (i) provide its own office space, facilities,
equipment and personnel for the performance of its duties under this Agreement;
and (ii) take all actions it deems necessary to properly execute its
responsibilities hereunder.
I. Services Related to Portfolio Valuation and Mutual Fund Accounting
All financial data provided to, processed and reported by FPS under this
Agreement shall be in United States dollars. FPS' obligation to convert,
equate or deal in foreign currencies or values extends only to the accurate
transposition of information received from the various pricing and
information services.
A. Daily Accounting Services
1) Calculate Net Asset Value ("NAV") and Offering Price Per Share ("POP"):
Series Level
. Update the daily market value of securities held by the Series using
FPS's standard agents for pricing U.S. equity, bond and foreign
securities. The U.S. equity pricing services are Reuters, Inc.,
Muller Data Corporation, J.J. Kenny Co., Inc. and Interactive Data
Corporation (IDC). Muller Data, Dow Jones Markets (formerly Telerate
Systems, Inc.), J.J. Kenny Co., Inc. and IDC are also used for bond,
money market prices/yields and foreign prices/exchange rates.
Bloomberg is available and used for price research.
. Enter limited number of manual prices supplied by the Trust and/or
broker.
. Review variance reporting on-line and in hard copy for price changes
in individual securities using variance levels established by the
Trust. Verify US dollar security prices exceeding variance levels by
notifying the Trust and pricing sources of noted variances.
. Complete daily variance analysis on foreign exchange rates and local
foreign prices. Notification of changes exceeding established levels
for the Trust verification. (The Trust should establish tolerance
levels for each country/currency so that local price changes and
foreign exchange rate changes exceeding this tolerance are
identified and NAV problems minimized).
. Review for ex-dividend items indicated by pricing sources; trace to
Fund's general ledger for agreement.
Series and Each Class
. Allocate daily unrealized Fund appreciation/depreciation, unrealized
currency gains/losses, and unrealized gains/losses on futures and
forwards to classes based upon value of outstanding class shares.
. Prepare NAV proof sheets. Review components of change in NAV for
reasonableness. Complete Fund and class control proofs.
Schedule "A" Page 2 of 15
<PAGE>
. Communicate required pricing information (NAV/POP) to the Trust, the
Funds' transfer agent (the "Transfer Agent") and electronically to
NASDAQ.
2) Determine and Report Cash Availability to Fund by approximately 9:30
a.m. Eastern time:
Series Level
. Receive daily cash and transaction statements from the agent
responsible for the safekeeping of the Funds' assets (the
"Custodian") by 8:30 a.m. Eastern time.
. Receive previous day shareholder activity reports from the Transfer
Agent by 8:30 a.m. Eastern time. Class level shareholder activity
will be accumulated into the Fund's available cash balances.
. Fax hard copy Cash Availability calculations with all details to the
Trust.
. Supply the Trust with 3-day cash projection report.
. For the Fund, prepare daily bank cash reconciliations. Notify the
Custodian and the Trust of any reconciling items.
3) Reconcile and Record All Daily Expense Accruals:
Series Level
. Accrue expenses based on budget supplied by the Trust either as
percentage of net assets or specific dollar amounts.
. If applicable, monitor expense limitations established by the Trust
. If applicable, accrue daily amortization of Organizational Expense.
Series and Each Class
. Class specific accruals completed such as daily accrual of 12b-1
expenses.
. Allocate Fund expenses to classes based upon value of outstanding
class shares.
4) Verify and Record All Daily Income Accruals for Debt Issues:
Series Level
. Review and verify all system generated Interest and Amortization
reports.
. Establish unique security codes for bond issues to permit segregated
Trial Balance income reporting.
Series and Each Class
. Allocate Fund income to classes based upon value of outstanding
class shares.
5) Monitor Securities Held for Cash Dividends, corporate actions and
capital changes such as splits, mergers, spinoffs, etc. and process
appropriately.
Series Level
. Monitor electronically received information from Muller Data
Corporation for all domestic securities.
. Review current daily security trades for dividend activity.
Schedule "A" Page 3 of 15
<PAGE>
. Monitor collection and postings of corporate actions, dividends and
interest.
. Process international dividend and capital change information
received from the Custodian and Adviser. Back-up information on
foreign dividends and corporate actions will also be obtained from
Muller Data Corporation or IDC (as pricing agents for the Fund).
. Provide mark-to-market analysis for currency exchange rate
fluctuations on unsettled dividends and interest.
Series and Each Class
. Allocate Fund dividend income and unrealized currency gains/losses
on dividends/interest to classes based upon value of outstanding
class shares.
6) Enter All Security Trades on Investment Accounting System (IAS) based
on written instructions from the Fund's Adviser.
Series Level
. Review system verification of trade and interest calculations.
. Verify settlement through statements supplied by the Custodian.
. Maintain security ledger transaction reporting.
. Maintain tax lot holdings.
. Determine realized gains or losses on security trades.
. Provide broker commission reporting.
. Provide each Fund's foreign currency exchange rate realized and
unrealized gains/losses detail.
Series and Each Class
. Allocate all Fund level realized and unrealized capital and currency
gains/losses to classes based upon value of class outstanding
shares.
7) Enter All Fund Share Transactions on IAS:
Each Class
. Process activity identified on reports supplied by the Transfer
Agent.
. Verify settlement through each Fund's statements supplied by the
Custodian.
. Reconcile to the FPS Services' Transfer Agent report balances.
. Roll each classes' capital share values into Fund and determine
allocation percentages based upon the value of each classes'
outstanding shares to the Fund total.
8) Prepare and Reconcile/Prove Accuracy of the Daily Trial Balance
(listing all asset, liability, equity, income and expense accounts)
Series Level
. Post manual entries to the general ledger.
. Post Custodian activity.
Schedule "A" Page 4 of 15
<PAGE>
. Post security transactions.
. Post and verify system generated activity, i.e. income and expense
accruals.
. Segregate foreign tax expense.
. Prepare daily mark-to-market analysis for all unrealized foreign
currency exchange rate gains/losses by asset/liability category.
Series and Each Class
. Prepare Fund's general ledger net cash proof used in NAV
calculation.
. Post class specific shareholder activity and roll values into Fund.
. Allocate all Fund level net cash accounts on the Fund Trial Balance
to each specific class based upon value of class outstanding shares.
. Maintain allocated Trial Balance accounts on class specific
Allocation Reports.
. Maintain class-specific expense accounts.
. Prepare class-specific proof/control reports to ensure accuracy of
allocations.
