Edgar Filing: CALAMOS CONVERTIBLE OPPORTUNITIES & INCOME FUND

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 19, 2002

1933 Act File No. 33-

1940 Act File No. 811-
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
(CHECK APPROPRIATE BOXES)
[X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] PRE-EFFECTIVE AMENDMENT NO.
[ ] POST-EFFECTIVE AMENDMENT NO.
and/or
[X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[ ] AMENDMENT NO.
CALAMOS CONVERTIBLE OPPORTUNITIES AND INCOME FUND
Exact Name of Registrant as Specified in Charter
1111 East Warrenville Road, Naperville, Illinois 60563-1493
Address of Principal Executive Offices (Number, Street, City, State, ZIP Code)

(630) 245-7200
Registrant's Telephone Number, including Area Code

James S. Hamman, Jr.,
Secretary
Calamos Asset Management, Inc.
1111 East Warrenville Road
Naperville, Illinois 60563-1493

Name and Address (Number, Street, City, State, ZIP Code) of Agent for Service

COPIES OF COMMUNICATIONS TO:

David A. Sturms Cameron S. Avery Leonard B. Mackey, Jr.
Vedder, Price, Kaufman & Bell, Boyd & Lloyd, LLC Clifford Chance Rogers & Wells
Kammholz 70 West Madison Street, Suite LLP
222 North LaSalle Street 3300 200 Park Avenue
Chicago, Illinois 60601-1003 Chicago, Illinois 60602-4207 New York, New York 10166

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of this Registration Statement

If any of the securities being registered on this Form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered in
connection with a dividend or interest reinvestment plans, check the following
box. [ ]

It is proposed that this filing will become effective (check appropriate
box)

[X] when declared effective pursuant to Section 8(c).

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

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PROPOSED MAXIMUM
TITLE OF SECURITIES PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF REGISTRATION
BEING REGISTERED AMOUNT BEING REGISTERED OFFERING PRICE PER UNIT PRICE(1) FEE(2)
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Common Shares (no par
value)............. 4,000,000 $15.00 $60,000,000 $5,520.00
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(1) Estimated solely for the purpose of calculating the registration fee.

(2) Transmitted prior to the filing date to the designated lockbox of the
Securities and Exchange Commission at Mellon Bank in Pittsburgh,
Pennsylvania.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT, WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED , 2002

PROSPECTUS

4,000,000 SHARES
CALAMOS CONVERTIBLE OPPORTUNITIES AND INCOME FUND

COMMON SHARES OF BENEFICIAL INTEREST
$15.00 PER SHARE
----------------------
Investment Objective. Calamos Convertible Opportunities and Income Fund
(the "Fund") is a newly organized, diversified, closed-end management investment
company. The Fund's investment objective is to provide total return, through a
combination of capital appreciation and current income.

Portfolio Contents. Under normal circumstances, the Fund will invest at
least 80% of its managed assets in a diversified portfolio of convertible
securities and non-convertible income securities. The portion of the Fund's
assets invested in convertible securities and non-convertible income securities
will vary from time to time consistent with the Fund's investment objective,
changes in equity prices and changes in interest rates and other economic and
market factors, although, under normal circumstances, the Fund will invest at
least 50% of its managed assets in convertible securities. "Managed assets"
means the total assets of the Fund (including any assets attributable to any
leverage that may be outstanding) minus the sum of accrued liabilities (other
than debt representing financial leverage). A substantial portion of the Fund's
assets may be invested in below investment grade (high yield, high risk)
securities. Below investment grade (high yield, high risk) securities are rated
Ba or lower by Moody's Investors Service, Inc. ("Moody's") or BB or lower by
Standard & Poor's Ratings Group, a division of The McGraw Hill Companies
("Standard & Poor's") or are unrated securities of comparable quality as
determined by the Fund's investment adviser. Below investment grade securities
are commonly referred to as "junk bonds" and are considered speculative with
respect to the issuer's capacity to pay interest and repay principal. They
involve greater risk of loss, are subject to greater price volatility and are
less liquid, especially during periods of economic uncertainty or change, than
higher rated debt securities. There can be no assurance that the Fund will
achieve its investment objective.

Investment Adviser. Calamos Asset Management, Inc. ("Calamos") is the
Fund's investment adviser. See "Management of the Fund."

No Prior History. Because the Fund is newly organized, its common shares
have no history of public trading. Shares of closed-end funds frequently trade
at a discount from their net asset value. The risk of loss due to a market
discount may be greater for initial investors expecting to sell their shares in
a relatively short period after completion of the public offering. The Fund has
applied to list its common shares on the New York Stock Exchange under the
symbol " ," subject to official notice of issuance.

Leverage. The Fund may, but is not required to, issue preferred shares,
borrow money or issue debt securities. This practice is known as leverage. The
Fund currently anticipates that it will issue preferred shares, as soon as
practicable after the closing of this offering, with an aggregate liquidation
preference of up to 25% of the Fund's total assets. The use of preferred shares
or borrowing to leverage the common shares creates risks.

INVESTING IN THE FUND'S COMMON SHARES INVOLVES RISKS THAT ARE DESCRIBED IN
"RISK FACTORS" BEGINNING ON PAGE 22 OF THIS PROSPECTUS.
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PER SHARE TOTAL
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Public offering price...................................... $ 15.00 $
Sales load................................................. $ .675 $
Proceeds, before expenses, to the Fund(1).................. $14.325 $

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(1) Total expenses of issuance and distribution are estimated to be $ .

The underwriters may also purchase up to an additional common
shares at the public offering price, less the sales load, within 45 days from
the date of this prospectus to cover over-allotments.

Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

The common shares will be ready for delivery on or about , 2002.
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[UNDERWRITERS]
----------------------
THE DATE OF THIS PROSPECTUS IS , 2002.

(continued from previous page)

You should read the prospectus, which contains important information about
the Fund, before deciding whether to invest in the Fund's common shares and
retain it for future reference. A statement of additional information, dated
, 2002, containing additional information about the Fund, has been
filed with the Securities and Exchange Commission and is incorporated by
reference in its entirety into this prospectus. You may request a free copy of
the statement of additional information, the table of contents of which is on
page of this prospectus, by calling 1-800- - or by
writing to the Fund. You can review and copy documents the Fund has filed at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
Call 1-202-942-8090 for information. The Commission charges a fee for copies.
You can get the same information free from the Commission's EDGAR database on
the Internet (http://www.sec.gov). You may also e-mail requests for these
documents to publicinfo@sec.gov or make a request in writing to the Commission's
Public Reference Section, Washington, D.C. 20549-0102.

The Fund's common shares do not represent a deposit or obligation of, and
are not guaranteed or endorsed by, any bank or other insured depository
institution and are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency.

TABLE OF CONTENTS

PAGE
----

Prospectus Summary.......................................... 4
Summary of Fund Expenses.................................... 14
The Fund.................................................... 15
Use of Proceeds............................................. 15
Investment Objective and Principal Investment Strategies.... 16
Leverage.................................................... 19
Risk Factors................................................ 22
Management of the Fund...................................... 27
Dividends and Distributions; Automatic Dividend Reinvestment
Plan...................................................... 28
Closed-End Fund Structure................................... 30
U.S. Federal Income Tax Matters............................. 31
Net Asset Value............................................. 33
Description of Shares....................................... 34
Certain Provisions of the Agreement and Declaration of Trust
and By-Laws............................................... 36
Underwriting................................................ 38
Custodian, Transfer Agent, Dividend Disbursing Agent and
Registrar and Fund
Accounting Agent.......................................... 40
Legal Opinions.............................................. 40
Table of Contents for Statement of Additional Information... 41

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE
YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT, AND THE
UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT
THE INFORMATION APPEARING IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF
THIS PROSPECTUS. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.

Through and including , 2002 (the 25th day after the date of this
prospectus), all dealers that buy, sell or trade the common shares, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealer's obligation to deliver a prospectus when
acting as underwriter and with respect to their unsold allotments or
subscriptions.

PROSPECTUS SUMMARY

This is only a summary. This summary may not contain all of the information
that you should consider before investing in the Fund's common shares. You
should review the more detailed information contained in this prospectus and in
the statement of additional information, especially the information set forth
under the heading "Risk Factors."

THE FUND...................... Calamos Convertible Opportunities and Income
Fund is a newly organized, diversified,
closed-end management investment company.
Throughout the prospectus, we refer to Calamos
Convertible Opportunities and Income Fund as
the "Fund" or as "we," "us," or "our." See "The
Fund."

THE OFFERING.................. The Fund is offering common shares of
beneficial interest ("common shares") at an
initial offering price of $15.00 per share. The
common shares are being offered by a group of
underwriters led by . You must
purchase at least 100 common shares ($1,500) in
order to participate in the offering. The Fund
has granted the underwriters the right to
purchase up to an additional common
shares at the public offering price, less the
sales load, within 45 days from the date of
this prospectus to cover over-allotments.
Calamos has agreed to pay organizational
expenses and offering costs (other than sales
load) that exceed $0.03 per share. See
"Underwriting."

INVESTMENT OBJECTIVE.......... The Fund's investment objective is to provide
total return, through a combination of capital
appreciation and current income. There can be
no assurance that the Fund will achieve its
investment objective. See "Investment Objective
and Principal Investment
Strategies -- Investment Objective."

INVESTMENT POLICIES........... Primary Investments. Under normal
circumstances, the Fund invests at least 80% of
its managed assets in a diversified portfolio
of convertible securities and non-convertible
income securities. The portion of the Fund's
assets invested in convertible securities and
non-convertible income securities will vary
from time to time consistent with the Fund's
investment objective, changes in equity prices
and changes in interest rates and other
economic and market factors, although, under
normal circumstances, the Fund will invest at
least 50% of its managed assets in convertible
securities. "Managed assets" means the total
assets of the Fund (including any assets
attributable to any leverage that may be
outstanding) minus the sum of accrued
liabilities (other than debt representing
financial leverage). For this purpose, the
liquidation preference on any preferred shares
will not constitute a liability. The Fund
invests in securities with a broad range of
maturities. The average term to maturity of the
Fund's securities will typically range from
five to ten years. See "Investment Objective
and Principal Investment
Strategies -- Principal Investment Strategies."

the Fund will invest at least 50% of its
managed assets in convertible securities.
Convertible securities are debt securities or
preferred stock that are exchangeable for
equity securities of the issuer at a
predetermined price (the "conversion price").
Depending upon the relationship of the
conversion price to the market value of the
underlying securities, convertible securities
may trade more like equity securities than debt
instruments. See "Investment Objective and
Principal Investment Strategies -- Principal
Investment Strategies -- Convertible
Securities."

Synthetic Convertible Securities. Calamos may
also create a "synthetic" convertible security
by combining separate securities that possess
the two principal characteristics of a true
convertible security, i.e., fixed-income
securities ("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 bonds, preferred stocks and money market
instruments. The convertible component is
achieved by investing in warrants or options to
buy common stock at a certain exercise price,
or options on a stock index. The Fund may also
purchase synthetic securities created by other
parties, typically investment banks, including
convertible structured notes. Different
companies may issue the fixed-income and
convertible components which may be purchased
separately, and at different times. The Fund's
holdings of synthetic convertible securities
are considered convertible securities for
purposes of the Fund's policy to invest at
least 50% of its managed assets in convertible
securities and 80% of its managed assets in a
diversified portfolio of convertible securities
and non-convertible income securities. See
"Investment Objective and Principal Investment
Strategies -- Principal Investment
Strategies -- Synthetic Convertible
Securities."

Non-Convertible Income Securities. The Fund
will also invest in non-convertible income
securities. The Fund's investments in non-
convertible income securities may have fixed or
variable principal payments and all types of
interest rate and dividend payment and reset
terms, including fixed rate, adjustable rate,
zero coupon, contingent, deferred, payment in
kind and auction rate features. See "Investment
Objective and Principal Investment
Strategies -- Principal Investment
Strategies -- Non-Convertible Income
Securities."

High Yield Securities. A substantial portion
of the Fund's assets may be invested in below
investment grade (high yield, high risk)
securities. These securities are rated Ba or
lower by Moody's or BB or lower by Standard &
Poor's or are unrated securities of comparable
quality as determined by Calamos, the Fund's
investment adviser. The Fund may invest in high
yield securities of any rating. Debt securities
rated below investment grade are commonly
referred to as "junk bonds" and are considered
speculative with respect to the issuer's
capacity to pay interest and repay principal.
They involve greater risk of loss, are

subject to greater price volatility and are
less liquid, especially during periods of
economic uncertainty or change, than higher
rated debt securities. See "Investment
Objective and Principal Investment
Strategies -- Principal Investment
Strategies -- High Yield Securities."

Foreign Issuers. While the Fund primarily
invests in securities of U.S. issuers, the Fund
may invest up to 25% of its net assets in
securities of foreign issuers, including debt
and equity securities of corporate issuers and
debt securities of government issuers in
developed and emerging markets. A foreign
issuer is a company organized under the laws of
a foreign country that is principally traded in
the financial markets of a foreign country. For
purposes of the 25% limitation, foreign
securities do not include securities
represented by American Depository Receipts
("ADRs") or securities guaranteed by a U.S.
person. See "Investment Objective and Principal
Investment Strategies -- Principal Investment
Strategies -- Foreign Issuers."

Rule 144A Securities. The Fund may invest
without limit in securities that have not been
registered for public sale, but that are
eligible for purchase and sale by certain
qualified institutional buyers ("Rule 144A
Securities"). See "Investment Objective and
Principal Investment Strategies -- Principal
Investment Strategies -- Rule 144A Securities."

Other Securities. Normally, the Fund invests
substantially all of its assets to meet its
investment objective. The Fund may invest the
remainder of its assets in other securities of
various types. For temporary defensive
purposes, the Fund may depart from its
principal investment strategies and invest part
or all of its assets in securities with
remaining maturities of less than one year,
cash equivalents, or may hold cash. During such
periods, the Fund may not be able to achieve
its investment objective. See "Investment
Objective and Principal Investment
Strategies -- Principal Investment Strategies."

USE OF LEVERAGE BY THE FUND... The Fund may, but is not required to, issue
preferred shares, borrow money or issue debt
securities. This practice is known as leverage.
The Fund currently anticipates that it will
issue preferred shares, as soon as practicable
after the closing of this offering, with an
aggregate liquidation preference of
approximately 25% of the Fund's total assets.
As a non-fundamental policy, such preferred
shares or borrowing may not exceed 33 1/3% of
the Fund's total assets. The Fund may not be
leveraged at all times and the amount of
borrowing or leverage, if any, may vary
depending upon a variety of factors, including
Calamos's outlook for the market and the costs
that the Fund would incur as a result of such
leverage. Leverage involves greater risks. The
Fund's leveraging strategy may not be
successful. By leveraging its investment
portfolio, the Fund creates an opportunity for
increased net income or capital appreciation.
However, the use of leverage also involves
risks, which can be significant. These risks
include the possibility that the value of the
assets acquired with such borrowing decreases

although the Fund's liability is fixed, greater
volatility in the Fund's net asset value and
the market price of the Fund's common shares
and higher expenses. In addition, the rights of
lenders and the holders of preferred shares and
debt securities issued by the Fund will be
senior to the rights of the holders of common
shares with respect to the payment of dividends
or upon liquidation. Since Calamos's fee is
based upon a percentage of the Fund's managed
assets, which include assets attributable to
any outstanding leverage, the investment
management fee will be higher if the Fund is
leveraged and Calamos will have an incentive to
be more aggressive and leverage the Fund.
Calamos intends only to leverage the Fund when
it believes that the potential return on such
additional investments is likely to exceed the
costs incurred in connection with the
borrowing. See "Leverage" and "Risks
Factors -- Leverage."

INVESTMENT ADVISER............ Calamos is the Fund's investment adviser.
Calamos is responsible on a day-to-day basis
for investment of the Fund's portfolio in
accordance with its investment objective and
policies. Calamos makes all investment
decisions for the Fund and places purchase and
sale orders for the Fund's portfolio
securities. As of April 1, 2002, Calamos
managed approximately $10.5 billion in assets
of individuals and institutions. Calamos is a
wholly-owned subsidiary of Calamos Holdings,
Inc. ("CHI"). CHI is controlled by John P.
Calamos, who has been engaged in the investment
advisory business since 1977.

The Fund pays Calamos an annual fee, payable
monthly, for its investment management services
equal to % of the Fund's average weekly
managed assets. "Managed assets" means the
total assets of the Fund (including any assets
attributable to any leverage that may be
outstanding) minus the sum of accrued
liabilities (other than debt representing
financial leverage). Calamos has contractually
agreed to reimburse the Fund for fees and
expenses in the amount of % of the average
weekly managed assets of the Fund for the first
full years of the Fund's operations
(through , 20 ),
and for a declining amount for an additional
years (through ,
20 ). See "Management of the Fund."

PORTFOLIO MANAGER............. John P. Calamos and Nick P. Calamos are
responsible for managing the portfolio of the
Fund. During the past five years, John P.
Calamos has been president of Calamos and
Calamos Financial Services, Inc. ("CFS"), an
affiliate of Calamos, and Nick P. Calamos has
been senior executive vice president of Calamos
and CFS.

LISTING....................... The Fund has applied to list its common shares
on the New York Stock Exchange under the symbol
" ," subject to official notice
of issuance.

CUSTODIAN AND TRANSFER
AGENT......................... will serve as the Fund's
custodian, and will serve as the
Fund's transfer agent. See

"Custodian, Transfer Agent, Dividend Disbursing
Agent and Register."

ADMINISTRATOR................. , an affiliate of ,
will serve as administrator for the Fund. The
Fund will pay the administrator a monthly fee
computed at an annual rate of % of the
Fund's average weekly managed assets, subject
to a minimum monthly fee of $ .

MARKET PRICE OF COMMON
SHARES........................ Common shares of closed-end investment
companies frequently trade at prices lower than
their net asset value. The Fund's net asset
value will be reduced immediately following
this offering by the sales load and the amount
of the organization and offering expenses paid
by the Fund. See "Use of Proceeds." In addition
to net asset value, the market price of the
Fund's common shares may be affected by such
factors as the Fund's use of leverage, dividend
stability, portfolio credit quality, liquidity,
market supply and demand and the Fund's
dividends paid (which are, in turn, affected by
expenses), call protection for portfolio
securities and interest rate movements. See
"Leverage," "Risk Factors" and "Description of
Shares." The Fund's common shares are designed
primarily for long-term investors, and you
should not purchase common shares if you intend
to sell them shortly after purchase.

DISTRIBUTIONS................. The Fund intends to distribute to common
shareholders all or a portion of its net
investment income monthly and net realized
capital gains, if any, at least annually. The
Fund expects to declare the initial monthly
dividend on the common shares within
approximately 45 days of the completion of this
offering and to pay that initial monthly
dividend approximately 60 to 90 days after the
completion of this offering. At times, in order
to maintain a stable level of distributions,
the Fund may pay out less than all of its net
investment income or pay out accumulated
undistributed income in addition to current net
investment income.

Pursuant to the Fund's Automatic Dividend
Reinvestment Plan, unless a shareholder is
ineligible or elects otherwise, all dividends
and capital gains distributions are
automatically reinvested in additional common
shares of the Fund. However, an investor can
choose to receive distributions in cash. Since
not all investors can participate in the
automatic dividend reinvestment plan, you
should contact your broker or nominee to
confirm that you are eligible to participate in
the plan. See "Dividends and Distributions;
Automatic Dividend Reinvestment Plan."

RISKS......................... No Operating History. The Fund is a newly
organized closed-end management investment
company and has no operating history or history
of public trading. See "Risks Factors -- No
Operating History."

Market Discount Risk. Shares of closed-end
funds frequently trade at a market price that
is below their net asset value. This

is commonly referred to as "trading at a
discount." This characteristic of shares of
closed-end funds is a risk separate and
distinct from the risk that the Fund's net
asset value may decrease. Investors who sell
their shares within a relatively short period
after completion of the public offering are
likely to be exposed to this risk. Accordingly,
the Fund is designed primarily for long-term
investors and should not be considered a
vehicle for trading purposes. Net asset value
will be reduced following the offering by the
underwriting discount and the amount of
offering expenses paid by the Fund. See "Risks
Factors -- Market Price of Shares."

Convertible Securities. The Fund is not
limited in the percentage of its assets
invested in convertible securities and
investment in convertible securities forms an
important part of the Fund's investment
strategies. Under normal circumstances, the
Fund will invest at least 50% of its managed
assets in convertible securities. Convertible
securities generally offer lower interest or
dividend yields than non-convertible securities
of similar quality. The market values of
convertible securities tend to decline as
interest rates increase and, conversely, to
increase as interest rates decline. However,
the convertible's market value tends to reflect
the market price of the common stock of the
issuing company when that stock price is
greater than the convertible's "conversion
price." The conversion price is defined as the
predetermined price at which the convertible
could be exchanged for the associated stock. A
convertible security may lose all of its value
if the value of the underlying stock falls
below the conversion price of the security. As
the market price of the underlying common stock
declines, the price of the convertible security
tends to be influenced more by the yield of the
convertible security. Thus, it may not decline
in price to the same extent as the underlying
common stock. In the event of a liquidation of
the issuing company, holders of convertible
securities would be paid before the company's
common stockholders. Consequently, the issuer's
convertible securities generally entail less
risk than its common stock. See "Risks
Factors -- Convertible Securities."

Synthetic Convertible Securities. The value of
a synthetic convertible security will respond
differently to market fluctuations than a
convertible security because a synthetic
convertible is composed of two or more separate
securities, each with its own market value. In
addition, if the value of the underlying common
stock or the level of the index involved in the
convertible component falls below the exercise
price of the warrant or option, the warrant or
option may lose all value. See "Risks
Factors -- Synthetic Convertible Securities."

High Yield Securities. Investment in high
yield securities involves substantial risk of
loss. Below investment grade securities or
comparable unrated securities are commonly
referred to as "junk bonds" and are considered
predominantly speculative with respect to the
issuer's ability to pay interest and

principal and are susceptible to default or
decline in market value due to adverse economic
and business developments. The market values
for high yield securities tend to be very
volatile, and these securities are less liquid
than investment grade debt securities. For
these reasons, your investment in the Fund is
subject to the following specific risks:

- increased price sensitivity to changing
interest rates and to a deteriorating
economic environment;

- greater risk of loss due to default or
declining credit quality;

- adverse company specific events are more
likely to render the issuer unable to make
interest and/or principal payments; and

- if a negative perception of the high yield
market develops, the price and liquidity of
high yield securities may be depressed. This
negative perception could last for a
significant period of time.

The secondary market for high yield securities
may not be as liquid as the secondary market
for more highly rated securities, a factor
which may have an adverse effect on the Fund's
ability to dispose of a particular security.
There are fewer dealers in the market for high
yield securities than for investment grade
obligations. The prices quoted by different
dealers may vary significantly and the spread
between the bid and asked price is generally
much larger than for higher quality
instruments. Under adverse market or economic
conditions, the secondary market for high yield
securities could contract further, independent
of any specific adverse changes in the
condition of a particular issuer, and these
instruments may become illiquid. As a result,
the Fund could find it more difficult to sell
these securities or may be able to sell the
securities only at prices lower than if such
securities were widely traded. Prices realized
upon the sale of such lower rated or unrated
securities, under these circumstances, may be
less than the prices used in calculating the
Fund's net asset value. See "Risks
Factors -- High Yield Securities."

Interest Rate Risk. In addition to the risks
discussed above, debt securities are subject to
certain risks, including:

- if interest rates go up, the value of debt
securities in the Fund's portfolio generally
will decline;

- during periods of declining interest rates,
the issuer of a security may exercise its
option to prepay principal earlier than
scheduled, forcing the Fund to reinvest in
lower yielding securities. This is known as
call or prepayment risk. High yield
securities frequently have call features that
allow the issuer to repurchase the security
prior to its stated maturity. An issuer may
redeem a high yield obligation if the issuer
can refinance the debt at a lower cost due to
declining interest rates or an improvement in
the credit standing of the issuer;

- during periods of rising interest rates, the
average life of certain types of securities
may be extended because of slower than
expected principal payments. This may lock in
a below market interest rate, increase the
security's duration (the estimated period
until the security is paid in full) and
reduce the value of the security. This is
known as extension risk; and

- Calamos's judgment about the attractiveness,
relative value or potential appreciation of a
particular sector, security or investment
strategy may prove to be incorrect. See
"Risks Factors -- Interest Rate Risks."

