PROSPECTUS --
January 31, 1997
Revised March 13, 1997
CALVERT SOCIAL INVESTMENT FUND
Money Market Portfolio Bond Portfolio
Managed Growth Portfolio Equity Portfolio
INTRODUCTION TO THE FUND
Calvert Social Investment Fund seeks to provide growth of capital or current
income through investment in enterprises that make a significant contribution
to society through their products and services and through the way they do
business. Investments are selected on the basis of their ability to contribute
to the dual objectives of the Fund. Potential investments are first screened
for financial soundness and then evaluated according to the Fund's social
criteria. An investment in the Fund is neither insured nor guaranteed by the
U.S. Government. There can be no assurance that the Money Market Portfolio
will be successful in maintaining a constant net asset value of $1.00 per
share.
The Fund has four different Portfolios, each with a different investment
objective.
The Money Market Portfolio invests in money market instruments, including
repurchase agreements with banks and brokers secured by such instruments,
selected in accordance with the Fund's investment and social criteria. The
Money Market Portfolio seeks to maintain a constant net asset value of $1.00
per share.
The Managed Growth Portfolio maintains an actively managed portfolio of
stocks, bonds and money market instruments selected with a concern for the
investment and social impact of each investment.
The Bond Portfolio invests primarily in corporate bonds and other straight
debt securities, selected in accordance with the Fund's investment and social
criteria.
The Equity Portfolio maintains an actively managed portfolio of stocks
selected with a concern for the investment and social impact of each
investment.
PURCHASE INFORMATION
The Managed Growth and Equity Portfolios offer two classes of shares, each
with different expense levels and sales charges. You may choose to purchase
(i) Class A shares, with a sales charge imposed at the time you purchase the
shares ("front-end sales charge"); or (ii) Class C shares which impose neither
a front-end sales charge nor a contingent deferred sales charge. Class C
shares are not available through all dealers. Class C shares have a higher
level of expenses than Class A shares, including higher Rule 12b-1 fees. These
alternatives permit you to choose the method of purchasing shares that is most
beneficial to you, depending on the amount of the purchase, the length of time
you expect to hold the shares, and other circumstances. The Bond Portfolio
only offers Class A shares with a front-end sales charge. See "Alternative
Sales Options" for further details.
TO OPEN AN ACCOUNT
Call your broker, or complete and return the enclosed Account Application.
Minimum investment is $1,000.
ABOUT THIS PROSPECTUS
Please read this Prospectus before investing. It is designed to provide you
with information you ought to know before investing and to help you decide if
the Fund's goals match your own. Keep this document for future reference.
A Statement of Additional Information for the Fund (dated January 31, 1997,
revised March 12, 1997) has been filed with the Securities and Exchange
Commission and is incorporated by reference. This free Statement is available
upon request from the Fund: 800-368-2748.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE FEDERAL OR
ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. WHEN INVESTORS SELL SHARES OF THE FUND,
THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY PAID.
HIGHLIGHTS
INVESTMENT OBJECTIVES AND POLICIES
Calvert Social Investment Fund is designed to provide opportunities for
investors seeking growth of capital or current income through investment in
enterprises that make a significant contribution to society through their
products and services and through the way they do business.
The Money Market Portfolio seeks to provide the highest level of current
income, consistent with liquidity, safety and stability, through investment in
money market instruments, including securities issued or guaranteed by
agencies of the U.S. Government and repurchase agreements with banks and
brokers secured by such instruments, selected in accordance with the Fund's
investment and social criteria. The Money Market Portfolio is designed for
short-term cash management and for investors needing stability of principal.
The Money Market Portfolio seeks to maintain a constant net asset value of
$1.00 per share.
The Managed Growth Portfolio seeks to achieve a total return above the rate of
inflation through an actively managed, diversified portfolio of common and
preferred stocks, bonds and money market instruments which offer income and
capital growth opportunity and which satisfy the investment and social concern
criteria established by the Fund.
The Bond Portfolio seeks to provide as high a level of current income as is
consistent with prudent investment risk and preservation of capital through
investment in bonds and other straight debt securities, selected pursuant to
the Fund's investment and social criteria.
The Equity Portfolio seeks growth of capital through investment in the equity
securities of issuers within industries perceived to offer opportunities for
potential capital appreciation and which satisfy the Fund's investment and
social criteria.
There can be no assurance that the Fund will be successful in meeting its
investment objectives or that the Money Market Portfolio will maintain a
constant net asset value of $1.00 per share. For a further description of the
Fund's four Portfolios and discussion of the Fund's investment techniques, see
"Investment Objectives and Policies," "Investment Selection Process" and
"Additional Investment Policies."
EXPERTISE IN THE MANAGEMENT OF THE FUND
The Fund's Investment Advisor is Calvert Asset Management Company,
Inc.("CAM"), a subsidiary of Acacia Mutual Life Insurance Company of Washington,
D.C. CAM manages the Money Market Portfolio, Bond Portfolio and the fixed-income
assets of the Managed Growth Portfolio. Investment Sub-Advisors for the quity
assets of the Managed Growth Portfolio include, NCM Capital Management Group,
Inc., Brown Capital Management, Inc., United States Trust Company of Boston,
Fortaleza Asset Management, Inc., and Frontier Capital Management Company, Inc.
CAM manages the fixed-income assets of the Managed Growth Portfolio. Loomis,
Sayles & Company, L.P. ("Loomis, Sayles") is the Investment Sub-Advisor to the
Equity Portfolio. (See "Management of the Fund," "Investment Selection Process,"
and "Additional Investment Policies.")
DIVERSIFICATION OF INVESTMENTS AND RISKS
By pooling the funds of many investors with similar investment objectives, the
Fund gives each an opportunity to benefit from a broadly diversified
portfolio, a benefit available ordinarily only to investors with substantial
capital. Although the Fund's social criteria and consideration tend to limit
the availability of investment opportunities more than is customary with other
investment companies, the Advisors of the Fund believe that there are
sufficient investment opportunities to permit full investment among issuers
which satisfy the Fund's investment and social investment objectives. (See
Statement of Additional Information, "Investment Selection Process.") For a
discussion of the risks which may be associated with investments in repurchase
and reverse repurchase agreements, privately placed securities, non-investment
grade debt securities, the securities of foreign issuers, and options and
futures contracts, see "Additional Investment Policies" and in the Statement
of Additional Information, "Investment Objectives and Policies" and "Portfolio
Transactions."
PURCHASE OF FUND SHARES
There is no sales charge on shares of the Money Market Portfolio. Class A
shares of the Managed Growth, Bond, and Equity Portfolios are sold subject to
a front-end sales charge which varies according to the dollar amount of shares
purchased (see "How to Buy Shares").
Purchases of shares of the Fund may be made by mail, bank wire, electronic
funds transfer, through the Fund's branch office or through brokers. (See "How
to Buy Shares.")
REDEMPTION OF FUND SHARES
Shares of each Portfolio may be redeemed at any time at no charge at the net
asset value next determined after a proper redemption request is received by
the Fund's transfer agent. Investors may redeem shares by mail or by
telephone, through brokers, or, for investors in the Money Market Portfolio,
by writing drafts in the amount of $250 or more against their account
balances. (See "How to Sell Your Shares.")
GENERAL INFORMATION
The Fund is an open-end, diversified management investment company organized
as a Massachusetts business trust under a Declaration of Trust dated December
14, 1981, and is a series company. The Money Market and Managed Growth
Portfolios commenced operations in October 1982, and the Bond and Equity
Portfolios commenced operations in August 1987. The Fund's authorized capital
and shares being offered by this Prospectus consist of an unlimited number of
shares of beneficial interest of no par value which may be issued in series
and classes. Shares have equal rights with all other shares of the same class
and series as to voting, dividends and liquidation.
FUND EXPENSES
Money Market Managed Growth
Portfolio Portfolio
A. Shareholder Transaction Costs Class A Class A Class C
Maximum Sales Charge on Purchases None 4.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge None None None
B. Annual Fund Operating Expenses-Fiscal
Year 1996
(as a percentage of average net assets,
after expense reimbursement/waiver)
Management Fees 0.50% 0.70% 0.70%
Rule 12b-1 Service and Distribution Fees
0.00% 0.24% 1.00%
Other Expenses 0.39% 0.34% 0.82%
Total Fund Operating Expenses<F1> 0.89% 1.28% 2.52%
Bond Portfolio Equity Portfolio
A. Shareholder Transaction Costs Class A Class A Class C
Maximum Sales Charge on Purchases 3.75% 4.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge None None None
B. Annual Fund Operating Expenses-Fiscal
Year 1996
(as a percentage of average net assets,
after expense reimbursement/waiver)
Management Fees 0.65% 0.51% 0.51%
Rule 12b-1 Service and Distribution Fees
0.20% 0.23% 1.00%
Other Expenses 0.44% 0.55% 1.35%
Total Fund Operating Expenses<F1> 1.29% 1.29% 2.86%
<F1> Net Fund Operating Expenses after reduction for fees paid indirectly were:
Managed Growth Class A 1.26% Money Market .87%
Managed Growth Class C 2.50%
<F2> Net Fund Operating Expenses after reduction for fees paid indirectly were:
Bond Class A 1.26% Equity Class A 1.27%
Equity Class C 2.85%
C. Example: You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return;(2) redemption at the end of each period; and
(3) for all Portfolios except the Money Market Portfolio, for Class
A Shares, payment of maximum initial sales charge at time of purchase:
1 Year 3 Years 5 Years 10 Years
Money Market Portfolio
$9 $28 $49 $110
Managed Growth Portfolio
Class A $60 $86 $114 $195
Class C $26 $78 $134 $286
Bond Portfolio
Class A $50 $77 $106 $187
Equity Portfolio
Class A $60 $86 $115 $196
Class C $29 $89 $151 $319
The example, which is hypothetical, should not be considered a representation
of past or future expenses. Actual expenses and return may be higher or lower
than those shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the Fund may
bear directly (shareholder transaction costs) or indirectly (annual fund
operating expenses).
A. Shareholder Transaction Costs are charges you pay when you buy or
sell shares of the Fund. See "Reduced Sales Charges" at Exhibit A to see if
you qualify for possible reductions in the sales charge. If you request a wire
redemption of less than $1,000, you will be charged a $5 wire fee.
B. Annual Fund Operating Expenses are based on historical expenses.
Management Fees are paid by the Fund to Calvert Asset Management Company, Inc.
("Investment Advisor") for managing the Fund's investments and business
affairs. Management fees include the Sub-Advisory fee paid by the Investment
Advisor to the Sub-Advisors of the Portfolios. The Management fees for the
Equity Portfolio are subject to a performance adjustment, which could cause
the fee to be as high as 0.90% or as low as 0.50%, depending on the
Portfolio's performance relative to the Standard & Poor 500 Composite Index.
The Management fees for the Managed Growth Portfolio are subject to a
performance adjustment which could cause the fee to be as high as 0.85% or as
low as 0.55%, depending on the Portfolio's performance relative to the
Sub-Advisor's Relevant Index. The Fund incurs Other Expenses for maintaining
shareholder records, furnishing shareholder statements and reports, and other
services. Management Fees and Other Expenses have already been reflected in
the Fund's yield or share price and are not charged directly to individual
shareholder accounts.
If Management had not reimbursed or waived fees, the current Other
Expenses and Total Fund Operating Expenses for the Money Market Portfolio
would have been 0.60% and 1.10%, respectively. For Class A shares of the
Managed Growth Portfolio, without waiver or reimbursement, Other Expenses and
Total Fund Operating Expenses would have been 0.35% and 1.29%, respectively.
For Managed Growth Class C shares, the current Other Expenses and Total Fund
Operating Expenses would have been 0.83% and 2.66%, respectively.
The Fund's Rule 12b-1 fees include an asset-based sales charge.
Thus, long-term shareholders in the Fund may pay more in total sales charges
than the economic equivalent of the maximum front-end sales charge permitted
by rules of the National Association of Securities Dealers, Inc.(the "NASD").
In addition to the compensation itemized above (sales charge and Rule 12b-1
service and distribution fees), certain broker/dealers and/or their
salespersons may receive certain compensation for the sale and distribution of
the securities or for services to the Fund. See the Statement of Additional
Information, "Method of Distribution".
FINANCIAL HIGHLIGHTS
The following tables provide information about the financial history of each
Portfolio's shares. They express the information in terms of a single share
outstanding for the respective Portfolio throughout each period. Information
for Class C shares is presented only since their inception on March 1, 1994.
The tables have been audited by the independent accountants, whose report is
included in the Annual Report to Shareholders of the Fund. The tables should
be read in conjunction with the financial statements and their related notes.
The current Annual Report to Shareholders is incorporated by reference into
the Statement of Additional Information.
Money Market Portfolio Class A Shares
Year Ended
September 30, 1996
Net asset value, beginning of year $1.00
Income from investment operations
Net investment income .048
Distributions from
Net investment income (.048)
Net asset value, end of year $1.00
Total return<F3> 4.88%
Ratio to average net assets:
Net investment income 4.77%
Total expenses<F4> .89%
Net expenses .87%
Expenses reimbursed and/or waived .21%
Net assets, end of year (in thousands) $166,516
Number of shares outstanding
at end of year (in thousands) 166,569
<F3>Total return prior to 1989 is not audited.
<F4>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Money Market Portfolio Class A Shares
Year Ended
September 30, 1995
Net asset value, beginning of year $1.00
Income from investment operations
Net investment income .050
Distributions from
Net investment income (.050)
Net asset value, end of year $1.00
Total return<F3> 5.13%
Ratio to average net assets:
Net investment income 5.03%
Total expenses<F4> .89%
Net expenses .87%
Expenses reimbursed and/or waived .18%
Net assets, end of year (in thousands) $153,996
Number of shares outstanding
at end of year (in thousands) 154,044
<F4>Total return prior to 1989 is not audited.
<F5>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Money Market Portfolio Class A Shares
Year Ended
September 30, 1994
Net asset value, beginning of year $1.00
Income from investment operations
Net investment income .031
Distributions from
Net investment income (.031)
Net asset value, end of year $1.00
Total return<F3> 3.13%
Ratio to average net assets:
Net investment income 3.07%
Total expenses<F4> --
Net expenses .87%
Expenses reimbursed and/or waived .18%
Net assets, end of year (in thousands) $143,779
Number of shares outstanding
at end of year (in thousands) 143,826
<F3>Total return prior to 1989 is not audited.
<F4>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Money Market Portfolio Class A Shares
Year Ended
September 30, 1993
Net asset value, beginning of year $1.00
Income from investment operations
Net investment income .025
Distributions from
Net investment income (.025)
Net asset value, end of year $1.00
Total return<F3> 2.56%
Ratio to average net assets:
Net investment income 2.54%
Total expenses<F4> --
Net expenses .87%
Expenses reimbursed and/or waived .20%
Net assets, end of year (in thousands) $144,985
Number of shares outstanding
at end of year (in thousands) 145,031
<F3>Total return prior to 1989 is not audited.