9) Review and Reconcile with Custodian Statements:
Series Level
. Verify all posted interest, dividends, expenses, and shareholder and
security payments/receipts, etc. (Discrepancies will be reported to
and resolved by the Custodian.)
. Post all cash settlement activity to the Trial Balance.
. Reconcile to ending cash balance accounts.
. Clear IAS subsidiary reports with settled amounts.
. Track status of past due items and failed trades as reported by the
Custodian.
10) Submission of Daily Accounting Reports to The Trust: (Additional
reports readily available.)
Series Level
. Portfolio Valuation (listing inclusive of holdings, costs, market
values, unrealized appreciation/depreciation and percentage of
portfolio comprised of each security.)
. Cash availability.
. 3-Day Cash Projection Report
Series and Each Class
. Fund Trial Balance and Class Allocation Report
. NAV Calculation Report
B. Monthly Accounting Services
1) For each Series, full Financial Statement Preparation (automated
Statements of Assets and Liabilities, of Operations and of Changes in
Net Assets) and submission to the Trust by 10th business day.
Schedule "A" Page 5 of 15
<PAGE>
. Class specific capital share activity and expenses will be disclosed
also.
2) Submission of Monthly Automated IAS Reports to The Trust:
Series Level
. Security Purchase/Sales Journal
. Interest and Maturity Report
. Brokers Ledger (Commission Report)
. Security Ledger Transaction Report with Realized Gains/Losses
. Security Ledger Tax Lot Holdings Report
. Additional reports available upon request
3) Reconcile Accounting Asset Listing to Custodian Asset Listing:
Series Level
. Report any security balance discrepancies to the Custodian/the Trust
4) Provide Monthly Analysis and Reconciliation of Additional Trial Balance
Accounts, such as:
Series Level
. Security cost and realized gains/losses
. Interest/dividend receivable and income
. Payable/receivable for securities purchased and sold
. Unrealized and realized currency gains/losses
Series and Each Class
. Payable/receivable for Fund's shares; issued and redeemed
. Expense payments and accruals analysis
C. Annual (and Semi-Annual) Accounting Services
1) Annually assist and supply the Funds' auditors with schedules
supporting securities and shareholder transactions, income and expense
accruals, etc. for each Fund and each Class during the year in
accordance with standard audit assistance requirements.
2) Provide N-SAR Reporting (Accounting Questions) on a Semi-Annual Basis:
If applicable for Fund and Classes, answer the following items of Form
N-SAR: 2, 12B, 20, 21, 22, 23, 28, 30A, 31, 32, 35, 36, 37, 43, 53,
55, 62, 63, 64B, 71, 72, 73, 74, 75, 76
Schedule "A" Page 6 of 15
<PAGE>
Calamos Investment Trust
The fees as set forth in Schedule "B" are based on the following assumptions.
To the extent these assumptions are inaccurate or requirements change, fee
revisions may be necessary.
Basic Assumptions and Certain Undertakings:
- -------------------------------------------
1. It is assumed that the portfolio asset composition will be primarily as
identified in the March 31, 1997 listings for the Funds. Trading activity
is expected to be light for global portfolio and medium to heavy for the
other portfolios with an annual turnover rate not to exceed 100%.
2. Each Fund has a tax year-end which coincides with its fiscal year-end. No
additional accounting requirements are necessary to identify or maintain
book-tax differences. FPS does not provide security tax accounting which
differs from its book accounting under this fee schedule.
3. Each Fund agrees to the use of FPS' standard current pricing services for
domestic equity, debt, ADR and foreign securities, which shall value such
securities in accordance with the methodologies specified in the Trust's
registration statement.
It is assumed that FPS will work closely with each Fund to ensure the
accuracy of the Funds' NAV and to obtain the most satisfactory pricing
sources and specific methodologies prior to the actual conversion date.
Each Fund will establish security variance procedures to minimize NAV
miscalculations.
4. To the extent a Fund requires a limited number of daily security prices
from specific brokers (as opposed to pricing information received
electronically), these manual prices will be obtained by the Funds' Adviser
and faxed to FPS by 4:00 p.m. Eastern time for inclusion in the NAV
calculations. The Adviser will supply FPS with the appropriate pricing
contacts for these manual quotes.
5. Procedural discussions between FPS and a Fund are required to clarify the
appropriate pricing and dividend rate sources if the Fund invests in open-
end regulated investment companies (RIC's). Depending on the methodologies
selected by the Fund, additional fees may apply.
6. FPS will supply daily Portfolio Valuation Reports to each Funds' Adviser
identifying current security positions, original/amortized cost, security
market values and changes in unrealized appreciation/depreciation. It will
be the responsibility of the Adviser to review these reports and to
promptly notify FPS of any possible problems, trade discrepancies,
incorrect security prices or corporate action/capital change information
known to it, that could result in a misstated NAV.
Schedule "A" Page 7 of 15
<PAGE>
7. Each Fund will supply FPS with critical income information such as accrual
methods, interest payment frequency details, coupon payment dates, floating
rate reset dates, and complete security descriptions with issue types and
cusip/Sedol numbers for all debt issues held by the Fund. If applicable,
the Funds' Adviser shall supply the yield to maturity and related cash flow
schedules for any mortgage/asset-backed securities held in the Fund.
8. With respect to Mortgage/Asset-Backed securities including GNMA's, FHLMC's,
FNMA's, CMO's, ARM's, the Funds shall direct the Custodian, or Trust
supplied source, to provide FPS with current principal repayment factors on
a timely basis in accordance with the appropriate securities' schedule.
Income accrual adjustments (to the extent necessary) based upon initial
estimates will be completed by FPS when actual principal/income payments
are collected by the Custodian and reported to FPS.
9. FPS will use the ICI/NAREIT Tracking System along with Bloomberg to obtain
receipt of complete and accurate information on REITs. The Adviser will
also supply/support FPS in timely receipt of dividend information and
return of capital characterization for the REITs held in each Fund, if not
available from the ICI or Bloomberg systems.
To the extent applicable, FPS will maintain on a daily basis U.S. dollar-
denominated qualified covered call options and index options reporting on
the daily Trial Balance and value the respective options and underlying
positions. This Agreement does not provide for tax classifications if they
are required.
10. Each Fund is responsible for the establishment and monitoring of any
segregated accounts pertaining to any Line of Credit for temporary
administrative purposes, and/or leveraging/hedging the portfolio. FPS will
reflect appropriate Trial Balance account entries and interest expense
accrual charges on the daily Trial Balance adjusting as necessary at month-
end.