Illiquid Investments. The Fund may invest
without limit in illiquid securities. The Fund
may also invest without limit in securities
that have not been registered for public sale,
but that are eligible for purchase and sale by
certain qualified institutional buyers.
Although many of the Rule 144A Securities in
which the Fund invests may be, in the view of
Calamos, liquid, if qualified institutional
buyers are unwilling to purchase these Rule
144A Securities, they may be illiquid. Illiquid
securities may be difficult to dispose of at a
fair price at the times when the Fund believes
it is desirable to do so. The market price of
illiquid securities generally is more volatile
than that of more liquid securities, which may
adversely affect the price that the Fund pays
for or recovers upon the sale of illiquid
securities. Illiquid securities are also more
difficult to value and Calamos's judgment may
play a greater role in the valuation process.
Investment of the Fund's assets in illiquid
securities may restrict the Fund's ability to
take advantage of market opportunities. The
risks associated with illiquid securities may
be particularly acute in situations in which
the Fund's operations require cash and could
result in the Fund borrowing to meet its
short-term needs or incurring losses on the
sale of illiquid securities. See "Risks
Factors -- Illiquid Investments."

Foreign Securities. Investments in non-U.S.
issuers may involve unique risks compared to
investing in securities of U.S. issuers. These
risks are more pronounced to the extent that
the Fund invests a significant portion of its
non-U.S investments in one region or in the
securities of emerging market issuers. These
risks may include:

- less information about non-U.S. issuers or
markets may be available due to less rigorous
disclosure or accounting standards or
regulatory practices;

- many non-U.S. markets are smaller, less
liquid and more volatile. In a changing
market, Calamos may not be able to sell the
Fund's portfolio securities at times, in
amounts and at prices it considers
reasonable;

- an adverse effect of currency exchange rates
or controls on the value of the Fund's
investments;

- the economies of non-U.S. countries may grow
at slower rates than expected or may
experience a downturn or recession;

- economic, political and social developments
may adversely affect the securities markets;
and

- withholding and other non-U.S. taxes may
decrease the Fund's return. See "Risks
Factors -- Foreign Securities."

Leverage. The Fund may issue preferred shares,
borrow money or issue debt securities. The Fund
currently anticipates that it will issue
preferred shares, as soon as practicable after
the closing of this offering, with an aggregate
liquidation preference of up to 25% of the
Fund's total assets. As a non-fundamental
policy, such preferred shares or borrowing may
not exceed 33 1/3% of the Fund's total assets.
Leverage creates risks which may adversely
affect the return for the holders of common
shares, including:

- the likelihood of greater volatility of net
asset value and market price of the Fund's
common shares;

- fluctuations in the dividend rates on any
preferred shares or in interest rates on
borrowings and short-term debt;

- increased operating costs, which may reduce
the Fund's total return; and

- the potential for a decline in the value of
an investment acquired with borrowed funds,
while the Fund's obligations under such
borrowing remain fixed.

of borrowing. The Fund may be subject to
certain restrictions on investments imposed by
guidelines of one or more nationally recognized
rating organizations which may issue ratings
for the preferred shares or short-term debt
instruments issued by the Fund. These
guidelines may impose asset coverage or
portfolio composition requirements that are
more stringent than those imposed by the
Investment Company Act of 1940 (the "1940
Act"). See "Risks Factors -- Leverage."

Antitakeover Provisions. The Fund's Agreement
and Declaration of Trust and By-laws include
provisions that could limit the ability of
other entities or persons to acquire control of
the Fund or to change the composition of its
Board of Trustees. Such provisions could limit
the ability of shareholders to sell their
shares at a premium over prevailing market
prices by discouraging a third party from
seeking to obtain control of the Fund. These
provisions include staggered terms of office
for the Trustees, advance notice requirements
for shareholder proposals, and super-majority
voting requirements for open-ending the Fund or
a merger, asset sale or similar transaction.
See "Risks Factors -- Antitakeover Provisions."

Recent Developments. As a result of the
terrorist attacks on the World Trade Center and
the Pentagon on September 11, 2001, some of the
U.S. securities markets were closed for a
four-day period. These terrorist attacks and
related events have led to increased short-term
market volatility and may have long-term
effects on U.S. and world economics and
markets. A similar disruption of the financial
markets could impact interest rates, auctions,
secondary trading, ratings, credit risk,
inflation and other factors relating to
securities or other financial interests. See
"Risks Factors -- Recent Developments."

SUMMARY OF FUND EXPENSES

The following tables show the Fund's estimated expenses as a percentage of
net assets attributable to common shares.

SHAREHOLDER TRANSACTION FEES:
Sales Load (as a percentage of offering price)............ 4.50%
Dividend Reinvestment Plan Fees........................... None(1)

PERCENTAGE OF NET
ASSETS ATTRIBUTABLE TO
COMMON SHARES(2)
----------------------

ANNUAL EXPENSES
Investment Advisory Fee................................... %
Other Expenses............................................ %
Total Annual Expenses..................................... %
Fee and Expense Reimbursement (years - )........... ( )%(3)
Total Net Annual Expenses (years - )............... %(3)

---------------

(1) A shareholder that directs the plan agent to sell shares held in a dividend
reinvestment account will pay brokerage charges.

(2) Assuming the Fund issues preferred shares in an amount equal to 25% of the
Fund's managed assets (after incurring leverage), the Fund's expenses would
be estimated as set out in the table below. "Managed assets" means the total
assets of the Fund (including any assets attributable to any leverage that
may be outstanding) minus the sum of accrued liabilities (other than debt
representing financial leverage). The liquidation preference of the
preferred shares is not a liability.

PERCENTAGE OF
MANAGED ASSETS
--------------

ANNUAL EXPENSES
Investment Advisory Fee................................... %
Other Expenses............................................ %
Total Annual Expenses..................................... %
Fee and Expense Reimbursement (years - )........... ( )%
Total Net Annual Expenses (years - )............... %

(3) Calamos has contractually agreed to reimburse the Fund for fees and expenses
in the amount of % of average weekly managed assets for the first full
years of the Fund's operations, % of the average weekly managed
assets in year , % of the average weekly managed assets in year
, . Calamos has agreed to pay organizational expenses and
offering costs (other than sales load) that exceed $0.03 per share.

The purpose of the table above is to help you understand all fees and
expenses that you, as a common shareholder, would bear directly or indirectly.
As of the date of this prospectus, the Fund has not commenced investment
operations. The amount set forth under other expenses is based upon estimates
for the current year, assuming no exercise of the over-allotment option granted
to the underwriters. The table assumes that the Fund issues
common shares and issues preferred shares as a means of leverage.
If the Fund issues fewer common shares, all other things being equal, these
expenses would increase. If the Fund leverages through borrowing, the Fund would
incur interest expense. For additional information with respect to the Fund's
expenses, see "Management of the Fund." Other expenses include custodial and
transfer agency fees, administration fees, legal and accounting expenses, and
listing fees.

The following example illustrates the expenses (including the sales load of
$45) that you would pay on a $1,000 investment in common shares, assuming (1)
total annual expenses of % of net assets attributable to common shares and
(2) a 5% annual return:(1)

1 YEAR 3 YEARS 5 YEARS 10 YEARS(2)
------ ------- ------- -----------

Total Expenses Incurred.......................... $ $ $ $

---------------

(1) The example should not be considered a representation of future expenses.
The example assumes that the estimated other expenses set forth in the fee
table are accurate and that all dividends and distributions are reinvested
at net asset value. Actual expenses may be greater or less than those
assumed. Moreover, the Fund's actual rate of return may be greater or less
than the hypothetical 5% return shown in the example. The expenses you would
pay, based on the Fund's expenses stated as a percentage of the Fund's
managed assets (assuming the leverage in an amount equal to 25% of the
Fund's managed assets) and otherwise on the assumptions in the example would
be: 1 year ; 3 years ; 5 years
; and 10 years .

(2) Assumes reimbursement of fees and expenses of % of average daily
managed assets in year , % in year ,
% in year . Calamos has not agreed to reimburse the Fund
for any portion of its fees and expenses beyond , 20 . See
"Management of the Fund -- Investment Management Agreement."

THE FUND

Calamos Convertible Opportunities and Income Fund is a newly organized,
diversified, closed-end management investment company. The Fund was organized
under the laws of the state of Delaware on April 17, 2002, and has registered
under the 1940 Act. As a recently organized entity, the Fund has no operating
history. The Fund's principal office is located at 1111 East Warrenville Road,
Naperville, Illinois 60563-1493, and its telephone number is 1-800-582-6959.

USE OF PROCEEDS

The net proceeds of this offering will be approximately $ (or
approximately $ assuming the underwriters exercise the over-allotment
option in full) after payment of offering costs estimated to be approximately
$ and the deduction of the sales load. Calamos has agreed to pay
organizational expenses and offering costs (other than sales load) that exceed
$0.03 per share.

The Fund will invest the net proceeds of the offering in accordance with
the Fund's investment objective and policies as stated below. It is presently
anticipated that the Fund will be able to invest substantially all of the net
proceeds in securities that meet these investment objectives and policies within
three months after completion of this offering. Pending such investment, the
Fund anticipates that all or a portion of the proceeds will be invested in U.S.
government securities or high grade, short-term money market instruments. If
necessary, the Fund may also purchase, as temporary investments, securities of
other open- or closed-end investment companies that invest primarily in the
types of securities in which the Fund may invest directly. See "Investment
Objective and Principal Investment Strategies."

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

INVESTMENT OBJECTIVE

The Fund's investment objective is to provide total return, through a
combination of capital appreciation and current income. The Fund makes no
assurance that it will realize its objective. An investment in the Fund may be
speculative in that it involves a high degree of risk and should not constitute
a complete investment program. See "Risk Factors."

PRINCIPAL INVESTMENT STRATEGIES

Under normal circumstances, the Fund will invest at least 80% of its
managed assets in a diversified portfolio of convertible securities and
non-convertible income securities. This is a non-fundamental policy and may be
changed by the Board of Trustees of the Fund provided that shareholders are
provided with at least 60 days prior written notice of any change as required by
the rules under the 1940 Act. The portion of the Fund's assets invested in
convertible securities and non-convertible income securities will vary from time
to time consistent with the Fund's investment objective, changes in equity
prices and changes in interest rates and other economic and market factors,
although, under normal circumstances, the Fund will invest at least 50% of its
managed assets in convertible securities. The Fund invests in securities with a
broad range of maturities. The average term to maturity of the Fund's securities
typically will range from five to ten years.

Convertible Securities. The Fund is not limited in the percentage of its
assets invested in convertible securities, and investment in convertible
securities forms an important part of the Fund's investment strategies.
Convertible securities are debt securities or preferred stock that are
exchangeable for equity securities of the issuer at a predetermined price.
Depending upon the relationship of the conversion price to the market value of
the underlying securities, convertible securities may trade more like equity
securities than debt instruments.

Synthetic Convertible Securities. Calamos may also create a "synthetic"
convertible security by combining separate securities that possess the two
principal characteristics of a true convertible security, i.e., fixed-income
securities ("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 bonds, preferred stocks and
money market instruments. The convertible component is achieved by investing in
warrants or options to buy common stock at a certain exercise price, or options
on a stock index. The Fund may also purchase synthetic securities created by
other parties, typically investment banks, including convertible structured
notes. Different companies may issue the fixed-income and convertible
components, which may be purchased separately and at different times. The Fund's
holdings of synthetic convertible securities are considered convertible
securities for purposes of the Fund's policy to invest at least 50% of its
managed assets in convertible securities and 80% of its managed assets in a
diversified portfolio of convertible securities and non-convertible income
securities.

Non-Convertible Income Securities. The Fund will also invest in
non-convertible income securities. The Fund's investments in non-convertible
income securities may have fixed or variable principal payments and all types of
interest rate and dividend payment and reset terms, including fixed rate,
adjustable rate, zero coupon, contingent, deferred, payment in kind and auction
rate features.

High Yield Securities. A substantial portion of the Fund's assets may be
invested in below investment grade (high yield, high risk) securities. The high
yield securities in which the Fund invests are rated Ba or lower by Moody's or
BB or lower by Standard & Poor's or are unrated but determined by Calamos to be
of comparable quality. Debt securities rated below investment grade are commonly
referred to as "junk bonds" and are considered speculative with respect to the
issuer's capacity to pay interest and repay principal. Below investment grade
debt securities involve greater risk of loss, are subject to greater price
volatility and are less liquid, especially during periods of economic
uncertainty or change, than higher rated debt securities.

Preferred Shares. The Fund may invest in preferred shares. The preferred
shares that the Fund typically will invest in will be convertible securities.
Preferred shares are equity securities, but they have many characteristics of
fixed income securities, such as a fixed dividend payment rate and/or a
liquidity preference over the issuer's common shares. However, because preferred
shares are equity securities, they may be more susceptible to risks
traditionally associated with equity investments than the Fund's fixed income
securities.

Foreign Securities. While the Fund primarily invests in securities of U.S.
issuers, the Fund may invest up to 25% of its net assets in securities of
foreign issuers, including debt and equity securities of corporate issuers and
debt securities of government issuers in developed and emerging markets. A
foreign issuer is a company organized under the laws of a foreign country that
is principally traded in the financial markets of a foreign country. For
purposes of the 25% limitation, foreign securities do not include securities
represented by American Depository Receipts ("ADRs") or securities guaranteed by
a U.S. person.

REITs. REITs primarily invest in income producing real estate or real
estate related loans or interests. REITs are generally classified as equity
REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. REITs are not taxed on income
distributed to shareholders provided they comply with the applicable
requirements of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"). The Fund will indirectly bear its proportionate share of any
management and other expenses paid by REITs in which it invests in addition to
the expenses paid by the Fund. Debt securities issued by REITs are, for the most
part, general and unsecured obligations and are subject to risks associated with
REITs.

U.S. Government Securities. U.S. government securities in which the Fund
invests include debt obligations of varying maturities issued by the U.S.
Treasury or issued or guaranteed by an agency or instrumentality of the U.S.
government, including the Federal Housing Administration, Federal Financing
Bank, Farmers Home Administration, Export-Import Bank of the United States,
Small Business Administration, Government National Mortgage Association
("GNMA"), General Services Administration, Central Bank for Cooperatives,
Federal Farm Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation ("FHLMC"), Federal National Mortgage Association ("FNMA"), Maritime
Administration, Tennessee Valley Authority, District of Columbia Armory Board,
Student Loan Marketing Association, Resolution Fund Corporation and various
institutions that previously were or currently are part of the Farm Credit
System (which has been undergoing reorganization since 1987). Some U.S.
government securities, such as U.S. Treasury bills, Treasury notes and Treasury
bonds, which differ only in their interest rates, maturities and times of
issuance, are supported by the full faith and credit of the United States.
Others are supported by: (i) the right of the issuer to borrow from the U.S.
Treasury, such as securities of the Federal Home Loan Banks; (ii) the
discretionary authority of the U.S. government to purchase the agency's
obligations, such as securities of the FNMA; or (iii) only the credit of the
issuer. No assurance can be given that the U.S. government will provide
financial support in the future to U.S. government agencies, authorities or
instrumentalities that are not supported by the full faith and credit of the
United States. Securities guaranteed as to principal and interest by the U.S.
government, its agencies, authorities or instrumentalities include: (i)
securities for which the payment of principal and interest is backed by an
irrevocable letter of credit issued by the U.S. government or any of its
agencies, authorities or instrumentalities; and (ii) participations in loans
made to non-U.S. governments or other entities that are so guaranteed. The
secondary market for certain of these participations is limited and, therefore,
may be regarded as illiquid.

Zero Coupon Securities. The securities in which the Fund invests may
include zero coupon securities, which are debt obligations that are issued or
purchased at a significant discount from face value. The discount approximates
the total amount of interest the security will accrue and compound over the
period until maturity or the particular interest payment date at a rate of
interest reflecting the market rate of the security at the time of issuance.
Zero coupon securities do not require the periodic payment of interest. These
investments benefit the issuer by mitigating its need for cash to meet debt
service, but generally require a higher rate of return to attract investors who
are willing to defer receipt of cash. These investments may experience greater
volatility in market value than U.S. government securities that make regular
payments of interest. The Fund accrues income on these investments for tax and
accounting purposes, which is distributable to shareholders and which, because
no cash is received at the time of accrual, may require the liquidation of other
portfolio securities to satisfy the Fund's distribution obligations, in which
case the Fund will forgo the purchase of additional income producing assets with
these funds. Zero coupon U.S. government securities include STRIPS and CUBES,
which are issued by the U.S. Treasury as component parts of U.S. Treasury bonds
and represent scheduled interest and principal payments on the bonds.

Investments in Equity Securities. Consistent with its objective, the Fund
may invest in equity securities. Equity securities, such as common stock,
generally represent an ownership interest in a company. While equity securities
have historically generated higher average returns than fixed income securities,
equity securities have also experienced significantly more volatility in those
returns. An adverse event, such as an unfavorable earnings report, may depress
the value of a particular equity security held by the Fund. Also, the price of
equity securities, particularly common stocks, are sensitive to general
movements in the stock market. A drop in the stock market may depress the price
of equity securities held by the Fund.

Other Investment Companies. The Fund may invest in the securities of other
investment companies to the extent that such investments are consistent with the
Fund's investment objective and policies and permissible under the 1940 Act.
Under the 1940 Act, the Fund may not acquire the securities of other domestic or
non-U.S. investment companies if, as a result, (1) more than 10% of the Fund's
total assets would be invested in securities of other investment companies, (2)
such purchase would result in more than 3% of the total outstanding voting
securities of any one investment company being held by the Fund, or (3) more
than 5% of the Fund's total assets would be invested in any one investment
company. These limitations do not apply to the purchase of shares of any
investment company in connection with a merger, consolidation, reorganization or
acquisition of substantially all the assets of another investment company.

The Fund, as a holder of the securities of other investment companies, will
bear its pro rata portion of the other investment companies' expenses, including
advisory fees. These expenses are in addition to the direct expenses of the
Fund's own operations.

Defensive and Temporary Investments. Under unusual market or economic
conditions or for temporary defensive purposes, the Fund may invest up to 100%
of its total assets in securities issued or guaranteed by the U.S. government or
its instrumentalities or agencies, certificates of deposit, bankers' acceptances
and other bank obligations, commercial paper rated in the highest category by a
nationally recognized statistical rating organization or other fixed income
securities deemed by Calamos to be consistent with a defensive posture, or may
hold cash. The yield on such securities may be lower than the yield on lower
rated fixed income securities.

Repurchase Agreements. The Fund may enter into repurchase agreements with
broker-dealers, member banks of the Federal Reserve System and other financial
institutions. Repurchase agreements are arrangements under which the Fund
purchases securities and the seller agrees to repurchase the securities within a
specific time and at a specific price. The repurchase price is generally higher
than the Fund's purchase price, with the difference being income to the Fund.
The counterparty's obligations under the repurchase agreement are collateralized
with U.S. Treasury and/or agency obligations with a market value of not less
than 100% of the obligations, valued daily. Collateral is held by the Fund's
custodian in a segregated, safekeeping account for the benefit of the Fund.
Repurchase agreements afford the Fund an

opportunity to earn income on temporarily available cash at low risk. In the
event of commencement of bankruptcy or insolvency proceedings with respect to
the seller of the security before repurchase of the security under a repurchase
agreement, the Fund may encounter delay and incur costs before being able to
sell the security. Such a delay may involve loss of interest or a decline in
price of the security. If the court characterizes the transaction as a loan and
the Fund has not perfected a security interest in the security, the Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
risk of losing some or all of the principal and interest involved in the
transaction.

Lending of Portfolio Securities. The Fund may lend portfolio securities to
registered broker-dealers or other institutional investors deemed by Calamos to
be of good standing under agreements which require that the loans be secured
continuously by collateral in cash, cash equivalents or U.S. Treasury bills
maintained on a current basis at an amount at least equal to the market value of
the securities loaned. The Fund continues to receive the equivalent of the
interest or dividends paid by the issuer on the securities loaned as well as the
benefit of an increase and the detriment of any decrease in the market value of
the securities loaned and would also receive compensation based on investment of
the collateral. The Fund would not, however, have the right to vote any
securities having voting rights during the existence of the loan, but would call
the loan in anticipation of an important vote to be taken among holders of the
securities or of the giving or withholding of consent on a material matter
affecting the investment.

As with other extensions of credit, there are risks of delay in recovery or
even loss of rights in the collateral should the borrower of the securities fail
financially. At no time would the value of the securities loaned exceed 33 1/3%
of the value of the Fund's total assets.

Portfolio Turnover. It is the policy of the Fund not to engage in trading
for short-term profits although portfolio turnover rate is not considered a
limiting factor in the execution of investment decisions for the Fund.

LEVERAGE

The Fund may issue preferred shares or borrow or issue short-term debt
securities to increase its assets available for investment. The Fund is
authorized to issue preferred shares, borrow or issue debt obligations. The Fund
currently anticipates that it will issue, as soon as practicable after the
closing of this offering, preferred shares with an aggregate liquidation
preference of up to 25% of the Fund's total assets. As a non-fundamental policy,
such preferred shares or borrowing may not exceed 33 1/3% of the Fund's total
assets. The Fund generally will not issue preferred shares or borrow unless
Calamos expects that the Fund will achieve a greater return on such borrowed
funds than the additional costs the Fund incurs as a result of such borrowing.
The Fund also may borrow money as a temporary measure for extraordinary or
emergency purposes, including the payment of dividends and the settlement of
securities transactions which otherwise might require untimely dispositions of
the Fund's holdings. When the Fund leverages its assets, the fees paid to
Calamos for investment management services will be higher than if the Fund did
not borrow because Calamos's fees are calculated based on the Fund's managed
assets, which include the proceeds of the issuance of preferred shares or any
outstanding borrowings. Consequently, the Fund and Calamos may have differing
interests in determining whether to leverage the Fund's assets.

The Fund's use of leverage is premised upon the expectation that the Fund's
preferred share dividends or borrowing cost will be lower than the return the
Fund achieves on its investments with the proceeds of the issuance of preferred
shares or borrowing. Such difference in return may result from the Fund's higher
credit rating or the short-term nature of its borrowing compared to the
long-term nature of its investments. Since the total assets of the Fund
(including the assets obtained from leverage) will be invested in the higher
yielding portfolio investments or portfolio investments with the potential for
capital appreciation, the holders of common shares will be the beneficiaries of
the incremental return. Should the differential between the underlying assets
and cost of leverage narrow, the incremental return "pick up" will be reduced.
Furthermore, if long-term rates rise or the Fund otherwise incurs losses on its
investments, the

Fund's net asset value attributable to its common shares will reflect the
decline in the value of portfolio holdings resulting therefrom.

Leverage creates risks which may adversely affect the return for the
holders of common shares, including:

- the likelihood of greater volatility of net asset value and market price
of common shares;

- fluctuations in the dividend rates on any preferred shares or in interest
rates on borrowings and short-term debt;

- increased operating costs, which may reduce the Fund's total return; and

- the potential for a decline in the value of an investment acquired with
borrowed funds, while the Fund's obligations under such borrowing remains
fixed.