<F4>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Money Market Portfolio Class A Shares
Year Ended
September 30, 1992
Net asset value, beginning of year $1.00
Income from investment operations
Net investment income .037
Distributions from
Net investment income (.037)
Net asset value, end of year $1.00
Total return<F3> 3.79%
Ratio to average net assets:
Net investment income 3.74%
Total expenses<F4> --
Net expenses .87%
Expenses reimbursed and/or waived .16%
Net assets, end of year (in thousands) $171,340
Number of shares outstanding
at end of year (in thousands) 171,407
<F3>Total return prior to 1989 is not audited.
<F4>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Money Market Portfolio Class A Shares
Year Ended
September 30, 1991
Net asset value, beginning of year $1.00
Income from investment operations
Net investment income .061
Distributions from
Net investment income (.061)
Net asset value, end of year $1.00
Total return<F5> 6.32%
Ratio to average net assets:
Net investment income 6.12%
Total expenses<F6> --
Net expenses .87%
Expenses reimbursed and/or waived .13%
Net assets, end of year (in thousands) $193,947
Number of shares outstanding
at end of year (in thousands) 194,015
<F5>Total return prior to 1989 is not audited.
<F6>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Money Market Portfolio Class A Shares
Year Ended
September 30, 1990
Net asset value, beginning of year $1.00
Income from investment operations
Net investment income .076
Distributions from
Net investment income (.076)
Net asset value, end of year $1.00
Total return<F5> 7.85%
Ratio to average net assets:
Net investment income 7.53%
Total expenses<F6> --
Net expenses .85%
Expenses reimbursed and/or waived .14%
Net assets, end of year (in thousands) $182,148
Number of shares outstanding
at end of year (in thousands) 182,193
<F5>Total return prior to 1989 is not audited.
<F6>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Money Market Portfolio Class A Shares
Year Ended
September 30, 1989
Net asset value, beginning of year $1.00
Income from investment operations
Net investment income .084
Distributions from
Net investment income (.084)
Net asset value, end of year $1.00
Total return<F5> 6.47%
Ratio to average net assets:
Net investment income 8.40%
Total expenses<F6> --
Net expenses .85%
Expenses reimbursed and/or waived .17%
Net assets, end of year (in thousands) $139,662
Number of shares outstanding
at end of year (in thousands) 139,707
<F5>Total return prior to 1989 is not audited.
<F6>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Money Market Portfolio Class A Shares
Year Ended
September 30, 1988
Net asset value, beginning of year $1.00
Income from investment operations
Net investment income .067
Distributions from
Net investment income (.067)
Net asset value, end of year $1.00
Total return<F5> 5.31%
Ratio to average net assets:
Net investment income 6.47%
Total expenses<F6> --
Net expenses .84%
Expenses reimbursed and/or waived .27%
Net assets, end of year (in thousands) $81,253
Number of shares outstanding
at end of year (in thousands) 81,278
<F5>Total return prior to 1989 is not audited.
<F6>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Money Market Portfolio Class A Shares
Year Ended
September 30, 1987
Net asset value, beginning of year $1.00
Income from investment operations
Net investment income .057
Distributions from
Net investment income (.057)
Net asset value, end of year $1.00
Total return<F5> 4.62%
Ratio to average net assets:
Net investment income 5.52%
Total expenses<F6> --
Net expenses .86%
Expenses reimbursed and/or waived .24%
Net assets, end of year (in thousands) $66,285
Number of shares outstanding
at end of year (in thousands) 66,288
<F5>Total return prior to 1989 is not audited.
<F6>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class A Shares
Year Ended
September 30, 1996
Net asset value, beginning of year $32.81
Income from investment operations
Net investment income .78
Net realized and unrealized gain
(loss) on investments 2.28
Total from investment operations 3.06
Distributions from
Net investment income (.77)
Net realized gains (3.75)
Total Distributions (4.52)
Total increase (decrease) in
net asset value (1.46)
Net asset value, end of year $31.35
Total return<F7> 10.27%
Ratio to average net assets:
Net investment income 2.58%
Total expenses<F8> 1.28%
Net expenses 1.26%
Expenses reimbursed and/or waived .01%
Portfolio turnover 111%
Average commission rate paid $.05
Net assets, end of year (in thousands) $594,482
Number of shares outstanding
at end of year (in thousands) 18,964
<F7>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F8>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class A Shares
Year Ended
September 30, 1995
Net asset value, beginning of year $28.77
Income from investment operations
Net investment income .87
Net realized and unrealized gain
(loss) on investments 4.25
Total from investment operations 5.12
Distributions from
Net investment income (.87)
Net realized gains (.21)
Total Distributions (1.08)
Total increase (decrease) in
net asset value 4.04
Net asset value, end of year $32.81
Total return<F7> 18.21%
Ratio to average net assets:
Net investment income 2.89%
Total expenses<F8> 1.28%
Net expenses 1.26%
Expenses reimbursed and/or waived .02%
Portfolio turnover 114%
Net assets, end of year (in thousands) $560,981
Number of shares outstanding
at end of year (in thousands) 17,099
<F7>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F8>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class A Shares
Year Ended
September 30, 1994
Net asset value, beginning of year $30.85
Income from investment operations
Net investment income .93
Net realized and unrealized gain
(loss) on investments (1.83)
Total from investment operations (.90)
Distributions from
Net investment income (.95)
Net realized gains (.23)
Total Distributions (1.18)
Total increase (decrease) in
net asset value (2.08)
Net asset value, end of year $28.77
Total return<F7> (2.95%)
Ratio to average net assets:
Net investment income 3.14%
Total expenses<F8> --
Net expenses 1.24%
Expenses reimbursed and/or waived --
Portfolio turnover 34%
Net assets, end of year (in thousands) $512,027
Number of shares outstanding
at end of year (in thousands) 17,800
<F7>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F8>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class A Shares
Year Ended
September 30, 1993
Net asset value, beginning of year $29.35
Income from investment operations
Net investment income .95
Net realized and unrealized gain
(loss) on investments 1.91
Total from investment operations 2.86
Distributions from
Net investment income (.95)
Net realized gains (.41)
Total Distributions (1.36)
Total increase (decrease) in
net asset value 1.50
Net asset value, end of year $30.85
Total return<F9> 9.98%
Ratio to average net assets:
Net investment income 3.25%
Total expenses<F10> --
Net expenses 1.25%
Expenses reimbursed and/or waived --
Portfolio turnover 33%
Net assets, end of year (in thousands) $536,170
Number of shares outstanding
at end of year (in thousands) 17,378
<F9>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F10>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class A Shares
Year Ended
September 30, 1992
Net asset value, beginning of year $28.42
Income from investment operations
Net investment income 1.07
Net realized and unrealized gain
(loss) on investments 1.82
Total from investment operations 2.89
Distributions from
Net investment income (1.95)
Net realized gains (.01)
Total Distributions (1.96)
Total increase (decrease) in
net asset value .93
Net asset value, end of year $29.35
Total return<F9> 10.71%
Ratio to average net assets:
Net investment income 3.90%
Total expenses<F10> --
Net expenses 1.28%
Expenses reimbursed and/or waived --
Portfolio turnover 14%
Net assets, end of year (in thousands) $419,514
Number of shares outstanding
at end of year (in thousands) 14,292
<F9>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F10>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class A Shares
Year Ended
September 30, 1991
Net asset value, beginning of year $25.87
Income from investment operations
Net investment income 1.20
Net realized and unrealized gain
(loss) on investments 3.10
Total from investment operations 4.30
Distributions from
Net investment income (1.00)
Net realized gains (.75)
Total Distributions (1.75)
Total increase (decrease) in
net asset value 2.55
Net asset value, end of year $28.42
Total return<F9> 17.51%
Ratio to average net assets:
Net investment income 4.73%
Total expenses<F10> --
Net expenses 1.31%
Expenses reimbursed and/or waived --
Portfolio turnover 25%
Net assets, end of year (in thousands) $329,922
Number of shares outstanding
at end of year (in thousands) 11,609
<F9>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F10>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class A Shares
Year Ended
September 30, 1990
Net asset value, beginning of year $27.72
Income from investment operations
Net investment income 1.09
Net realized and unrealized gain
(loss) on investments (1.85)
Total from investment operations (.76)
Distributions from
Net investment income (.63)
Net realized gains (.46)
Total Distributions (1.09)
Total increase (decrease) in
net asset value (1.85)
Net asset value, end of year $25.87
Total return<F9> (2.87%)
Ratio to average net assets:
Net investment income 4.85%
Total expenses<F10> --%
Net expenses 1.30%
Expenses reimbursed and/or waived --
Portfolio turnover 24%
Net assets, end of year (in thousands) $242,617
Number of shares outstanding
at end of year (in thousands) 9,377
<F9>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F10>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class A Shares
Year Ended
September 30, 1989
Net asset value, beginning of year $25.04
Income from investment operations
Net investment income 1.15
Net realized and unrealized gain
(loss) on investments 2.97
Total from investment operations 4.12
Distributions from
Net investment income (.98)
Net realized gains (.46)
Total Distributions (1.44)
Total increase (decrease) in
net asset value 2.68
Net asset value, end of year $27.72
Total return<F9> 17.31%
Ratio to average net assets:
Net investment income 4.49%
Total expenses<F10> --
Net expenses 1.29%
Expenses reimbursed and/or waived --
Portfolio turnover 34%
Net assets, end of year (in thousands) $212,178
Number of shares outstanding
at end of year (in thousands) 7,654
<F9>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F10>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class A Shares
Year Ended
September 30, 1988
Net asset value, beginning of year $27.44
Income from investment operations
Net investment income 1.09
Net realized and unrealized gain
(loss) on investments (1.91)
Total from investment operations (.82)
Distributions from
Net investment income (1.08)
Net realized gains (.50)
Total Distributions (1.58)
Total increase (decrease) in
net asset value (2.40)
Net asset value, end of year $25.04
Total return<F9> (2.48%)
Ratio to average net assets:
Net investment income 4.30%
Total expenses<F10> --
Net expenses 1.34%
Expenses reimbursed and/or waived --
Portfolio turnover 46%
Net assets, end of year (in thousands) $171,931
Number of shares outstanding
at end of year (in thousands) 6,866
<F9>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F10>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class A Shares
Year Ended
September 30, 1987
Net asset value, beginning of year $23.25
Income from investment operations
Net investment income .65
Net realized and unrealized gain
(loss) on investments 4.35
Total from investment operations 5.00
Distributions from
Net investment income (.70)
Net realized gains (.11)
Total Distributions (.81)
Total increase (decrease) in
net asset value 4.19
Net asset value, end of year $27.44
Total return<F9> 22.04%
Ratio to average net assets:
Net investment income 2.82%
Total expenses<F10> --%
Net expenses 1.29%
Expenses reimbursed and/or waived --
Portfolio turnover 14%
Net assets, end of year (in thousands) $174,218
Number of shares outstanding
at end of year (in thousands) 6,348
<F9>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F10>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class C Shares
Period Ended
September 30, 1996
Net asset value, beginning of period $32.60
Income from investment operations
Net investment income .46
Net realized and unrealized gain
(loss) on investments 2.17
Total from investment operations 2.63
Distributions from
Net investment income (.43)
Net realized gains (3.75)
Total Distributions (4.18)
Total increase (decrease) in
net asset value 1.55
Net asset value, end of period $31.05
Total return<F9> 8.85%
Ratio to average net assets:
Net investment income 1.34%
Total expenses<F10> 2.52%
Net expenses 2.50%
Expenses reimbursed and/or waived .14%
Portfolio turnover 111%
Average commission rate paid $.05
Net assets, end of period (in thousands) $6,715
Number of shares outstanding
at end of period (in thousands) 216
<F9>Total return is not.
<F10>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class C Shares
Period Ended
September 30, 1995
Net asset value, beginning of period $28.65
Income from investment operations
Net investment income .54
Net realized and unrealized gain
(loss) on investments 4.20
Total from investment operations 4.74
Distributions from
Net investment income (.58)
Net realized gains (.21)
Total Distributions (.79)
Total increase (decrease) in
net asset value 3.95
Net asset value, end of period $32.60
Total return<F9> 16.85%
Ratio to average net assets:
Net investment income 1.61%
Total expenses<F10> 2.51%
Net expenses 2.50%
Expenses reimbursed and/or waived .42%
Portfolio turnover 114%
Net assets, end of period (in thousands) $4,065
Number of shares outstanding
at end of period (in thousands) 125
<F9>Total return is not.
<F10>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Managed Growth Portfolio Class C Shares
From Inception
(March 1, 1994) to
September 30, 1994
Net asset value, beginning of period $30.43
Income from investment operations
Net investment income .51
Net realized and unrealized gain
(loss) on investments (1.66)
Total from investment operations (1.15)
Distributions from
Net investment income (.63)
Net realized gains --
Total Distributions (.63)
Total increase (decrease) in
net asset value (1.78)
Net asset value, end of period $28.65
Total return<F9> (3.30%)
Ratio to average net assets:
Net investment income 1.83%(a)
Total expenses<F10> --
Net expenses 2.47%(a)
Expenses reimbursed and/or waived 1.46%(a)
Portfolio turnover 34%
Net assets, end of period (in thousands) $1,893
Number of shares outstanding
at end of period (in thousands) 66
<F9>Total return is not annualized.