11. If a Fund commences participation in security lending, swaps, or short
sales within its portfolio securities, additional fees may apply. Should a
Fund require these additional services, procedural discussions must take
place between FPS and the Funds' Adviser to clarify responsibilities. (Two
weeks advance notice to FPS is required should a Fund desire to participate
in the above.)
12. Each Fund will supply FPS with portfolio specific expense accrual
procedures and monitor the expense accrual balances for adequacy based on
outstanding liabilities monthly.
13. Specific deadlines will be met and complete information will be supplied by
each Fund in order to minimize any settlement problems, NAV miscalculations
or income accrual adjustments.
Each Fund will direct its Adviser to provide Trade Authorization Forms to
FPS with the appropriate officer's signature on all security trades placed
by the Fund no later
Schedule "A" Page 8 of 15
<PAGE>
than 12:30 p.m. Eastern time on settlement/value date for short term money
market securities issues (assuming that trade date equals settlement date);
and by 11:00 a.m. Eastern time on trade date plus one for non-money market
securities. Receipt by FPS of trade information within these identified
deadlines may be via telex, fax or on-line system access. The Adviser will
supply FPS with the trade details in accordance with the above stated
deadlines.
The Adviser will provide all information required by FPS, including
cusip/Sedol numbers and/or ticker symbols for all trades on the Trade
Authorization, telex or on-line support. FPS will supply the Adviser with
recommended trade ticket documents to minimize receipt of incomplete
information. FPS will not be responsible for NAV changes or distribution
rate adjustments that result from incomplete trade information.
14. To the extent a Fund utilizes purchases in-kind (U.S. dollar denominated
securities only) as a method for shareholder subscriptions, FPS will
provide the Fund with procedures to properly handle and process such
transactions. Should a Fund prefer procedures other than those provided by
FPS, additional fees may apply. Discussions shall take place at least two
weeks in advance between FPS and the Fund to clarify the appropriate in-
kind operational procedures to be followed.
15. The Parties will establish mutually agreed upon amortization procedures and
accretion requirements for debt issues held by the Fund prior to
commencement of operations/conversion. Adjustments for financial
statements regarding any issues with original issue discount (OID) are not
included under this Agreement. Each Fund will direct its independent
auditors to complete the necessary OID adjustments for financial statements
and/or tax reporting.
16. The Accounting Fees as identified in Schedule "B" assume Transfer Agency
and Custody Administration services will be supplied by FPS.
II. Services of FPS Related to Shareholders and Share Transactions
A. Shareholder File
1. Establish new accounts and enter demographic data into shareholder base.
Includes in-house processing and National Securities Clearing Corporation -
Fund/SERV - Networking transmissions.
2. Create Customer Information File (CIF) to link accounts within the Fund and
across Funds within the Fund Group. Facilitates account maintenance, lead
tracking, quality control, household mailings and combined statements.
3. 100% quality of new account information, including verification of initial
investment.
4. Maintain account and customer file records, based on shareholder request
and routine quality
Schedule "A" Page 9 of 15
<PAGE>
review.
5. Maintain tax ID certification and Non Resident Agent records for each
account, including backup withholding.
6. Provide written confirmation of address changes or registration changes.
7. Produce shareholder statements for daily activity, dividends, on-request,
third party, and periodic mailings.
8. Establish and maintain dealer file by Fund Group, including dealer,
branch, representative number and name.
9. Automated processing of dividends and capital gains with daily, monthly,
quarterly or annual distributions. Payment options include reinvestment,
directed payment to another Fund, cash via mail, Fed wire or ACH.
10. Image all applications, account documents, data changes, correspondence,
monetary transactions, and other pertinent shareholder documents.
B. Shareholder Services
1. Provide quality service through a staff of highly trained NASD licensed
customer service personnel, including phone, research and correspondence
representatives.
2. Answer shareholder calls: provide routine account information, transaction
details including direct and wire purchases, redemptions, exchanges,
systematic withdrawals, pre-authorized drafts, FundSERV and wire order
trades, problem solving and process telephone transactions.
3. Silent monitoring of telephone representative calls by the phone
supervisor during live conversations to ensure exceptional customer
service.
4. Record and maintain tape recordings of all shareholder calls for a six
month period.
5. Phone Supervisor produces daily management reports of shareholder calls
which include tracking volumes, call length, average wait time and
abandoned call rates to ensure quality service (including target abandoned
call rate of less than 2%).
6. Phone representatives are thoroughly trained through in house training
programs on the techniques of providing Exceptional Customer Service.
7. Customer inquiries received by letter or telephone are researched by a
correspondence team. These inquires include such items, as account/
customer file information, complete historical account information, stop
payments on checks, transaction details, and lost certificates.
8. Provide written correspondence in response to shareholder inquiries and
request (within two business days) through the CORRO Letter Writer system.
Whenever possible, unclear
Schedule "A" Page 10 of 15
<PAGE>
shareholder instructional letters are handled by a phone call to the
shareholder from our phone representatives to avoid delay in processing of
the request.
C. Investment Processing
1. Establish and maintain Rights of Accumulation and Letter of Intent files.
2. Initial investment (checks or Fed wires).
3. Subsequent investments processed through lock box.
4. Pre-authorized investments (PAD) through ACH system.
5. Government allotments through ACH system.
6. Wire-order and NSCC-FundSERV trades.
7. Prepare and process daily bank deposit of shareholder investments.
D. Redemption Processing
1. Process letter redemption requests.
2. Process telephone redemption transactions.
3. Establish Systematic Withdrawal File and process automated transactions on
monthly basis.
4. Provide wire order and NSCC - FundSERV trade processing.
5. Distribute redemption proceeds to shareholder by check, Fed wire or ACH
processing.
E. Exchange & Transfer Processing
1. Process legal transfers.
2. Process ACATS transfers.
3. Issue and cancel certificates.
4. Replace certificates through surety bonds (separate charge to shareholder).
5. Process exchange transactions (letter and telephone request).
F. Retirement Plan Services
Schedule "A" Page 11 of 15
<PAGE>
1. Fund sponsored IRAs offered using Semper Trust Company as custodian.
Services include:
a. Contribution processing
b. Distribution processing
c. Apply rollover transactions
d. Process Transfer of Assets
e. Letters of Acceptance to prior custodians
f. Notify IRA holders of 70 1/2 requirements
g. Calculate Required Minimum Distributions (RMD)
h. Maintain beneficiary information file
i. Solicit and maintain birth date information
2. Fund sponsored SEP-IRA plans offered using Semper Trust Company as
custodian. Services include those listed under IRA's and:
a. Identification of employer contributions
3. Fund sponsored Qualified plans offered:
a. Plan document available
b. Omnibus/master account processing only
c. Produce annual statements
d. Process contributions
e. Process distributions
f. Process rollover and Transfer of Assets transactions
G. Commission Processing
1. Settlement and payment of Dealer Commissions on the 10th and 25th of each
month for front end load funds.