To the extent the income or capital appreciation derived from securities
purchased with funds received from leverage exceeds the cost of leverage, the
Fund's return will be greater than if leverage had not been used. Conversely, if
the income or capital appreciation from the securities purchased with such funds
is not sufficient to cover the cost of leverage or if the Fund incurs capital
losses, the return of the Fund will be less than if leverage had not been used,
and therefore the amount available for distribution to shareholders as dividends
and other distributions will be reduced or potentially eliminated. Calamos may
determine to maintain the Fund's leveraged position if it expects that the
long-term benefits to the Fund's shareholders of maintaining the leveraged
position will outweigh the current reduced return. Capital raised through the
issuance of preferred shares or borrowing will be subject to dividend payments
or interest costs that may or may not exceed the income and appreciation on the
assets purchased. The issuance of additional classes of preferred shares
involves offering expenses and other costs and may limit the Fund's freedom to
pay dividends on shares or common shares or to engage in other activities. The
Fund also may be required to maintain minimum average balances in connection
with borrowings or to pay a commitment or other fee to maintain a line of
credit; either of these requirements will increase the cost of borrowing over
the stated interest rate.

The Fund may be subject to certain restrictions on investments imposed by
guidelines of one or more nationally recognized rating organizations which may
issue ratings for the preferred shares or short-term debt instruments issued by
the Fund. These guidelines may impose asset coverage or portfolio composition
requirements that are more stringent than those imposed by the 1940 Act. Certain
types of borrowings may result in the Fund being subject to covenants in credit
agreements, including those relating to asset coverage, borrowing base and
portfolio composition requirements and additional covenants that may affect the
Fund's ability to pay dividends and distributions on common shares in certain
instances. The Fund may also be required to pledge its assets to the lenders in
connection with certain types of borrowing. Calamos does not anticipate that
these covenants or restrictions will adversely affect its ability to manage the
Fund's portfolio in accordance with the Fund's investment objective and
policies. Due to these covenants or restrictions, the Fund may be forced to
liquidate investments at times and at prices that are not favorable to the Fund,
or the Fund may be forced to forgo investments that Calamos otherwise views as
favorable.

Under the 1940 Act, the Fund is not permitted to issue preferred shares
unless immediately after such issuance the net asset value of the Fund's
portfolio is at least 200% of the liquidation value of the outstanding preferred
shares (i.e., such liquidation value may not exceed 50% of the value of the
Fund's total assets). In addition, the Fund is not permitted to declare any cash
dividend or other distribution on its common shares unless, at the time of such
declaration, the net asset value of the Fund's portfolio (determined after
deducting the amount of such dividend or distribution) is at least 200% of such
liquidation value. In the event preferred shares are issued, the Fund intends,
to the extent possible, to purchase or redeem preferred shares from time to time
to maintain coverage of any preferred shares of at least 200%. Under the 1940
Act, the Fund is not permitted to incur indebtedness unless immediately after
such borrowing the Fund has an asset coverage of at least 300% of the aggregate
outstanding principal balance of indebtedness (i.e., such indebtedness may not
exceed 33 1/3% of the value of the Fund's total
20

assets). Additionally, under the 1940 Act, the Fund may not declare any dividend
or other distribution upon any class of its shares, or purchase any such shares,
unless the aggregate indebtedness of the Fund has, at the time of the
declaration of any such dividend or distribution or at the time of any such
purchase, an asset coverage of at least 300% after deducting the amount of such
dividend, distribution, or purchase price, as the case may be.

If and to the extent that the Fund employs leverage will depend on many
factors, the most important of which are investment outlook, market conditions
and interest rates. Successful use of a leveraging strategy depends on Calamos's
ability to predict correctly interest rates and market movements. There is no
assurance that a leveraging strategy will be successful during any period in
which it is employed. None of the other investment companies managed by Calamos
use leverage to a material extent or as part of a systematic investment program.

EFFECTS OF LEVERAGE

Assuming the Fund issues preferred shares with a liquidation preference
equal to approximately 25% of the Fund's total assets and an annual dividend
rate of % of such liquidation preference (which rate is approximately the
current rate which Calamos expects the Fund to pay), based on market rates as of
the date of this prospectus, the Fund would need to achieve an annual return on
its total assets of % in order to cover such dividend payments on the
preferred shares. Actual dividend rates may vary and may be significantly higher
or lower than the rate estimated above.

The following table illustrates the hypothetical effect on the return to a
holder of the Fund's common shares of the leverage obtained by issuing preferred
shares with a liquidation value equal to 25% of the Fund's total assets,
assuming hypothetical annual returns of the Fund's portfolio of minus 10% to
plus 10%. As the table shows, leverage generally increases the return to
shareholders when portfolio return is positive and greater than the cost of
leverage and decreases the return when the portfolio return is negative or less
than the cost of leverage. The figures appearing in the table are hypothetical
and actual returns may be greater or less than those appearing in the table.

Assumed Portfolio Return (Net of Expenses).................. (10)% (5)% 0% 5% 10%
Corresponding Common Share Return........................... ( )% ( )% ( )% % %

Until the Fund issues preferred shares or borrows, the Fund's common shares
will not be leveraged, and the risks and special considerations related to
leverage described in this prospectus will not apply. Such leveraging of the
common shares cannot be fully achieved until the proceeds resulting from the use
of leverage have been invested in longer term debt instruments in accordance
with the Fund's investment objective and policies.

RISK FACTORS

General. The Fund is a newly organized, diversified, closed-end management
investment company designed primarily as a long-term investment and not as a
trading tool. The Fund invests in a diversified portfolio of convertible
securities and non-convertible income securities. An investment in the Fund's
common shares may be speculative and it involves a high degree of risk. The Fund
should not constitute a complete investment program. Due to the uncertainty in
all investments, there can be no assurance that the Fund will achieve its
investment objective.

No Operating History. The Fund is a newly organized closed-end management
investment company and has no operating history or history of public trading.

Convertible Securities. The Fund is not limited in the percentage of its
assets invested in convertible securities, and investment in convertible
securities form an important part of the Fund's investment strategies.
Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality. The market values of convertible
securities tend to decline as interest rates increase and, conversely, to
increase as interest rates decline. However, the convertible's market value
tends to reflect the market price of the common stock of the issuing company
when that stock price is greater than the convertible's "conversion price." The
conversion price is defined as the predetermined price at which the convertible
could be exchanged for the associated stock. A convertible security may lose all
of its value if the value of the underlying stock falls below the conversion
price of the security. As the market price of the underlying common stock
declines, the price of the convertible security tends to be influenced more by
the yield of the convertible security. Thus, it may not decline in price to the
same extent as the underlying common stock. In the event of a liquidation of the
issuing company, holders of convertible securities would be paid before the
company's common stock holders. Consequently, the issuer's convertible
securities generally entail less risk than its common stock.

Synthetic Convertible Securities. The value of a synthetic convertible
security will respond differently to market fluctuations than a convertible
security because a synthetic convertible is composed of two or more separate
securities, each with its own market value. In addition, if the value of the
underlying common stock or the level of the index involved in the convertible
component falls below the exercise price of the warrant or option, the warrant
or option may lose all value.

High Yield Securities. Investment in high yield securities involves
substantial risk of loss. Below investment grade debt securities or comparable
unrated securities are commonly referred to as "junk bonds" and are considered
predominantly speculative with respect to the issuer's ability to pay interest
and principal and are susceptible to default or decline in market value due to
adverse economic and business developments. The market values for high yield
securities tend to be very volatile, and these securities are less liquid than
investment grade debt securities. For these reasons, your investment in the Fund
is subject to the following specific risks:

- increased price sensitivity to changing interest rates and to a
deteriorating economic environment;

- greater risk of loss due to default or declining credit quality;

- adverse company specific events are more likely to render the issuer
unable to make interest and/or principal payments; and

- if a negative perception of the high yield market develops, the price and
liquidity of high yield securities may be depressed. This negative
perception could last for a significant period of time.

Debt securities rated below investment grade are speculative with respect
to the capacity to pay interest and repay principal in accordance with the terms
of such securities. A rating of C from Moody's means that the issue so rated can
be regarded as having extremely poor prospects of ever attaining any real
investment standing. Standard & Poor's assigns a rating of C to issues that are
currently highly vulnerable to nonpayment, and the C rating may be used to cover
a situation where a bankruptcy petition has been filed or similar action taken,
but payments on the obligation are being continued (a C rating is also assigned
to a preferred stock issue in arrears on dividends or sinking fund payments, but
that is currently
22

paying). See the statement of additional information for a description of
Moody's and Standard & Poor's ratings.

Adverse changes in economic conditions are more likely to lead to a
weakened capacity of a high yield issuer to make principal payments and interest
payments than an investment grade issuer. The principal amount of high yield
securities outstanding has proliferated in the past decade as an increasing
number of issuers have used high yield securities for corporate financing. An
economic downturn could severely affect the ability of highly leveraged issuers
to service their debt obligations or to repay their obligations upon maturity.
The percentage of defaults on high yield debt securities as reported by Moody's
were 5.5% and 5.7% in 1999 and 2000, respectively, increasing to 10.2% in 2001.
If the national economy enters into a deeper recessionary phase during 2002 or
interest rates rise sharply, the number of defaults by high yield issuers is
likely to increase. Similarly, down-turns in profitability in specific
industries could adversely affect the ability of high yield issuers in those
industries to meet their obligations. The market values of lower quality debt
securities tend to reflect individual developments of the issuer to a greater
extent that do higher quality securities, which react primarily to fluctuations
in the general level of interest rates. Factors having an adverse impact on the
market value of lower quality securities may have an adverse effect on the
Fund's net asset value and the market value of its common shares. In addition,
the Fund may incur additional expenses to the extent it is required to seek
recovery upon a default in payment of principal or interest on its portfolio
holdings. In certain circumstances, the Fund may be required to foreclose on an
issuer's assets and take possession of its property or operations. In such
circumstances, the Fund would incur additional costs in disposing of such assets
and potential liabilities from operating any business acquired.

The secondary market for high yield securities may not be as liquid as the
secondary market for more highly rated securities, a factor which may have an
adverse effect on the Fund's ability to dispose of a particular security when
necessary to meet its liquidity needs. There are fewer dealers in the market for
high yield securities than investment grade obligations. The prices quoted by
different dealers may vary significantly and the spread between the bid and
asked price is generally much larger than for higher quality instruments. Under
adverse market or economic conditions, the secondary market for high yield
securities could contract further, independent of any specific adverse changes
in the condition of a particular issuer, and these instruments may become
illiquid. As a result, the Fund could find it more difficult to sell these
securities or may be able to sell the securities only at prices lower than if
such securities were widely traded. Prices realized upon the sale of such lower
rated or unrated securities, under these circumstances, may be less than the
prices used in calculating the Fund's net asset value.

Since investors generally perceive that there are greater risks associated
with lower quality debt securities of the type in which the Fund may invest a
portion of its assets, the yields and prices of such securities may tend to
fluctuate more than those for higher rated securities. In the lower quality
segments of the debt securities market, changes in perceptions of issuers'
creditworthiness tend to occur more frequently and in a more pronounced manner
than do changes in higher quality segments of the debt securities market,
resulting in greater yield and price volatility.

If the Fund invests in high yield securities that are rated C or below, the
Fund will incur significant risk in addition to the risks associated with
investments in high yield securities and corporate loans. Distressed securities
frequently do not produce income while they are outstanding. The Fund may
purchase distressed securities that are in default or the issuers of which are
in bankruptcy. The Fund may be required to bear certain extraordinary expenses
in order to protect and recover its investment.

Leverage. The Fund may issue preferred shares, borrow money or issue debt
securities. The Fund currently anticipates that it will issue preferred shares,
as soon as practicable after the closing of this offering, with an aggregate
liquidation preference of approximately 25% of the Fund's total assets. As a
non-fundamental policy, such preferred shares, borrowing or debt securities may
not exceed 33 1/3% of the

Fund's total assets. Leverage creates risks which may adversely affect the
return for the holders of common shares, including:

- the likelihood of greater volatility of net asset value and market price
of common shares;

- fluctuations in the dividend rates on any preferred shares or in interest
rates on borrowings and short-term debt;

- increased operating costs, which may reduce the Fund's total return; and

- the potential for a decline in the value of an investment acquired with
borrowed funds, while the Fund's obligations under such borrowing remain
fixed.

Certain types of borrowings may result in the Fund being subject to
covenants in credit agreements, including those relating to asset coverage,
borrowing base and portfolio composition requirements and additional covenants
that may affect the Fund's ability to pay dividends and distributions on common
shares in certain instances. The Fund may also be required to pledge its assets
to the lenders in connection with certain types of borrowing. The Fund may be
subject to certain restrictions on investments imposed by guidelines of one or
more nationally recognized rating organizations which may issue ratings for the
preferred shares or short-term debt instruments issued by the Fund. These
guidelines may impose asset coverage or portfolio composition requirements that
are more stringent than those imposed by the 1940 Act.

Since Calamos's investment management fee is a percentage of the Fund's
managed assets, Calamos's fee will be higher if the Fund is leveraged and
Calamos will have an incentive to be more aggressive and leverage the Fund.

Interest Rate Risk. Fixed income securities, including high yield
securities, are subject to certain common risks, including:

- if interest rates go up, the value of debt securities in the Fund's
portfolio generally will decline;

- during periods of declining interest rates, the issuer of a security may
exercise its option to prepay principal earlier than scheduled, forcing
the Fund to reinvest in lower yielding securities. This is known as call
or prepayment risk. Debt securities frequently have call features that
allow the issuer to repurchase the security prior to its stated maturity.
An issuer may redeem an obligation if the issuer can refinance the debt
at a lower cost due to declining interest rates or an improvement in the
credit standing of the issuer;

- during periods of rising interest rates, the average life of certain
types of securities may be extended because of slower than expected
principal payments. This may lock in a below market interest rate,
increase the security's duration (the estimated period until the security
is paid in full) and reduce the value of the security. This is known as
extension risk; and

- Calamos's judgment about the attractiveness, relative value or potential
appreciation of a particular sector, security or investment strategy may
prove to be incorrect.

REITS. Investing in REITs involves certain unique risks in addition to
those risks associated with investing in the real estate industry in general. An
equity REIT may be affected by changes in the value of the underlying properties
owned by the REIT. A mortgage REIT may be affected by changes in interest rates
and the ability of the issuers of its portfolio mortgages to repay their
obligations. REITs are dependent upon the skills of their managers and are not
diversified. REITs are generally dependent upon

maintaining cash flows to repay borrowings and to make distributions to
shareholders and are subject to the risk of default by lessees or borrowers.
REITs whose underlying assets are concentrated in properties used by a
particular industry, such as health care, are also subject to risks associated
with such industry.

REITs (especially mortgage REITs) are also subject to interest rate risks.
When interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. If the REIT invests in adjustable rate mortgage loans the interest
rates on which are reset periodically, yields on a REIT's investments in such
loans will gradually align themselves to reflect changes in market interest
rates. This causes the value of such investments to fluctuate less dramatically
in response to interest rate fluctuations than would investments in fixed rate
obligations.

REITs may have limited financial resources, may trade less frequently and
in a limited volume and may be subject to more abrupt or erratic price movements
than larger company securities. Historically, REITs have been more volatile in
price than the larger capitalization stocks included in Standard & Poor's 500
Stock Index.

Illiquid Investments. The Fund may invest without limit in illiquid
securities. The Fund may also invest without limitation in securities that have
not been registered for public sale, but that are eligible for purchase and sale
by certain qualified institutional buyers. Although many of the Rule 144A
Securities in which the Fund invests may be, in the view of Calamos, liquid, if
qualified institutional buyers are unwilling to purchase these Rule 144A
Securities, they may be illiquid. Illiquid securities may be difficult to
dispose of at a fair price at the times when the Fund believes it is desirable
to do so. The market price of illiquid securities generally is more volatile
than that of more liquid securities, which may adversely affect the price that
the Fund pays for or recovers upon the sale of illiquid securities. Illiquid
securities are also more difficult to value and Calamos's judgment may play a
greater role in the valuation process. Investment of the Fund's assets in
illiquid securities may restrict the Fund's ability to take advantage of market
opportunities. The risks associated with illiquid securities may be particularly
acute in situations in which the Fund's operations require cash and could result
in the Fund borrowing to meet its short-term needs or incurring losses on the
sale of illiquid securities.

Foreign Securities. Investments in non-U.S. issuers may involve unique
risks compared to investing in securities of U.S. issuers. These risks are more
pronounced to the extent that the Fund invests a significant portion of its
non-U.S. investments in one region or in the securities of emerging market
issuers. These risks may include:

- less information about non-U.S. issuers or markets may be available due
to less rigorous disclosure or accounting standards or regulatory
practices;

- many non-U.S. markets are smaller, less liquid and more volatile. In a
changing market, Calamos may not be able to sell the Fund's portfolio
securities at times, in amounts and at prices it considers reasonable;

- adverse effect of currency exchange rates or controls on the value of the
Fund's investments;

- the economies of non-U.S. countries may grow at slower rates than
expected or may experience a downturn or recession;

- economic, political and social developments may adversely affect the
securities markets; and

- withholding and other non-U.S. taxes may decrease the Fund's return.

There may be less publicly available information about non-U.S. markets and
issuers than is available with respect to U.S. securities and issuers. Non-U.S.
companies generally are not subject to accounting, auditing and financial
reporting standards, practices and requirements comparable to those applicable
to U.S. companies. The trading markets for most non-U.S. securities are
generally less liquid and subject to greater price volatility than the markets
for comparable securities in the United States. The markets for securities in
certain emerging markets are in the earliest stages of their development. Even
the markets for

relatively widely traded securities in certain non-U.S. markets, including
emerging market countries, may not be able to absorb, without price disruptions,
a significant increase in trading volume or trades of a size customarily
undertaken by institutional investors in the United States. Additionally, market
making and arbitrage activities are generally less extensive in such markets,
which may contribute to increased volatility and reduced liquidity.

Economies and social and political climate in individual countries may
differ unfavorably from the United States. Non-U.S. economies may have less
favorable rates of growth of gross domestic product, rates of inflation,
currency valuation, capital reinvestment, resource self-sufficiency and balance
of payments positions. Many countries have experienced substantial, and in some
cases extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, very
negative effects on the economies and securities markets of certain emerging
countries. Unanticipated political or social developments may also affect the
values of the Fund's investments and the availability to the Fund of additional
investments in such countries.

Currency Risks. The value of the securities denominated or quoted in
foreign currencies may be adversely affected by fluctuations in the relative
currency exchange rates and by exchange control regulations. The Fund's
investment performance may be negatively affected by a devaluation of a currency
in which the Fund's investments are denominated or quoted. Further, the Fund's
investment performance may be significantly affected, either positively or
negatively, by currency exchange rates because the U.S. dollar value of
securities denominated or quoted in another currency will increase or decrease
in response to changes in the value of such currency in relation to the U.S.
dollar.

Market Price of Shares. Shares of closed-end funds frequently trade at a
market price that is below their net asset value. This is commonly referred to
as "trading at a discount." This characteristic of shares of closed-end funds is
a risk separate and distinct from the risk that the Fund's net asset value may
decrease. Investors who sell their shares within a relatively short period after
completion of the public offering are likely to be exposed to this risk.
Accordingly, the Fund is designed primarily for long-term investors and should
not be considered a vehicle for trading purposes. Net asset value will be
reduced following the offering by the underwriting discount and the amount of
offering expenses paid by the Fund.

Whether investors will realize a gain or loss upon the sale of the Fund's
common shares will depend upon whether the market value of the shares at the
time of sale is above or below the price the investor paid, taking into account
transaction costs, for the shares and is not directly dependent upon the Fund's
net asset value. Because the market value of the Fund's shares will be
determined by factors such as the relative demand for and supply of the shares
in the market, general market conditions and other factors beyond the control of
the Fund, the Fund cannot predict whether its common shares will trade at, below
or above net asset value, or below or above the initial offering price for the
shares.

Antitakeover Provisions. The Fund's Agreement and Declaration of Trust and
By-laws include provisions that could limit the ability of other entities or
persons to acquire control of the Fund or to change the composition of its Board
of Trustees. Such provisions could limit the ability of shareholders to sell
their shares at a premium over prevailing market prices by discouraging a third
party from seeking to obtain control of the Fund. These provisions include
staggered terms of office for the Trustees, advance notice requirements for
shareholder proposals, and super-majority voting requirements for certain
transaction with affiliates, open-ending the Fund or a merger, asset sale or
similar transaction.

Recent Developments. As a result of the terrorist attacks on the World
Trade Center and the Pentagon on September 11, 2001, some of the U.S. securities
markets were closed for a four-day period. These terrorist attacks and related
events have led to increased short-term market volatility and may have long-term
effects on U.S. and world economics and markets. A similar disruption of the
financial markets could impact interest rates, auctions, secondary trading,
ratings, credit risk, inflation and other factors relating to securities or
other financial interests.

MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS

The Fund's Board of Trustees provides broad supervision over the affairs of
the Fund. The officers of the Fund are responsible for the Fund's operations.
There are Trustees of the Fund, two of whom are "interested persons"
(as defined in the 1940 Act) and of whom are not "interested persons."
The names and business addresses of the trustees and officers of the Fund and
their principal occupations and other affiliations during the past five years
are set forth under "Management of the Fund" in the statement of additional
information.

INVESTMENT ADVISER

The Fund's investments are managed by Calamos, 1111 E. Warrenville Road,
Naperville, IL. On April 1, 2002 Calamos managed approximately $10.5 billion in
assets of individuals and institutions. Calamos is a wholly-owned subsidiary of
CHI. CHI is controlled by John P. Calamos, who has been engaged in the
investment advisory business since 1977.

INVESTMENT MANAGEMENT AGREEMENT

Subject to the overall authority of the Board of Trustees, Calamos provides
continuous investment supervision and management to the Fund under an investment
management agreement and also furnishes office space, equipment and management
personnel.

Under the investment management agreement, the Fund will pay to Calamos a
fee based on the average weekly managed assets that is accrued daily and paid on
a monthly basis. The fee paid by the Fund is at the annual rate of % of
managed assets. Because the fees paid to Calamos are determined on the basis of
the Fund's managed assets, Calamos's interest in determining whether to leverage
the Fund may differ from the interests of the Fund and its common shareholders.

Under the terms of its investment agreement with the Fund, Calamos pays all
the operating expenses, including executive salaries and the rental of office
space, relating to its services for the Fund, with the exception of the
following, which are to be paid by the Fund: (a) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including, to
the extent such services are performed by personnel of Calamos or its
affiliates, office space and facilities and personnel compensation, training and
benefits; (b) the charges and expenses of any administrator, custodian, transfer
agent, plan agent, dividend disbursing agent and registrar appointed by the
Fund; (c) issue and transfer taxes chargeable to the Fund in connection with
securities transactions to which the Fund is a party; (d) insurance premiums,
interest charges, dues and fees for membership in trade associations and all
taxes and corporate fees payable by the Fund to federal, state or other
governmental agencies; (e) fees and expenses involved in registering and
maintaining registrations of the Fund and/or its shares with federal regulatory
agencies, state or blue sky securities agencies and foreign jurisdictions,
including the preparation of prospectuses and statements of additional
information for filing with such regulatory authorities; (f) all expenses of
shareholders and Trustees meetings and of preparing, printing and distributing
prospectuses, notices, proxy statements and all reports to shareholders and to
governmental agencies; (g) charges and expenses of legal counsel to the Fund and
the Trustees; (h) compensation of those Trustees of the Fund who are not
affiliated with or interested persons of Calamos or the Fund (other than as
Trustees); (i) the cost of preparing and printing share certificates; (j)
interest on borrowed money, if any; and (k) the fees and other expenses of
listing the Fund's shares on the New York Stock Exchange or any other national
stock exchange. In addition, the Fund will pay all brokers' and underwriting
commissions chargeable to the Fund in connection with securities transactions to
which the Fund is a party.

PORTFOLIO MANAGER

John P. Calamos and Nick P. Calamos are responsible for managing the
portfolio of the Fund. During the past five years, John P. Calamos has been
president of Calamos and Calamos Financial
27

Services, Inc. ("CFS"), an affiliate of Calamos, and Nick P. Calamos has been
senior executive vice president of Calamos and CFS.

ADMINISTRATOR

, an affiliate of , will serve as
administrator for the Fund. The Fund will pay a monthly fee equal at
an annual rate to % of the average weekly value of the Fund's managed
assets, subject to a minimum monthly fee of .