<F10>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
(a) Annualized
Bond Portfolio Class A Shares
Period Ended
September 30, 1996
Net asset value, beginning of period $16.34
Income from investment operations
Net investment income .92
Net realized and unrealized gain
(loss) on investments (.29)
Total from investment operations .63
Distributions from
Net investment income (.91)
Net realized gains --
Tax return of capital --
Total Distributions (.91)
Total increase (decrease) in
net asset value (.28)
Net asset value, end of period $16.06
Total return<F11> 3.96%
Ratio to average net assets:
Net investment income 5.60%
Total expenses<F12> 1.29%
Net expenses 1.26%
Expenses reimbursed and/or waived --
Portfolio turnover 22%
Net assets, end of period (in thousands) $62,259
Number of shares outstanding
at end of period (in thousands) 3,876
<F11>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F12>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Bond Portfolio Class A Shares
Period Ended
September 30, 1995
Net asset value, beginning of period $15.49
Income from investment operations
Net investment income .96
Net realized and unrealized gain
(loss) on investments .91
Total from investment operations 1.87
Distributions from
Net investment income (.93)
Net realized gains (.06)
Tax return of capital (.03)
Total Distributions (1.02)
Total increase (decrease) in
net asset value .85
Net asset value, end of period $16.34
Total return<F11> 12.57%
Ratio to average net assets:
Net investment income 6.04%
Total expenses<F12> 1.24%
Net expenses 1.22%
Expenses reimbursed and/or waived --
Portfolio turnover 29%
Net assets, end of period (in thousands) $62,929
Number of shares outstanding
at end of period (in thousands) 3,850
<F11>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F12>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Bond Portfolio Class A Shares
Period Ended
September 30, 1994
Net asset value, beginning of period $17.77
Income from investment operations
Net investment income .94
Net realized and unrealized gain
(loss) on investments (1.81)
Total from investment operations (.87)
Distributions from
Net investment income (.94)
Net realized gains (.47)
Tax return of capital --
Total Distributions (1.41)
Total increase (decrease) in
net asset value (2.28)
Net asset value, end of period $15.49
Total return<F11> (5.18%)
Ratio to average net assets:
Net investment income 5.64%
Total expenses<F12> --
Net expenses 1.10%
Expenses reimbursed and/or waived --
Portfolio turnover 19%
Net assets, end of period (in thousands) $61,573
Number of shares outstanding
at end of period (in thousands) 3,976
<F11>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F12>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Bond Portfolio Class A Shares
Period Ended
September 30, 1993
Net asset value, beginning of period $17.05
Income from investment operations
Net investment income 1.08
Net realized and unrealized gain
(loss) on investments .85
Total from investment operations 1.93
Distributions from
Net investment income (1.08)
Net realized gains (.13)
Tax return of capital --
Total Distributions (1.21)
Total increase (decrease) in
net asset value .72
Net asset value, end of period $17.77
Total return<F11> 11.89%
Ratio to average net assets:
Net investment income 6.33%
Total expenses<F12> --
Net expenses .79%
Expenses reimbursed and/or waived .20%
Portfolio turnover 28%
Net assets, end of period (in thousands) $67,134
Number of shares outstanding
at end of period (in thousands) 3,778
<F11>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F12>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Bond Portfolio Class A Shares
Period Ended
September 30, 1992
Net asset value, beginning of period $16.48
Income from investment operations
Net investment income 1.15
Net realized and unrealized gain
(loss) on investments .78
Total from investment operations 1.93
Distributions from
Net investment income (1.15)
Net realized gains (.21)
Tax return of capital --
Total Distributions (1.36)
Total increase (decrease) in
net asset value .57
Net asset value, end of period $17.05
Total return<F11> 12.29%
Ratio to average net assets:
Net investment income 6.90%
Total expenses<F12> --
Net expenses .75%
Expenses reimbursed and/or waived .24%
Portfolio turnover 29%
Net assets, end of period (in thousands) $50,572
Number of shares outstanding
at end of period (in thousands) 2,965
<F11>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F12>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Bond Portfolio Class A Shares
Period Ended
September 30, 1991
Net asset value, beginning of period $15.34
Income from investment operations
Net investment income 1.21
Net realized and unrealized gain
(loss) on investments 1.15
Total from investment operations 2.36
Distributions from
Net investment income (1.21)
Net realized gains (.01)
Tax return of capital --
Total Distributions (1.22)
Total increase (decrease) in
net asset value 1.14
Net asset value, end of period $16.48
Total return<F11> 15.95%
Ratio to average net assets:
Net investment income 7.63%
Total expenses<F12> --
Net expenses .77%
Expenses reimbursed and/or waived .27%
Portfolio turnover 24%
Net assets, end of period (in thousands) $33,259
Number of shares outstanding
at end of period (in thousands) 2,018
<F11>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F12>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Bond Portfolio Class A Shares
Period Ended
September 30, 1990
Net asset value, beginning of period $15.71
Income from investment operations
Net investment income 1.24
Net realized and unrealized gain
(loss) on investments (.32)
Total from investment operations .92
Distributions from
Net investment income (1.24)
Net realized gains (.05)
Tax return of capital --
Total Distributions (1.29)
Total increase (decrease) in
net asset value (.37)
Net asset value, end of period $15.34
Total return<F11> 6.09%
Ratio to average net assets:
Net investment income 8.02%
Total expenses<F12> --
Net expenses .65%
Expenses reimbursed and/or waived .45%
Portfolio turnover 22%
Net assets, end of period (in thousands) $23,298
Number of shares outstanding
at end of period (in thousands) 1,519
<F11>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F12>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Bond Portfolio Class A Shares
Period Ended
September 30, 1989
Net asset value, beginning of period $15.43
Income from investment operations
Net investment income 1.31
Net realized and unrealized gain
(loss) on investments .30
Total from investment operations 1.61
Distributions from
Net investment income (1.29)
Net realized gains (.04)
Tax return of capital --
Total Distributions (1.33)
Total increase (decrease) in
net asset value .28
Net asset value, end of period $15.71
Total return<F13> 10.93%
Ratio to average net assets:
Net investment income 8.53%
Total expenses<F14> --
Net expenses .17%
Expenses reimbursed and/or waived .92%
Portfolio turnover 50%
Net assets, end of period (in thousands) $12,792
Number of shares outstanding
at end of period (in thousands) 814
<F13>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F14>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Bond Portfolio Class A Shares
Period Ended
September 30, 1988
Net asset value, beginning of period $14.81
Income from investment operations
Net investment income 1.16
Net realized and unrealized gain
(loss) on investments .62
Total from investment operations 1.78
Distributions from
Net investment income (1.16)
Net realized gains --
Tax return of capital --
Total Distributions (1.16)
Total increase (decrease) in
net asset value .62
Net asset value, end of period $15.43
Total return<F13> 12.32%
Ratio to average net assets:
Net investment income 8.14%
Total expenses<F14> --
Net expenses --
Expenses reimbursed and/or waived 1.56%
Portfolio turnover 27%
Net assets, end of period (in thousands) $5,235
Number of shares outstanding
at end of period (in thousands) 339
<F13>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F14>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Bond Portfolio Class A Shares
From Inception
(August 24, 1987) to
September 30, 1987
Net asset value, beginning of period $15.00
Income from investment operations
Net investment income .04
Net realized and unrealized gain
(loss) on investments (.20)
Total from investment operations (.16)
Distributions from
Net investment income (.03)
Net realized gains --
Tax return of capital --
Total Distributions (.03)
Total increase (decrease) in
net asset value (.19)
Net asset value, end of period $14.81
Total return<F13> (13.56%)(a)
Ratio to average net assets:
Net investment income .34%(a)
Total expenses<F14> --
Net expenses .50%(a)
Expenses reimbursed and/or waived 1.16%(a)
Portfolio turnover --
Average commission rate paid
Net assets, end of period (in thousands) $344
Number of shares outstanding
at end of period (in thousands) 23
<F13>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F14>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
(a) Annualized
Managed Growth Portfolio Class C Shares
From Inception
(March 1, 1994) to
September 30, 1994
Net asset value, beginning of period $16.71
Income from investment operations
Net investment income .45
Net realized and unrealized gain
(loss) on investments (1.23)
Total from investment operations (.78)
Distributions from
Net investment income (.50)
Net realized gains --
Tax return of capital --
Total Distributions (.50)
Total increase (decrease) in
net asset value (1.28)
Net asset value, end of period $15.43
Total return<F4> (4.13%)
Ratio to average net assets:
Net investment income 4.63%(a)
Total expenses<F5> --
Net expenses 2.41%(a)
Expenses reimbursed and/or waived 9.60%(a)
Portfolio turnover 19%
Net assets, end of period (in thousands) $315
Number of shares outstanding
at end of period (in thousands) 20
<F4>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges.
<F5>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
(a) Annualized
Equity Portfolio Class A Shares
Year Ended
September 30, 1996
Net asset value, beginning of year $21.12
Income from investment operations
Net investment income .03
Net realized and unrealized gain
(loss) on investments 3.26
Total from investment operations 3.29
Distributions from
Net investment income (.06)
Net realized gains (1.81)
Total Distributions (1.87)
Total increase (decrease) in
net asset value 1.42
Net asset value, end of year $22.54
Total return<F15> 16.62%
Ratio to average net assets:
Net investment income .15%
Total expenses<F16> 1.29%
Net expenses 1.27%
Expenses reimbursed and/or waived --
Portfolio turnover 118%
Average commission rate paid $.06
Net assets, end of period (in thousands)$101,344
Number of shares outstanding
at end of year (in thousands) 4,496
<F15>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F16>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class A Shares
Year Ended
September 30, 1995
Net asset value, beginning of year $20.13
Income from investment operations
Net investment income .06
Net realized and unrealized gain
(loss) on investments 2.22
Total from investment operations 2.28
Distributions from
Net investment income (.04)
Net realized gains (1.25)
Total Distributions (1.29)
Total increase (decrease) in
net asset value .99
Net asset value, end of year $21.12
Total return<F15> 12.43%
Ratio to average net assets:
Net investment income .32%
Total expenses<F16> 1.38%
Net expenses 1.36%
Expenses reimbursed and/or waived --
Portfolio turnover 35%
Net assets, end of period (in thousands) $90,951
Number of shares outstanding
at end of year (in thousands) 4,307
<F15>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F16>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class A Shares
Year Ended
September 30, 1994
Net asset value, beginning of year $21.43
Income from investment operations
Net investment income .13
Net realized and unrealized gain
(loss) on investments (1.04)
Total from investment operations (.91)
Distributions from
Net investment income (.28)
Net realized gains (.11)
Total Distributions (.39)
Total increase (decrease) in
net asset value (1.30)
Net asset value, end of year $20.13
Total return<F15> (4.33%)
Ratio to average net assets:
Net investment income .65%
Total expenses<F16> --
Net expenses 1.27%
Expenses reimbursed and/or waived --
Portfolio turnover 94%
Net assets, end of period (in thousands) $92,970
Number of shares outstanding
at end of year (in thousands) 4,620
<F15>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F16>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class A Shares
Year Ended
September 30, 1993
Net asset value, beginning of year $20.03
Income from investment operations
Net investment income .21
Net realized and unrealized gain
(loss) on investments 1.36
Total from investment operations 1.57
Distributions from
Net investment income (.17)
Net realized gains --
Total Distributions (.17)
Total increase (decrease) in
net asset value 1.40
Net asset value, end of year $21.43
Total return<F15> 7.82%
Ratio to average net assets:
Net investment income 1.06%
Total expenses<F16> --
Net expenses 1.13%
Expenses reimbursed and/or waived --
Portfolio turnover 43%
Net assets, end of period (in thousands) $85,042
Number of shares outstanding
at end of year (in thousands) 3,968
<F15>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F16>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class A Shares
Year Ended
September 30, 1992
Net asset value, beginning of year $18.89
Income from investment operations
Net investment income .17
Net realized and unrealized gain
(loss) on investments 1.20
Total from investment operations 1.37
Distributions from
Net investment income (.23)
Net realized gains --
Total Distributions (.23)
Total increase (decrease) in
net asset value 1.14
Net asset value, end of year $20.03
Total return<F17> 7.36%
Ratio to average net assets:
Net investment income 1.02%
Total expenses<F18> --
Net expenses 1.17%
Expenses reimbursed and/or waived --
Portfolio turnover 24%
Net assets, end of period (in thousands) $64,629
Number of shares outstanding
at end of year (in thousands) 3,226
<F17>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F18>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class A Shares
Year Ended
September 30, 1991
Net asset value, beginning of year $15.86
Income from investment operations
Net investment income .44
Net realized and unrealized gain
(loss) on investments 2.96
Total from investment operations 3.40
Distributions from
Net investment income (.37)
Net realized gains --
Total Distributions (.37)
Total increase (decrease) in
net asset value 3.03
Net asset value, end of year $18.89
Total return<F17> 21.88%
Ratio to average net assets:
Net investment income 1.94%
Total expenses<F18> --
Net expenses 1.04%
Expenses reimbursed and/or waived .18%
Portfolio turnover 27%
Net assets, end of period (in thousands) $42,642
Number of shares outstanding
at end of year (in thousands) 2,258
<F17>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F18>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class A Shares
Year Ended
September 30, 1990
Net asset value, beginning of year $18.07
Income from investment operations
Net investment income .32
Net realized and unrealized gain
(loss) on investments (2.24)
Total from investment operations (1.92)
Distributions from
Net investment income (.24)
Net realized gains (.05)
Total Distributions (.29)
Total increase (decrease) in
net asset value (2.21)
Net asset value, end of year $15.86
Total return<F17> (10.80%)
Ratio to average net assets:
Net investment income 2.64%
Total expenses<F18> --
Net expenses .78%
Expenses reimbursed and/or waived .50%
Portfolio turnover 31%
Net assets, end of period (in thousands) $22,212
Number of shares outstanding
at end of year (in thousands) 1,401
<F17>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F18>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class A Shares
Year Ended
September 30, 1989
Net asset value, beginning of year $14.58
Income from investment operations
Net investment income .40
Net realized and unrealized gain
(loss) on investments 3.40
Total from investment operations 3.80
Distributions from
Net investment income (.31)
Net realized gains --
Total Distributions (.31)
Total increase (decrease) in
net asset value 3.49
Net asset value, end of year $18.07
Total return<F17> 26.69%
Ratio to average net assets:
Net investment income 2.48%
Total expenses<F18> --
Net expenses .21%
Expenses reimbursed and/or waived 1.17%
Portfolio turnover 8%
Net assets, end of period (in thousands) $7,927
Number of shares outstanding
at end of year (in thousands) 439
<F17>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F18>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class A Shares
Year Ended
September 30, 1988
Net asset value, beginning of year $15.33
Income from investment operations
Net investment income .87
Net realized and unrealized gain
(loss) on investments (1.53)
Total from investment operations (.66)
Distributions from
Net investment income (.08)
Net realized gains (.01)
Total Distributions (.09)
Total increase (decrease) in
net asset value (.75)
Net asset value, end of year $14.58
Total return<F17> (4.26%)
Ratio to average net assets:
Net investment income 2.85%
Total expenses<F18> --
Net expenses --
Expenses reimbursed and/or waived 2.49%
Portfolio turnover 23%
Net assets, end of period (in thousands) $1,711
Number of shares outstanding
at end of year (in thousands) 117
<F17>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F18>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class A Shares
From Inception
(August 24, 1987) to
September 30, 1987
Net asset value, beginning of year $15.00
Income from investment operations
Net investment income .02
Net realized and unrealized gain
(loss) on investments .31
Total from investment operations .33
Distributions from
Net investment income --
Net realized gains --
Total Distributions --
Total increase (decrease) in
net asset value .33
Net asset value, end of year $15.33
Total return<F17> 25.56%(a)
Ratio to average net assets:
Net investment income .31%(a)
Total expenses<F18> --
Net expenses .50%(a)
Expenses reimbursed and/or waived 1.50%(a)
Portfolio turnover --
Net assets, end of period (in thousands) $265
Number of shares outstanding
at end of year (in thousands) 17
<F17>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F18>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
(a) Annualized
Equity Portfolio Class C Shares
Year Ended
September 30, 1996
Net asset value, beginning of year $20.66
Income from investment operations
Net investment income (.16)
Net realized and unrealized gain
(loss) on investments 3.04
Total from investment operations 2.88
Distributions from
Net investment income (.02)
Net realized gains (1.81)
Total Distributions (1.83)
Total increase (decrease) in
net asset value 1.05
Net asset value, end of year $21.71
Total return<F17> 14.85%
Ratio to average net assets:
Net investment income (loss) (1.42%)
Total expenses<F18> 2.86%
Net expenses 2.85%
Expenses reimbursed and/or waived --
Portfolio turnover 118%
Average commission rate paid $.06
Net assets, end of period (in thousands) $2,996
Number of shares outstanding
at end of year (in thousands) 138
<F17>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F18>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class C Shares
Year Ended
September 30, 1995
Net asset value, beginning of year $19.98
Income from investment operations
Net investment income (.03)
Net realized and unrealized gain
(loss) on investments 2.05
Total from investment operations 2.02
Distributions from
Net investment income (.09)
Net realized gains (1.25)
Total Distributions (1.34)
Total increase (decrease) in
net asset value .68
Net asset value, end of year $20.66
Total return<F17> 11.16%
Ratio to average net assets:
Net investment income (loss) (.84%)
Total expenses<F18> 2.51%
Net expenses 2.50%
Expenses reimbursed and/or waived 1.07%
Portfolio turnover 35%
Net assets, end of period (in thousands) $1,802
Number of shares outstanding
at end of year (in thousands) 87
<F17>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F18>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
Equity Portfolio Class C Shares
March 1, 1994(Inception) to
September 30, 1994
Net asset value, beginning of year $22.12
Income from investment operations
Net investment income (.06)
Net realized and unrealized gain
(loss) on investments (2.08)
Total from investment operations (2.14)
Distributions from
Net investment income --
Net realized gains --
Total Distributions --
Total increase (decrease) in
net asset value (2.14)
Net asset value, end of year $19.98
Total return<F17> (9.14%)
Ratio to average net assets:
Net investment income (1.06%)(a)
Total expenses<F18> --
Net expenses 2.75%(a)
Expenses reimbursed and/or waived 4.60%(a)
Portfolio turnover 94%
Net assets, end of period (in thousands) $670
Number of shares outstanding
at end of year (in thousands) 34
<F17>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges. Total return prior to 1989 is not audited.