2. Settlement and payment of CDSC fees on the 1st of each month for back end
load funds.
H. Settlement & Control
1. Daily review of processed shareholder transactions to assure input was
processed correctly. Accurate trade activity figures passed to the Trust's
Accounting Agent by 9:00 a.m. Eastern time on trade date + 1.
2. Preparation of daily cash movement sheets to be passed to Trust's
Accounting Agent and Custodian Bank by 10:00 a.m. Eastern time on trade
date + 1 for use in determining Trust's daily cash availability.
3. Prepare a daily share reconcilement which balances the shares on the
Transfer Agent system to those on the books of the Trust.
4. Resolve any outstanding share or cash issues that are not cleared by trade
date + 2.
5. Process shareholder adjustments to include also the proper notification of
any booking entries needed, as well as any necessary cash movement.
Schedule "A" Page 12 of 15
<PAGE>
6. Settlement and review of the Trust' declared dividends and capital gains
to include the following:
a. Review record date report for accuracy of shares.
b. Preparation of dividend settlement report after dividend is posted.
Verify the posting date shares, the rate used and the NAV price of
reinvest date to ensure dividend was posted properly.
c. Distribute copies to the Trust' Accounting Agent.
d. Preparation of the checks prior to being mailed.
e. Sending of any dividends via wires if requested.
f. Preparation of cash movement sheets for the cash portion of the
dividend payment on payable date.
7. Placement of stop payments on dividend and liquidation checks as well as
the issuance of their replacements.
8. Maintain inventory control for stock certificates and dividend check form.
9. Aggregate tax filings for all FPS clients. Monthly deposits to the IRS of
all taxes withheld from shareholder disbursements, distributions and
foreign account distributions. Correspond with the IRS concerning any of
the above issues.
10. Timely settlement and cash movement for all NSCC/FundSERV activity.
I. Year End Processing
1. Maintain shareholder records in accordance with IRS notices for under-
reporting and invalid Tax IDs. This includes initiating backup withholding
and notifying shareholders of their tax status and the corrective action
which is needed.
2. Conduct annual W-9 solicitation of all uncertified accounts. Update
account tax status to reflect backup withholding or certified status
depending upon responses.
3. Conduct periodic W-8 solicitation of all non-resident alien shareholder
accounts. Update account tax status with updated shareholder information
and treaty rates for NRA tax.
4. Review IRS Revenue Procedures for changes in transaction and distribution
reporting and specifications for the production of forms to ensure
compliance.
5. Coordinate year-end activity with client. Activities include producing
year-end statements, scheduling record dates for year dividends and
capital gains, production of combined statements and printing of inserts
to be mailed with tax forms.
6. Distribute Dividend Letter to Funds for them to sign off on all
distributions paid year
Schedule "A" Page 13 of 15
<PAGE>
to date. Dates and rates must be authorized so that they can be used for
reporting to the IRS.
7. Coordinate the ordering of form stock and envelopes from vendor in
preparation of tax reporting. Review against IRS requirements to ensure
accuracy. Upon receipt of forms and envelopes allocate space for storage.
8. Prepare form flashes for the microfiche vendor. Test and oversee the
production of fiche for year-end statements and tax forms.
9. Match and settle tax reporting totals to fund records and on-line data
from INVESTAR.
10. Produce forms 1099R, 1099B, 1099Div, 5498, 1042S and year-end valuations.
Quality assure forms before mailing to shareholders.
11. Monitor IRS deadlines and special events such as crossover dividends and
prior year IRA contributions.
12. Prepare IRS magnetic tapes and appropriate forms for the filing of all
reportable activity to the Internal Revenue Service.
J. Client Services
1. An Account Manager is assigned to each relationship. The Account Manager
acts as the liaison between the Trust and the Transfer Agency staff.
Responsibilities include scheduling of events, system enhancement
implementation, special promotion/event implementation and follow-up, and
constant Trust interaction on daily operational issues.
Specifically:
a. Scheduling of dividends, proxies, report mailing and special mailings.
b. Coordinate with the Trust shipment of materials for scheduled mailings.
c. Liaison between the Trust and support services for preparation of
proofs and eventual printing of statement forms, certificates, proxy
cards, envelopes, etc.
d. Handle all notification to the client regarding proxy tabulation
through the meeting. Coordinate scheduling of materials including voted
cards, tabulation letters, and shareholder list to be available for the
meeting.
e. Order special reports, tapes, discs for special systems requests
received.
f. Implement any new operational procedures, e.g., check writing feature,
load discounts, minimum waivers, sweeps, telephone options, PAD
promotions, etc.
g. Coordinate with systems, services and operations, special events, e.g.,
mergers, new fund start ups, household mailings, additional mail files.
h. Prepare standard operating procedures and review prospectuses for new
start up funds and our current client base. Coordinate implementation
of suggested changes with the Trust.
i. Liaison between the Trust and the Transfer Agency staff regarding all
service and operational issues.
j. Produce shareholder lists, labels and ad hoc reports to Fund management
as
Schedule "A" Page 14 of 15
<PAGE>
requested.
2. Proxy Processing (Currently one free per year per Fund)
a. Coordinate printing of cards with vendor.
b. Coordinate mailing of shareholder cards with Account Manager and
mailroom. Tabulation of returned cards.
c. Provide daily report totals to Account Manager for client
notification.
d. Preparation of affidavit of mailing documents.
e. Provide one shareholder list.
f. Prepare final tabulation letter.
3. Blue Sky Processing
a. Maintain file with additions, deletions, changes and updates at the
Funds' direction.
Daily Reports
-------------
Report Number Report Description
------------- ------------------
-- Daily Activity Register
024 Tax Reporting Proof
051 Cash Receipts and Disbursement Proof
053 Daily Share Proof
091 Daily Gain/Loss Report
104 Maintenance Register
044 Transfer/Certificate Register
056 Blue Sky Warning Report
Monthly Reports
---------------
Report Description
------------------
Blue Sky
Certificate Listing
State Sales and Redemption
Monthly Statistical Report
Account Demographic Analysis
MTD Sales - Demographics by Account Group
Account Analysis by Type
III. Services of FPS Related to Custody Administration
Pursuant to the appointment by the Trust of FPS to act as the Trust's agent
for the specific purpose of taking receipt of, and making payment for, custody
services performed on the Trust's behalf by the Custodian pursuant to an
agreement between the Custodian and the
Schedule "A" Page 15 of 15
<PAGE>
Trust, FPS shall provide the following services:
A. Assign an experienced Custody Administrator to accept, control and process
the Trust's daily portfolio transactions.