DIVIDENDS AND DISTRIBUTIONS; AUTOMATIC DIVIDEND REINVESTMENT PLAN

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to distribute dividends of all or a portion of its net
investment income monthly to holders of common shares. The Fund expects to
declare the initial monthly dividend on the common shares within approximately
45 days of the completion of this offering and to pay that initial monthly
dividend approximately 60 to 90 days after the completion of this offering.
Dividends and distributions may be payable in cash or common shares, with the
option to receive cash in lieu of the shares. The Fund may at times, and in its
discretion, pay out less than the entire amount of net investment income earned
in any particular period and may at times pay out such accumulated undistributed
income in addition to net investment income earned in other periods in order to
permit the Fund to maintain a more stable level of distributions. As a result,
the dividend paid by the Fund to holders of common shares for any particular
period may be more or less than the amount of net investment income earned by
the Fund during such period. The Fund is not required to maintain a stable level
of distributions to shareholders. For federal income tax purposes, the Fund is
required to distribute substantially all of its net investment income for each
year to both reduce its federal income tax liability and to avoid a potential
excise tax. The Fund intends to distribute all realized capital gains, if any,
at least annually.

Under the 1940 Act, the Fund is not permitted to incur indebtedness unless
immediately after such incurrence the Fund has an asset coverage of at least
300% of the aggregate outstanding principal balance of indebtedness.
Additionally, under the 1940 Act, the Fund may not declare any dividend or other
distribution upon any class of its capital shares, or purchase any such capital
shares, unless the aggregate indebtedness of the Fund has, at the time of the
declaration of any such dividend or distribution or at the time of any such
purchase, an asset coverage of at least 300% after deducting the amount of such
dividend, distribution, or purchase price, as the case may be.

While any preferred shares are outstanding, the Fund may not declare any
cash dividend or other distribution on its common shares, unless at the time of
such declaration, (1) all accumulated preferred dividends have been paid and (2)
the net asset value of the Fund's portfolio (determined after deducting the
amount of such dividend or other distribution) is at least 200% of the
liquidation value of the outstanding preferred shares (expected to be equal to
the original purchase price per share plus any accumulated and unpaid dividends
thereon).

In addition to the limitations imposed by the 1940 Act described above,
certain lenders may impose additional restrictions on the payment of dividends
or distributions on the common shares in the event of a default on the Fund's
borrowings. If the Fund's ability to make distributions on its common shares is
limited, such limitation could, under certain circumstances, impair the ability
of the Fund to maintain its qualification for taxation as a regulated investment
company, which would have adverse tax consequences for shareholders. See
"Leverage" and "U.S. Federal Income Tax Matters."

See "Automatic Dividend Reinvestment Plan" for information concerning the
manner in which dividends and distributions to common shareholders may be
automatically reinvested in common shares. Dividends and distributions may be
taxable to shareholders whether they are reinvested in shares of the Fund or
received in cash.

The yield on the Fund's common shares will vary from period to period
depending on factors including, but not limited to, market conditions, the
timing of the Fund's investment in portfolio securities, the securities
comprising the Fund's portfolio, changes in interest rates including changes in
the relationship between short-term rates and long-term rates, the amount and
timing of the use of borrowings and other leverage by the Fund, the effects of
leverage on the common shares discussed above under "Leverage," the timing of
the investment of leverage proceeds in portfolio securities, the Fund's net
assets and its operating expenses. Consequently, the Fund cannot guarantee any
particular yield on its shares and the yield for any given period is not an
indication or representation of future yields on the Fund's shares.

AUTOMATIC DIVIDEND REINVESTMENT PLAN

Pursuant to the Fund's Automatic Dividend Reinvestment Plan ("Plan"),
unless a shareholder is ineligible or elects otherwise, all dividend and capital
gains distributions are automatically reinvested by , as agent for
shareholders in administering the Plan ("Plan Agent"), in additional common
shares of the Fund. In the event a dividend or capital gains distribution is
declared in shares with the option to take cash and the shares are trading at a
"market discount," as described below, the Plan provides that its distribution
will be taken in cash and reinvested in accordance with the Plan. Shareholders
who are ineligible or who elect not to participate in the Plan will receive all
dividends and distributions payable in cash paid by check mailed directly to the
shareholder of record (or, if the shares are held in street or other nominee
name, then to such nominee) by , as dividend paying agent. Such
shareholders may elect not to participate in the Plan and to receive all
distributions of dividends and capital gains in cash by sending written
instructions to , as dividend paying agent, at the address set forth
below. Participation in the Plan is completely voluntary and may be terminated
or resumed at any time without penalty by written notice if received by the Plan
Agent not less than ten days prior to any dividend record date; otherwise, such
termination will be effective with respect to any subsequently declared dividend
or capital gains distribution.

Whenever the Fund declares an ordinary income dividend or a capital gain
dividend (collectively referred to as "dividends") payable either in shares or
in cash, non-participants in the Plan will receive cash, and participants in the
Plan will receive the equivalent in shares of common shares. The shares are
acquired by the Plan Agent for the participant's account, depending upon the
circumstances described below, either (i) through receipt of additional unissued
but authorized common shares from the Fund ("newly issued shares") or (ii) by
purchase of outstanding common shares on the open market ("open-market
purchases") on the New York Stock Exchange or elsewhere. If, on the dividend
payment date, the net asset value per share of the common shares is equal to or
less than the market price per common share plus estimated brokerage commissions
(such condition being referred to herein as "market premium"), the Plan Agent
will invest the amount of such dividend distribution in newly issued shares on
behalf of the participant. The number of newly issued common shares to be
credited to the participant's account will be determined by dividing the dollar
amount of the dividend by the net asset value per share on the date the shares
are issued, provided that the maximum discount from the then current market
price per share on the date of issuance may not exceed 5%. If, on the dividend
payment date the net asset value per share is greater than the market value
(such condition being referred to herein as "market discount"), the Plan Agent
will invest the dividend amount in shares acquired on behalf of the participant
in open-market purchases. Prior to the time common shares commence trading on
the New York Stock Exchange, participants in the Plan will receive any dividends
in newly issued shares.

In the event of a market discount on the dividend payment date for any
dividend or distribution, the Plan Agent has until the last business day before
the next date on which the shares trade on an "ex-dividend" basis or in no event
more than 30 days after the dividend payment date (last purchase date) to invest
the dividend amount in shares acquired in open-market purchases. It is
contemplated that the Fund will pay monthly income dividends. Therefore, the
period during which open-market purchases can be made will exist only from the
payment date on the dividend through the date before the next ex-dividend date,
which typically will be approximately ten days. If, before the Plan Agent has
completed its open-market purchases, the market price of a common share exceeds
the net asset value per share, the average

per share purchase price paid by the Plan Agent may exceed the net asset value
of the Fund's shares, resulting in the acquisition of fewer shares than if the
dividend had been paid in newly issued shares on the dividend payment date.
Because of the foregoing difficulty with respect to open-market purchases, the
Plan provides that if the Plan Agent is unable to invest the full dividend
amount in open-market purchases during the purchase period or if the market
discount shifts to a market premium during the purchase period, the Plan Agent
will cease making open-market purchases and will invest the uninvested portion
of the dividend amount in newly issued shares at the close of business on the
last purchase date.

The Plan Agent maintains all shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the account, including
information needed by shareholders for tax records. Dividend reinvestment is
confirmed quarterly. Shares in the account of each Plan participant will be held
by the Plan Agent in non-certificated form in the name of the participant, and
each shareholder's proxy will include those shares purchased or received
pursuant to the Plan. The Plan Agent will forward all proxy solicitation
materials to participants and vote proxies for shares held pursuant to the Plan
in accordance with the instructions of the participants.

In the case of shareholders such as banks, brokers or nominees which hold
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
record shareholders as representing the total amount registered in the record
shareholder's name and held for the account of beneficial owners who are to
participate in the Plan.

There will be no brokerage charges with respect to shares issued directly
by the Fund as a result of dividends or capital gains distributions payable
either in shares or in cash. However, each participant will pay a pro rata share
of brokerage commissions incurred with respect to the Plan Agent's open-market
purchases in connection with the reinvestment of dividends.

The automatic reinvestment of dividends and distributions will not relieve
participants of any federal, state or local income tax that may be payable (or
required to be withheld) on such dividends. See "U.S. Federal Income Tax
Matters."

Shareholders participating in the Plan may receive benefits not available
to shareholders not participating in the Plan. If the market price plus
commissions of the Fund's shares is higher than the net asset value,
participants in the Plan will receive shares of the Fund at less than they could
otherwise purchase them and will have shares with a cash value greater than the
value of any cash distribution they would have received on their shares. If the
market price plus commissions is below the net asset value, participants receive
distributions of shares with a net asset value greater than the value of any
cash distribution they would have received on their shares. However, there may
be insufficient shares available in the market to make distributions in shares
at prices below the net asset value. Also, since the Fund does not redeem its
shares, the price on resale may be more or less than the net asset value. See
"U.S. Federal Income Tax Matters" for a discussion of tax consequences of the
Plan.

Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan if in
the judgment of the Board of Trustees such a change is warranted. There is no
direct service charge to participants in the Plan; however, the Fund reserves
the right to amend the Plan to include a service charge payable by the
participants.

All correspondence concerning the Plan should be directed to the Plan Agent
at .

CLOSED-END FUND STRUCTURE

The Fund is a newly organized, diversified, closed-end management
investment company (commonly referred to as a closed-end fund). Closed-end funds
differ from open-end management investment companies (which are generally
referred to as mutual funds) in that closed-end funds generally list their
shares for trading on a stock exchange and do not redeem their shares at the
request of the shareholder. This means that if you wish to sell your shares of a
closed-end fund you must trade them on the market like any other stock at the
prevailing market price at that time. In a mutual fund, if the shareholder

wishes to sell shares of the fund, the mutual fund will redeem or buy back the
shares at "net asset value." Also, mutual funds generally offer new shares on a
continuous basis to new investors, and closed-end funds generally do not. The
continuous inflows and outflows of assets in a mutual fund can make it difficult
to manage the fund's investments. By comparison, closed-end funds are generally
able to stay more fully invested in securities that are consistent with their
investment objectives and also have greater flexibility to make certain types of
investments and to use certain investment strategies, such as financial leverage
and investments in illiquid securities.

Shares of closed-end funds frequently trade at a discount to their net
asset value. To the extent the common shares do trade at a discount, the Fund's
Board of Trustees may from time to time engage in open-market repurchases or
tender offers for shares after balancing the benefit to shareholders of the
increase in the net asset value per share resulting from such purchases against
the decrease in the assets of the Fund and potential increase in the expense
ratio of expenses to assets of the Fund. The Board of Trustees believes that in
addition to the beneficial effects described above, any such purchases or tender
offers may result in the temporary narrowing of any discount but will not have
any long-term effect on the level of any discount. We cannot guarantee or
assure, however, that the Fund's Board of Trustees will decide to engage in any
of these actions. Nor is there any guarantee or assurance that such actions, if
undertaken, would result in the shares trading at a price equal or close to net
asset value per share. The Board of Trustees might also consider converting the
Fund to an open-end mutual fund, which would also require a vote of the
shareholders of the Fund. Conversion of the Fund to an open-end mutual fund
would require an amendment to the Fund's Declaration of Trust. Such an amendment
would require the favorable vote of the holders of at least 75% of the Fund's
outstanding shares (including any preferred shares) entitled to be voted on the
matter, voting as a single class (or a majority of such shares if the amendment
were previously approved, adopted or authorized by 75% of the total number of
Trustees fixed in accordance with the By-laws), and, assuming preferred shares
are issued, the affirmative vote of a majority of outstanding preferred shares,
voting as a separate class.

U.S. FEDERAL INCOME TAX MATTERS

The following is a description of certain U.S. federal income tax
consequences to a shareholder that acquires, holds and/or disposes of common
shares of the Fund. The discussion reflects applicable tax laws of the United
States as of the date of this prospectus, which tax laws may be changed or
subject to new interpretations by the courts or the Internal Revenue Service
("IRS") retroactively or prospectively. No attempt is made to present a detailed
explanation of U.S. federal income tax concerns affecting the Fund and its
shareholders, and the discussion set forth herein does not constitute tax
advice. In addition, no attempt is made to present state, local or foreign tax
concerns or tax concerns applicable to an investor with a special tax status
such as a financial institutional or non-U.S. investors. Investors are urged to
consult their own tax advisors to determine the tax consequences to them of
investing in the Fund.

The Fund intends to elect to be treated, and to qualify each year, as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code") so that it will not pay U.S. federal income tax
on income and capital gains distributed to shareholders. If the Fund qualifies
as a regulated investment company and distributes to its shareholders at least
90% of the sum of (i) its "investment company taxable income" as that term is
defined in the Code (which includes, among other things, dividends, taxable
interest, the excess of any net short-term capital gains over net long-term
capital losses and certain net foreign exchange gains as reduced by certain
deductible expenses) without regard to the deduction for dividends paid and (ii)
the excess of its gross tax-exempt interest, if any, over certain disallowed
deductions, the Fund will be relieved of U.S. federal income tax on any income
of the Fund, including long-term capital gains, distributed to shareholders.
However, if the Fund retains any investment company income or "net capital gain"
(the excess of net long-term capital gain over net short-term capital loss), it
will be subject to U.S. federal income tax at regular corporate rates (currently
at the maximum rate of 35%) on the amount retained. The Fund intends to
distribute at least annually all or substantially all of its investment company
income, net tax-exempt interest, and net capital gain.
31

If for any taxable year the Fund did not qualify as a regulated investment
company for U.S. federal income tax purposes, it would be treated as a U.S.
corporation subject to U.S. federal income tax and distributions to its
shareholders would not be deducted by the Fund in computing its taxable income.
In addition, in the event of a failure to qualify as a regulated investment
company, the Fund's distributions, to the extent derived from the Fund's current
or accumulated earnings and profits, would generally constitute ordinary
dividends, which although eligible for the corporate dividend received
deduction, would be taxable to shareholders as ordinary income, even though such
distributions might otherwise, at least in part, have been treated as long-term
capital gains in such shareholder's hands.

Unless a shareholder is ineligible to participate or elects otherwise, all
distributions will be automatically reinvested in additional shares of common
stock of the Fund pursuant to the Plan. For U.S. federal income tax purposes,
all dividends are taxable whether a shareholder takes them in cash or they are
reinvested pursuant to the Plan in additional shares of the Fund. Dividends from
investment company taxable income are generally taxable as ordinary income.
Dividends from net capital gain, if any, are generally taxable as long-term
capital gains for U.S. federal income tax purposes without regard to the length
of time the shareholder has held shares of the Fund. The U.S. federal income tax
status of all distributions will be designated by the Fund and reported to the
shareholders annually.

If the Fund retains any net capital gain, the Fund may designate the
retained amount as undistributed capital gains in a notice to shareholders who,
if subject to U.S. federal income tax on long-term capital gains (i) will be
required to include in income as long-term capital gain, their proportionate
share of such undistributed amount, and (ii) will be entitled to credit their
proportionate share of the tax paid by the Fund on the undistributed amount
against their U.S. federal income tax liabilities, if any, and to claim refunds
to the extent the credit exceeds such liabilities. For U.S. federal income tax
purposes, the tax basis of shares owned by a shareholder of the Fund will
generally be increased by an amount equal to 65% of the amount of undistributed
net capital gain included in the shareholder's gross income.

If a shareholder's distributions are automatically reinvested pursuant to
the Plan and the Plan Agent invests the distribution in shares acquired on
behalf of the shareholder in open-market purchases, for U.S. federal income tax
purposes, the shareholder will be treated as having received a taxable
distribution in the amount of the cash dividend that the shareholder would have
received if the shareholder had elected to receive cash. If a shareholder's
distributions are automatically reinvested pursuant to the Plan and the Plan
Agent invests the distribution in newly issued shares of the Fund, the
shareholder will be treated as receiving a taxable distribution equal to the
fair market value of the stock the shareholder receives.

Sales and other dispositions of the Fund's shares are taxable events for
shareholders that are subject to federal income tax. Shareholders should consult
their own tax advisors with reference to their individual circumstances to
determine whether any particular transaction in the Fund's shares is properly
treated as a sale for tax purposes, as the following discussion assumes, and the
tax treatment of any gains or losses recognized in such transactions. Any loss
realized by a shareholder upon the sale or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares. Losses on sales or other dispositions of
shares may be disallowed under the "wash sale" rules in the event of other
investments in the Fund (including those made pursuant to reinvestment of
dividends) within a period of 61 days beginning 30 days before and ending 30
days after a sale or other disposition of shares. In such a case, the disallowed
portion of any loss generally would be included in the U.S. federal tax basis of
the shares acquired in the other investments.

The Fund is required in certain circumstances to backup withhold at a rate
of 30% (for calendar year 2002 and 2003) on reportable payments including
dividends, capital gain distributions, and proceeds of sales or other
dispositions of the Fund's shares paid to certain holders of the Fund's shares
who do not furnish the Fund with their correct social security number or other
taxpayer identification number and certain other certifications, or who are
otherwise subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld from payments made to a shareholder may be refunded or

credited against such shareholder's U.S. federal income tax liability, if any,
provided that the required information is furnished to the IRS.

THE FOREGOING IS A GENERAL AND ABBREVIATED SUMMARY OF THE PROVISIONS OF THE
CODE AND THE TREASURY REGULATIONS IN EFFECT AS THEY DIRECTLY GOVERN THE TAXATION
OF THE FUND AND ITS SHAREHOLDERS. THESE PROVISIONS ARE SUBJECT TO CHANGE BY
LEGISLATIVE OR ADMINISTRATIVE ACTION, AND ANY SUCH CHANGE MAY BE RETROACTIVE. A
MORE COMPLETE DISCUSSION OF THE TAX RULES APPLICABLE TO THE FUND CAN BE FOUND IN
THE STATEMENT OF ADDITIONAL INFORMATION WHICH IS INCORPORATED BY REFERENCE INTO
THIS PROSPECTUS. SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING
SPECIFIC QUESTIONS AS TO U.S. FEDERAL, FOREIGN, STATE, AND LOCAL INCOME OR OTHER
TAXES.

NET ASSET VALUE

Net asset value per share is determined as of the close of regular session
trading on the New York Stock Exchange (usually 4:00 p.m., Eastern time), on the
last business day in each week. Net asset value is calculated by dividing the
value of all of the securities and other assets of the Fund, less its
liabilities (including accrued expenses and indebtedness) and the aggregate
liquidation value of any outstanding preferred shares, by the total number of
common shares outstanding. Currently, the net asset values of shares of publicly
traded closed-end investment companies investing in debt securities are
published in Barron's, the Monday edition of The Wall Street Journal and the
Monday and Saturday editions of The New York Times.

The values of the securities in the Fund are based on market prices from
the primary market in which they are traded. As a general rule, equity
securities listed on a U.S. securities exchange or Nasdaq National Market are
valued at the last quoted sale price on the day the valuation is made. Bonds and
other fixed-income securities that are traded over the counter and on an
exchange will be valued according to the broadest and most representative
market, and it is expected this will ordinarily be the over-the-counter market.
The foreign securities held by a Fund are traded on exchanges throughout the
world. Trading on these foreign securities exchanges is completed at various
times throughout the day and often does not coincide with the close of trading
on the New York Stock Exchange. The value of foreign securities is determined at
the close of trading of the exchange on which the securities are traded or at
the close of trading on the New York Stock Exchange, whichever is earlier. If
market prices are not readily available or the Fund's valuation methods do not
produce a value reflective of the fair value of the security, securities and
other assets are priced at a fair value as determined by the Board of Trustees
or a committee thereof.

DESCRIPTION OF SHARES

The Fund is authorized to issue an unlimited number of common shares,
without par value. The Fund is also authorized to issue preferred shares. After
the completion of this offering, the Fund will only have common shares
outstanding. The Board of Trustees is authorized, however, to classify and
reclassify any unissued shares into one or more additional classes or series of
shares. The Board of Trustees may establish such series or class, including
preferred shares, from time to time by setting or changing in any one or more
respects the designations, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of such shares and pursuant to such classification or
reclassification to increase or decrease the number of authorized shares of any
existing class or series. The Board of Trustees, without shareholder approval,
is authorized to amend the Agreement and Declaration of Trust and By-laws to
reflect the terms of any such class or series, including any class of preferred
shares. The Fund currently anticipates that it will issue preferred shares as
soon as practicable after the closing of this offering. See "Leverage." The Fund
is also authorized to issue other securities, including debt securities.

COMMON SHARES

Common shares, when issued and outstanding, will be fully paid and
non-assessable. Shareholders are entitled to share pro rata in the net assets of
the Fund available for distribution to common shareholders upon liquidation of
the Fund. Common shareholders are entitled to one vote for each share held.

In the event that the Fund issues preferred shares and so long as any
shares of the Fund's preferred shares are outstanding, holders of common shares
will not be entitled to receive any net income of or other distributions from
the Fund unless all accumulated dividends on preferred shares have been paid,
and unless asset coverage (as defined in the 1940 Act) with respect to preferred
shares would be at least 200% after giving effect to such distributions. See
"Leverage."

The Fund will send unaudited reports at least semiannually and audited
annual financial statements to all of its shareholders.

Calamos provided the initial capital for the Fund by purchasing
shares of common shares of the Fund for $ . As of the date of this
prospectus, Calamos owned 100% of the outstanding common shares. Calamos may be
deemed to control the Fund until such time as it owns less than 25% of the
outstanding shares of the Fund.

PREFERRED SHARES

The Fund currently anticipates issuing, as soon as practicable after the
closing of this offering, preferred shares with an aggregate liquidation
preference of approximately 25% of the Fund's total assets. As a non-fundamental
policy, the Fund may not issue preferred shares (or borrow money and issue debt
securities) with an aggregate liquidation preference (or aggregate principal
amount) exceeding 33 1/3% of the Fund's total assets. However, the Board of
Trustees reserves the right to issue preferred shares to the extent permitted by
the 1940 Act, which currently limits the aggregate liquidation preference of all
outstanding preferred shares to 50% of the value of the Fund's total assets less
the Fund's liabilities and indebtedness. Although the terms of any preferred
shares, including dividend rate, liquidation preference and redemption
provisions, will be determined by the Board of Trustees, subject to applicable
law and the Agreement and Declaration of Trust, it is likely that the preferred
shares will be structured to carry a relatively short-term dividend rate
reflecting interest rates on short-term bonds, by providing for the periodic
redetermination of the dividend rate at relatively short intervals through an
auction, remarketing or other procedure. The Fund also believes that it is
likely that the liquidation preference, voting rights and redemption provisions
of the preferred shares will be similar to those stated below.

In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Fund, the holders of preferred shares will be entitled to
receive a preferential liquidating distribution, which is expected to equal the
original purchase price per preferred share plus accrued and unpaid dividends,

whether or not declared, before any distribution of assets is made to holders of
common shares. After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of preferred shares will not be entitled
to any further participation in any distribution of assets by the Fund.

The 1940 Act requires that the holders of any preferred shares, voting
separately as a single class, have the right to elect at least two Trustees at
all times. The remaining Trustees will be elected by holders of common shares
and preferred shares, voting together as a single class. In addition, subject to
the prior rights, if any, of the holders of any other class of senior securities
outstanding, the holders of any preferred shares have the right to elect a
majority of the Trustees at any time two years' dividends on any preferred
shares are unpaid. The 1940 Act also requires that, in addition to any approval
by shareholders that might otherwise be required, the approval of the holders of
a majority of any outstanding preferred shares, voting separately as a class,
would be required to (1) adopt any plan of reorganization that would adversely
affect the preferred shares, and (2) take any action requiring a vote of
security holders under Section 13(a) of the 1940 Act, including, among other
things, changes in the Fund's subclassification as a closed-end investment
company or changes in its fundamental investment restrictions. See "Certain
Provisions in the Agreement and Declaration of Trust and By-Laws." As a result
of these voting rights, the Fund's ability to take any such actions may be
impeded to the extent that there are any preferred shares outstanding. The Board
of Trustees presently intends that, except as otherwise indicated in this
prospectus and except as otherwise required by applicable law, holders of
preferred shares will have equal voting rights with holders of common shares
(one vote per share, unless otherwise required by the 1940 Act) and will vote
together with holders of common shares as a single class.