<F18>Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
(a) Annualized
INVESTMENT OBJECTIVES AND POLICIES
The Fund is designed for individual and institutional investors, including
ERISA fiduciaries, seeking growth of capital or current income through
investment in enterprises that make a significant contribution to society
through their products and services and through the way they do business. The
Managed Growth Portfolio is designed for long-term investment. The Money
Market Portfolio is designed for short-term cash management and stability of
principal. The Bond Portfolio is designed for current income and preservation
of capital. The Equity Portfolio is designed for capital growth.
Money Market Portfolio
The Money Market Portfolio seeks to provide the highest level of current
income, consistent with liquidity, safety and security of capital, through
investment in money market instruments, including repurchase agreements with
recognized securities dealers and banks secured by such instruments, and
reverse repurchase agreements, all selected in accordance with the Fund's
investment and social criteria. The Money Market Portfolio attempts to
maintain a constant net asset value of $1.00 per share.
The Money Market Portfolio invests only in high grade, short-term money market
instruments which may include: obligations issued or guaranteed as to
principal by the United States Government, its agencies and instrumentalities;
U.S. dollar-denominated certificates of deposit, time deposits and bankers'
acceptances of U.S. banks, generally banks with assets in excess of $1
billion; taxable municipal securities, including variable rate demand notes;
and commercial paper (including participation interests in loans extended by
banks to issuers of commercial paper) that at the date of investment is rated
A-1 by Standard & Poor's Ratings Group ("S&P") or Prime-1 by Moody's Investors
Service, Inc. ("Moody's"), or, if not rated, is of comparable quality.
Managed Growth Portfolio
The Managed Growth Portfolio seeks to achieve a total return above the rate of
inflation through an actively managed portfolio of stocks, bonds and money
market instruments (including repurchase agreements secured by such
instruments) selected with a concern for the investment and social impact of
each investment. It is not the policy of the Managed Growth Portfolio to take
risks to obtain speculatively or aggressively high returns. The portfolio is a
"Balanced" portfolio, and intends to invest approximately 55% of its assets in
equities and 45% in fixed income securities. See "Portfolio Mangers" for
more information. Generally, equity investments are selected by the
Sub-Advisors, subject to direction and control by the Fund's Advisor and Board
of Trustees. CAM manages the Portfolio's fixed-income assets. The Investment
Advisors determine the mix for the Managed Growth Portfolio depending upon
their view of market conditions and the economic outlook.
The Managed Growth Portfolio may purchase both common and preferred stock. The
Portfolio normally invests in bonds which are considered investment grade,
including bonds which are direct or indirect obligations of the U.S.
Government, or which at the date of investment are rated AAA, AA, A, or BBB by
S&P or Aaa, Aa, A, or Baa by Moody's. The Portfolio may purchase lower-rated
obligations (those rated below BBB, which are considered non-investment grade
securities) but no more than 20% of its assets may be invested in obligations
rated lower than B. The Portfolio may purchase without limitation bonds which
are unrated but of comparable quality to bonds rated B or better as determined
by the Advisors under the supervision of the Board of Trustees. The Managed
Growth Portfolio does not currently hold or intend to invest more than 5% of
its net assets in non-investment grade securities. See the Statement of
Additional Information ("SAI") for additional information concerning bond
ratings.
Bond Portfolio
The Bond Portfolio seeks to provide as high a level of current income as is
consistent with prudent investment risk and preservation of capital through
investment in bonds and other straight debt securities, including taxable
municipal securities, selected pursuant to the Fund's investment and social
criteria. The Bond Portfolio is neither speculative nor conservative in its
investment policies and will take reasonable risks in seeking to achieve its
investment objective of current income and preservation of capital. Debt
securities may be long-term, intermediate-term, short-term, or any combination
thereof, depending on the Advisors' evaluation of current and anticipated
market patterns and trends; the Advisors expect that the Bond Portfolio's
average weighted maturity will range between 5 and 20 years. The value of the
Portfolio will vary inversely with changes in interest rates.
In seeking to achieve these objectives, it is anticipated that under normal
conditions the Bond Portfolio will invest at least 65% of the value of its
assets in publicly-traded straight debt securities which have an investment
grade rating of A or above as determined by a nationally recognized rating
service such as S&P or Moody's, or if unrated, determined to be of comparable
quality. The Portfolio may also invest in obligations issued or guaranteed by
the U.S. Government or its agencies or instrumentalities, or in cash and cash
equivalents. Up to 20% of the Bond Portfolio's total assets may be invested in
straight debt securities which are not rated within the four highest grades
(including bonds rated below Baa or BBB and unrated securities), in
convertible debt securities, convertible preferred and preferred stocks, or
other securities. The Bond Portfolio does not currently hold or intend to
invest more than 5% of its net assets in non-investment grade securities. See
the SAI for additional information concerning bond ratings.
Equity Portfolio
The Equity Portfolio seeks growth of capital through investment in the equity
securities of issuers within industries perceived to offer opportunities for
potential capital appreciation and which satisfy the Fund's investment and
social criteria. The Equity Portfolio is neither speculative nor conservative
in its investment policies and will take reasonable risks in seeking to
achieve its investment objective of growth of capital.
The Equity Portfolio normally invests at least 80% of the value of its net
assets in equity securities. Such securities include common stocks,
convertible securities and preferred stocks. For liquidity purposes or pending
the investment of the proceeds of the sale of its shares, the Equity Portfolio
may invest up to 20% of the value of its assets in money market instruments,
including: obligations of the U.S. Government, its agencies and
instrumentalities; certificates of deposit of banks, generally, those having
total assets of at least one billion dollars; and commercial paper or other
corporate notes of investment grade quality. Such securities may be purchased
subject to repurchase agreements with recognized securities dealers and banks.
If the Equity Portfolio has assumed a temporary defensive posture, there is no
limitation on the percentage of its assets which may be invested in money
market instruments. The Equity Portfolio does not currently hold or intend to
invest more than 5% of its net assets in non-investment grade debt securities.
ALL INVESTMENTS ARE SELECTED WITH A CONCERN FOR THE SOCIAL IMPACT OF EACH
INVESTMENT
The Fund invests in accordance with its philosophy that long-term
rewards to investors will come from those organizations whose products,
services, and methods enhance the human condition and the traditional American
values of individual initiative, equality of opportunity and cooperative
effort.
The Fund has developed the following criteria for the selection of
organizations in which it invests. The Fund recognizes, however, that these
criteria represent standards of behavior which few, if any, organizations
totally satisfy and that, as a matter of practice, evaluation of a particular
organization in the context of these criteria will involve subjective judgment
by the Fund's Investment Advisor and Sub-Advisors.
Given these considerations, the Fund seeks to invest in a producer or
service provider which:
1. Delivers safe products and services in ways which sustain our
natural environment. For example, the Fund looks for companies
that produce energy from renewable resources, while avoiding
consistent polluters.
2. Is managed with participation throughout the organization in
defining and achieving objectives. For example, the Fund looks
for companies that offer employee stock ownership or
profit-sharing plans.
3. Negotiates fairly with its workers, provides an environment
supportive of their wellness, does not discriminate on the basis
of race, gender, religion, age, disability, ethnic origin, or
sexual orientation, does not consistently violate regulations of
the Equal Employment Opportunity Commission, and provides
opportunities for women, disadvantaged minorities, and others
for whom equal opportunities have often been denied. For
example, the Fund considers both unionized and non-union firms
with good labor relations.
4. Fosters awareness of a commitment to human goals, such as
creativity, productivity, self-respect and responsibility,
within the organization and the world, and continually recreates
a context within which these goals can be realized. For example,
the Fund looks for companies with an above average commitment to
community affairs and charitable giving.
The Fund will not invest in an issuer which the Advisors determine to
be significantly engaged in:
1. The production of nuclear energy or the manufacture of equipment
to produce nuclear energy.
2. Business activities in support of repressive regimes.
3. The manufacture of weapon systems.
The Fund will not, as a matter of operating policy which may be changed
without the approval of a majority of the outstanding shares, invest in an
issuer primarily engaged in the manufacture of alcoholic beverages or tobacco
products, or the operation of gambling casinos.
The Fund believes that social and technological change will continue to
transform America and the world for the balance of this century. Those
enterprises which exhibit a social awareness measured in terms of the above
attributes and considerations should be better prepared to meet future
societal needs for goods and services. By responding to social concerns, these
enterprises should maintain flexibility and further social goals. In so doing
they should not only avoid the liability that may be incurred when a product
or service is determined to have a negative social impact or has outlived its
usefulness, but also be better positioned to develop opportunities to make a
profitable contribution to society. These enterprises should be ready to
respond to external demands and ensure that over the longer term they will be
viable to provide a positive return to both investors and society as a whole.
INVESTMENT SELECTION PROCESS
Investments are selected on the basis of their ability to contribute to the
dual objectives of the Fund.
Potential investments are first screened for financial soundness and then
evaluated according to the Fund's social criteria. To the greatest extent
possible investments are made in companies exhibiting unusual, positive
accomplishments with respect to one or more of the criteria. Companies must
meet the Fund's minimum standards for all the criteria. With respect to
government securities, the Fund invests primarily in debt obligations issued
or guaranteed by agencies or instrumentalities of the U.S. Government whose
purposes further or are compatible with the Fund's social criteria, such as
obligations of the Student Loan Marketing Association, rather than general
obligations of the U.S. Government, such as Treasury securities. It should be
noted that the Fund's social criteria tend to limit the availability of
investment opportunities more than is customary with other investment
companies.
The selection of an organization for investment by a Portfolio does not
constitute endorsement or validation by the Fund, nor does the exclusion of an
organization necessarily reflect failure to satisfy the Fund's social
criteria. Investors in the Fund are invited to send a brief description of
companies they believe might be suitable for investment by the Fund.
ADDITIONAL INVESTMENT POLICIES
As a matter of fundamental investment policy which cannot be changed without
shareholder approval, no more than 25% of the value of a Portfolio's assets
may be invested in any one industry, no more than 5% of a Portfolio's assets
may be invested in any one company, nor may a Portfolio, or the Fund in the
aggregate, purchase more than 10% of the voting securities of any issuer.
The Managed Growth, Bond and Equity Portfolios each can use various techniques
to increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and futures
contracts and leveraged notes, entering into swap agreements, and purchasing
indexed securities. The Portfolios can use these practices either as
substitution or as protection against an adverse move in the Portfolios to
adjust the risk and return characteristics of the Portfolios. If the Advisor
and/or Sub-Advisor judges market conditions incorrectly or employs a strategy
that does not correlate well with a Portfolio's investments, or if the
counterparty to the transaction does not perform as promised, these techniques
could result in a loss. These techniques may increase the volatility of a
Portfolio and may involve a small investment of cash relative to the magnitude
of the risk assumed. Any instruments determined to be illiquid are subject to
the Fund's 10% restriction on illiquid securities. See the SAI for more detail
about these strategies.
The Fund may engage in repurchase agreements and reverse repurchase
agreements. In a repurchase agreement, the Fund buys a security subject to the
right and obligation to sell it back at a higher price. In order to minimize
any risk involved, the Fund engages in such transactions only with recognized
securities dealers determined by the Advisor to present a minimal credit risk.
Repurchase agreements are fully collateralized and always have a maturity of
less than one year. In a reverse repurchase agreement, the Fund sells a
security subject to the right and obligation to buy it back at a higher price.
The Fund then invests the proceeds from the transaction in another obligation
in which it is authorized to invest. For reverse repurchase agreements, the
Fund maintains in a segregated account liquid assets equal in value to the
repurchase price.
Each Portfolio may borrow money from banks (and pledge its assets to secure
such borrowing) for temporary or emergency purposes, but not for leverage.
Such borrowing may not exceed 10% of the value of that Portfolio's total
assets.
The Fund has adopted the following operating (i.e., non-fundamental)
investment policies which may be changed by the Board of Trustees without
shareholder approval:
No Portfolio may purchase or hold illiquid securities if more than 10% of the
value of that Portfolio's net assets would be invested in such securities.
Each Portfolio may invest up to 25% of its assets in the securities of foreign
issuers. The Portfolios may purchase foreign securities directly, on foreign
markets, or those represented by American Depositary Receipts ("ADRs"), or
other receipts evidencing ownership of foreign securities, such as
International Depository Receipts and Global Depository Receipts. ADRs are
U.S. dollar-denominated and traded in the U.S. on exchanges or over the
counter. Foreign securities may involve additional risks, including currency
fluctuations, risks relating to political or economic conditions, and the
potentially less stringent investor protection and disclosure standards of
foreign markets. These factors could make foreign investments, especially
those in developing countries, less liquid and more volatile. In addition, the
costs of foreign investing, including withholding taxes, brokerage commissions
and custodial costs are generally higher than for U.S. investments. By
investing in ADRs rather than directly in foreign issuers' stock, the
Portfolios may avoid some currency and some liquidity risks. The information
available for ADRs is subject to the more uniform and more exacting
accounting, auditing and financial reporting standards of the domestic market
or exchange on which they are traded. The Money Market Portfolio may purchase
only high quality U.S. dollar-denominated instruments.