B. Match and review DTC eligible ID's and trade information with the Trust's
instructions for accuracy and coordinating with the Custodian and the Accounting
Agent for recording and affirmation processing with the depository.
C. Settle all depository eligible issues in a totally automated environment.
Transactions requiring physical delivery will be settled through the Custodian's
New York office.
D. Assist the Trust in placing cash management trades through the Custodian,
such as commercial paper, CDs and repurchase agreements.
E. Provide the Trust's fund accounting agent and investment Adviser with daily
custodian statements reflecting all prior day cash activity on behalf of each
portfolio by 8:30 a.m. Eastern time. Complete descriptions of any posting,
inclusive of Sedol/CUSIP numbers, interest/dividend payment date, capital stock
details, expense authorizations, beginning/ending cash balances, etc., will be
provided by the Custodian's reports or system.
F. Provide monthly activity statements combining both cash changes and
security trades, and a full portfolio listing.
G. Communicate to the Trust and the Trust's fund accounting agent on any
corporate actions, capital changes and interest rate changes supported by
appropriate supplemental reports received from the Custodian. Follow-up will be
made with the Custodian to ensure all necessary actions and/or paperwork is
completed.
H. Work with fund accounting and the Custodian Bank on monthly asset
reconciliations.
I. Coordinate and resolve unsettled dividends, interest, paydowns and capital
changes. Assist in resolution of failed transactions and any settlement
problems.
J. Provide a comprehensive program that audits transactions, monitors and
evaluates the Custodian's service and recommends changes that may improve
performance.
K. Arrange for Securities Lending, Lines of Credit, and/or Letters of Credit
through the Custodian.
L. Monitor Fund cash positions.
M. Provide Automated Mortgage-Backed processing through the Custodian.
N. Provide the Trust's auditors with trade documentation to help expedite the
fund's audit.
Schedule "A" Page 16 of 15
<PAGE>
O. Cooperation and communication between Fund Accounting, the Custodian and
the Transfer Agent is facilitated smoothly when Custody Administration is
performed by FPS Services, Inc.
Schedule "A" Page 17 of 15
<PAGE>
Schedule "B"
============
Fee Schedule
For
Calamos Investment Trust
(All fees will be for a term of five (5) years from effective date, discount
fees specified below will be offered for the first two years with full fees
effective for year 3)
I. Fees related to Portfolio Valuation and Mutual Fund Accounting
A. Annual Fee Schedule Per Domestic Portfolio: **U.S. Dollar Denominated
Securities only (1/12th payable monthly)
$25,000 Minimum to $ 20 Million of Average Daily Net Assets*
.0003 On Next $ 30 Million of Average Daily Net Assets*
.0002 On Next $ 50 Million of Average Daily Net Assets*
.0001 Over $100 Million of Average Daily Net Assets*
Each additional class is $7,500 minimum per year.
* For multiple class portfolios, fees are based on Combined Classes'
Average Daily Net Assets.
** - Should a portfolio hold more than 5 non-U.S.D. securities, Section
"B" below will apply in lieu of Section A.
- Should a portfolio require the use of multiple Custodians with
separate statements and accounts, resulting in additional FPS
reconciliations and money movements, Section "B" below will apply in
lieu of Section A.
B. Annual Fee Schedule Per Complex Domestic Portfolio : **(1/12th payable
monthly)
$30,000 Minimum to $ 20 Million of Average Daily Net Assets*
.0003 On Next $ 30 Million of Average Daily Net Assets*
.0002 On Next $ 50 Million of Average Daily Net Assets*
.0001 Over $100 Million of Average Daily Net Assets*
Each additional class is $7,500 minimum per year.
* For multiple class portfolios, fees are based on Combined Classes'
Average Daily Net Assets.
** Should a portfolio hold more than 50% of its assets in non-U.S.D.
securities, Section "C" below will apply in lieu of Section A or B.
C. Annual Fee Schedule Per Global Portfolio : (1/12th payable monthly)
$40,000 Minimum to $ 20 Million of Average Daily Net Assets*
.0003 On Next $ 30 Million of Average Daily Net Assets*
.0002 On Next $ 50 Million of Average Daily Net Assets*
Schedule "B" Page 1 of 7
<PAGE>
.0001 Over $100 Million of Average Daily Net Assets*
Each additional class is $7,500 minimum per year.
* For multiple class portfolios, fees are based on Combined Classes'
Average Daily Net Assets.
The above fees are subject to the following discounts;
Full fee for any portfolio over $10 million
20% discount on annual fee schedule first year for any fund under $10 million
10% discount on annual fee schedule second year for any fund under $10 million
D. Pricing Services Quotation Fee
Specific costs will be identified based upon options selected by the Trust
and will be billed monthly.
FPS does not currently pass along the charges for the U.S. equity prices
supplied by Muller Data. Should the Fund invest in security types other
than domestic equities supplied by Muller, the following fees would apply.
<TABLE>
<CAPTION>
----------------------------------------------
Muller Data Interactive J.J. Kenny
Security Types Corp.* Data Corp.* Co., Inc.*
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Government Bonds $.50 $.50 $ .25 (a)
--------------------------------------------------------------------------------------------------
Mortgage-Backed (evaluated, seasoned, closing) .50 .50 .25 (a)
--------------------------------------------------------------------------------------------------
Corporate Bonds (short and long term) .50 .50 .25 (a)
--------------------------------------------------------------------------------------------------
U.S. Municipal Bonds (short and long term) .55 .80 .50 (b)
--------------------------------------------------------------------------------------------------
CMO's/ARM's/ABS 1.00 .80 1.00 (a)
--------------------------------------------------------------------------------------------------
Convertible Bonds .50 .50 1.00 (a)
--------------------------------------------------------------------------------------------------
High Yield Bonds .50 .50 1.00 (a)
--------------------------------------------------------------------------------------------------
Mortgage-Backed Factors (per Issue per Month) 1.00 n/a n/a
--------------------------------------------------------------------------------------------------
U.S. Equities (d) .15 n/a
---------------------------------------------------------------------------------------------------
U.S. Options n/a .15 n/a
--------------------------------------------------------------------------------------------------
Domestic Dividends & Capital Changes
(per Issue per Month) (d) 3.50 n/a
---------------------------------------------------------------------------------------------------
</TABLE>
Schedule "B" Page 2 of 7
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------
Muller Data Interactive J.J. Kenny
Security Types Corp.* Data Corp.* Co., Inc.*
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Foreign Securities .50 .50 n/a
--------------------------------------------------------------------------------------------------
Foreign Securities Dividends & Capital Changes
(per Issue per Month) 2.00 4.00 n/a
--------------------------------------------------------------------------------------------------
Set-up Fees (one-time) n/a n/a (e) .25 (c)
---------------------------------------------------------------------------------------------------
All Added Items n/a n/a .25 (c)
--------------------------------------------------------------------------------------------------
</TABLE>
* Based on current Vendor costs, subject to change. Costs are quoted based
on individual security CUSIP/identifiers and are per issue per day except
as noted.