The affirmative vote of the holders of a majority of the outstanding
preferred shares, voting as a separate class, will be required to amend, alter
or repeal any of the preferences, rights or powers of holders of preferred
shares so as to affect materially and adversely such preferences, rights or
powers, or to increase or decrease the authorized number of preferred shares.
The class vote of holders of preferred shares described above will in each case
be in addition to any other vote required to authorize the action in question.

The terms of the preferred shares are expected to provide that (i) they are
redeemable by the Fund in whole or in part at the original purchase price per
share plus accrued dividends per share, (ii) the Fund may tender for or purchase
preferred shares and (iii) the Fund may subsequently resell any shares so
tendered for or purchased. Any redemption or purchase of preferred shares by the
Fund will reduce the leverage applicable to the common shares, while any resale
of shares by the Fund will increase that leverage.

The discussion above describes the possible offering of preferred shares by
the Fund. If the Board of Trustees determines to proceed with such an offering,
the terms of the preferred shares may be the same as, or different from, the
terms described above, subject to applicable law and the Agreement and
Declaration of Trust. The Board of Trustees, without the approval of the holders
of common shares, may authorize an offering of preferred shares or may determine
not to authorize such an offering, and may fix the terms of the preferred shares
to be offered.

CERTAIN PROVISIONS OF THE AGREEMENT AND DECLARATION OF TRUST
AND BY-LAWS

The Fund's Agreement and Declaration of Trust includes provisions that
could have the effect of limiting the ability of other entities or persons to
acquire control of the Fund or to change the composition of its Board of
Trustees and could have the effect of depriving shareholders of an opportunity
to sell their shares at a premium over prevailing market prices by discouraging
a third party from seeking to obtain control of the Fund. The Board of Trustees
is divided into three classes of approximately equal size. The terms of the
Trustees of the different classes are staggered so that approximately one third
of the Board of Trustees is elected by shareholders each year. A Trustee may be
removed from office with or without cause by a vote of at least a majority of
the then Trustees if such removal is approved by the holders of at least 75% of
the shares entitled to be voted on the matter.

In addition, the Agreement and Declaration of Trust requires the favorable
vote of the holders of at least 75% of the shares entitled to vote on the matter
for the Trust to merge or consolidate with any other corporation, association,
trust or other organization or to sell, lease or exchange all or substantially
all of the Fund's assets; unless such action has been approved, adopted or
authorized by the affirmative vote of at least 75% of the Trustees then in
office, in which case the affirmative vote of a majority of the shares entitled
to vote on the matter is required.

In addition, conversion of the Fund to an open-end investment company would
require an amendment to the Fund's Agreement and Declaration of Trust. Such an
amendment would require the favorable vote of a majority of the then Trustees
followed by a favorable vote of the holders of at least 75% of the shares
entitled to vote on the matter, voting as separate classes or series (or a
majority of such shares if the amendment was previously approved by 75% of the
Trustees). Such a vote also would satisfy a separate requirement in the 1940 Act
that the change be approved by the shareholders. Shareholders of an open-end
investment company may require the company to redeem their shares of common
stock at any time (except in certain circumstances as authorized by or under the
1940 Act) at their net asset value, less such redemption charge, if any, as
might be in effect at the time of a redemption. All redemptions will be made in
cash. If the Fund is converted to an open-end investment company, it could be
required to liquidate portfolio securities to meet requests for redemption, and
the common shares would no longer be listed on the New York Stock Exchange.
Conversion to an open-end investment company would also require changes in
certain of the Fund's investment policies and restrictions, such as those
relating to the purchase of illiquid securities.

In addition, the Agreement and Declaration of Trust requires the
affirmative vote of consent of a majority of the then Trustees followed by the
affirmative vote or consent of the holders of at least 75% of the shares of each
affected class or series of the Fund, voting separately as a class or series, to
approve, adopt or authorize certain transactions with 5% or greater holders of a
class or series of shares and their associates, unless the transaction has been
approved by at least 75% of the Trustees, in which case "a majority of the
outstanding voting securities" (as defined in the 1940 Act) entitled to vote
shall be required. For purposes of these provisions, a 5% or greater holder of a
class or series of shares (a "Principal Shareholder") refers to any person who,
whether directly or indirectly and whether alone or together with its affiliates
and associates, beneficially owns 5% or more of the outstanding shares of any
class or series of shares of beneficial interest of the Fund. The 5% holder
transactions subject to these special approval requirements are:

- the merger or consolidation of the Fund or any subsidiary of the Fund
with or into any Principal Shareholder;

- the issuance of any securities of the Fund to any Principal Shareholder
for cash;

- the sale, lease or exchange to the Fund or any subsidiary of the Fund in
exchange for securities of the Fund, of any assets of any Principal
Shareholder, except assets having an aggregate fair market value of less
than $1,000,000, aggregating for the purpose of such computation all
assets sold, leased or exchanged in any series of similar transactions
within a 12-month period; or

- the sale, lease or exchange to the Fund or any subsidiary of the Fund, in
exchange for securities of the Fund, of any assets of any Principal
Shareholder, except assets having an aggregate fair market value of less
than $1,000,000, aggregating for purposes of such computation all assets
sold, leased or exchanged in any series of similar transactions within a
12-month period.

The Fund may be terminated by the affirmative vote of not less than
three-quarters of the Trustees then in office by written notice to the
shareholders.

The Agreement and Declaration of Trust and By-laws provide that the Board
of Trustees has the power, to the exclusion of shareholders, to make, alter or
repeal any of the By-laws (except for any by-law specified not to be amended or
repealed by the Board), subject to the requirements of the 1940 Act. Neither
this provision of the Agreement and Declaration of Trust, nor any of the
foregoing provisions thereof requiring the affirmative vote of 75% of
outstanding shares of the Fund, can be amended or repealed except by the vote of
such required number of shares.

The Fund's By-laws generally require that advance notice be given to the
Fund in the event a shareholder desires to nominate a person for election to the
Board of Trustees or to transact any other business at an annual meeting of
shareholders. With respect to an annual meeting following the first annual
meeting of shareholders, notice of any such nomination or business must be
delivered to or received at the principal executive offices of the Fund not less
than 90 calendar days nor more than 120 calendar days prior to the anniversary
date of the prior year's annual meeting (subject to certain exceptions). In the
case of the first annual meeting of shareholders, the notice must be given no
later than the tenth calendar day following public disclosure as specified in
the By-laws of the date of the meeting. Any notice by a shareholder must be
accompanied by certain information as provided in the By-laws.

UNDERWRITING

Subject to the terms and conditions of a purchase agreement dated
, 2002, each underwriter named below has severally agreed to purchase,
and the Fund has agreed to sell to such underwriter, the number of common shares
set forth opposite the name of such underwriter.

NUMBER OF
UNDERWRITER COMMON SHARES
----------- -------------

.............................................................
--------
Total..........................................
========

The purchase agreement provides that the obligations of the underwriters to
purchase the shares included in this offering are subject to the approval of
certain legal matters by counsel and to certain other conditions. The
underwriters are obligated to purchase all the common shares sold under the
purchase agreement if any of the common shares are purchased. In the purchase
agreement, the Fund and Calamos have agreed to indemnify the underwriters
against certain liabilities, including liabilities arising under the Securities
Act of 1933, or to contribute payments the underwriters may be required to make
for any of those liabilities.

The underwriters propose to initially offer some of the common shares
directly to the public at the public offering price set forth on the cover page
of this prospectus and some of the common shares to certain dealers at the
public offering price less a concession not in excess of $ .
per share. The underwriters may allow, and the dealers may reallow, a discount
not in excess of $ . per share on sales to other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.

The following table shows the public offering price, sales load and
proceeds before expenses to the Fund. The information assumes either no exercise
or full exercise by the underwriters of their over-allotment option.

PER SHARE WITHOUT OPTION WITH OPTION
--------- -------------- -----------

Public offering price............................ $ 15.00 $ $
Sales load....................................... $ .675 $ $
Proceeds, before expenses, to the Fund........... $14.325 $ $

The expenses of the offering are estimated at $ and are payable by
the Fund. The Fund has agreed to pay the underwriters $0.005 per common share as
a partial reimbursement of expenses incurred in connection with the offering.
Calamos has agreed to pay organizational expenses and offering costs of the Fund
(other than sales load) that exceed $0.03 per share.

The Fund has granted the underwriters an option to purchase up to
additional common shares at the public offering price, less the sales
load, within 45 days from the date of this prospectus solely to cover any
over-allotments. If the underwriters exercise this option, each will be
obligated, subject to conditions contained in the purchase agreement, to
purchase a number of additional shares proportionate to that underwriter's
initial amount reflected in the above table.

In connection with the requirements for listing the Fund's common shares on
the New York Stock Exchange, the underwriters have undertaken to sell lots of
100 or more common shares to a minimum of 2,000 beneficial owners in the United
States. The minimum investment requirement is 100 common shares.

Until the distribution of the common shares is complete, Securities and
Exchange Commission ("SEC") rules may limit underwriters and selling group
members from bidding for and purchasing the Fund's common shares. However, the
representatives may engage in transactions that stabilize the price of common
shares, such as bids or purchases to peg, fix or maintain that price.

If the underwriters create a short position in the Fund's common shares in
connection with the offering, i.e., if they sell more common shares than are
listed on the cover of this prospectus, the representatives may reduce that
short position by purchasing common shares in the open market. The
representatives may also elect to reduce any short position by exercising all or
part of the over-allotment option described above. Purchases of common shares to
stabilize its price or to reduce a short position may cause the price of the
Fund's common shares to be higher than it might be in the absence of such
purchases.

The purchase agreement provides that it may be terminated .

Neither the Fund nor any of the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transaction
described above may have on the price of common shares. In addition, neither the
Fund nor any of the underwriters make any representation that the
representatives will engage in these transactions or that these transactions,
once commenced, will not be discontinued without notice.

The Fund has agreed not to offer or sell any additional common shares for a
period of 180 days after the date of the purchase agreement without the prior
written consent of the underwriters, except for the sale of common shares to the
underwriters pursuant to the purchase agreement.

The Fund anticipates that the underwriters may from time to time act as
brokers or dealers in executing the Fund's portfolio transactions after they
have ceased to be underwriters. The underwriters are active underwriters of, and
dealers in, securities and act as market makers in a number of such securities
and, therefore, can be expected to engage in portfolio transactions with the
Fund.

The principal business address of is .

CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR

The Fund's securities and cash are held under a custodian agreement with
, [address]. The transfer agent, dividend disbursing agent and
registrar for the Fund's shares is , [address].

LEGAL OPINIONS

Bell, Boyd & Lloyd, LLC, Chicago, Illinois, serves as counsel to the Fund
and to the non-interested Trustees. Vedder, Price, Kaufman & Kammholz ("Vedder
Price"), Chicago, Illinois, which is serving as special counsel to the Fund in
connection with the offering, will pass on the legality of the shares offered
hereby. Vedder Price is also counsel to Calamos. Vedder Price may rely on
matters of Delaware law on the opinion of . Certain matters will be
passed upon for the underwriters by Clifford Chance Rogers & Wells LLP, New
York, New York. Clifford Chance Rogers & Wells LLP may rely on matters of
Delaware law on the opinion of .

TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION

Use of Proceeds............................................. S-1
Investment Objective and Policies........................... S-1
Investment Restrictions..................................... S-18
Management of the Fund...................................... S-19
Portfolio Transactions...................................... S-25
Repurchase of Common Shares................................. S-26
U.S. Federal Income Tax Matters............................. S-27
Experts..................................................... S-33
Additional Information...................................... S-33
Financial Statement and Independent Auditors' Report........ S-33
Appendix A -- Description of Ratings........................ A-1

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

4,000,000 SHARES

CALAMOS CONVERTIBLE OPPORTUNITIES AND INCOME FUND

COMMON SHARES OF BENEFICIAL INTEREST

-----------------------
PROSPECTUS
-----------------------

, 2002

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

The information in this Statement of Additional Information is not complete and
may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
Statement of Additional Information is not an offer to sell these securities
and is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED ___________________ __, 2002

CALAMOS CONVERTIBLE OPPORTUNITIES AND INCOME FUND

STATEMENT OF ADDITIONAL INFORMATION

Calamos Convertible Opportunities and Income Fund (the "Fund") is a
newly organized, diversified, closed-end management investment company. This
Statement of Additional Information relating to common shares does not
constitute a prospectus, but should be read in conjunction with the Prospectus
relating thereto dated _______________ __, 2002. This Statement of Additional
Information does not include all information that a prospective investor should
consider before purchasing common shares, and investors should obtain and read
the Prospectus prior to purchasing such shares. A copy of the Prospectus may be
obtained without charge by calling 1-800-____-______. You may also obtain a copy
of the Prospectus on the Securities and Exchange Commission's web site
(http://www.sec.gov).

TABLE OF CONTENTS

Use of Proceeds................................................................................................S-1
Investment Objective and Policies..............................................................................S-1
Investment Restrictions.......................................................................................S-18
Management of the Fund........................................................................................S-19
Portfolio Transactions........................................................................................S-25
Repurchase of Common Shares...................................................................................S-26
U.S. Federal Income Tax Matters...............................................................................S-27
Experts .....................................................................................................S-33
Additional Information........................................................................................S-33
Financial Statement and Independent Auditors' Report..........................................................S-33
Appendix A-- Description of Ratings............................................................................A-1

This Statement of Additional Information is dated _____________ __, 2002.

USE OF PROCEEDS

The Fund will invest the net proceeds of the offering in accordance
with the Fund's investment objective and policies as stated below. It is
presently anticipated that the Fund will be able to invest substantially all of
the net proceeds in securities that meet the investment objective and policies
within three months after completion of the offering. Pending such investment,
the net proceeds may be invested in U.S. government securities high grade,
short-term money market instruments. If necessary, the Fund may also purchase,
as temporary investments, securities of other open- or closed-end investment
companies that invest primarily the types of securities in which the Fund may
invest directly.

INVESTMENT OBJECTIVE AND POLICIES

The prospectus presents the investment objective and the principal
investment strategies and risks of the Fund. This section supplements the
disclosure in the Fund's prospectus and provides additional information on the
Fund's investment policies or restrictions. Restrictions or policies stated as a
maximum percentage of the Fund's assets are only applied immediately after a
portfolio investment to which the policy or restriction is applicable (other
than the limitations on borrowing). Accordingly, any later increase or decrease
resulting from a change in values, net assets or other circumstances will not be
considered in determining whether the investment complies with the Fund's
restrictions and policies.

PRIMARY INVESTMENTS

Under normal circumstances, the Fund will invest at least 80% of its
managed assets in a diversified portfolio of convertible securities and
non-convertible income securities. The Fund will provide written notice to
shareholders at least 60 days prior to any change to the requirement that it
invest at least 80% of its managed assets as described in the sentence above.
The portion of the Fund's assets invested in convertible securities and
non-convertible income securities will vary from time to time in light of the
Fund's investment objective, changes in equity prices and changes in interest
rates and other economic and market factors, although, under normal
circumstances, the Fund will invest at least 50% of its managed assets in
convertible securities. "Managed assets" means the total assets of the Fund
(including any assets attributable to any leverage that may be outstanding)
minus the sum of accrued liabilities (other than debt representing financial
leverage). For this purpose, the liquidation preference on the preferred shares
will not constitute a liability.

CONVERTIBLE SECURITIES

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. 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.

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 typically will 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

S-1

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.

SYNTHETIC CONVERTIBLE SECURITIES

Calamos may create a "synthetic" convertible security by combining
fixed income securities with the right to acquire equity securities. 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 Calamos
believes that such a combination would better promote the 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, the 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 purchased to create the synthetic convertible security. 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. Because 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.

The Fund may also purchase synthetic convertible securities
manufactured by other parties, including convertible structured notes.
Convertible structured notes are fixed income debentures linked to equity, and
are typically issued by investment banks. Convertible structured notes have the
attributes of a convertible security, however, the investment bank that issued
the convertible note assumes the credit risk associated with the investment,
rather than the issuer of the underlying common stock into which the note is
convertible.

The Fund's holdings of synthetic convertible securities are considered
convertible securities for purposes of the Fund's policy to invest at least 50%
of its assets in convertible securities and 80% of its managed assets in a
diversified portfolio of convertible and non-convertible income securities.

HIGH YIELD SECURITIES

A substantial portion of the Fund's assets may be invested in below
investment grade (high yield, high risk) securities. The high yield securities
in which the Fund invests are rated Ba or lower by Moody's or BB or lower by
Standard & Poor's or are unrated but determined by Calamos to be of comparable
quality. Debt securities rated below investment grade are commonly referred to
as "junk bonds" and are considered speculative with respect to the issuer's
capacity to pay interest and repay principal.

S-2

INVESTMENT IN HIGH YIELD SECURITIES INVOLVES SUBSTANTIAL RISK OF LOSS.
Below investment grade debt securities or comparable unrated securities are
commonly referred to as "junk bonds" and are considered predominantly
speculative with respect to the issuer's ability to pay interest and principal
and are susceptible to default or decline in market value due to adverse
economic and business developments. The market values for high yield securities
tend to be very volatile, and these securities are less liquid than investment
grade debt securities. For these reasons, your investment in the Fund is subject
to the following specific risks:

- increased price sensitivity to changing interest rates and to a
deteriorating economic environment;

- greater risk of loss due to default or declining credit quality;

- adverse company specific events are more likely to render the issuer
unable to make interest and/or principal payments; and

- if a negative perception of the high yield market develops, the
price and liquidity of high yield securities may be depressed. This
negative perception could last for a significant period of time.

Debt securities rated below investment grade are speculative with
respect to the capacity to pay interest and repay principal in accordance with
the terms of such securities. A rating of C from Moody's means that the issue so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing. Standard & Poor's assigns a rating of C to issues that
are currently highly vulnerable to nonpayment, and the C rating may be used to
cover a situation where a bankruptcy petition has been filed or similar action
taken, but payments on the obligation are being continued (a C rating is also
assigned to a preferred stock issue in arrears on dividends or sinking fund
payments, but that is currently paying). See Appendix A to this statement of
additional information for a description of Moody's and Standard & Poor's
ratings.

Adverse changes in economic conditions are more likely to lead to a
weakened capacity of a high yield issuer to make principal payments and interest
payments than an investment grade issuer. The principal amount of high yield
securities outstanding has proliferated in the past decade as an increasing
number of issuers have used high yield securities for corporate financing. An
economic downturn could severely affect the ability of highly leveraged issuers
to service their debt obligations or to repay their obligations upon maturity.
The percentage of defaults on high yield debt securities as reported by Moody's
were 5.5% and 5.7% in 1999 and 2000, and it increased to 10.2% in 2001. If the
national economy enters into a deeper recessionary phase during 2002 or interest
rates rise sharply, the number of defaults by high yield issuers is likely to
increase. Similarly, down-turns in profitability in specific industries could
adversely affect the ability of high yield issuers in that industry to meet
their obligations. The market values of lower quality debt securities tend to
reflect individual developments of the issuer to a greater extent that do higher
quality securities, which react primarily to fluctuations in the general level
of interest rates. Factors having an adverse impact on the market value of lower
quality securities may have an adverse effect on the Fund's net asset value and
the market value of its common shares. In addition, the Fund may incur
additional expenses to the extent it is required to seek recovery upon a default
in payment of principal or interest on its portfolio holdings. In certain
circumstances, the Fund may be required to foreclose on an issuer's assets and
take possession of its property or operations. In such circumstances, the Fund
would incur additional costs in disposing of such assets and potential
liabilities from operating any business acquired.

S-3

a particular security when necessary to meet its liquidity needs. There are
fewer dealers in the market for high yield securities than investment grade
obligations. The prices quoted by different dealers may vary significantly and
the spread between the bid and asked price is generally much larger than higher
quality instruments. Under adverse market or economic conditions, the secondary
market for high yield securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer, and these
instruments may become illiquid. As a result, the Fund could find it more
difficult to sell these securities or may be able to sell the securities only at
prices lower than if such securities were widely traded. Prices realized upon
the sale of such lower rated or unrated securities, under these circumstances,
may be less than the prices used in calculating the Fund's net asset value.

Since investors generally perceive that there are greater risks
associated with lower quality debt securities of the type in which the Fund may
invest a portion of its assets, the yields and prices of such securities may
tend to fluctuate more than those for higher rated securities. In the lower
quality segments of the debt securities market, changes in perceptions of
issuers' creditworthiness tend to occur more frequently and in a more pronounced
manner than do changes in higher quality segments of the debt securities market,
resulting in greater yield and price volatility.

If the Fund invests in high yield securities that are rated C or below,
the Fund will incur significant risk in addition to the risks associated with
investments in high yield securities and corporate loans. Distressed securities
frequently do not produce income while they are outstanding. The Fund may
purchase distressed securities that are in default or the issuers of which are
in bankruptcy. The Fund may be required to bear certain extraordinary expenses
in order to protect and recover its investment.

DISTRESSED SECURITIES

The Fund may invest up to 5% of its total assets in distressed
securities, including corporate loans, which are the subject of bankruptcy
proceedings or otherwise in default as to the repayment of principal and/or
payment of interest at the time of acquisition by the Fund or are rated in the
lower rating categories (Ca or lower by Moody's or CC or lower by Standard &
Poor's) or which are unrated investments considered by Calamos to be of
comparable quality. Investment in distressed securities is speculative and
involves significant risk. Distressed securities frequently do not produce
income while they are outstanding and may require the Fund to bear certain
extraordinary expenses in order to protect and recover its investment.
Therefore, to the extent the Fund seeks capital appreciation through investment
in distressed securities, the Fund's ability to achieve current income for its
shareholders may be diminished. The Fund also will be subject to significant
uncertainty as to when and in what manner and for what value the obligations
evidenced by the distressed securities will eventually be satisfied (e.g.,
through a liquidation of the obligor's assets, an exchange offer or plan of
reorganization involving the distressed securities or a payment of some amount
in satisfaction of the obligation). In addition, even if an exchange offer is
made or a plan of reorganization is adopted with respect to distressed
securities held by the Fund, there can be no assurance that the securities or
other assets received by the Fund in connection with such exchange offer or plan
of reorganization will not have a lower value or income potential than may have
been anticipated when the investment was made. Moreover, any securities received
by the Fund upon completion of an exchange offer or plan of reorganization may
be restricted as to resale. As a result of the Fund's participation in
negotiations with respect to any exchange offer or plan of reorganization with
respect to an issuer of distressed securities, the Fund may be restricted from
disposing of such securities.

LOANS

The Fund may invest up to 5% of its total assets in loan participations
and other direct claims against a borrower. The corporate loans in which the
Fund invests primarily consist of direct obligations of a borrower and may
include debtor in possession financings pursuant to Chapter 11 of the U.S.

S-4

Bankruptcy Code, obligations of a borrower issued in connection with a
restructuring pursuant to Chapter 11 of the U.S. Bankruptcy Code, leveraged
buy-out loans, leveraged recapitalization loans, receivables purchase
facilities, and privately placed notes. The Fund may invest in a corporate loan
at origination as a co-lender or by acquiring in the secondary market
participations in, assignments of or novations of a corporate loan. By
purchasing a participation, the Fund acquires some or all of the interest of a
bank or other lending institution in a loan to a corporate or government
borrower. The participations typically will result in the Fund having a
contractual relationship only with the lender not the borrower. The Fund will
have the right to receive payments of principal, interest and any fees to which
it is entitled only from the lender selling the participation and only upon
receipt by the lender of the payments from the borrower. Many such loans are
secured, although some may be unsecured. Such loans may be in default at the
time of purchase. Loans that are fully secured offer the Fund more protection
than an unsecured loan in the event of non-payment of scheduled interest or
principal. However, there is no assurance that the liquidation of collateral
from a secured loan would satisfy the corporate borrower's obligation, or that
the collateral can be liquidated. Direct debt instruments may involve a risk of
loss in case of default or insolvency of the borrower and may offer less legal
protection to the Fund in the event of fraud or misrepresentation. In addition,
loan participations involve a risk of insolvency of the lending bank or other
financial intermediary. The markets in loans are not regulated by federal
securities laws or the Securities and Exchange Commission (SEC).