For further information on the Fund's investment policies and restrictions,
see the SAI.
Special Equities and Private Placements
Due to the particular social objective of the Fund, opportunities may exist to
promote especially promising approaches to social goals through privately
placed investments. The Special Equities Committee of the Board of Trustees
identifies, evaluates, and selects certain of these investments, typically for
the Managed Growth Portfolio, subject to ratification by the Board. The
private placement investments undertaken by the Fund, if any, may be subject
to a high degree of risk. Such investments may involve relatively small and
untried enterprises that have been selected in the first instance because of
some attractive social objectives or policies.
Many private placement investments have no readily available market and may
therefore be considered illiquid. Fund investments in private placements and
other securities for which market quotations are not readily available are
valued at fair value under the direction and control of the Board.
High Social Impact Investments
Each Portfolio may invest a small portion of its respective assets in
investments in securities that offer a rate of return below the then
prevailing market rate and that present attractive opportunities for
furthering the Fund's social criteria ("High Social Impact Investments"); such
High Social Impact investments must be less than 1% of the Portfolio's assets.
Such securities are typically illiquid and unrated and generally considered
non-investment grade debt securities which involve a greater risk of default or
price decline than investment-grade securities. Through diversification and
credit analysis and limited maturity, investment risk can be reduced, although
there can be no assurance that losses will not occur. The High Social Impact
Investments Committee of the Board identifies, evaluates, selects and values
these investments, subject to ratification by the Board.
YIELD AND TOTAL RETURN
The Portfolios may advertise different types of yield and total return
performance, which is calculated separately for each class. All performance
figures are based on historical earnings and are not intended to indicate
future performance. Further information about the Fund's performance is
contained in its Annual Report to Shareholders, which may be obtained without
charge.
Money Market Portfolio
The Money Market Portfolio may advertise "yield" and "effective yield." The
"yield" of the Fund refers to the actual income generated by an investment in
the Portfolio over a particular base period, stated in the advertisement. If
the base period is less than one year, the yield will be "annualized." That
is, the amount of income generated by the investment during the base period is
assumed to be generated over a one-year period and is shown as a percentage of
the investment. The "effective yield" is calculated like yield, but assumes
reinvestment of earned income. The effective yield will be slightly higher
than the yield because of the compounding effect of this assumed reinvestment.
Bond Portfolio
Yield measures the Bond Portfolio's current investment performance for each
class, that is, the rate of income on its portfolio investments divided by the
share price of the class. Yield is computed by annualizing the result of
dividing the net investment income per share over a 30-day period by the
maximum offering price per share for that class on the last day of that
period. Yields are calculated according to accounting methods that are
standardized for all stock and bond funds.
Managed Growth, Bond, and Equity Portfolios
Total return differs from yield in that yield figures measure only the income
component of a Portfolio's investments, while total return includes not only
the effect of income dividends but also any change in net asset value, or
principal amount, during the stated period. The total return of a class shows
its overall change in value, including changes in share price and assuming all
of its dividends and capital gain distributions are reinvested. A cumulative
total return reflects the performance of the class over a stated period of
time. An average annual total return reflects the hypothetical annual
compounded return that would have produced the same cumulative total return if
the performance had been constant over the entire period. Because average
annual returns tend to smooth out variations in the returns, you should
recognize that they are not the same as actual year-by-year results. Both
types of total return for Class A shares usually will include the effect of
paying the front-end sales charge. Of course, total returns will be higher if
sales charges are not taken into account. Quotations of "return without
maximum sales charge" do not reflect deduction of the sales charge. You should
consider these figures only if you qualify for a reduced sales charge,
or for purposes of comparison with comparable figures which also do not reflect
sales charges, such as mutual fund averages compiled by Lipper Analytical
Services, Inc.
MANAGEMENT OF THE FUND
The Board of Trustees supervises the Fund's activities and reviews its
contracts with companies that provide the Fund with services.
The Fund is an open-end diversified management investment company, organized
as a Massachusetts business trust on March 15, 1982.
The Fund is not required to hold annual shareholder meetings, but special
meetings may be called for certain purposes such as electing Trustees,
changing fundamental policies, or approving a management contract. As a
shareholder, you receive one vote for each share you own, except that matters
affecting classes differently, such as Distribution Plans, will be voted on
separately by the affected class(es).
Board of Trustees
REBECCA ADAMSON
President, First Nations Development Institute
RICHARD L. BAIRD, JR.
Director of Finance, Family Health Council, Inc.
JOHN G. GUFFEY, JR.
Chair, Calvert Social Investment Foundation
Treasurer and Director, Silby, Guffey & Co., Inc.
JOY V. JONES, Esq.
Attorney and Entertainment Manager
TERRENCE J. MOLLNER, Ed.D.
Founder and Chair, Trusteeship Institute, Inc.
(Ms.) SYDNEY AMARA MORRIS
Senior Minister, Unitarian Church of Vancouver, Canada
CHARLES T. NASON
Chairman, President, and Chief Executive Officer, The Acacia Group
D. WAYNE SILBY
President, Secretary, and Director, Silby, Guffey & Co., Inc.
CLIFTON S. SORRELL, JR.
President, Calvert Group, Ltd. and its subsidiaries
Advisory Council
The Advisory Council is a resource to the Board of Trustees regarding
communication networks for the Fund and the application and refinement of the
Fund's social criteria.
TIMOTHY SMITH
(Chair) Executive Director, Interfaith Center on Corporate Responsibility
University
ROBERT BROWNE
President, Twenty-First Century Foundation
WILLIAM J. BYNUM
President and CEO, Enterprise Corporation for the Delta
JACK CHIN
Program Officer, Gap Foundation
FRED DAVIE
Deputy President, Borough of Manhattan
MARIAN WRIGHT EDELMAN
President & Founder, Children's Defense Fund
MICHAEL FISCHER
Executive Director, California State Coastal Conservancy
ELIZABETH HARRIS
Vice President, UNC Partners, Inc.
SOPHIA BRACEY HARRIS
Founder and Executive Director, The Federation of Childcare Centers of
Alabama, Inc.
JAMES E. HEARD
President, Institutional Shareholder Services, Inc.
HAZEL HENDERSON
Independent Futurist and Author
ERICA HUNT
Senior Program Officer, New World Foundation
GRACE LECLAIR
Writer, Consultant and Theorist Concerning the Impacts of Economics on Family
and Community Life
KAI LEE
Professor of Environmental Studies and Director of the Center for
Environmental Studies, Williams College
JESSICA LIPNACK
President, The Networking Institute, Inc.
ROBERT CARTER RANDOLPH
Special Trade Representative, Office of the Governor, State of Washington
RUSTUM ROY
Professor of Geochemistry, Pennsylvania State University
BYRON RUSHING
State Representative, Massachusetts
MARC DAVID SARKADY
Leadership Consultant on Values & Visions to Renew Corporations & Governments
GAIL SNOWDEN
President, First Community Bank, Bank of Boston
JEFFREY STAMPS
Chairman, The Networking Institute, Inc.
THOMAS STONEBACK
Vice President and Chief Administrative Officer, Rodale Press, Inc.
DARRELD RAY TURNER, II
Policy Advisor, Cherokee Nation of Oklahoma
DIANE WHITE
Owner, Blackberry
D. Wayne Silby, Chair of the Fund's Board of Trustees, serves as an ex officio
member of the Advisory Council. Mr. Smith is the chair of the Advisory Council.
Calvert Asset Management Serves as Advisor to the Fund.
Calvert Asset Management Company, Inc. (the "Advisor") is the Fund's
investment advisor. The Advisor provides the Fund with investment supervision
and management, administrative services and office space; furnishes executive
and other personnel to the Fund; and pays the salaries and fees of all
Trustees who are affiliated persons of the Advisor. The Advisor may also
assume and pay certain advertising and promotional expenses of the Fund and
reserves the right to compensate broker-dealers in return for their
promotional or administrative services.
Portfolio Managers
Managed Growth Portfolio
The Managed Growth Portfolio is managed by multiple investment sub-advisors.
With the multi-manager approach, there will be several investment strategies
in place at any given time in order to help the Portfolio pursue its
investment objectives. The Managed Growth Portfolio may employ "growth
managers," who generally concentrate on stocks that have demonstrated, or are
expected to produce, earnings growth rates significantly greater than the
market as a whole, as well as "value managers," who tend to make stock
selections on the basis of perceived relative value as determined by a defined
model in a bottom-up approach.
Specifically, CAM has retained, and the Portfolio's shareholders have
authorized a pool of five investment sub-advisors ("Sub-Advisors") to manage the
Managed Growth Portfolio's assets, though they will not necessarily be managing
the Portfolio's money at the same time. CAM has retained United States Trust
Company of Boston ("U.S. Trust"), NCM Capital Management Group, Inc. ("NCM"),
Brown Capital Management, Inc. ("Brown"), Fortaleza Asset Management, Inc. and
Frontier Capital Management, Inc. as sub-advisors for the Portfolio. Currently,
portfolio assets are managed by CAM, NCM, and Brown. See the SAI for information
on the other Sub-Advisors.
Asset management of the Managed Growth Portfolio will be by a team headed by
Reno J. Martini, Sr. Vice President and Chief Investment Officer. Mr. Martini
oversees the management of all Calvert portfolios. He has extensive experience
evaluating and purchasing municipal securities.
NCM's portfolio management team consists of seven members. Maceo K. Sloan,
CFA, FLMI, is Chairman, President, Chief Executive Officer, and Chief
Investment Officer of the company. He received a BA from Morehouse College,
and MBA from Georgia State University, and a JD from North Carolina Central
University. He is a Chartered Financial Analyst, and is Fellow of the Life
Management Institute. Mr. Sloan is a regular panelist on the PBS program Wall
Street Week in Review and has been a panelist and chaired several conferences
concerning investment opportunities in South Africa, such as the RCB
International Seminar and the Pensions 2000 on South Africa.
Asset management by Brown Capital Management, Inc. is by a team headed by
Eddie C. Brown.Eddie C. Brown, Portfolio Manager, is founder and President of
Brown Capital Management. He has over 22 years of investment experience, having
served as Vice President and Portfolio Manager for 10 years at T. Rowe Price
Associates immediately prior to starting his own firm. Mr. Brown holds a BS in
Electrical Engineering from Howard University, an MS in Business Administration
from the Indiana University School of Business. He is a
professionally-designated Chartered Financial Analyst and Chartered Investment
Counselor. Additionally, he is a Commissioner for Maryland Public Broadcasting
(a Gubernatorial appointment), member of the Board of Directors of the Baltimore
Community Foundation, member of the Dean's Advisory Council of Indiana
University School of Business, sole inductee of the "Wall Street Week Hall of
Fame," and a member of The President's Roundtable.
Bond Portfolio
U.S. Trust is the Sub-Advisor to the Bond Portfolio. U.S. Trust is a
Massachusetts - chartered commercial bank with full trust powers. It is
wholly-owned and the principal subsidiary of UST Corp., a Massachusetts bank
holding company. It is located at 30 Court Street, Boston, Massachusetts
02108. The Trust Department of U.S. Trust has managed funds as a fiduciary
since 1895.
Cheryl Smith, Vice President of U.S. Trust is the portfolio manager for the
Bond Portfolio. Ms. Smith joined U.S. Trust in 1992. In addition to the
management of the Bond Portfolio, her duties at U.S. Trust include management
of institutional and individual client investment portfolios and integration
of client social criteria into the portfolio management process. She served as
Vice President of Franklin Research & Development from 1987 to 1992. Ms. Smith
has managed the Bond Portfolio since August 1994. She is a Chartered Financial
Analyst and holds a Ph.D. in Economics from Yale University.
Equity Portfolio
Philip J. Schettewi, Managing Partner, Vice President, and Chief Portfolio
Strategist of Loomis, Sayles & Company, L.P., is the portfolio manager for the
Equity Portfolio. Mr. Schettewi is a Chartered Financial Analyst, and has 15
years experience in the investment business.
Calvert Group is one of the largest investment management firms in the
Washington, D.C. area.
Calvert Group, Ltd., parent of the Fund's investment advisor, transfer agent,
and distributor, is a subsidiary of Acacia Mutual Life Insurance Company of
Washington, D.C. Calvert Group is one of the largest investment management
firms in the Washington, D.C. area. Calvert Group, Ltd. and its subsidiaries
are located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
As of December 31, 1996, Calvert Group managed and administered assets in
excess of $5.2 billion and more than 220,000 shareholder and depositor
accounts.
NCM Capital Management Group, Inc.
Managed Growth Portfolio
NCM Capital Management Group, Inc. manages approximately 55% of the equity
portion of the Managed Growth Portfolio as of December 31, 1996. NCM was
founded by Maceo K. Sloan in 1986 as a subsidiary of North Carolina Mutual
Life Insurance Company, which was established by Mr. Sloan's ancestors in 1898
and is one of the oldest and largest minority-owned financial institutions in
the country. NCM has been an employee-owned subsidiary of Sloan Financial
Group since 1991. Sixty percent of Sloan Financial Group is co-owned by Mr.
Sloan and Justin E. Beckett, who is Executive Vice President and a Director of
NCM. NCM is one of the largest minority-owned investment management firms in
the country, and provides products in equity, fixed income and balanced
portfolio management. It is also one of the industry leaders in the employment
and training of minority and women investment professionals.
Clifford D. Mpare, CFA, CMA, is Senior Vice President and Director of
Investments. He received his BComm from St. Mary's University and an MBA from
Dalhousie University. He is a Chartered Financial Analyst and a Certified
Management Accountant. Lawrence J. Verny is a Vice President. He received his
BS from Fairleigh Dickinson University and is a CFA candidate. Wendell E.
Mackey is a Vice President. He received his BBA from Howard University, and an
MM from the J.L. Kellogg Graduate School of Management at Northwestern
University. Mr. Mackey is a CFA candidate. Stephon A. Jackson, CFA, is a Vice
President and Director of Research. He received his BS from the University of
North Carolina and his MBA from The Wharton School of the University of
Pennsylvania. He is a Chartered Financial Analyst. David C. Carter is a Vice
President, and received his BS and MBA from New York University. Mr. Carter is
a CFA candidate. Lorenzo Newsome, Jr. is a Vice President. He received his BS
from the University of Pittsburgh, an MA from Bowie State University, and is a
CFA candidate.