(a) $35.00 per day minimum
(b) $25.00 per day minimum
(c) $ 1.00, if no cusip
(d) At no additional cost to FPS clients
(e) Interactive Data also charges monthly transmission costs and disk
storage charges.
1) Futures and Currency Forward Contracts $2.00 per Issue per Day
2) Dow Jones Markets (formerly Telerate Systems, Inc.)* (if applicable)
*Based on current vendor costs, subject to change.
Specific costs will be identified based upon options selected by the
Trust and will be billed monthly.
3) Reuters, Inc.*
*Based on current vendor costs, subject to change.
FPS does not currently pass along the charges for the domestic security
prices supplied by Reuters, Inc.
4) Municipal Market Data* (if applicable)
*Based on current vendor costs, subject to change.
Specific costs will be identified based upon options selected by the
Trust and will be billed monthly.
E. SEC Yield Calculation - For Domestic Funds Only: (if applicable)
Provide up to 12 reports per year to reflect the yield calculations for
non-
Schedule "B" Page 3 of 7
<PAGE>
money market Funds required by the SEC, $1,000 per year per Fund. For
multiple class Funds, $1,000 per year per class. Daily SEC yield reporting
is available at $3,000 per year per Fund (US dollar denominated securities
only).
II. Fees related to Shareholder Servicing
A. Transfer Agent and Shareholder Services:
$20.00 per account per year per portfolio
Minimum monthly fee - $2,000 per portfolio
Each additional class minimum monthly fee is $1,000.
The above fees are subject to the following discounts:
20% first year / 10% second year
B. IRA's, 403(b) Plans, Defined Contribution/Benefit Plans:
Annual Maintenance Fee - $12.00 per account per year
(Normally charged to participants)
C. Fund/Serv Processing (If Applicable)
$50.00 Per month/per Fund monthly maintenance fee
D. Networking Processing (If Applicable)
$75.00 Per month/per Fund monthly maintenance fee
III. Fees related to Custody Administration
A. The Bank of New York
1. Domestic Securities and ADRs, Per Portfolio: (1/12th payable monthly)
U.S. Dollar Denominated Securities only
.00010 On First $100 Million of Average Daily Net Assets
.000085 On the Next $100 Million of Average Daily Net Assets
.000075 Over $200 Million of Average Daily Net Assets
Minimum monthly fee is $250 per portfolio
2. Custody Domestic Securities Transactions Charge: (billed monthly)
Book Entry DTC, Federal Book Entry, PTC $11.00
Options/Futures $20.00
Physical Securities $20.00
P & I Paydowns $ 5.50
Wires $ 7.00
Check Request $ 6.00
Schedule "B" Page 4 of 7
<PAGE>
A transaction includes buys, sells, maturities or free security movements.
Cedel/Euroclear
---------------
4 BPS safekeeping charge, $25 transaction charge.
Fee expressed in basis points per annum based upon month end market value.
CUSTODY OF FOREIGN SECURITIES PER GLOBAL PORTFOLIO
(Bank of New York Custody Schedule)
<TABLE>
<CAPTION>
=====================================================================
Countries *Safekeeping Charges Transaction Fee
(BASIS POINTS) (USD)
---------------------------------------------
<S> <C> <C>
Argentina 22 75
---------------------------------------------------------------------
Australia 5 65
---------------------------------------------------------------------
Austria 6 90
---------------------------------------------------------------------
Bangladesh 49 180
---------------------------------------------------------------------
Belgium (reg bds) 3.5 80
---------------------------------------------------------------------
Belgium (equities and Cpn bds) 6 80
---------------------------------------------------------------------
Brazil 34 40
---------------------------------------------------------------------
Canada 3 20
---------------------------------------------------------------------
Chile 34 65
---------------------------------------------------------------------
China 24 20
---------------------------------------------------------------------
Colombia 54 165
---------------------------------------------------------------------
Czech Republic 27 65
---------------------------------------------------------------------
Denmark 4 110
---------------------------------------------------------------------
Euromarket (Cedel/Euroclear) 4 20
---------------------------------------------------------------------
Finland 16 75
---------------------------------------------------------------------
France 5 75
---------------------------------------------------------------------
Germany 3 40
---------------------------------------------------------------------
Greece 34 150
---------------------------------------------------------------------
Hong Kong 10 70
---------------------------------------------------------------------
Hungary 69 205
---------------------------------------------------------------------
India 54 180**
---------------------------------------------------------------------
Indonesia 15 105
---------------------------------------------------------------------
Ireland 4.5 55
---------------------------------------------------------------------
Israel 79 60
---------------------------------------------------------------------
</TABLE>
Schedule "B" Page 5 of 7
<PAGE>
<TABLE>
<CAPTION>
=====================================================================
Countries *Safekeeping Charges Transaction Fee
(BASIS POINTS) (USD)
---------------------------------------------
<S> <C> <C>
Italy 5 95
---------------------------------------------------------------------
Japan (bonds) 5 15
---------------------------------------------------------------------
Japan (equities) 4 15
---------------------------------------------------------------------
Luxembourg 9.50 85
---------------------------------------------------------------------
Malaysia 11 95
---------------------------------------------------------------------
Mexico 15 30
---------------------------------------------------------------------
Morocco 39 115
---------------------------------------------------------------------
Netherlands 8 17
---------------------------------------------------------------------
New Zealand 4.5 90
---------------------------------------------------------------------
Norway 4 90
---------------------------------------------------------------------
Pakistan 44 170
---------------------------------------------------------------------
Peru 79 195
---------------------------------------------------------------------
Philippines 15 145
---------------------------------------------------------------------
Poland 59 155
---------------------------------------------------------------------
Portugal 34 145
---------------------------------------------------------------------
Russia 31 170
---------------------------------------------------------------------
Singapore 7 45
---------------------------------------------------------------------
South Africa 3 40
---------------------------------------------------------------------
South Korea 16 30
---------------------------------------------------------------------
Spain 6 55
---------------------------------------------------------------------
Sri Lanka 21 75
---------------------------------------------------------------------
Sweden 4 65
---------------------------------------------------------------------
Switzerland 4 105
---------------------------------------------------------------------
Taiwan 20 105
---------------------------------------------------------------------
Thailand 6 50
---------------------------------------------------------------------
Turkey 34 105
---------------------------------------------------------------------
United Kingdom 4 40
---------------------------------------------------------------------
United Kingdom (gilts) 4 55
---------------------------------------------------------------------
Uruguay (Equities) 64 90
---------------------------------------------------------------------
Uruguay (bonds) 44 90
---------------------------------------------------------------------
Venezuela 54 180
=====================================================================
</TABLE>
Schedule "B" Page 6 of 7
<PAGE>
CHART NOTES:
* Fee expressed in basis points per annum is calculated based upon
month-end market value.