As in the case of other high yield investments, such corporate loans
may be rated in the lower rating categories of the established rating services
(Ba or lower by Moody's or BB or lower by Standard & Poor's), or may be unrated
investments considered by Calamos to be of comparable quality. As in the case of
other high yield investments, such corporate loans can be expected to provide
higher yields than lower yielding, higher rated fixed income securities, but may
be subject to greater risk of loss of principal and income. There are, however,
some significant differences between corporate loans and high yield bonds.
Corporate loan obligations are frequently secured by pledges of liens and
security interests in the assets of the borrower, and the holders of corporate
loans are frequently the beneficiaries of debt service subordination provisions
imposed on the borrower's bondholders. These arrangements are designed to give
corporate loan investors preferential treatment over high yield investors in the
event of a deterioration in the credit quality of the issuer. Even when these
arrangements exist, however, there can be no assurance that the borrowers of the
corporate loans will repay principal and/or pay interest in full. Corporate
loans generally bear interest at rates set at a margin above a generally
recognized base lending rate that may fluctuate on a day-to-day basis, in the
case of the prime rate of a U.S. bank, or which may be adjusted on set dates,
typically 30 days but generally not more than one year, in the case of the
London Interbank Offered Rate. Consequently, the value of corporate loans held
by the Fund may be expected to fluctuate significantly less than the value of
other fixed rate high yield instruments as a result of changes in the interest
rate environment. On the other hand, the secondary dealer market for certain
corporate loans may not be as well developed as the secondary dealer market for
high yield bonds, and therefore presents increased market risk relating to
liquidity and pricing concerns.

FOREIGN SECURITIES

The 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

S-5

for the U.S. securities markets and EDRs and GDRs, in bearer form, are designed
for use in foreign securities markets. The Fund may invest in sponsored or
unsponsored ADRs. In the case of an unsponsored ADR, the Fund is likely to bear
its proportionate share of the expenses of the depository and it may have
greater difficulty in receiving shareholder communications than it would have
with a sponsored ADR.

To the extent positions in portfolio securities are denominated in
foreign currencies, the 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 Fund intends to invest in companies and government
securities 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.

The Fund expects that substantially all of its investments will be in
developed nations. However, the Fund may invest in the securities of emerging
countries. The securities markets of emerging countries are substantially
smaller, less developed, less liquid and more volatile than the securities
markets of the U.S. 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.

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

S-6

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 the Fund accruing in connection with the
purchase and sale of its portfolio securities or the receipt of dividends or
interest thereon. Portfolio hedging is the use of forward contracts with respect
to portfolio security positions denominated or quoted in a particular foreign
currency. Portfolio hedging allows the Fund to limit or reduce its exposure in a
foreign currency by entering into a forward contract to sell such foreign
currency (or another foreign currency that acts as a proxy for that currency) at
a future date for a price payable in U.S. dollars so that the value of the
foreign denominated portfolio securities can be approximately matched by a
foreign denominated liability. The Fund may not engage in portfolio hedging with
respect to the currency of a particular country to an extent greater than the
aggregate market value (at the time of making such sale) of the securities held
in its portfolio denominated or quoted in that particular currency, except that
the Fund may hedge all or part of its foreign currency exposure through the use
of a basket of currencies or a proxy currency where such currencies or currency
act as an effective proxy for other currencies. In such a case, the Fund may
enter into a forward contract where the amount of the foreign currency to be
sold exceeds the value of the securities denominated in such currency. The use
of this basket hedging technique may be more efficient and economical than
entering into separate forward contracts for each currency held in the Fund. The
Fund may not engage in "speculative" currency exchange transactions.

If the 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 the 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.

S-7

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
the 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. Because currency exchange transactions are usually conducted
on a principal basis, no fees or commissions are involved.

SYNTHETIC FOREIGN MONEY MARKET POSITIONS

The Fund may invest in money market instruments denominated in foreign
currencies. In addition to, or in lieu of, such direct investment, the 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.

DEBT OBLIGATIONS OF NON-U.S. GOVERNMENTS

An investment in debt obligations of non-U.S. governments and their
political subdivisions (sovereign debt) involves special risks that are not
present in corporate debt obligations. The non-U.S. issuer of the sovereign debt
or the non-U.S. governmental authorities that control the repayment of the debt
may be unable or unwilling to repay principal or interest when due, and the Fund
may have limited recourse in the event of a default. During periods of economic
uncertainty, the market prices of sovereign debt may be more volatile than
prices of debt obligations of U.S. issuers. In the past, certain non-U.S.
countries have encountered difficulties in servicing their debt obligations,
withheld payments of principal and interest and declared moratoria on the
payment of principal and interest on their sovereign debt.

A sovereign debtor's willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its cash
flow situation, the extent of its foreign currency reserves, the availability of
sufficient non-U.S. currency, the relative size of the debt service burden, the
sovereign debtor's policy toward its principal international lenders and local
political constraints. Sovereign debtors may also be dependent on expected
disbursements from non-U.S. governments, multilateral agencies and other
entities to reduce principal and interest arrearages on their debt. The failure
of a sovereign debtor to implement economic reforms, achieve specified levels of
economic performance or repay principal or interest when due may result in the
cancellation of third-party commitments to lend funds to the sovereign debtor,
which may further impair such debtor's ability or willingness to service its
debts.

EURODOLLAR INSTRUMENTS AND SAMURAI AND YANKEE BONDS. The Fund may
invest in Eurodollar instruments and Samurai and Yankee bonds. Eurodollar
instruments are bonds of corporate and government issuers that pay interest and
principal in U.S. dollars but are issued in markets outside the

S-8

United States, primarily in Europe. Samurai bonds are yen-denominated bonds sold
in Japan by non-Japanese issuers. Yankee bonds are U.S. dollar-denominated bonds
typically issued in the U.S. by non-U.S. governments and their agencies and
non-U.S. banks and corporations. The Fund may also invest in Eurodollar
Certificates of Deposit ("ECDs"), Eurodollar Time Deposits ("ETDs") and Yankee
Certificates of Deposit ("Yankee CDs"). ECDs are U.S. dollar-denominated
certificates of deposit issued by non-U.S. branches of domestic banks; ETDs are
U.S. dollar-denominated deposits in a non-U.S. branch of a U.S. bank or in a
non-U.S. bank; and Yankee CDs are U.S. dollar-denominated certificates of
deposit issued by a U.S. branch of a non-U.S. bank and held in the U.S. These
investments involve risks that are different from investments in securities
issued by U.S. issuers, including potential unfavorable political and economic
developments, non-U.S. withholding or other taxes, seizure of non-U.S. deposits,
currency controls, interest limitations or other governmental restrictions which
might affect payment of principal or interest.

LENDING OF PORTFOLIO SECURITIES

The 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 may pay
reasonable fees to persons unaffiliated with the Fund for services in arranging
these loans. 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
Calamos'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.

OPTIONS ON SECURITIES, INDEXES AND CURRENCIES

The 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 the Nasdaq National Market System. The 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.)

The 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

S-9

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 the Fund expires, the Fund realizes a capital
gain equal to the premium received at the time the option was written. If an
option purchased by the Fund expires, the Fund realizes a capital loss equal to
the premium paid.

Prior to the earlier of exercise or expiration, an option may be closed
out by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price and expiration). There
can be no assurance, however, that a closing purchase or sale transaction can be
effected when the Fund desires.

The 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 the 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 the 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 the
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.

S-10

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

The 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 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.

The 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.

The 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 investment
manager 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 investment manager 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 the 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
the 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

----------
(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.

S-11

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 is less, the Fund realizes a capital loss. The transaction costs must also
be included in these calculations.

RISKS ASSOCIATED WITH FUTURES

There are several risks associated with the use of futures contracts
and futures options. A purchase or sale of a futures contract may result in
losses in excess of the amount invested in the futures contract. In trying to
increase or reduce market exposure, there can be no guarantee that there will be
a correlation between price movements in the futures contract and in the
portfolio exposure sought. In addition, there are significant differences
between the securities and futures markets that could result in an imperfect
correlation between the markets, causing a given transaction not to achieve its
objectives. The degree of imperfection of correlation depends on circumstances
such as: variations in speculative market demand for futures, futures options
and the related securities, including technical influences in futures and
futures options trading and differences between the securities markets and the
securities underlying the standard contracts available for trading. For example,
in the case of index futures contracts, the composition of the index, including
the issuers and the weighing of each issue, may differ from the composition of
the Fund's portfolio, and, in the case of interest rate futures contracts, the
interest rate levels, maturities and creditworthiness of the issues underlying
the futures contract may differ from the financial instruments held in the
Fund's portfolio. A decision as to whether, when and how to use futures
contracts involves the exercise of skill and judgment, and even a well-conceived
transaction may be unsuccessful to some degree because of market behavior or
unexpected stock price or interest rate trends.

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 the 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

S-12

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, the Fund may also use
those investment vehicles, provided the Board of Trustees determines that their
use is consistent with the Fund's investment objective.

When purchasing a futures contract or writing a put option on a futures
contract, the Fund must maintain with its custodian (or broker, if legally
permitted) cash or cash equivalents (including any margin) equal to the market
value of such contract. When writing a call option on a futures contract, the
Fund similarly will maintain with its custodian cash or cash equivalents
(including any margin) equal to the amount by which such option is in-the-money
until the option expires or is closed by the Fund.

The 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%.

WARRANTS

Each Fund may invest in warrants. 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 be greater than
the percentage increase or decrease in the value of the underlying common stock.

PORTFOLIO TURNOVER

Although the Fund does 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

S-13

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.

SHORT SALES

The 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. The Fund may make short sales of
securities only if at all times when a short position is open the Fund owns an
equal amount of such securities or securities convertible into or exchangeable
for, without payment of any further consideration, securities of the same issue
as, and equal in amount to, the securities sold short.

In addition to selling short against the box, the 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. The Fund
would use this technique 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, the 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 adjust daily 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.

[The 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.]

S-14

Short sales may protect the 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 the 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 the 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. The Fund will also incur transaction costs in connection with short
sales. Certain provisions of the Internal Revenue Code (and related Treasury
Regulations thereunder) may limit the degree to which the Fund is able to enter
into short sales and other transactions with similar effects without triggering
adverse tax consequences, which limitations might impair the Fund's ability to
achieve its investment objective. See "U.S. Federal Income Tax Matters."

In addition to enabling the Fund to hedge against market risk, short
sales may afford the 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.

"WHEN-ISSUED" AND DELAYED DELIVERY SECURITIES AND REVERSE REPURCHASE AGREEMENTS

The 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 Calamos 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.

The 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 the 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.

S-15

ILLIQUID SECURITIES

The Fund may invest without limitation in securities that have not been
registered for public sale, but that are eligible for purchase and sale by
certain qualified institutional buyers. Although many of the Rule 144A
Securities in which the Fund invests may be, in the view of Calamos, liquid if
qualified institutional buyers are unwilling to purchase these Rule 144A
Securities, they may be illiquid. The Fund may invest without limit in illiquid
securities. Illiquid securities may be difficult to dispose of at a fair price
at the times when the Fund believes its is desirable to do so. The market price
of illiquid securities generally is more volatile than that of more liquid
securities, which may adversely affect the price that the Fund pays for or
recovers upon the sale of illiquid securities. Illiquid securities are also more
difficult to value and Calamos's judgment may play a greater role in the
valuation process. Investment of the Fund's assets in illiquid securities may
restrict the Fund's ability to take advantage of market opportunities. The risks
associated with illiquid securities may be particularly acute in situations in
which the Fund's operations require cash and could result in the Fund borrowing
to meet its short-term needs or incurring losses on the sale of illiquid
securities.

The Fund may invest without limit in bonds, corporate loans,
convertible securities, preferred stocks and other securities that lack a
secondary trading market or are otherwise considered illiquid. Liquidity of a
security relates to the ability to easily dispose of the security and the price
to be obtained upon disposition of the security, which may be less than would be
obtained for a comparable more liquid security. Such investments may affect the
Fund's ability to realize the net asset value in the event of a voluntary or
involuntary liquidation of its assets.

TEMPORARY INVESTMENTS

The Fund may make temporary investments without limitation when Calamos
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
that 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.

REPURCHASE AGREEMENTS

As part of its strategy for the temporary investment of cash, the 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 the 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 the Fund to earn interest on assets awaiting long
term investment. The Fund requires 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.

S-16

PREFERRED SHARES

The Fund may invest in preferred shares. The preferred shares that the
Fund will invest in will typically be convertible securities. Preferred shares
are equity securities, but they have many characteristics of fixed income
securities, such as a fixed dividend payment rate and/or a liquidity preference
over the issuer's common shares.

REAL ESTATE INVESTMENT FUNDS ("REITS") AND ASSOCIATED RISK FACTORS

REITs are pooled investment vehicles which invest primarily in income
producing real estate or real estate related loans or interests. REITs are
generally classified as equity REITs, mortgage REITs or a combination of equity
and mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling properties that have appreciated
in value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive income from the collection of interest payments. REITs are
not taxed on income distributed to shareholders provided they comply with the
applicable requirements of the Internal Revenue Code of 1986, as amended (the
"Code"). The Fund will indirectly bear its proportionate share of any management
and other expenses paid by REITs in which it invests in addition to the expenses
paid by the Fund. Debt securities issued by REITs are, for the most part,
general and unsecured obligations and are subject to risks associated with
REITs.

Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. An
equity REIT may be affected by changes in the value of the underlying properties
owned by the REIT. A mortgage REIT may be affected by changes in interest rates
and the ability of the issuers of its portfolio mortgages to repay their
obligations. REITs are dependent upon the skills of their managers and are not
diversified. REITs are generally dependent upon maintaining cash flows to repay
borrowings and to make distributions to shareholders and are subject to the risk
of default by lessees or borrowers. REITs whose underlying assets are
concentrated in properties used by a particular industry, such as health care,
are also subject to risks associated with such industry.

REITs (especially mortgage REITs) are also subject to interest rate
risks. When interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates rise,
the value of a REIT's investment in fixed rate obligations can be expected to
decline. If the REIT invests in adjustable rate mortgage loans the interest
rates on which are reset periodically, yields on a REIT's investments in such
loans will gradually align themselves to reflect changes in market interest
rates. This causes the value of such investments to fluctuate less dramatically
in response to interest rate fluctuations than would investments in fixed rate
obligations.

REITs may have limited financial resources, may trade less frequently
and in a limited volume and may be subject to more abrupt or erratic price
movements than larger company securities. Historically REITs have been more
volatile in price than the larger capitalization stocks included in Standard &
Poor's 500 Stock Index.

OTHER INVESTMENT COMPANIES

The Fund may invest in the securities of other investment companies to
the extent that such investments are consistent with the Fund's investment
objective and policies and permissible under the Investment Company Act of 1940,
as amended (the "1940 Act"). Under the 1940 Act, the Fund may not acquire the
securities of other domestic or non-U.S. investment companies if, as a result,
(i) more than 10% of the Fund's total assets would be invested in securities of
other investment companies, (ii) such purchase would result in more than 3% of
the total outstanding voting securities of any one investment company being held
by the Fund, or (iii) more than 5% of the Fund's total assets would be invested
in any

S-17

one investment company. These limitations do not apply to the purchase of shares
of any investment company in connection with a merger, consolidation,
reorganization or acquisition of substantially all the assets of another
investment company.

The Fund, as a holder of the securities of other investment companies,
will bear its pro rata portion of the other investment companies' expenses,
including advisory fees. These expenses are in addition to the direct expenses
of the Fund's own operations.

INVESTMENT RESTRICTIONS

The following are the Fund's fundamental investment restrictions. These
restrictions may not be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities (which for this purpose and
under the 1940 Act means the lesser of (i) 67% of the common shares represented
at a meeting at which more than 50% of the outstanding common shares are
represented or (ii) more than 50% of the outstanding common shares). If the Fund
were to issue a class of preferred shares, the investment restrictions could not
be changed without the approval of a majority of the outstanding common and
preferred shares, voting together as a class, and the approval of a majority of
the outstanding preferred shares, voting separately by class.

The Fund may not:

(1) Issue senior securities, except as permitted by the 1940 Act
and the rules and interpretive positions of the SEC
thereunder.

(2) Borrow money, except as permitted by the 1940 Act and the
rules and interpretive positions of the SEC thereunder.

(3) Invest in real estate, except that the Fund may invest in
securities of issuers that invest in real estate or interests
therein, securities that are secured by real estate or
interests therein, securities of real estate investment funds
and mortgage-backed securities.

(4) Make loans, except by the purchase of debt obligations, by
entering into repurchase agreements or through the lending of
portfolio securities and as otherwise permitted by the 1940
Act and the rules and interpretive positions of the SEC
thereunder.

(5) Invest in physical commodities or contracts relating to
physical commodities.

(6) Act as an underwriter, except as it may be deemed to be an
underwriter in a sale of securities held in its portfolio.

(7) Make any investment inconsistent with the Fund's
classification as a diversified investment company under the
1940 Act and the rules and interpretive positions of the SEC
thereunder.

(8) Concentrate its investments in securities of companies in any
particular industry as defined in the 1940 Act and the rules
and interpretive positions of the SEC thereunder.

All other investment policies of the Fund are considered
non-fundamental and may be changed by the Board of Trustees without prior
approval of the Fund's outstanding voting shares.

Under the 1940 Act, the Fund may invest up to 10% of its total assets
in the aggregate in shares of other investment companies and up to 5% of its
total assets in any one investment company, provided

S-18

the investment does not represent more than 3% of the voting stock of the
acquired investment company at the time such shares are purchased. As a
shareholder in any investment company, the Fund will bear its ratable share of
that investment company's expenses, and would remain subject to payment of the
Fund's advisory fees and other expenses with respect to assets so invested.
Holders of common shares would therefore be subject to duplicative expenses to
the extent the Fund invests in other investment companies. In addition, the
securities of other investment companies may also be leveraged and will
therefore be subject to the same leverage risks described herein and in the
Prospectus. As described in the prospectus in the section entitled "Risks," the
net asset value and market value of leveraged shares will be more volatile and
the yield to shareholders will tend to fluctuate more than the yield generated
by unleveraged shares.

In addition, to comply with federal income tax requirements for
qualification as a "regulated investment company," the Fund's investments will
be limited by both an income and an asset test. See "U.S. Federal Income Tax
Matters."

As a non-fundamental policy, the Fund may not issue preferred shares,
borrow money or issue debt securities in an aggregate amount exceeding 33 1/3%
of the Fund's total assets.

MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS

The Fund's Board of Trustees provides broad supervision over the Fund's
affairs. The officers of the Fund are responsible for the Fund's operations. The
Fund's Trustees and officers are listed below, together with their principal
occupations during the past five years. Asterisks indicates those Trustees who
are interested persons of the Fund within the meaning of the 1940 Act, and they
are referred to as Interested Trustees. Trustees who are not interested persons
of the Fund are referred to as Independent Trustees. Each of the Trustees serves
as a Trustee of each of the __ U.S. registered investment portfolios for which
Calamos serves as investment adviser (the "Calamos Funds"). The address for all
Interested Trustees and all officers of the Fund is 1111 East Warrenville Road,
Naperville, Illinois 60563-1493. The addresses of the "non-interested" Trustees
are as follows [by amendment]:

TERM OF
POSITIONS OFFICE AND
HELD WITH THE LENGTH OF PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
NAME AND AGE FUND SERVICE AND OTHER DIRECTORSHIPS HELD BY THE TRUSTEE
----------------------- ---------------- -------------- --------------------------------------------

INTERESTED TRUSTEES:

*John P. Calamos (61) Trustee and Trustee since President, Calamos; President, Calamos Financial
President _________. Services, Inc. ("CFS"); Trustee and President,
[Term expires Calamos Investment Trust and Calamos Advisors
in ________.] Trust.
INDEPENDENT TRUSTEES:

[BY AMENDMENT]

FUND OFFICERS:

Patrick H. Dudasik (46) Vice President Since Executive Vice President, Chief Financial and
________. Administrative Officer and Treasurer of Calamos,
Serves at the since 2001; Chief Financial Officer, David Gomez
discretion of and Associates, 1998-2001; Chief Financial
the Board. Officer, Scudder Kemper Investments, Inc.,
1994-1998.

S-19

Rhowena Blank (33) Treasurer Since Vice President-Operations, Calamos, since 1999;
________. Director of Operations, Christian Brothers
Serves at the Investment Services, 1998-1999; Audit Manager,
discretion of Ernst & Young, LP, 1994-1998.
the Board.

Jeff Lotito (29) Assistant Since Operations Manager, Calamos, since 2000;
Treasurer ________. Manager-Fund Administration, Van Kampen,
Serves at the 1999-2000; Supervisor-Corporate Accounting,
discretion of Stein Roe and Farnham, 1998-1999;
the Board. Supervisor-Financial Reporting, Scudder Kemper
Investments, Inc., 1996-1998.

James S. Hamman, Jr. Secretary Since Executive Vice President and General Counsel,
(32) ________. Calamos, since 1998; Vice President and
Serves at the Associate Counsel, Scudder Kemper Investments,
discretion of Inc., 1996-1998.
the Board.

------------------

* John P. Calamos is a trustee who is an "interested person" of the Trust as
defined in the Investment Company Act of 1940 (the "1940 Act") because of his
position with Calamos.

The Trustees of the Trust are also Trustees of Calamos Advisors Trust
and Calamos Investment Trust, both open-end investment companies advised by
Calamos.

[The Fund's Board of Trustees consists of __ members. The term of one
class expires each year commencing with the first annual meeting following this
public offering and no term shall continue for more than three years after the
applicable election. The terms of ___________ and __________ expire at the first
annual meeting following this public offering, the terms of __________ and
__________ expire at the second annual meeting, and the terms of __________ and
_____________ expire at the third annual meeting. Subsequently, each class of
Trustees will stand for election at the conclusion of its respective term. Such
classification may prevent replacement of a majority of the Trustees for up to a
two-year period.]

BOARD COMMITTEES

The Board of Trustees has an Executive Committee, which is comprised of
John Calamos and Nick Calamos, an Audit Committee, which is comprised of
________________ and a Governance Committee, which is comprised of ____________.

The Executive Committee has authority during intervals between meetings
of the Board of Trustees to exercise the powers of the Board.

The Audit Committee makes recommendations regarding the selection of
the Fund's independent auditors and meets with representatives of the
independent auditors to determine the scope and review the results of each
audit. The Board of Trustees has adopted a charter for the Audit Committee. In
accordance with its charter, the purposes of the Audit Committee are:
[Amendment]

The Governance Committee reviews the qualifications of any candidate
recommended by the Independent Trustees to serve as an Independent Trustee and
makes a recommendation regarding that person's qualifications. The Committee
does not accept nominations from shareholders.

S-20

The Fund's Agreement and Declaration of Trust provides that the Fund
will indemnify the Trustees and officers against liabilities and expenses
incurred in connection with any litigation in which they may be involved because
of their offices with the Fund, unless it is determined in the manner specified
in the Agreement and Declaration of Trust that they have not acted in good faith
in the reasonable belief that their actions were in the best interests of the
Fund or that such indemnification would relieve any officer or Trustee of any
liability to the Fund or its shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of his or her duties.

COMPENSATION OF OFFICERS AND TRUSTEES

The Fund pays no salaries or compensation to any of its officers. The
Calamos Funds, including the Fund, compensate each Trustee who is not an
"interested person" as follows [amendment]:

The following table sets forth certain information with respect to the
compensation paid to each Trustee by the Fund and the Calamos Funds as a group.
Compensation from the Fund is for the current calendar year and is estimated.
Total compensation from the Calamos Funds as a group is for the calendar year
ended December 31, 2001.