Brown Capital Management, Inc.
Managed Growth Portfolio
Brown Capital Management, Inc. of 809 Cathedral Street, Baltimore,
Maryland, has managed a part of the equity portion of the Managed Growth
Portfolio since September 30, 1996. Brown Capital Management, Inc. believes that
capital can be enhanced in times of opportunity and preserved in times of
adversity without timing the market. The firm uses a bottom-up approach that
incorporates growth-adjusted price earnings. Stocks purchased are generally
undervalued and have momentum, have earnings-per-share growth rates greater than
the market, are more profitable than the market, and have relatively low
price-earnings ratios. The firm concentrates on mid-/large-cap growth stocks.
Loomis, Sayles
Equity Portfolio
Loomis, Sayles & Company, L.P., ("Loomis, Sayles") is the Sub-Advisor to the
Equity Portfolio. A private investment counsel firm founded in 1926, Loomis,
Sayles is organized as a limited partnership, controlled by New England Mutual
Life Insurance Company. The principal business address of Loomis, Sayles is
One Financial Center, Boston, Massachusetts 02111.
The Advisor receives a fee based on a percentage of the Fund's assets, and for
the Managed Growth and Equity Portfolios only, the performance. From this, the
Advisor pays the Sub-Advisor.
For its services during fiscal year 1996, the Advisor was entitled to and
did receive, pursuant to the Investment Advisory Agreement, 0.50% of the Money
Market Portfolio's, 0.65% of the Bond Portfolio's, 0.51% of the Equity
Portfolio's, (after performance adjustment)and 0.70% of the Managed Growth
Portfolio's average daily net assets as investment advisory fees.
The Investment Advisory Agreement between the Fund and the Advisor, with
respect to the Managed Growth Portfolio, provides that the Advisor is entitled
to a base annual fee, payable monthly, of 0.70% of the Portfolio's average
daily net assets. The Advisor may earn (or have its base fee reduced by) a
performance adjustment based on the extent to which performance of the Fund
exceeds or trails the Relevant Index. The Relevant Indices are as follows:
CAM: Lehman Aggregate Bond Index
U.S. Trust - equity assets: Russell 3000
U.S. Trust - fixed income assets: Lehman Aggregate Bond Index
NCM: Standard & Poors 500 Stock Index
Brown: Standard & Poors 500 Stock Index
Fortaleza: Russell 2000
Frontier: 70% Russell 1000, 30% Russell 2000 (Blend)
Performance versus Performance Fee
the Relevant Adjustment
Index
6% to less than 12% 0.05%
12% to less than 18% 0.10%
18% or more 0.15%
The Investment Advisory Agreement between the Fund and the Advisor, with
respect to the Equity Portfolio, provides that the Advisor is entitled to a
base annual fee, payable monthly, of 0.70% of the Portfolio's average daily
net assets. The Fund pays a monthly performance fee of plus or minus .20%,
based on the extent to which performance of the Fund exceeds or trails the
S&P's 500 Composite Index:
Performance versus Performance Fee
the S&P's 500 Adjustment
Composite Index
6% to less than 12% 0.07%
12% to less than 18% 0.14%
18% or more 0.20%
Pursuant to an Investment Sub-Advisory Agreement with the Advisor, U.S. Trust
makes investment selections for the Bond Portfolio. For these services U.S.
Trust receives a sub-advisory fee from the Advisor based on a percentage of
the respective Portfolio's average daily net assets (other than High Social
Impact Investments), subject to a monthly minimum fee of $1,000. For fiscal
1996, the Advisor paid U.S. Trust a fee of .20% of the assets of the Bond
Portfolio.
Investment selections for the fixed-income assets of the Managed Growth
Portfolio are made by the Investment Advisor, CAM. The Sub-Advisors make the
investment selections for the remaining assets. Sub-advisory fees are paid by
the Advisor and are equal to a base fee ("Base Fee") of 0.25% of the Managed
Growth Portfolio's average daily net assets, plus or minus a performance fee
("Performance Fee") as set forth in the table above. Payment (or subtraction)
of a Performance Fee is conditioned on (1) the performance of the Portfolio as
a whole having exceeded (or trailed) The Lipper Balanced Fund Index ("Fund
Index") during the Performance Period; and (2) payment of the Performance Fee
not causing the Portfolio's performance to fall below the Fund Index.
Loomis, Sayles makes investment selections for the Equity Portfolio. It
receives a sub-advisory fee from the Advisor equal to a base fee ("Base Fee")
of 0.25% of the Equity Portfolio's average daily net assets, plus or minus a
performance fee ("Performance Fee") as set forth in the table above. Loomis,
Sayles also receives a 0.05% fee, paid by the Advisor (not the Fund) for its
assistance with the distribution of the Fund.
Calvert Distributors, Inc. serves as underwriter to market the Fund's shares.
Calvert Distributors, Inc. ("CDI") is the Fund's principal underwriter and
distributor. Under the terms of its underwriting agreement with the Fund, CDI
markets and distributes the Fund's shares and is responsible for preparing
advertising and sales literature, and printing and mailing prospectuses to
prospective investors.
The transfer agent keeps your account records.
Calvert Shareholder Services, Inc. is the Fund's transfer, dividend disbursing
and shareholder servicing agent.
SHAREHOLDER GUIDE
Opening An Account
You can buy shares of the Fund in several ways which are described here and in
the chart below.
An account application accompanies this prospectus. A completed and signed
application is required for each new account you open, regardless of the
method you choose for making your initial investment. Additional forms may be
required from corporations, associations, and certain fiduciaries. If you have
any questions or need extra applications, call your broker, or Calvert Group
at 800-368-2748. Be sure to specify which class you wish to purchase.
To invest in any of Calvert's tax-deferred retirement plans, please call
Calvert Group at 800-368-2748 to receive information and the required separate
application.
Alternative Sales Options
The Managed Growth and Equity Portfolios both offer two classes of shares:
Class A Shares - Front-End Load Option
Class A shares are sold with a front-end sales charge at the time of purchase.
Class A shares are not subject to a sales charge when they are redeemed.
Class C shares - Level Load Option
Class C shares are sold without a sales charge at the time of purchase or
redemption.
Class C shares have higher expenses
Each Portfolio bears some of the costs of selling its shares under
Distribution Plans adopted with respect to its Class A and Class C shares
pursuant to Rule 12b-1 under the 1940 Act. Payments under the Class A
Distribution Plan are limited to 0.35% annually of the average daily net asset
value of Class A shares, while payments under the Class C Distribution Plan
are 1.00% of the average daily net asset value of Class C shares.
Considerations for deciding which class of shares to buy
Income distributions for Class A shares will probably be higher than those for
Class C shares, as a result of the distribution expenses described above. (See
also "Yield and Total Return.") You should consider Class A shares if you
qualify for a reduced sales charge under Class A or if you plan to hold the
shares for several years. Class C shares are not available for investments of
$1 million or more.
Class A Shares - Managed Growth and Equity Portfolios
Class A shares are offered at net asset value plus a front-end sales charge as
follows:
Amount of As a % of As a % of Allowed to Dealers
price invested price
Less than $50,000 4.75% 4.99% 4.00%
$50,000 but less
than $100,000 3.75% 3.90% 3.00%
$100,000 but less
than $250,000 2.75% 2.83% 2.25%
$250,000 but less
than $500,000 1.75% 1.78% 1.25%
$500,000 but less
than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
Bond Portfolio
Shares are offered at net asset value plus a front-end sales charge as follows:
Amount of As a % of As a % of Allowed to Dealers
Investment of offering net amount as a % offering
price invested price
Less than $50,000 3.75% 3.90% 3.00%
$50,000 but less
than $100,000 3.00% 3.09% 2.25%
$100,000 but less
than $250,000 2.25% 2.30% 1.75%
$250,000 but less
than $500,000 1.75% 1.78% 1.25%
$500,000 but less
than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
CDI reserves the right to recoup any portion of the amount paid to the dealer
if the investor redeems some or all of the shares from the Fund within twelve
months of the time of purchase.
Managed Growth, Bond and Equity Portfolios:
Front-end sales charges on shares may be reduced or eliminated in certain
cases. See Exhibit A to this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a portion to
your broker-dealer. Upon written notice to dealers with whom it has dealer
agreements, CDI may reallow up to the full applicable sales charge. Dealers to
whom 90% or more of the entire sales charge is reallowed may be deemed to be
underwriters under the Securities Act of 1933.
In addition to any sales charge reallowance, your broker-dealer, or other
financial service firm through which your account is held, currently will be
paid periodic service fees at an annual rate of up to 0.25% of the average
daily net asset value of Class A shares of the Managed Growth and Equity
Portfolios and on shares of the Bond Portfolio held in accounts maintained by
that firm.
Class A Distribution Plan
All Portfolios
The Fund has adopted a Distribution Plan with respect to its Class A shares
(the "Class A Distribution Plan"), which provides for payments at a maximum
annual rate of 0.35% (0.25% for the Money Market Portfolio) of the average
daily net asset value of Class A shares, to pay expenses associated with the
distribution and servicing of Class A shares. Amounts paid by the Fund to CDI
under the Class A Distribution Plan are used to pay to dealers and others,
including CDI salespersons who service accounts, service fees at an annual
rate of up to 0.25% of the average daily net asset value of Class A shares,
and to pay CDI for its marketing and distribution expenses, including, but not
limited to, preparation of advertising and sales literature and the printing
and mailing of prospectuses to prospective investors. For the fiscal year
ended September 30, 1996, the Managed Growth, Bond, and Equity Portfolios paid
Class A Distribution Plan expenses of 0.24%, 0.20%, and 0.23% of average net
assets, respectively. The Money Market Portfolio did not pay any Distribution
Plan expenses in fiscal 1996.
Class C Shares
Managed Growth and Equity Portfolios
Class C shares are not available through all dealers. Class C shares are
offered at net asset value, without a front-end sales charge or a contingent
deferred sales charge. Class C expenses are higher than those of Class A.
Class C Distribution Plan
The Fund has adopted a Distribution Plan with respect to its Class C shares
(the "Class C Distribution Plan"), which provides for payments at an annual
rate of up to 1.00% of the average daily net asset value of Class C shares, to
pay expenses of the distribution and servicing of Class C shares. Amounts paid
by the Fund under the Class C Distribution Plan are currently used by CDI to
pay dealers and other selling firms quarterly compensation at an annual rate
of up to 0.75%, plus a service fee as described above under "Class A
Distribution Plan," of up to 0.25%, of the average daily net asset value of
each share sold by such others. For the 1996 fiscal year, the Class C
Distribution Plan expenses for Managed Growth and Equity Portfolios were 1.00%
and 1.00% of average net assets, respectively.
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the affected class. Dealers or others may receive different levels of
compensation depending on which class of shares they sell. Payments pursuant
to a Distribution Plan are included in the operating expenses of the class.
Arrangements with Broker-Dealers and Others
All Portfolios and all classes
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing registered
representatives who have sold or are expected to sell a minimum dollar amount
of shares of the Fund and/or shares of other Funds underwritten by CDI. CDI
may make expense reimbursements for special training of a dealer's registered
representatives, advertising or equipment, or to defray the expenses of sales
contests. All such payments will be in compliance with NASD rules.
HOW TO BUY SHARES
(BE SURE TO SPECIFY WHICH CLASS YOU ARE BUYING)
Method New Accounts
Additional Investments
By Mail $1,000 minimum $250 minimum
Please make your check Please make your check payable
payable to the Fund to the Fund
and mail it with your mail it with your and
application to: investment slip to:
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas City, MO Kansas City, MO
64179-6542 64105-6739
By Registered, Certified, or Overnight Mail: Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, M 64105-1807
Through Your Broker $1,000 minimum $250 minimum
At the Calvert Visit the Calvert Branch Office to make investments
Branch Office by check. See back cover page for the address.
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR BROKER, OR CALVERT GROUP AT
800-368-2745
By Exchange $1,000 minimum $250 minimum
(From your account in another Calvert Group Fund)
When opening an account by exchange, your new account must be established with
the same name(s), address and taxpayer identification number as your existing
Calvert account.
By Bank Wire $1,000 minimum $250 minimum
By Calvert Money Not Available for $50 minimum
Controller* Initial Investment
*Please allow sufficient time for Calvert Group to process your initial
request for this service, normally 10 business days. The maximum transaction
amount is $300,000, and your purchase request must be received by 4:00 p.m.
Eastern time.
NET ASSET VALUE
The Money Market Portfolio shares are sold without a sales charge.
Money Market Portfolio: The price of one share is its "net asset value," or
NAV. NAV is computed by adding the value of the Fund's investments plus cash
and other assets, deducting liabilities and then dividing the result by the
number of shares outstanding. The securities are valued according to the
"amortized cost" method, which is intended to stabilize the NAV at $1.00 per
share.
Managed Growth, Bond, and Equity Portfolios: Net asset value, or "NAV" refers
to the worth of one share. NAV is computed by adding the value of all
portfolio holdings, plus other assets, deducting liabilities and then dividing
the result by the number of shares outstanding. For Portfolios with more than
one class of shares, the NAVs of each class will vary daily based on the
market values of the Portfolio's investments.
Portfolio securities and other assets are valued based on market quotations,
except that securities maturing within 60 days are valued at amortized cost.
If quotations are not available, securities are valued by a method that the
Board of Trustees believes accurately reflects fair value.
The NAV is calculated at the close of the Fund's business day, which coincides
with the closing of the regular session of the New York Stock Exchange
(normally 4:00 p.m. Eastern time). The Fund is open for business each day the
New York Stock Exchange is open. All purchases of Fund shares will be
confirmed and credited to your account in full and fractional shares (rounded
to the nearest 1/1000 of a share). The Money Market Portfolio may send monthly
statements in lieu of immediate confirmations of purchases and redemptions.
WHEN YOUR ACCOUNT WILL BE CREDITED
Before you buy shares, please read the following information to make sure your
investment is accepted and credited properly.
All of your purchases must be made in U.S. dollars and checks must be drawn
on U.S. banks. No cash will be accepted. The Fund reserves the right to suspend
the offering of shares for a period of time or to reject any specific purchase
order. If your check does not clear, your purchase will be canceled and you will
be charged a $10 fee plus costs incurred by the Fund. When you purchase by check
or with Calvert Money Controller, those funds will be on hold for up to 10
business days from the date of receipt. During that period, the proceeds of
redemptions against those funds will be held until the transfer agent is
reasonably satisfied that the purchase payment has been collected. Drafts
written on the Money Market Portfolio against such funds will be returned for
uncollected funds. To avoid this collection period, you can wire federal funds
from your bank, which may charge you a fee. As of convenience, check purchases
can be received at Calvert's offices for overnight mail delivery to the
transfer agent and will be credited the next business day. Any check purchase
received without an investment slip may cause delayed crediting.