** Transaction charge is per 10,000 shares or part thereof.
A transaction includes buys, sells, maturities or Free Security movements.
GLOBAL NETWORK USAGE FEE:
$350 per portfolio per month.
If trades in foreign assets denominated in foreign currencies held in the
local country, the above fee will apply. The $350 fee is waived on
Euroclear/Cedel transactions.
Minimum charges imposed by Agent Banks/Local Administrators
Chile - USD 5,000 per annum.
Columbia - USD 600 per month.
Peru - USD 6,000 per annum per account.
Brazil - USD 15 basis points for annual administrative charge.
Taiwan - USD 3,000 account opening charge.
C. When Issued, Securities Lending, Index Futures, etc:
Should any investment vehicle require a separate segregated custody account,
a fee of $250 per account per month will apply.
D. Custody Miscellaneous Fees
Administrative fees incurred in certain local markets will be passed onto the
customer with a detailed description of the fees. Fees include income
collection, corporate action handling, overdraft charges, funds transfer,
special local taxes, stamp duties, registration fees, messenger and courier
services and other out-of-pocket expenses.
IV. Out of-Pocket Expenses
The Trust will reimburse FPS Services, Inc. monthly for all reasonable
out-of-pocket expenses, including telephone, postage, overdraft charges,
Fund/SERV and networking expenses, incoming wire charges, telecommunications,
special reports, record retention, special transportation costs, copying and
sending materials to auditors and/or regulatory agencies as incurred and
approved.
V. Additional Services
To the extent the Funds commence using investment techniques such as Futures,
Security
Schedule "B" Page 7 of 7
<PAGE>
Lending, Swaps, Leveraging, Short Sales, Derivatives, Precious Metals, or
foreign currency futures and options, additional fees will apply. Activities
of a non-recurring nature such as shareholder inkinds, fund consolidations,
mergers or reorganizations will be subject to negotiation. Any
additional/enhanced services, programming requests, or reports will be quoted
upon request.
VI. Conversion Expense
Conversion costs, if any, to be determined based on file conditions, history
detail and programming costs.
Schedule "B" Page 8 of 7
<PAGE>
Schedule "C"
============
Identification of Funds
-----------------------
Below are listed the separate Series and Classes to which services under this
Agreement are to be performed as of the Execution Date of this Agreement:
Calamos Convertible Fund- Class A
Calamos Convertible Fund- Class C
Calamos Convertible Fund- Class I
Calamos Growth & Income Fund- Class A
Calamos Growth & Income Fund- Class C
Calamos Strategic Income Fund- Class A
Calamos Growth Fund- Class A
Calamos Growth Fund- Class C
Calamos Global Growth & Income Fund- Class A
Calamos Global Growth & Income Fund- Class C
This Schedule "C" may be amended from time to time by agreement of the Parties.
Schedule "C" Page 1 of 1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent the reference to our firm under the captions "Financial Highlights"
and "Independent Auditors" and to the incorporation by reference of our report
dated May 15, 1998 in the Registration Statement (Form N-1A) and in the related
Prospectus of Calamos Investment Trust, filed with the Securities and Exchange
Commission in this Post-Effective Amendment No. 18 to the Registration Statement
under the Securities Act of 1933 (Registration No. 33-19228) and in this
Amendment No. 22 to the Registration Statement under the Investment Company Act
of 1940 (Registration No. 811-5443).
ERNST & YOUNG LLP
Chicago, Illinois
July 29, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
3/31/98 Annual Report and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> CALAMOS CONVERTIBLE FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 90,616,700
<INVESTMENTS-AT-VALUE> 109,738,415
<RECEIVABLES> 2,545,195
<ASSETS-OTHER> 3,419,152
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115,702,762
<PAYABLE-FOR-SECURITIES> 2,996,179
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 240,295
<TOTAL-LIABILITIES> 3,236,474
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 94,696,353
<SHARES-COMMON-STOCK> 6,449,617
<SHARES-COMMON-PRIOR> 4,987,757
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,292,860
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19,062,795
<NET-ASSETS> 112,466,288
<DIVIDEND-INCOME> 705,171
<INTEREST-INCOME> 2,756,480
<OTHER-INCOME> 0
<EXPENSES-NET> 1,008,587
<NET-INVESTMENT-INCOME> 2,453,064
<REALIZED-GAINS-CURRENT> 2,560,225
<APPREC-INCREASE-CURRENT> 15,584,412
<NET-CHANGE-FROM-OPS> 20,597,701
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,152,727
<DISTRIBUTIONS-OF-GAINS> 4,381,803
<DISTRIBUTIONS-OTHER> 521,015
<NUMBER-OF-SHARES-SOLD> 4,369,444
<NUMBER-OF-SHARES-REDEEMED> 781,375
<SHARES-REINVESTED> 201,183
<NET-CHANGE-IN-ASSETS> 73,421,661
<ACCUMULATED-NII-PRIOR> 367,208
<ACCUMULATED-GAINS-PRIOR> 984,533
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 579,633
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,008,587
<AVERAGE-NET-ASSETS> 48,070,050
<PER-SHARE-NAV-BEGIN> 14.68
<PER-SHARE-NII> .49
<PER-SHARE-GAIN-APPREC> 3.92
<PER-SHARE-DIVIDEND> .61
<PER-SHARE-DISTRIBUTIONS> .95
<RETURNS-OF-CAPITAL> .10
<PER-SHARE-NAV-END> 17.43
<EXPENSE-RATIO> 1.41
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
3/31/98 Annual Report and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> CALAMOS GROWTH AND INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 12,915,785
<INVESTMENTS-AT-VALUE> 15,781,103
<RECEIVABLES> 604,199
<ASSETS-OTHER> 598,751
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,984,053
<PAYABLE-FOR-SECURITIES> 592,693
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 55,853
<TOTAL-LIABILITIES> 648,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,100,542
<SHARES-COMMON-STOCK> 878,918
<SHARES-COMMON-PRIOR> 715,043