AGGREGATE TOTAL COMPENSATION FROM THE
NAME OF TRUSTEE COMPENSATION FROM FUND FUND AND OTHER CALAMOS FUNDS
---------------------------- ---------------------- ----------------------------

OWNERSHIP OF SHARES OF THE FUND AND OTHER CALAMOS FUNDS

The following table indicates the value of shares that each Trustee
beneficially owns in the Fund and the Calamos Funds in the aggregate. The value
of shares of the Calamos Funds is determined on the basis of the net asset value
of the class of shares held as of December 31, 2001. The value of the shares
held are stated in ranges in accordance with the requirements of the SEC. The
table reflects the Trustee's beneficial ownership of shares of the Calamos
Funds. Beneficial ownership is determined in accordance with the rules of the
SEC.

AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL
DOLLAR RANGE OF EQUITY REGISTERED INVESTMENT
NAME OF TRUSTEE SECURITIES IN THE FUND COMPANIES IN THE CALAMOS FUNDS
---------------------------- ----------------------- ------------------------------

INTERESTED TRUSTEES:
John P. Calamos

[MATERIAL RELATIONSHIPS OF THE INDEPENDENT TRUSTEES. For purposes of
the statements below:

- the IMMEDIATE FAMILY MEMBERS of any person includes their spouse,
children in the person's household (including step and adoptive
children) and any dependent of the person.

- an entity in a CONTROL RELATIONSHIP means any person who controls,
is controlled by or is under common control with the named person.
For example, UniCredito is an entity that is in a control
relationship with Calamos.

- a RELATED FUND is a registered investment company or an entity
exempt from the definition of an investment company pursuant to
Sections 3(c)(1) or 3(c)(7) of the 1940 Act, for which Calamos or
any of its affiliates act as investment adviser or for which any
underwriter listed under "Underwriting" in the prospectus (each an

S-21

"Underwriter") or any affiliate of an Underwriter act as principal
underwriter. For example, the Fund's related funds include all of
the Calamos Funds and any non-U.S. funds managed by Calamos or its
affiliates.

As of December 31, 2001, none of the Independent Trustees, nor any of
their immediate family members, beneficially own any securities issued by
Calamos or any other entity in a control relationship to Calamos or issued by an
Underwriter or any person in a control relationship to an Underwriter. During
the calendar years 2000 and 2001, none of the Independent Trustees, nor any of
their immediate family members, had any direct or indirect interest (the value
of which exceeded $60,000), whether by contract, arrangement or otherwise, in
Calamos or any other entity in a control relationship to Calamos or an
Underwriter or any person that controls an Underwriter. During the calendar
years 2000 and 2001, none of the Independent Trustees, nor any of their
immediate family members, had an interest in a transaction or a series of
transactions in which the aggregate amount involved exceeded $60,000 and to
which any of the following were a party (each a "fund related party"):

- the Fund

- an officer of the Fund

- a related fund

- an officer of any related fund

- Calamos

- an Underwriter

- an officer of an Underwriter

- any affiliate of Calamos or an Underwriter

- an officer of any such affiliate

During the calendar years 2000 and 2001, none of the Independent
Trustees, nor any of their immediate family members, had any relationship (the
value of which exceeded $60,000) with any fund related party, including, but not
limited to, relationships arising out of (i) the payments for property and
services, (ii) the provision of legal services, (iii) the provision of
investment banking services (other than as a member of the underwriting
syndicate) or (iv) the provision of consulting services.

During the calendar years 2000 and 2001, none of the Independent
Trustees, nor any of their immediate family members, served as a member of a
board of directors on which an officer of any of the following entities also
serves as a director:

- Calamos

- an Underwriter

- any other entity in a control relationship with Calamos or an
Underwriter

None of the Fund's Trustees or officers has any arrangement with any
other person pursuant to which that Trustee or officer serves on the Board of
Trustees. During the calendar years 2000 and 2001, none of the Independent
Trustees, nor any of their immediate family members, had any position, including
as an officer, employee, director or partner, with any of the following:

S-22

- the Fund

- any related fund

- Calamos

- an Underwriter

- any affiliated person of the Fund

- any other entity in a control relationship to the Fund]

CODE OF ETHICS

The Fund and Calamos have adopted a code of ethics under Rule 17j-1 of
the 1940 Act which is applicable to officers, directors/Trustees and designated
employees of Calamos and CFS. Employees of Calamos and CFS are permitted to make
personal securities transactions, including transactions in securities that the
Fund may purchase, sell or hold, subject to requirements and restrictions set
forth in the code of ethics of Calamos and CFS. The code of ethics contains
provisions and requirements designed to identify and address certain conflicts
of interest between personal investment activities of Calamos and CFS employees
and the interests of investment advisory clients such as the Fund. Among other
things, the code of ethics prohibits certain types of transactions absent prior
approval, imposes time periods during which personal transaction of duplicate
broker confirmations and statements and quarterly reporting of securities
transactions. Additional restrictions apply to portfolio managers, traders,
research analysts and others involved in the investment advisory process.
Exceptions to these and other provisions of the code of ethics may be granted in
particular circumstances after review by appropriate personnel.

[DESCRIPTION OF UNDERWRITERS CODES OF ETHICS]

INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT

Subject to the overall authority of the board of trustees, Calamos
provides continuous investment supervision and management to the Fund under an
investment management agreement and also furnishes office space, equipment, and
management personnel.

Under the investment management agreement, the Fund pays to Calamos a
fee based on the average weekly managed assets that is accrued daily and paid on
a monthly basis. The fee paid by the Fund is at the annual rate of 1.00% of
managed assets. Because the fees paid to Calamos are determined on the basis of
the Fund's managed assets, Calamos's interest in determining whether to leverage
the Fund may differ from the interests of the Fund.

For the first ____ years of the Fund's operation, Calamos has
contractually agreed to reimburse the Fund for fees and expenses in the amounts,
and for the time periods, set forth below:

PERCENTAGE REIMBURSED PERCENTAGE REIMBURSED
YEAR ENDING (AS A PERCENTAGE OF YEAR ENDING (AS A PERCENTAGE OF
_______, ____ WEEKLY MANAGED ASSETS) _______, ____ WEEKLY MANAGED ASSETS)
---------------- ---------------------- -------------- ----------------------

2002 ___%
20__(1) ___%

------------------
(1) From the commencement of operations.

S-23

Reducing Fund expenses in this manner will tend to increase the amount
of income available for the holders of common shares. Calamos has not agreed to
reimburse the Fund for any portion of its fees and expenses beyond _________ __,
20__.

[Under the terms of its investment agreement with the Fund, Calamos
pays all the operating expenses, including executive salaries and the rental of
office space, relating to its services for the Fund, with the exception of the
following, which are to be paid by the Fund: (a) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including, to
the extent such services are performed by personnel of Calamos or its
affiliates, office space and facilities and personnel compensation, training and
benefits; (b) the charges and expenses of any administrator, custodian, transfer
agent, plan agent, dividend disbursing agent and registrar appointed by the
Fund; (d) issue and transfer taxes chargeable to the Fund in connection with
securities transactions to which the Fund is a party; (e) insurance premiums,
interest charges, dues and fees for membership in trade associations and all
taxes and corporate fees payable by the Fund to federal, state or other
governmental agencies; (f) fees and expenses involved in registering and
maintaining registrations of the Fund and/or its shares with federal regulatory
agencies, state or blue sky securities agencies and foreign jurisdictions,
including the preparation of prospectuses and statements of additional
information for filing with such regulatory authorities; (g) all expenses of
shareholders and Trustees meetings and of preparing, printing and distributing
prospectuses, notices, proxy statements and all reports to shareholders and to
governmental agencies; (h) charges and expenses of legal counsel to the Fund and
the Trustees; (i) compensation of those Trustees of the Fund who are not
affiliated with or interested persons of Calamos or the Fund (other than as
Trustees); (j) the cost of preparing and printing share certificates; (k)
interest on borrowed money, if any; and (l) the fees and other expenses of
listing the Fund's shares on the New York Stock Exchange or any other national
stock exchange. In addition, the Fund shall pay all brokers' and underwriting
commissions chargeable to the Fund in connection with securities transactions to
which the Fund is a party.]

Unless earlier terminated as described below, the investment management
agreement will remain in effect until [August 1, 2003]. The investment
management agreement continues in effect from year to year 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
investment management agreement, cast in person at a meeting called for the
purpose of voting on such approval. The investment management agreement may be
terminated at any time, without penalty, by either the Fund or Calamos upon 60
days' written notice, and is automatically terminated in the event of its
assignment as defined in the 1940 Act.

[FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN APPROVING THE
INVESTMENT MANAGEMENT AGREEMENT. The 1940 Act requires that the Fund's
investment management agreement be approved before it is entered into and
thereafter annually both by the Board of Trustees and a majority of the
Independent Trustees voting separately. The Independent Trustees have determined
that the terms of the Fund's investment management agreement are fair and
reasonable and that the agreement is in the Fund's best interests. The
Independent Trustees believe that the investment management agreement will
enable the Fund to enjoy high quality investment management services at a cost
which they deem appropriate, reasonable and in the best interests of the Fund
and its shareholders. In making such determinations, the Independent Trustees
met independently from the interested Trustees of the Fund and any officers of
Calamos or its affiliates. The Independent Trustees also relied upon the
assistance of counsel to the Independent Trustees.

In evaluating the investment management agreement, the Independent
Trustees reviewed materials furnished by Calamos, including information
regarding Calamos, its affiliates and their personnel, operations and financial
condition. The Independent Trustees discussed with representatives

S-24

of Calamos the Fund's operations and Calamos's ability to provide advisory and
other services to the Fund. The Independent Trustees also reviewed, among other
things:

- the investment performance of other Calamos funds with similar
investment strategies;

- the proposed fees to be charged by Calamos for investment management
services;

- the Fund's projected total operating expenses;

- the investment performance, fees and total expenses of investment
companies with similar objectives and strategies managed by other
investment advisers;

- the experience of the investment advisory and other personnel
providing services to the Fund and the historical quality of the
services provided by Calamos; and

The Independent Trustees considered the following as relevant to their
recommendations: (1) the favorable history, reputation, qualification and
background of Calamos, as well as the qualifications of their personnel and
their respective financial conditions; (2) that the fee and expense ratios of
the Fund are reasonable given the quality of services expected to be provided
and are comparable to the fee and expense ratios of similar investment
companies; (3) the relative performance of other funds managed by Calamos with
similar objectives compared to the results of other comparable investment
companies and unmanaged indices; and (4) other factors that the Independent
Trustees deemed relevant.

The use of the name "Calamos" in the name of the Fund is pursuant to
licenses granted by Calamos, and the Fund has agreed to change the names to
remove those references if Calamos ceases to act as investment adviser to the
Fund.

_________, an affiliate of __________________________________________
____, will serve as administrator for the Fund. The Fund will pay ________ a
monthly fee equal at an annual rate to ___% of the average weekly value of the
Fund's managed assets, subject to a minimum monthly fee of ______.

PORTFOLIO TRANSACTIONS

Portfolio transactions on behalf of the Fund 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 Fund usually includes an
undisclosed dealer commission or mark-up. In underwritten offerings, the price
paid by the Fund includes a disclosed, fixed commission or discount retained by
the underwriter or dealer.

In executing portfolio transactions, Calamos uses its best efforts to
obtain for the Fund the most favorable combination of price and execution
available. In seeking the most favorable combination of price and execution,
Calamos 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 Fund
may be executed through CFS if, in the judgment of Calamos, the use of CFS is
likely to result in prices and execution at least as

S-25

favorable to the Funds 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. 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 Fund will not effect principal
transactions with CFS.

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, Calamos may consider sales of shares of the Fund as a
factor in the selection of broker-dealers to execute portfolio transactions for
that Fund.

In allocating the Fund's portfolio brokerage transactions to
unaffiliated broker-dealers, Calamos 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 Calamos believes these services have substantial value,
they are considered supplemental to Calamos'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"), Calamos may pay a broker-dealer
that provides brokerage and research services an amount of commission for
effecting a securities transaction for the Fund in excess of the commission that
another broker-dealer would have charged for effecting that transaction if the
amount is believed by Calamos to be reasonable in relation to the value of the
overall quality of the brokerage and research services provided. Other clients
of Calamos may indirectly benefit from the availability of these services to
Calamos, and the Fund may indirectly benefit from services available to Calamos
as a result of transactions for other clients.

REPURCHASE OF COMMON SHARES

The Fund is a closed-end investment company and as such its
shareholders will not have the right to cause the Fund to redeem their shares.
Instead, the Fund's common shares will trade in the open market at a price that
will be a function of several factors, including dividend levels (which are in
turn affected by expenses), net asset value, call protection, dividend
stability, relative demand for and supply of such shares in the market, general
market and economic conditions and other factors. Because shares of a closed-end
investment company may frequently trade at prices lower than net asset value,
the Fund's Board of Trustees may consider action that might be taken to reduce
or eliminate any material discount from net asset value in respect of common
shares, which may include the repurchase of such shares in the open market or in
private transactions, the making of a tender offer for such shares, or the
conversion of the Fund to an open-end investment company. The Board of Trustees
may decide not to take any of these actions. In addition, there can be no
assurance that share repurchases or tender offers, if undertaken, will reduce
market discount.

Notwithstanding the foregoing, at any time when the Fund's preferred
shares are outstanding, the Fund may not purchase, redeem or otherwise acquire
any of its common shares unless (1) all accrued preferred shares dividends have
been paid and (2) at the time of such purchase, redemption or acquisition, the
net asset value of the Fund's portfolio (determined after deducting the
acquisition price of the common shares) is at least 200% of the liquidation
value of the outstanding preferred shares (expected to equal the original
purchase price per share plus any accrued and unpaid dividends thereon). Any
service fees incurred in connection with any tender offer made by the Fund will
be borne by the Fund and will not reduce the stated consideration to be paid to
tendering shareholders.

S-26

Subject to its investment restrictions, the Fund may borrow to finance
the repurchase of shares or to make a tender offer. Interest on any borrowings
to finance share repurchase transactions or the accumulation of cash by the Fund
in anticipation of share repurchases or tenders will reduce the Fund's net
income. Any share repurchase, tender offer or borrowing that might be approved
by the Fund's Board of Trustees would have to comply with the Exchange Act, the
1940 Act and the rules and regulations thereunder.

Although the decision to take action in response to a discount from net
asset value will be made by the Board of Trustees at the time it considers such
issue, it is not currently anticipated that the Board of Trustees would
authorize repurchases of common shares or a tender offer for such shares if: (1)
such transactions, if consummated, would (a) result in the delisting of the
common shares from the New York Stock Exchange, or (b) impair the Fund's status
as a regulated investment company under the Code, (which would make the Fund a
taxable entity, causing the Fund's income to be taxed at the corporate level in
addition to the taxation of shareholders who receive dividends from the Fund) or
as a registered closed-end investment company under the 1940 Act; (2) the Fund
would not be able to liquidate portfolio securities in an orderly manner and
consistent with the Fund's investment objective and policies in order to
repurchase shares; or (3) there is, in the board's judgment, any (a) material
legal action or proceeding instituted or threatened challenging such
transactions or otherwise materially adversely affecting the Fund, (b) general
suspension of or limitation on prices for trading securities on the New York
Stock Exchange, (c) declaration of a banking moratorium by federal or state
authorities or any suspension of payment by United States or New York banks, (d)
material limitation affecting the Fund or the issuers of its portfolio
securities by federal or state authorities on the extension of credit by lending
institutions or on the exchange of foreign currency, (e) commencement of war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, or (f) other event or condition which
would have a material adverse effect (including any adverse tax effect) on the
Fund or its shareholders if shares were repurchased.

The repurchase by the Fund of its shares at prices below net asset
value will result in an increase in the net asset value of those shares that
remain outstanding. However, there can be no assurance that share repurchases or
tender offers at or below net asset value will result in the Fund's shares
trading at a price equal to their net asset value. Nevertheless, the fact that
the Fund's shares may be the subject of repurchase or tender offers from time to
time, or that the Fund may be converted to an open-end investment company, may
reduce any spread between market price and net asset value that might otherwise
exist.

In addition, a purchase by the Fund of its common shares will decrease
the Fund's total managed assets which would likely have the effect of increasing
the Fund's expense ratio. Any purchase by the Fund of its common shares at a
time when preferred shares are outstanding will increase the leverage applicable
to the outstanding common shares then remaining.

Before deciding whether to take any action if the common shares trade
below net asset value, the Fund's Board of Trustees would likely consider all
relevant factors, including the extent and duration of the discount, the
liquidity of the Fund's portfolio, the impact of any action that might be taken
on the Fund or its shareholders and market considerations. Based on these
considerations, even if the Fund's shares should trade at a discount, the Board
of Trustees may determine that, in the interest of the Fund and its
shareholders, no action should be taken.

U.S. FEDERAL INCOME TAX MATTERS

The following is a summary discussion of certain U.S. federal income
tax consequences that may be relevant to a shareholder that acquires, holds
and/or disposes of common shares to the Fund. This

S-27

discussion only addresses U.S. federal income tax consequences to U.S.
shareholders who hold their shares as capital assets and does not address all of
the U.S. federal income tax consequences that may be relevant to particular
shareholders in light of their individual circumstances. This discussion also
does not address the tax consequences to shareholders who are subject to special
rules, including, without limitation, financial institutions, insurance
companies, dealers in securities or foreign currencies, foreign holders, persons
who hold their shares as or in a hedge against currency risk, a constructive
sale, or conversion transaction, holders who are subject to the alternative
minimum tax, or tax-exempt or tax-deferred plans, accounts, or entities. In
addition, the discussion does not address any state, local, or foreign tax
consequences. The discussion reflects applicable tax laws of the United States
as of the date of this prospectus, which tax laws may be changed or subject to
new interpretations by the courts or the Internal Revenue Service ("IRS")
retroactively or prospectively. No attempt is made to present a detailed
explanation of all U.S. federal income tax concerns affecting the Fund and its
shareholders, and the discussion set forth herein does not constitute tax
advice. Investors are urged to consult their own tax advisers to determine the
specific tax consequences to them of investing in the trust, including the
applicable federal, state, local and foreign tax consequences to them and the
effect of possible changes in tax laws.

The Fund intends to elect to be treated and to qualify each year as a
"regulated investment company" under Subchapter M of the Code so that it will
not pay U.S. federal income tax on income and capital gains distributed to
shareholders. If a Fund qualifies as a regulated investment company and
distributes to its shareholders at least 90% of the sum of (i) its "investment
company taxable income" as that term is defined in the Code (which includes,
among other things, dividends, taxable interest, and the excess of any net
short-term capital gains over net long-term capital losses as reduced by certain
deductible expenses) without regard to the deduction for dividends paid and (ii)
the excess of its gross tax-exempt interest, if any, over certain disallowed
deductions, the Fund will be relieved of U.S. federal income tax on any income
of the Fund, including long-term capital gains, distributed to shareholders.
However, if the Fund retains any investment company income or "net capital gain"
(the excess of net long-term capital gain over net short-term capital loss), it
will be subject to U.S. federal income tax at regular corporate rates on the
amount retained. The Fund intends to distribute at least annually all or
substantially all of its investment company income, net tax-exempt interest, and
net capital gain. If for any taxable year the Fund did not qualify as a
regulated investment company for U.S. federal income tax purposes, it would be
treated as a U.S. corporation subject to U.S. federal income tax and
distributions to its shareholders would not be deductible by the Fund in
computing its taxable income.

In addition, in the event that the Fund does not so qualify, the Fund's
distributions, to the extent derived from the Fund's current or accumulated
earnings and profits, would generally constitute ordinary dividends, which
although eligible for the corporate dividend received deduction, would be
taxable to shareholders as ordinary income, even though such distributions might
otherwise, at least in part, have been treated as long-term capital gains in
such shareholder's hands.

Under the Code, the Fund will be subject to a nondeductible 4% federal
excise tax on a portion of its undistributed ordinary income and capital gains
if it fails to meet certain distribution requirements with respect to each
calendar year. The Fund intends to make distributions in a timely manner and
accordingly does not expect to be subject to the excise tax.

The Fund expects to declare the initial monthly dividend on the common
shares within approximately 45 days of the completion of this offering and to
pay that initial monthly dividend approximately 60 to 90 days after the
completion of this offering. The Fund intends to distribute any net short- and
long-term capital gains at least annually. Dividends from income and/or capital
gains may also be paid at such other times as may be necessary for the Fund to
avoid U.S. federal income or excise tax.

S-28

In order to qualify as a regulated investment company under Subchapter
M of the Code, the Fund must, among other things, derive at least 90% of its
gross income for each taxable year from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stock,
securities or foreign currencies, or other income (including gains from options,
futures and forward contracts) derived with respect to its business of investing
in such stock, securities or currencies (the "90% income test"). For purposes of
the 90% income test, the character of income earned by certain entities in which
the Fund invests that are not treated as corporations (e.g., partnerships) for
U.S. federal income tax purposes will generally pass through to the Fund.
Consequently, the Fund may be required to limit its equity investments in such
entities that earn fee income, rental income or other nonqualifying income.

In addition to the 90% income test, the Fund must also diversify its
holdings (commonly referred to as the asset test) so that, at the end of each
quarter of its taxable year (i) at least 50% of the market value of the Fund's
assets is represented by cash and cash items, U.S. government securities,
securities of other regulated investment companies and other securities, with
such other securities of any one issuer limited for the purposes of this
calculation to an amount not greater in value than 5% of the value of the Fund's
total assets and to not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its total assets is
invested in the securities of any one issuer (other than U.S. government
securities or securities of other regulated investment companies) or of two or
more issuers controlled by the Fund and engaged in the same, similar or related
trades or businesses.

Unless a shareholder is ineligible to participate or elects otherwise,
all distributions will be automatically reinvested in additional common shares
of the Fund pursuant to the Automatic Dividend Reinvestment Plan (the "Plan").
For U.S. federal income tax purposes, all dividends are generally taxable
whether a shareholder takes them in cash or they are reinvested pursuant to the
Plan in additional shares of the Fund. Dividends from investment company taxable
income, which includes net investment income, net short-term capital gain in
excess of net long-term capital loss and certain net foreign exchange gains, are
taxable as ordinary income to the extent of the Fund's current and accumulated
earnings and profits. Dividends from net capital gain (net long-term capital
gain in excess of net short-term capital loss), if any, are taxable as long-term
capital gains for U.S. federal income tax purposes without regard to the length
of time the shareholder has held shares of the Fund. The U.S. federal income tax
status of all distributions will be designated by the Fund and reported to the
shareholders annually.

If the Fund retains any net capital gain, the Fund may designate the
retained amount as undistributed capital gains in a notice to shareholders who,
if subject to U.S. federal income tax on long-term capital gains (i) will be
required to include in income, as long-term capital gain, their proportionate
share of such undistributed amount, and (ii) will be entitled to credit their
proportionate share of the tax paid by the Fund on the undistributed amount
against their U.S. federal income tax liabilities, if any, and to claim refunds
to the extent the credit exceeds such liabilities. For U.S. federal income tax
purposes, the tax basis of shares owned by a shareholder of the Fund will be
increased by an amount equal to 65% of the amount of undistributed net capital
gain included in the shareholder's gross income.

If a shareholder's distributions are automatically reinvested pursuant
to the Plan and the Plan Agent invests the distribution in shares acquired on
behalf of the shareholder in open-market purchases, for U.S. federal income tax
purposes, the shareholder will be treated as having received a taxable
distribution in the amount of the cash dividend that the shareholder would have
received if the shareholder had elected to receive cash. If a shareholder's
distributions are automatically reinvested pursuant to the Plan and the Plan
Agent invests the distribution in newly issued shares of the Fund, the
shareholder will be treated as receiving a taxable distribution equal to the
fair market value of the stock the shareholder receives.