Money Market Portfolio
Your purchase will be processed at the net asset value calculated after your
order is received and accepted. If your wire purchase is received by 5:00 p.m.
Eastern time, your account will begin earning dividends on the next business
day. Exchanges begin earning dividends the next business day after the
exchange request is received by mail or telephone. If the purchase is by check
and is received by 4:00 p.m. Eastern time, it will begin earning dividends the
next business day.
Managed Growth, Bond, and Equity Portfolios
Your purchase will be processed at the next offering price based on the next
net asset value calculated for each class after your order is received and
accepted.
Certain financial institutions or broker-dealers which have entered into a
sales agreement with the Distributor may enter confirmed purchase orders on
behalf of customers by phone, with payment to follow within a certain number
of days of the order as specified by the program. If payment is not received
in the time specified, the financial institution could be held liable for
resulting fees or losses.
EXCHANGES
Each exchange represents the sale of shares of one Portfolio and the purchase
of shares of another. Therefore, you could realize a taxable gain or loss on
the transaction.
If your investment goals change, the Calvert Group of Funds has a variety of
investment alternatives that includes common stock funds, tax-exempt and
corporate bond funds, and money market funds. The exchange privilege is a
convenient way to buy shares in other Calvert Group Funds in order to respond
to changes in your goals or in market conditions. Before you make an exchange
from a Fund or Portfolio, please note the following:
o Call your broker or a Calvert representative for information and a
prospectus for any of Calvert's other Funds registered in your state. Read the
prospectus of the Fund or Portfolio into which you want to exchange for
relevant information, including class offerings.
o Complete and sign an application for an account in that Fund or
Portfolio, taking care to register your new account in the same name and
taxpayer identification number as your existing Calvert account(s). Exchange
instructions may then be given by telephone if telephone redemptions have been
authorized and the shares are not in certificate form.
o You may exchange shares on which you have already paid a sales charge
at Calvert Group and shares acquired by reinvestment of dividends or
distributions into another fund at no additional charge. You may exchange
Class C shares for shares of another fund, but you will have to pay the
front-end sales charge, if applicable.
o Shareholders (and those managing multiple accounts) who make two
purchases and two exchange redemptions of shares of the same Portfolio during
any 6-month period will be given written notice that they may be prohibited
from making additional investments. This policy does not prohibit a
shareholder from redeeming shares of the Fund, and does not apply to trades
solely among money market funds.
o For purposes of the exchange privilege, the Fund is related to Summit
Cash Reserves Fund by investment and investor services. The Fund reserves the
right to terminate or modify the exchange privilege in the future upon 60
days' written notice
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour yield and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers obtain prices, yields, account balances, and authorize certain
transactions.
Calvert Money Controller
Calvert Money Controller eliminates the delay of mailing a check or the
expense of wiring funds. You can request this free service on your application.
This service allows you to authorize electronic transfers of money to purchase
or sell shares. You use Calvert Money Controller like an "electronic check" to
move money ($50 to $300,000) between your bank account and your Calvert Group
account with one phone call. Allow one or two business days after the call for
the transfer to take place; for money recently invested, allow normal check
clearing time (up to 10 business days) before redemption proceeds are sent to
your bank.
You may also arrange systematic monthly or quarterly investments (minimum $50)
into your Calvert Group account. After you give us proper authorization, your
bank account will be debited to purchase Fund shares. A debit entry will
appear on your bank statement. If you would like to make arrangements for
systematic monthly or quarterly redemptions from your Calvert Group account,
call your broker or Calvert for a Money Controller Application.
Telephone Transactions
Calvert may record all telephone calls.
If you have telephone transaction privileges, you may purchase, redeem, or
exchange shares, wire funds and use Calvert Money Controller by telephone. You
automatically have telephone privileges unless you elect otherwise. The Fund,
the transfer agent and their affiliates are not liable for acting in good
faith on telephone instructions relating to your account, so long as they
follow reasonable procedures to determine that the telephone instructions are
genuine. Such procedures may include recording the telephone calls and
requiring some form of personal identification. You should verify the accuracy
of telephone transactions immediately upon receipt of your confirmation
statement.
Complete the account application for the easiest way to establish services.
The easiest way to establish optional services on your Calvert Group account
is to select the options you desire when you complete your account
application. If you wish to add other options later, you may have to provide
us with additional information and a signature guarantee. Please call your
broker or Calvert Investor Relations at 800-368-2745 for further assistance.
For our mutual protection, we may require a signature guarantee on certain
written transaction requests. A signature guarantee verifies the authenticity
of your signature, and may be obtained from any bank, savings and loan
association, credit union, trust company, broker-dealer firm or member of a
domestic stock exchange. A signature guarantee cannot be provided by a notary
public.
Householding of General Mailings
Householding reduces Fund expenses and saves paper and trees for the
environment.
If you have multiple accounts with Calvert, you may receive combined mailings
of some shareholder information, such as semi-annual and annual reports.
Please contact Calvert Investor Relations at 800-368-2745 to receive
additional copies of information.
Special Services and Charges
The Fund pays for shareholder services but not for special services that are
required by a few shareholders, such as a request for a historical transcript
of an account. You may be required to pay a research fee for these special
services.
If you are purchasing shares of the Fund through a program of services offered
by a broker-dealer or financial institution, you should read the program
materials in conjunction with this Prospectus. Certain features may be
modified in these programs, and administrative charges may be imposed by the
broker-dealer or financial institution for the services rendered.
Tax-Saving Retirement Plans
Contact Calvert Group for complete information kits discussing the plans, and
their benefits, provisions and fees.
Calvert Group can set up your new account under one of several tax-deferred
plans. These plans let you invest for retirement and shelter your investment
income from current taxes. Minimums may differ from those listed in the "How
to Buy Shares" chart. Also, reduced sales charges may apply. See "Exhibit A -
Reduced Sales Charges."
o Individual retirement accounts (IRAs): available to anyone who has
earned income. You may also be able to make investments in the name of your
spouse, if your spouse has no earned income.
o Qualified Profit-Sharing and Money-Purchase Plans (including 401(k)
Plans): available to self-employed people and their partners, or to
corporations and their employees.
o Simplified Employee Pension Plan (SEP-IRA): available to
self-employed people and their partners, or to corporations.
o 403(b)(7) Custodial Accounts: available to employees of most
non-profit organizations and public schools and universities.
SELLING YOUR SHARES
You may redeem all or a portion of your shares on any business day. Your
shares will be redeemed at the next net asset value calculated after your
redemption request is received and accepted. See below for specific
requirements necessary to make sure your redemption request is acceptable.
Remember that the Fund may hold payment on the redemption of your shares until
it is reasonably satisfied that investments made by check or by Calvert Money
Controller have been collected (normally up to 10 business days).
Redemption Requirements To Remember
To ensure acceptance of your redemption request, please follow the procedures
described here and below.
Once your shares are redeemed, the proceeds will normally be sent to you on
the next business day, but if making immediate payment could adversely affect
the Fund, it may take up to seven (7) days. Calvert Money Controller
redemptions generally will be credited to your bank account on the second
business day after your phone call. When the New York Stock Exchange is closed
(or when trading is restricted) for any reason other than its customary
weekend or holiday closings, or under any emergency circumstances as
determined by the Securities and Exchange Commission, redemptions may be
suspended or payment dates postponed.
Money Market Portfolio
If you sell shares by telephone or written request, you will receive dividends
through the date the request is received and processed. If you write a draft
to sell shares, the shares will earn dividends until the draft is presented to
the Portfolio to be paid.
Minimum account balance is $1,000 per Portfolio.
Please maintain a balance in your account of at least $1,000 per Portfolio,
per class. If, due to redemptions, the account falls below $1,000, or you fail
to invest at least $1,000, your account may be closed and the proceeds mailed
to you at the address of record. You will be given notice that your account
will be closed after 30 days unless you make an additional investment to
increase your account balance to the $1,000 minimum.
HOW TO SELL YOUR SHARES
Draftwriting (Money Market Portfolio only)
You may redeem shares in your Money Market Portfolio account by writing a
draft for at least $250. If you complete and return the signature card for
Draftwriting, the Portfolio will mail bank drafts to you, printed with your
name and address. Generally, there is no charge to you for the maintenance of
this service or the clearance of drafts, but the Fund reserves the right to
charge a service fee for drafts returned for uncollected or insufficient
funds. The Fund will charge $25 for any stop payments on drafts. As a service
to shareholders, the Portfolio may automatically transfer the dollar amount
necessary to cover drafts you have written on the Portfolio to your Portfolio
account from any other of your identically registered accounts in Calvert
money market funds or Calvert Insured Plus. The Fund may charge a fee for this
service.
By Mail To:
Calvert Group
P.O. Box 419544
Kansas City, MO
64179-6544
You may redeem available shares from your account at any time by sending a
letter of instruction, including your name, account and Portfolio number, the
number of shares or dollar amount, and where you want the money to be sent.
Additional requirements, below, may apply to your account. The letter of
instruction must be signed by all required authorized signers. If you want the
money to be wired to a bank not previously authorized, then a voided bank
check must be enclosed with your letter. If you do not have a voided check or
if you would like funds sent to a different address or another person, your
letter must be signature guaranteed.
Type of
Registration Requirements
Corporations, Associations Letter of instruction and
a corporate resolution,
signed by person(s)
authorized to act on the
account, accompanied by
signature guarantee(s).
Trusts Letter of instruction
signed by the Trustee(s)
(as Trustee), with a
signature guarantee. (If
the Trustee's name is not
registered on your
account, provide a copy
of the trust document,
certified within the last
60 days.)
By Telephone
Please call 800-368-2745. You may redeem shares from your account by telephone
and have your money mailed to your address of record or wired to an address or
bank you have previously authorized. A charge of $5 is imposed on wire
transfers of less than $1,000. See "Telephone Transactions."
Calvert Money Controller
Please allow sufficient time for Calvert Group to process your initial request
for this service (normally 10 business days). You may also authorize automatic
fixed amount redemptions by Calvert Money Controller. All requests must be
received by 4:00 p.m. (Eastern time). Accounts cannot be closed by this
service.
Exchange to Another Calvert Group Fund
You must meet the minimum investment requirement of the other Calvert Group
Fund or Portfolio. You can only exchange between accounts with identical
names, addresses and taxpayer identification number, unless previously
authorized with a signature-guaranteed letter.
Systematic Check Redemptions
If you maintain an account with $10,000 or more, you may have up to two (2)
redemption checks for $100 or more sent to you on the 15th of each month,
simply by sending a letter with all the information, including your account
number, and the dollar amount ($100 minimum). If you would like a regular
check mailed to another person or place, your letter must be signature
guaranteed.
Through your Broker
If your account is held in your broker's name ("street name"), you should
contact your broker directly to transfer, exchange or redeem shares.
DIVIDENDS AND TAXES
Each year, the Fund distributes substantially all of its net investment income
to shareholders.
Dividends from the Money Market Portfolio's net investment income are accrued
daily and paid monthly. The Managed Growth Portfolio pays dividends quarterly,
the Bond Portfolio pays dividends monthly, and the Equity Portfolio pays
dividends annually. Net investment income consists of interest income, net
short-term capital gains, if any, and dividends declared and paid on
investments, less expenses. Distributions of the Fund's net short-term capital
gains (treated as dividends for tax purposes) and its net long-term capital
gains, if any, are normally paid once a year; however, the Fund does not
anticipate making any such distributions unless available capital loss
carryovers have been used or have expired. Dividend and distribution payments
will vary between classes; dividend payments are anticipated to be generally
higher for Class A shares.
Dividend payment options
(available monthly or quarterly)
Dividends and any distributions are automatically reinvested in the same
Portfolio at net asset value (no sales charge), unless you elect to have the
dividends of $10 or more paid in cash (by check or by Calvert Money
Controller). Dividends and distributions from any Calvert Group Fund or
Portfolio may be automatically invested in an identically registered account
with the same account number in any other Calvert Group Fund at net asset
value. If reinvested in the same Fund account, new shares will be purchased at
net asset value on the reinvestment date, which is generally 1 to 3 days prior
to the payment date. You must notify the Fund in writing to change your
payment options. If you elect to have dividends and/or distributions paid in
cash, and the U.S. Postal Service cannot deliver the check, or if it remains
uncashed for six months, it, as well as future dividends and distributions,
will be reinvested in additional shares.
"Buying a Dividend"
At the time of purchase, the share price of each class of the Managed Growth,
Bond, and Equity Portfolios may reflect undistributed income, capital gains or
unrealized appreciation of securities. Any income or capital gains from these
amounts which are later distributed to you are fully taxable. On the record
date for a distribution, the Fund's share value is reduced by the amount of
the distribution. If you buy shares just before the record date ("buying a
dividend") you will pay the full price for the shares and then receive a
portion of the price back as a taxable distribution.
Federal Taxes
In January, the Fund will mail you Form 1099-DIV indicating the federal tax
status of dividends and any capital gain distributions paid to you by the Fund
during the past year. Generally, dividends and distributions are taxable in
the year they are paid. However, any dividends and distributions paid in
January but declared during the prior three months are taxable in the year
declared. Dividends and distributions are taxable to you regardless of whether
they are taken in cash or reinvested. Dividends, including short-term capital
gains, are taxable as ordinary income. Distributions from long-term capital
gains are taxable as long-term capital gains, regardless of how long you have
owned Fund shares.
Managed Growth, Bond, and Equity Portfolios
You may realize a capital gain or loss when you sell or exchange shares. This
capital gain or loss will be short- or long-term, depending on how long you
have owned the shares which were sold. In January, the Portfolios will mail
you Form 1099-B indicating the total amount of all sales, including exchanges.
You should keep your annual year-end account statements to determine the cost
(basis) of the shares to report on your tax returns.
Other Tax Information
In addition to federal taxes, you may be subject to state or local taxes on
your investment, depending on the laws in your area. You will be notified to
the extent, if any, that dividends reflect interest received from U.S.
government securities. Such dividends may be exempt from certain state income
taxes.
Taxpayer Identification Number
If we do not have your correct Social Security or Taxpayer Identification
Number ("TIN") and a signed certified application or Form W-9, Federal law
requires the Fund to withhold 31% of your dividends, and, for the Managed
Growth, Bond, and Equity Portfolios, 31% of certain redemptions. In addition,
you may be subject to a fine. You will also be prohibited from opening another
account by exchange. If this TIN information is not received within 60 days
after your account is established, your account may be redeemed (closed) at
the current NAV on the date of redemption. The Fund reserves the right to
reject any new account or any purchase order for failure to supply a certified
TIN.
EXHIBIT A
REDUCED SALES CHARGES (CLASS A ONLY)
You may qualify for a reduced sales charge through several purchase plans
available. You must notify the Fund at the time of purchase to take advantage
of the reduced sales charge.
Right of Accumulation
The sales charge is calculated by taking into account not only the dollar
amount of a new purchase of shares, but also the higher of cost or current
value of shares previously purchased in Calvert Group Funds that impose sales
charges. This automatically applies to your account for each new purchase.