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 369,647
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,865,318
<NET-ASSETS> 16,335,507
<DIVIDEND-INCOME> 100,648
<INTEREST-INCOME> 392,705
<OTHER-INCOME> 0
<EXPENSES-NET> 243,711
<NET-INVESTMENT-INCOME> 249,642
<REALIZED-GAINS-CURRENT> 1,385,182
<APPREC-INCREASE-CURRENT> 2,264,937
<NET-CHANGE-FROM-OPS> 3,899,761
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 307,892
<DISTRIBUTIONS-OF-GAINS> 1,406,829
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 379,793
<NUMBER-OF-SHARES-REDEEMED> 141,115
<SHARES-REINVESTED> 77,326
<NET-CHANGE-IN-ASSETS> 7,596,931
<ACCUMULATED-NII-PRIOR> 43,395
<ACCUMULATED-GAINS-PRIOR> 406,148
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 92,242
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 243,711
<AVERAGE-NET-ASSETS> 10,579,548
<PER-SHARE-NAV-BEGIN> 15.52
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> 5.14
<PER-SHARE-DIVIDEND> .41
<PER-SHARE-DISTRIBUTIONS> 2.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.59
<EXPENSE-RATIO> 1.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
3/31/98 Annual Report and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> CALAMOS STRATEGIC INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 950,815
<INVESTMENTS-AT-VALUE> 1,117,584
<RECEIVABLES> 161,483
<ASSETS-OTHER> 562,909
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,841,976
<PAYABLE-FOR-SECURITIES> 694,686
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,052
<TOTAL-LIABILITIES> 718,738
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 995,835
<SHARES-COMMON-STOCK> 94,337
<SHARES-COMMON-PRIOR> 99,410
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (632)
<ACCUMULATED-NET-GAINS> 45,862
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 82,173
<NET-ASSETS> 1,123,238
<DIVIDEND-INCOME> 8,243
<INTEREST-INCOME> 63,851
<OTHER-INCOME> 0
<EXPENSES-NET> 25,291
<NET-INVESTMENT-INCOME> 46,803
<REALIZED-GAINS-CURRENT> 60,889
<APPREC-INCREASE-CURRENT> 71,669
<NET-CHANGE-FROM-OPS> 179,361
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 51,603
<DISTRIBUTIONS-OF-GAINS> 4,304
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,545
<NUMBER-OF-SHARES-REDEEMED> 37,430
<SHARES-REINVESTED> 4,357
<NET-CHANGE-IN-ASSETS> 179,361
<ACCUMULATED-NII-PRIOR> 4,168
<ACCUMULATED-GAINS-PRIOR> (10,723)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,079
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 75,195
<AVERAGE-NET-ASSETS> 1,210,917
<PER-SHARE-NAV-BEGIN> 10.81
<PER-SHARE-NII> .50
<PER-SHARE-GAIN-APPREC> 1.19
<PER-SHARE-DIVIDEND> .55
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 11.91
<EXPENSE-RATIO> 2.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
3/31/98 Annual Report and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> CALAMOS GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 8,982,682
<INVESTMENTS-AT-VALUE> 11,164,022
<RECEIVABLES> 174,456
<ASSETS-OTHER> 626,332
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,964,810
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41,454
<TOTAL-LIABILITIES> 41,454
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,935,593
<SHARES-COMMON-STOCK> 594,209
<SHARES-COMMON-PRIOR> 431,749
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (193,577)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,181,340
<NET-ASSETS> 11,923,356
<DIVIDEND-INCOME> 33,318
<INTEREST-INCOME> 15,642
<OTHER-INCOME> 0
<EXPENSES-NET> 181,007
<NET-INVESTMENT-INCOME> (132,047)
<REALIZED-GAINS-CURRENT> 2,128,477
<APPREC-INCREASE-CURRENT> 1,782,223
<NET-CHANGE-FROM-OPS> 3,778,653
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2,332,954
<DISTRIBUTIONS-OTHER> 80,888
<NUMBER-OF-SHARES-SOLD> 222,101
<NUMBER-OF-SHARES-REDEEMED> 122,817
<SHARES-REINVESTED> 104,981
<NET-CHANGE-IN-ASSETS> 5,279,525
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 138,376
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 92,400
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 209,823
<AVERAGE-NET-ASSETS> 8,453,799
<PER-SHARE-NAV-BEGIN> 17.04
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> 8.53
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 5.32
<RETURNS-OF-CAPITAL> .18
<PER-SHARE-NAV-END> 20.06
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
3/31/98 Annual Report and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 5
<NAME> CALAMOS GLOBAL GROWTH AND INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 5,415,061
<INVESTMENTS-AT-VALUE> 6,682,456
<RECEIVABLES> 115,535
<ASSETS-OTHER> 390,369
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,188,360
<PAYABLE-FOR-SECURITIES> 342,454
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,372
<TOTAL-LIABILITIES> 380,826
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,692,436
<SHARES-COMMON-STOCK> 1,037,778
<SHARES-COMMON-PRIOR> 1,596,189
<ACCUMULATED-NII-CURRENT> 68,156
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (243,364)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,295,306
<NET-ASSETS> 6,807,534
<DIVIDEND-INCOME> 57,940
<INTEREST-INCOME> 109,975
<OTHER-INCOME> 0
<EXPENSES-NET> 99,773
<NET-INVESTMENT-INCOME> 68,142
<REALIZED-GAINS-CURRENT> (9,692)
<APPREC-INCREASE-CURRENT> 1,241,159
<NET-CHANGE-FROM-OPS> 1,299,609
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 241,372
<DISTRIBUTIONS-OF-GAINS> 111,771
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 472,583
<NUMBER-OF-SHARES-REDEEMED> 102,626
<SHARES-REINVESTED> 52,222
<NET-CHANGE-IN-ASSETS> 3,491,713
<ACCUMULATED-NII-PRIOR> 92,862
<ACCUMULATED-GAINS-PRIOR> 21,623
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 49,105
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 49,340
<AVERAGE-NET-ASSETS> 4,159,053
<PER-SHARE-NAV-BEGIN> 5.39
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> 1.42
<PER-SHARE-DIVIDEND> .28
<PER-SHARE-DISTRIBUTIONS> .14
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.56
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