S-29

Any dividend declared by the Fund as of a record date in October,
November or December and paid during the following January will be treated for
U.S. federal income tax purposes as received by shareholders on December 31 of
the calendar year in which it is declared.

Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, certain options and futures contracts relating to foreign currency,
foreign currency forward contracts, foreign currencies, or payables or
receivables denominated in a foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. Under future Treasury regulations, any such
transactions that are not directly related to the Fund's investments in stock or
securities (or its options contracts or futures contracts with respect to stock
or securities) may have to be limited in order to enable the Fund to satisfy the
90% income test.

If the Fund acquires any equity interest (under future Treasury
regulations, generally including not only stock but also an option to acquire
stock such as is inherent in a convertible bond) in certain foreign corporations
that receive at least 75% of their annual gross income from passive sources
(such as interest, dividends, certain rents and royalties, or capital gains) or
that hold at least 50% of their assets in investments producing such passive
income ("passive foreign investment companies"), the Fund could be subject to
U.S. federal income tax and additional interest charges on "excess
distributions" received from such companies or on gain from the sale of stock in
such companies, even if all income or gain actually received by the Fund is
timely distributed to its shareholders. The Fund would not be able to pass
through to its shareholders any credit or deduction for such a tax. An election
may generally be available that would ameliorate these adverse tax consequences,
but any such election could require the Fund to recognize taxable income or gain
(subject to tax distribution requirements) without the concurrent receipt of
cash. These investments could also result in the treatment of associated capital
gains as ordinary income. The Fund may limit and/or manage its holdings in
passive foreign investment companies to limit its tax liability or maximize its
return from these investments.

The Fund may invest to a significant extent, in debt obligations that
are in the lowest rating categories or are unrated, including debt obligations
of issuers not currently paying interest or who are in default. Investments in
debt obligations that are at risk of or in default present special tax issues
for the Fund. Tax rules are not entirely clear about issues such as when the
Fund may cease to accrue interest, original issue discount or market discount,
when and to what extent deductions may be taken for bad debts or worthless
securities and how payments received on obligations in default should be
allocated between principal and income. These and other related issues will be
addressed by the Fund when, as and if it invests in such securities, in order to
seek to ensure that it distributes sufficient income to preserve its status as a
regulated investment company and does not become subject to U.S. federal income
or excise tax.

If the Fund utilizes leverage through borrowing, asset coverage
limitations imposed by the 1940 Act as well as additional restrictions that may
be imposed by certain lenders on the payment of dividends or distributions
potentially could limit or eliminate the Fund's ability to make distributions on
its common shares until the asset coverage is restored. These limitations could
prevent the Fund from distributing at least 90% of its net income as is required
under the Code and therefore might jeopardize the Fund's qualification for the
reduced rates of corporate tax applicable to certain regulated investment
companies and/or might subject the Fund to a nondeductible 4% excise tax. Upon
any failure to meet the asset coverage requirements imposed by the 1940 Act, the
Fund may, in its sole discretion and to the extent permitted under the 1940 Act,
purchase or redeem shares of preferred stock in order to maintain or restore the
requisite asset coverage and avoid the adverse consequences to the Fund and its
shareholders of failing to meet the distribution requirements. There can be no
assurance, however, that any such action

S-30

would achieve these objectives. The Fund will endeavor to avoid restrictions on
its ability to distribute dividends.

If the Fund invests in certain pay-in-kind securities, zero coupon
securities, deferred interest securities or, in general, any other securities
with original issue discount (or with market discount if the Fund elects to
include market discount in income currently), the Fund must accrue income on
such investments for each taxable year, which generally will be prior to the
receipt of the corresponding cash payments. However, the Fund must distribute,
at least annually, all or substantially all of its net income, including such
accrued income, to shareholders to avoid U.S. federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.

At the time of an investor's purchase of the Fund's shares, a portion
of the purchase price may be attributable to realized or unrealized appreciation
in the Fund's portfolio or undistributed taxable income of the Fund.
Consequently, subsequent distributions by the Fund with respect to these shares
from such appreciation or income may be taxable to such investor even if the net
asset value of the investor's shares is, as a result of the distributions,
reduced below the investor's cost for such shares and the distributions
economically represent a return of a portion of the investment.

Sales and other dispositions of the Fund's shares are taxable events
for shareholders that are subject to tax. Shareholders should consult their own
tax advisors with reference to their individual circumstances to determine
whether any particular transaction in the Fund's shares is properly treated as a
sale for tax purposes (as the following discussion assumes) and the tax
treatment of any gains or losses recognized in such transactions. Any loss
realized by a shareholder upon the sale or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares. Losses on sales or other dispositions of
shares may be disallowed under "wash sale" rules in the event of other
investments in the Fund (including those made pursuant to reinvestment of
dividends) within a period of 61 days beginning 30 days before and ending 30
days after a sale or other disposition of shares. In such a case, the disallowed
portion of any loss generally would be included in the U.S. federal tax basis of
the shares acquired in the other investments in the Fund.

The Fund may engage in various transactions utilizing options, futures
contracts, forward contracts, hedge instruments, straddles, and other similar
transactions. Such transactions may be subject to special provisions of the Code
that, among other things, affect the character of any income by the Fund from
such investments accelerate recognition of income to the Fund, defer Fund
losses, and affect the determination of whether capital gain and loss is
characterized as long-term or short-term capital gain or loss. These rules could
therefore affect the character, amount and timing of distributions to
shareholders. These provisions may also require the Fund to mark-to-market
certain types of the positions in its portfolio (i.e., treat them as if they
were closed out), which may cause the Fund to recognize income without receiving
cash with which to make distributions in amounts necessary to satisfy the
distribution requirements for avoiding U.S. federal income and excise taxes.
The Fund will monitor its transactions, will make the appropriate tax elections,
and will make the appropriate entries in its books and records when it acquires
an option, futures contract, forward contract, or hedge instrument or other
similar investment in order to mitigate the effect of these rules, prevent
disqualification of the Fund as a regulated investment company and minimize the
imposition of U.S. federal income and excise taxes.

Certain distributions by the Fund to its corporate shareholders may
qualify for the corporate dividends-received deduction subject to certain
holding period requirements and limitations on debt financings under the Code,
but only to the extent the Fund earned dividend income from stock investments in
U.S. domestic corporations and certain other requirements are satisfied. The
Fund is

S-31

permitted to acquire stocks of U.S. domestic corporations, and it is therefore
possible that a small portion of the Fund's distributions, from the dividends
attributable to such stocks, may qualify for the dividend-received deduction.
Such qualifying portion, if any, may affect a corporate shareholder's liability
for alternative minimum tax and/or result in basis reductions and other
consequences in certain circumstances.

The IRS has taken the position that if a regulated investment company
has two classes of shares, it must designate distributions made to each class in
any year as consisting of no more than such class's proportionate share of
particular types of income, including dividends qualifying for the corporate
dividends-received deduction (if any) and net capital gains. Consequently, if
both common shares and preferred shares are outstanding, the Fund intends to
designate distributions made to the classes of particular types of income in
accordance with the classes' proportionate share of such income. Thus, the Fund
will designate dividends qualifying for the corporate dividends-received
deduction (if any), income not qualifying for the dividends-received deduction
and net capital gains in a manner that allocates such income between the holders
of common shares and preferred shares in proportion to the total distributions
made to each class during or for the taxable year, or otherwise as required by
applicable law.

The Fund may invest in REITs that hold residual interests in real
estate mortgage investment conduits ("REMICs"). Under Treasury regulations that
have not yet been issued, but may apply retroactively, a portion of the Fund's
income from a REIT that is attributable to the REITS's residual interest in a
REMIC (referred to in the Code as an "excess inclusion") will be subject to
federal income tax in all events. These regulations are also expected to provide
that excess inclusion income of a regulated investment company, such as the
Fund, will be allocated to shareholders of the regulated investment company in
proportion to the dividends received by such shareholders, with the same
consequences as if the shareholders held the related REMIC residual interest
directly. In general, excess inclusion income allocated to shareholders (i)
cannot be offset by net operating losses (subject to a limited exception for
certain thrift institutions), (ii) will constitute unrelated business taxable
income to entities (including a qualified pension plan, an individual retirement
account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax
on unrelated business income, thereby potentially requiring such an entity that
is allocated excess inclusion income, and otherwise might not be required to
file a tax return, to file a tax return and pay tax on such income, and (iii) in
the case of a foreign shareholder, will not qualify for any reduction in U.S.
federal withholding tax. In addition, if at any time during any taxable year a
"disqualified organization" (as defined in the Code) is a record holder of a
share in a regulated investment company, then the regulated investment company
will be subject to a tax equal to that portion of its excess inclusion income
for the taxable year that is allocable to the disqualified organization,
multiplied by the highest federal income tax rate imposed on corporations. The
Investment Manager does not intend on behalf of the Fund does not intend to
invest in REITs in which a substantial portion of the assets will consist of
residual interests in REMICs.

The Fund may be subject to withholding and other taxes imposed by
foreign countries, including taxes on interest, dividends and capital gains with
respect to its investments in those countries, which would, if imposed, reduce
the yield on or return from those investments. Tax treaties between certain
countries and the U.S. may reduce or eliminate such taxes in some cases. The
Fund does not expect to satisfy the requirements for passing through to its
shareholders their pro rata shares of qualified foreign taxes paid by the Fund,
with the result that shareholders will not include such taxes in their gross
incomes and will not be entitled to a tax deduction or credit for such taxes on
their own tax returns.

Federal law requires that the Fund withhold, as "backup withholding,"
30% (for calendar year 2002 and 2003) of reportable payments, including
dividends, capital gain distributions and the proceeds of sales or other
dispositions of the Fund's shares paid to shareholders who have not complied
with IRS

S-32

regulations. In order to avoid this withholding requirement, shareholders must
certify on their Account Applications, or on a separate IRS Form W-9, that the
Social Security Number or other Taxpayer Identification Number they provide is
their correct number and that they are not currently subject to backup
withholding, or that they are exempt from backup withholding. The Fund may
nevertheless be required to withhold if it receives notice from the IRS or a
broker that the number provided is incorrect or backup withholding is applicable
as a result of previous underreporting of interest or dividend income.

The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons,
(i.e., U.S. citizens or residents or U.S. corporations, partnerships, Funds or
estates and who are subject to U.S. federal income tax). Investors other than
U.S. persons may be subject to different U.S. tax treatment, including a
non-resident alien U.S. withholding tax at the rate of 30% or at a lower treaty
rate on amounts treated as ordinary dividends from the Fund and, unless an
effective IRS Form W-8BEN, or other authorized withholding certificate is on
file, to backup withholding at the rate of 30% on certain other payments from
the Fund. Shareholders should consult their own tax advisors on these matters
and on any specific question of U.S. federal, state, local, foreign and other
applicable tax laws.

EXPERTS

The statement of net assets of the Fund as of __________ __, 2002
appearing in this statement of additional information has been audited by
_______________________, independent auditors, as set forth in their report
thereon appearing elsewhere herein, and is included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

A Registration Statement on Form N-2, including amendments thereto,
relating to the shares offered hereby, has been filed by the Fund with the
Securities and Exchange Commission (the "Commission"), Washington, D.C. The
prospectus and this statement of additional information do not contain all of
the information set forth in the Registration Statement, including any exhibits
and schedules thereto. For further information with respect to the Fund and the
shares offered hereby, reference is made to the Registration Statement.
Statements contained in the prospectus and this statement of additional
information as to the contents of any contract or other document referred to are
not necessarily complete and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. A copy of the Registration Statement may be inspected without charge
at the Commission's principal office in Washington, D.C., and copies of all or
any part thereof may be obtained from the Commission upon the payment of certain
fees prescribed by the Commission.

FINANCIAL STATEMENT AND INDEPENDENT AUDITORS' REPORT

S-33

APPENDIX A -- DESCRIPTION OF RATINGS(2)

MOODY'S PRIME RATING SYSTEM

Moody's short-term ratings are opinions of the ability of issuers to
honor senior financial obligations and contracts. Such obligations generally
have an original maturity not exceeding one year, unless explicitly noted.

Moody's employs the following designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:

PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:

Leading market positions in well-established industries. High rates of
return on funds employed. Conservative capitalization structure with moderate
reliance on debt and ample asset protection. Broad margins in earnings coverage
of fixed financial charges and high internal cash generation. Well-established
access to a range of financial markets and assured sources of alternate
liquidity.

PRIME-2: Issuers (or supporting institutions) rated Prime-2 have a
strong ability to repay senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation than is the case for Prime-2 securities. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.

PRIME-3: Issuers (or supporting institutions) rated Prime-3 have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt-protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime
rating categories.

In addition, in certain countries the prime rating may be modified by
the issuer's or guarantor's senior unsecured long-term debt rating.

MOODY'S DEBT RATINGS

Aaa: Bonds and preferred stock which are rated Aaa are judged to be of
the best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While 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
issues.

----------
(2) The ratings indicated herein are believed to be the most recent ratings
available at the date of this prospectus for the securities listed. Ratings are
generally given to securities at the time of issuance. While the rating agencies
may from time to time revise such ratings, they undertake no obligation to do
so, and the ratings indicated do not necessarily represent ratings which will be
given to these securities on the date of the fund's fiscal year-end.

A-1

Aa: Bonds and preferred stock which are rated Aa are judged to be of
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 securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risk appear somewhat larger than
the Aaa securities.

A: Bonds and preferred stock which are 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 some time in the future.

Baa: Bonds and preferred stock which are 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 and preferred stock which are 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 and preferred stock which are 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 and preferred stock which are rated Caa are of poor
standing. Such issues may be in default or there may be present elements of
danger with respect to principal or interest.

Ca: Bonds and preferred stock which are rated Ca represent obligations
which are speculative in a high degree. Such issues are often in default or have
other marked shortcomings.

C: Bonds and preferred stock which are rated C are the lowest rated
class of bonds, and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.

Moody's assigns ratings to individual debt securities issued from
medium-term note (MTN) programs, in addition to indicating ratings to MTN
programs themselves. Notes issued under MTN programs with such indicated ratings
are rated at issuance at the rating applicable to all pari passu notes issued
under the same program, at the program's relevant indicated rating, provided
such notes do not exhibit any of the characteristics listed below. For notes
with any of the following characteristics, the rating of the individual note may
differ from the indicated rating of the program:

1) Notes containing features which link the cash flow and/or market
value to the credit performance of any third party or parties.

2) Notes allowing for negative coupons, or negative principal.

3) Notes containing any provision which could obligate the investor to
make any additional payments.

Market participants must determine whether any particular note is
rated, and if so, at what rating level.

A-2

Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of that generic rating category.

STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS

A-1: A short-term obligation rated A-1 is rated in the highest category
by Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.

A-2: A short-term obligation rated A-2 is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.

A-3: A short-term obligation rated A-3 exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

B: A short-term obligation rated B is regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.

C: A short-term obligation rated C is currently vulnerable to
nonpayment and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the obligation.

D: A short-term obligation rated D is in payment default. The D rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The D rating
also will be used upon the filing of a bankruptcy petition or the taking of a
similar action if payments on an obligation are jeopardized.

STANDARD & POOR'S LONG-TERM ISSUE CREDIT RATINGS

Issue credit ratings are based, in varying degrees, on the following
considerations:

- Likelihood of payment-capacity and willingness of the obligor to
meet its financial commitment on an obligation in accordance with
the terms of the obligation;

- Nature of and provisions of the obligation;

- Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under
the laws of bankruptcy and other laws affecting creditors' rights.

The issue rating definitions are expressed in terms of default risk. As
such, they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinated obligations, secured and unsecured obligations, or
operating company and holding

A-3

company obligations.) Accordingly, in the case of junior debt, the rating may
not conform exactly with the category definition.

AAA: An obligation rated AAA has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.

AA: An obligation rated AA differs from the highest rated obligations
only in small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.

A: An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

BBB: An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

Obligations rated BB, B, CCC, CC, and C are regarded as having
significant speculative characteristics. BB indicates the least degree of
speculation and C the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.

B: An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.

CCC: An obligation rated CCC is currently vulnerable to nonpayment, and
is dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.

CC: An obligation rated CC is currently highly vulnerable to
nonpayment.

C: A subordinated debt or preferred stock obligation rated C is
CURRENTLY HIGHLY VULNERABLE to nonpayment. The C rating may be used to cover a
situation where a bankruptcy petition has been filed or similar action taken,
but payments on this obligation are being continued. A C also will be assigned
to a preferred stock issue in arrears on dividends or sinking fund payments, but
that is currently paying.

D: An obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.

A-4

PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.

r: This symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or volatility of
expected returns which are not addressed in the credit rating.

N.R.: This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular obligation as a matter of policy.

LOCAL CURRENCY AND FOREIGN CURRENCY RISKS

Country risk considerations are a standard part of Standard & Poor's
analysis for credit ratings on any issuer or issue. Currency of repayment is a
key factor in this analysis. An obligor's capacity to repay foreign currency
obligations may be lower than its capacity to repay obligations in its local
currency due to the sovereign government's own relatively lower capacity to
repay external versus domestic debt. These sovereign risk considerations are
incorporated in the debt ratings assigned to specific issues. Foreign currency
issuer ratings are also distinguished from local currency issuer ratings to
identify those instances where sovereign risks make them different for the same
issuer.

A-5

PART C -- OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

1. Financial statements.

The Registrant's [statement of assets and liabilities (balance sheet)]
dated ______________ __, 2002, notes to that financial statement and
report of independent public accountants thereon will be filed with a
pre-effective amendment to the Registrant's Registration Statement.

2. Exhibits:

a.1. Agreement and Declaration of Trust. (*)
a.2. Certificate of Trust. (*)
b. By-Laws. (*)
c. None.
d. Form of Share Certificate. (**)
e. Automatic Dividend Reinvestment Plan. (**)
f. None.
g. Investment Management Agreement with Calamos Asset Management,
Inc. (**)
h. Copies of each underwriting or distribution contract between
the Registrant and a principal underwriter and specimens or
copies of all agreements between principal underwriters and
dealers. (**)
i. None.
j. Custodian Agreement. (**)
k.1. Transfer Agency Agreement. (**)
k.2. Fund Accounting Agent Agreement. (**)
l.1. Opinion of Vedder Price Kaufman & Kammholz. (**)
l.2. Opinion of ______________. (**)
m. None.
n. Consent of Auditors. (**)
o. Not applicable.
p. Subscription Agreement. (**)
q. None.
r.1. Code of Ethics of Calamos Asset Management, Inc. and the
Fund. (**)
r.2. Code of Ethics of _____________________________________.(**)
r.3. Code of Ethics of ________________.
s. Powers of Attorney. (**)

(*) Filed herewith.
(**) To be filed by amendment.

ITEM 25. MARKETING ARRANGEMENTS

Reference will be made to the underwriting agreement for the Registrant's shares
of beneficial interest to be filed in an amendment to the Registrant's
Registration Statement.

Part C-1-

ITEM 26. OTHER EXPENSES AND DISTRIBUTION

The following table sets forth the estimated expenses to be incurred in
connection with the offering described in this Registration Statement:

Registration fees....................................... $
New York Stock Exchange listing fee.....................
Printing (other than certificates)......................
Engraving and printing certificates.....................
Accounting fees and expenses............................
Legal fees and expenses.................................
NASD fee................................................
Miscellaneous...........................................
Total................................................ $

ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

None.

ITEM 28. NUMBER OF HOLDERS OF SECURITIES

As of ________________ __, 2002, the number or record holders of each class of
securities of the Registrant was

(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS

Common Shares (no par value) --

ITEM 29. INDEMNIFICATION

The Registrant's Agreement and Declaration of Trust (the "Declaration"), dated
April 17, 2002, provides that every person who is, or has been, a Trustee or an
officer, employee or agent of the Registrant (including any individual who
serves at its request as director, officer, partner, employee, Trustee, agent or
the like of another organization in which it has any interest as a shareholder,
creditor or otherwise) ("Covered Person") shall be indemnified by the Registrant
or the appropriate series of the Registrant to the fullest extent permitted by
law against liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a Covered
Person and against amounts paid or incurred by him in the settlement thereof;
provided that no indemnification shall be provided to a Covered Person (i) who
shall have been adjudicated by a court or body before which the proceeding was
brought (A) to be liable to the Registrant or its shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, or (B) not to have acted in good
faith and in a manner the person reasonably believed to be or not opposed to the
best interest of the Registrant; or (ii) in the event of a settlement, unless
there has been a

Part C-2-

determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office; (A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither Interested Persons
of the Trust nor are parties to the matter based upon a review of readily
available facts (as opposed to a full trial-type inquiry); (C) by written
opinion of independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry) or (D) by a vote of a majority
of the Outstanding Shares entitled to vote (excluding any Outstanding Shares
owned of record or beneficially by such individual).

The Declaration also provides that if any shareholder or former shareholder of
any series of the Registrant shall be held personally liable solely by reason of
his being or having been a shareholder and not because of his acts or omissions
or for some other reason, the shareholder or former shareholder (or his heirs,
executors, administrators or other legal representatives or in the case of any
entity, its general successor) shall be entitled out of the assets belonging to
the applicable series of the Registrant to be held harmless from and indemnified
against all loss and expense arising from such liability. The Registrant, on
behalf of its affected series, shall, upon request by such shareholder, assume
the defense of any claim made against such shareholder for any act or obligation
of the series and satisfy any judgment thereon from the assets of the series.

Insofar as indemnification for liability arising under the Securities Act of
1933, as amended (the "1933 Act"), may be available 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 SEC such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant's 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 1933 Act and will be governed by the final
adjudication of such issue.

ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

The information in the Statement of Additional Information under the caption
"Management - Trustees and Officers" is incorporated by reference.

ITEM 31. LOCATION OF ACCOUNTS AND RECORDS

All such accounts, books, and other documents are maintained at the offices of
the Registrant, at the offices of the Registrant's investment manager, Calamos
Asset Management, Inc., 1111 East Warrenville Road, Naperville, Illinois 60563,
at the offices of the custodian, ______________________, at the offices of the
transfer agent, ________________________ or at the offices of the Fund
Accounting Agent _______________________________________.

ITEM 32. MANAGEMENT SERVICES

Not applicable.

Part C-3-

ITEM 33. UNDERTAKINGS

1. The Registrant undertakes to suspend the offering of shares
until the prospectus is amended if (1) subsequent to the
effective date of its registration statement, the net asset
value declines more than ten percent from its net asset value
as of the effective date of the registration statement or (2)
the net asset value increases to an amount greater than its
net proceeds as stated in the prospectus.

2. Not applicable.

3. Not applicable.

4. Not applicable.

5. (a) For the purposes of determining any liability under the
1933 Act, the information omitted from the form of prospectus
filed as part of a registration statement in reliance upon
Rule 430A and contained in the form of prospectus filed by the
Registrant under Rule 497(h) under the 1933 Act shall be
deemed to be part of the Registration Statement as of the time
it was declared effective.

(b) For the purpose of determining any liability under the
1933 Act, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of the securities at that time shall be deemed to be
the initial bona fide offering thereof.

6. The Registrant undertakes to send by first class mail or other
means designed to ensure equally prominent delivery within two
business days of receipt of a written or oral request the
Registrants statement of additional information.

Part C-4-

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or Investment
Company Act of 1940, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Naperville and State of Illinois, on the 19th day of April, 2002.

Calamos Convertible Opportunities
and Income Fund

By: /s/ John P. Calamos
----------------------------------------------
John P. Calamos, Trustee and President

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
date(s) indicated.

/s/ John P. Calamos Trustee and President (Principal
---------------------------- Executive Officer) April 19, 2002
John P. Calamos

/s/ Rhowena Blank Treasurer (Principal Financial and
---------------------------- Accounting Officer) April 19, 2002
Rhowena Blank

EXHIBIT INDEX

Exhibit Document
------- --------

a.1. Agreement and Declaration of Trust

a.2. Certificate of Trust

b. By-Laws