Letter of Intent
If you plan to purchase $50,000 or more of Fund shares over the next 13
months, your sales charge may be reduced through a "Letter of Intent." You pay
the lower sales charge applicable to the total amount you plan to invest over
the 13-month period, excluding any money market fund purchases. Part of your
shares will be held in escrow, so that if you do not invest the amount
indicated, you will have to pay the sales charge applicable to the smaller
investment actually made. For more information, see the SAI.
Group Purchases
If you are a member of a qualified group, you may purchase shares of the Fund
at the reduced sales charge applicable to the group taken as a whole. The
sales charge is calculated by taking into account not only the dollar amount
of the shares you purchase, but also the higher of cost or current value of
shares previously purchased and currently held by other members of your group.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring Fund shares at a discount, and
(iii) satisfies uniform criteria which enable CDI and dealers offering Fund
shares to realize economies of scale in distributing such shares. A qualified
group must have more than 10 members, must be available to arrange for group
meetings between representatives of CDI or dealers distributing the Fund's
shares, must agree to include sales and other materials related to the Fund in
its publications and mailings to members at reduced or no cost to CDI or
dealers.
Pension plans may not qualify participants for group purchases; however, such
plans may qualify for reduced sales charges under a separate provision (see
below). Members of a group are not eligible for a Letter of Intent.
Retirement Plans Under Section 457, Section 403(b)(7), or Section 401(k)
There is no sales charge on shares purchased for the benefit of a retirement
plan under Section 457 of the Internal Revenue Code of 1986, as amended
("Code"), or for a plan qualifying under Section 403(b)(7) of the Code if, at
the time of purchase, Calvert Group has been notified in writing that the
403(b)(7) plan has at least 200 eligible employees. Furthermore, there is no
sales charge on shares purchased for the benefit of a retirement plan qualifying
under Section 401(k) of the Code if, at the time of such purchase, the 401(k)
plan administrator has notified Calvert Group in writing that a) its 401(k) plan
has at least 200 eligible employees; or b) the cost or current value of shares
the plan has in Calvert Group of Funds (except money market funds) is at least
$1 million.
Neither the Fund, nor CDI, nor any affiliate thereof will reimburse a plan or
participant for any sales charges paid prior to receipt of such written
communication and confirmation by Calvert Group. Plan administrators should
send requests for the waiver of sales charges based on the above conditions
to: Calvert Group Retirement Plans, 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814.
Other Circumstances
There is no sales charge on shares of any fund (portfolio or series) of the
Calvert Group of Funds sold to:
(1) current and retired members of the Board of Trustees/Directors of the
Calvert Group of Funds, (and the Advisory Council of the Calvert Social
Investment Fund);
(2) directors, officers and employees of the Advisor, Distributor, and their
affiliated companies;
(3) directors, officers and registered representatives of brokers distributing
the Fund's shares; and immediate family members of persons listed in (1), (2),
or (3) above;
(4) dealers, brokers, or registered investment advisors that have entered into
an agreement with CDI providing specifically for the use of shares of the Fund
(Portfolio or Series) in particular investment programs or products (where
such program or product already has a fee charged therein) made available to
the clients of such dealer, broker, or registered investment advisor;
(5) trust departments of banks or savings institutions for trust clients of
such bank or savings institution; and
(6) purchases placed through a broker maintaining an omnibus account with the
Fund (Portfolio or Series) and the purchases are made by (a) investment
advisors or financial planners placing trades for their own accounts (or the
accounts of their clients) and who charge a management, consulting, or other
fee for their services; or (b) clients of such investment advisors or
financial planners who place trades for their own accounts if such accounts
are linked to the master account of such investment advisor or financial
planner on the books and records of the broker or agent; or (c) retirement and
deferred compensation plans and trusts, including, but not limited to, those
defined in Section 401(a) or Section 403(b) of the I.R.C., and "rabbi trusts."
Established Accounts
Shares of the Managed Growth Portfolio may be sold at net asset value to you
if your account was established on or before July 17, 1986.
Dividends and Capital Gain Distributions from other Calvert Group Funds
You may prearrange to have your dividends and capital gain distributions from
another Calvert Group Fund automatically invested in another account with no
additional sales charge.
Purchases made at net asset value ("NAV")
Except for money market funds, if you make a purchase at NAV, you may exchange
that amount to another fund at no additional sales charge.
Reinstatement Privilege
If you redeem Fund shares and then within 30 days decide to reinvest in the
same Fund, you may do so at the net asset value next computed after the
reinvestment order is received, without a sales charge. You may use the
reinstatement privilege only once. The Fund reserves the right to modify or
eliminate this privilege.
To Open an Account: Prospectus
800-368-2748 January 31, 1997
Performance and Prices:
Calvert Information Network CALVERT SOCIAL INVESTMENT FUND
Money Market Portfolio
24 hours, 7 days a week Managed Growth Portfolio
800-368-2745 Bond Portfolio
Equity Portfolio
Service for Existing Account:
Shareholders 800-368-2745
Brokers 800-368-2746
TDD for Hearing Impaired:
800-541-1524
Branch Office:
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified or
Overnight Mail:
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105
Calvert Group Web-Site
Address: http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Inside Front Cover:
TABLE OF CONTENTS
Highlights
Fund Expenses
Financial Highlights
Investment Objectives and Policies
Investment Selection Process
Additional Investment Policies
Yield and Total Return
Management of the Fund
SHAREHOLDER GUIDE:
Alternative Sales Options
How to Buy Shares
Net Asset Value
When Your Account Will Be Credited
Exchanges
Other Calvert Group Services
Selling Your Shares
How to Sell Your Shares
Dividends and Taxes
Exhibit A - Reduced Sales charge
<PAGE>
Calvert Social Investment Fund
Statement of Additional Information
January 31, 1997
Revised March 12, 1997
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objectives and Policies 1
Investment Restrictions 8
Investment Selection Process 10
Dividends and Taxes 11
Net Asset Value 12
Calculation of Yield and Total Return 13
Purchase and Redemption of Shares 15
Reduced Sales Charges (Class A) 16
Advertising 17
Trustees, Officers and Advisory Council 17
Investment Advisor 20
Method of Distribution 22
Transfer and Shareholder Servicing
Agent 22
Portfolio Transactions 23
Independent Accountants and Custodians 24
General Information 24
Financial Statements 25
Appendix 25
STATEMENT OF ADDITIONAL INFORMATION-January 31, 1997 Revised March 12, 1997
CALVERT SOCIAL INVESTMENT FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account (800) 368-2748
Shareholder (800) 368-2745
Information:(301) 951-4820
Services: (301) 951-4810 Broker Services: (800) 368-2746
TDD for the
Hearing-Impaired:(301) 951-4850
(800) 541-1524
This Statement of Additional Information is not a prospectus. Investors
should read the Statement of Additional Information in conjunction with the
Fund's Prospectus, dated January 31, 1997, revised March 12, 1997, which may be
obtained free of charge by writing the Fund at the above address or calling the
Fund.
INVESTMENT OBJECTIVES AND POLICIES
Calvert Social Investment Fund (the "Fund") is designed to provide
opportunities for individual and institutional investors, including ERISA
fiduciaries, seeking growth of capital or current income through investment in
enterprises that make a significant contribution to society through their
products and services and through the way they do business. The Fund offers
investors a choice of four separate portfolios selected with a concern for the
social impact of each investment: the Money Market Portfolio, the Managed
Growth Portfolio, the Equity Portfolio and the Bond Portfolio.
The Money Market Portfolio seeks to provide the highest level of
current income, consistent with liquidity, safety and stability, through
investment in money market instruments, including securities issued or
guaranteed by agencies of the U.S. Government and repurchase agreements with
banks and brokers secured by such instruments, selected in accordance with the
Fund's investment and social criteria. The Money Market Portfolio is designed
for short-term cash management and for investors needing stability of
principal. The Money Market Portfolio seeks to maintain a constant net asset
value of $1.00 per share. Shares of the Money Market Portfolio are sold at
their net asset value per share which is not subject to a sales charge.
The Managed Growth Portfolio seeks to achieve a total return above
the rate of inflation through an actively managed, diversified portfolio of
common and preferred stocks, bonds and money market instruments which offer
income and capital growth opportunity without extreme risk-taking and which
best satisfy the investment and social concern criteria established by the
Fund. It is the Managed Growth Portfolio's investment philosophy that
long-term favorable investment performance is provided by companies which
combine sound business policies and circumstances with social and ethical
values.
The Equity Portfolio seeks growth of capital through investment in
the equity securities of issuers within industries perceived to offer
opportunities for potential capital appreciation and which satisfy the Fund's
investment and social criteria. It is the philosophy of the Equity Portfolio
that favorable investment performance is provided by companies which combine
sound business policies and circumstances with social and ethical values.
The Bond Portfolio seeks to provide as high a level of current income
as is believed to be consistent with prudent investment risk, through
investment in bonds and other straight debt securities, selected pursuant to
the Fund's investment and social criteria. An additional objective is to seek
preservation of shareholders' capital. It is the philosophy of the Bond
Portfolio that favorable investment performance is provided by companies which
combine sound business policies and circumstances with social and ethical
values.
There can be, of course, no assurance that the Fund will be
successful in meeting its investment objective or that the Money Market
Portfolio will maintain a constant net asset value of $1.00 per share.
Foreign Securities
Each Portfolio may invest up to 25% of its assets in the securities
of foreign issuers. The Money Market Portfolio may purchase only high quality,
U.S. dollar-denominated instruments. Investments in foreign securities may
present risks not typically involved in domestic investments.
Additional costs may be incurred in connection with international
investment since foreign brokerage commissions and the custodial costs
associated with maintaining foreign portfolio securities are generally higher
than in the United States. Fee expense may also be incurred on currency
exchanges when the Fund changes investments from one country to another or
converts foreign securities holdings into U.S. dollars.
United States Government policies have at times, in the past, through
imposition of interest equalization taxes and other restrictions, discouraged
certain investments abroad by United States investors. While such taxes or
restrictions are not presently in effect, they may be reinstituted from time
to time as a means of fostering a favorable United States balance of payments.
In addition, foreign countries may impose withholding and taxes on dividends
and interest.
Since investments in securities of issuers domiciled in foreign
countries usually involve currencies of the foreign countries, and since the
Fund may temporarily hold funds in foreign currencies during the completion of
investment programs, the value of the assets of the Fund as measured in United
States dollars may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations. For example, if the
value of the foreign currency in which a security is denominated increases or
declines in relation to the value of the U.S. dollar, the value of the
security in U.S. dollars will increase or decline correspondingly. The Fund
will conduct its foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign exchange market,
or through entering into forward contracts to purchase or sell foreign
currencies. A forward foreign currency contract involves an obligation to
purchase or sell a specific currency at a future date which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded in the
interbank market conducted directly between currency traders (usually large,
commercial banks) and their customers. A forward foreign currency contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades.
The Fund may enter into forward foreign currency contracts for two
reasons. First, the Fund may desire to preserve the United States dollar price
of a security when it enters into a contract for the purchase or sale of a
security denominated in a foreign currency. The Fund may be able to protect
itself against possible losses resulting from changes in the relationship
between the United States dollar and foreign currencies during the period
between the date the security is purchased or sold and the date on which
payment is made or received by entering into a forward contract for the
purchase or sale, for a fixed amount of dollars, of the amount of the foreign
currency involved in the underlying security transactions.
Second, when the Advisor believes that the currency of a particular
foreign country may suffer a substantial decline against the United States
dollar, the Fund enters into a forward foreign currency contract to sell, for
a fixed amount of dollars, the amount of foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in such
foreign currency. The precise matching of the forward foreign currency
contract amounts and the value of the portfolio securities involved will not
generally be possible since the future value of the securities will change as
a consequence of market movements between the date the forward contract is
entered into and the date it matures. The projection of short-term currency
market movement is difficult, and the successful execution of this short-term
hedging strategy is uncertain. Although forward foreign currency contracts
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time they tend to limit any potential gain which might
result should the value of such currency increase. The Fund does not intend to
enter into such forward contracts under this circumstance on a regular or
continuous basis.
Foreign Money Market Instruments
The Money Market Portfolio may invest without limitation in money
market instruments of banks, whether foreign or domestic, including
obligations of U.S. branches of foreign banks ("Yankee" instruments) and
obligations of foreign branches of U.S. banks ("Eurodollar" instruments). All
such instruments must be high-quality, U.S. dollar-denominated obligations. It
is an operating (i.e., non-fundamental) policy of the Fund that the Money
Market Portfolio may invest only in foreign money market instruments if they
are of comparable quality to the obligations of domestic banks. Although these
instruments are not subject to foreign currency risk since they are U.S.
dollar-denominated, investments in foreign money market instruments may
involve risks that are different than investments in securities of U.S.
issuers. See "Foreign Securities" above.
Private Placements and Illiquid Securities
Due to the particular social objective of the Fund, opportunities may
exist to promote especially promising approaches to social goals through
privately placed investments. The private placement investments undertaken by
the Fund, if any, may be subject to a high degree of risk. Such investments
may involve relatively small and untried enterprises that have been selected
in the first instance because of some attractive social objectives or
policies. The Investment Advisors seek to structure the Fund's investments to
provide the greatest assurance of attaining the intended investment return. It
is an operating policy of the Fund that no private placements shall be
acquired for a Portfolio until the value of that Portfolio's investments
exceeds $20 million.
Many private placement investments have no readily available market
and may therefore be considered illiquid. Securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 may be determined by
the Board of Trustees to be liquid. The Board may delegate such determinations
of liquidity to the Advisor, pursuant to guidelines and oversight by the
Board. Fund investments in private placements and other securities for which
market quotations are not readily available are valued at fair market value as
determined by the Advisor under the direction and control of the Board.
Repurchase Agreements
The Fund may purchase debt securities subject to repurchase
agreements which are arrangements under which the Fund buys a security and the
seller simultaneously agrees to repurchase the security at a specified time
and price reflecting a market rate of interest. The Fund engages in repurchase
agreements in order to earn a higher rate of return than it could earn simply
by investing in the obligation which is the subject of the repurchase
agreement. Repurchase agreements are not, however, without risk. In the event
of the bankruptcy of a seller during the term of a repurchase agreement, a
legal question exists as to whether the Fund would be deemed the owner of the
underlying security or would be deemed only to have a security interest in and
lien upon such security. The Fund will only engage in repurchase agreements
with recognized securities dealers and banks determined to present minimal
credit risk by the Advisor under the direction and supervision of the Fund's
Board of Trustees. In addition, the Fund will only engage in repurchase
agreements reasonably designed to secure fully during the term of the
agreement the seller's obligation to repurchase the underlying security and
will monitor the market value of the underlying security during the term of
the agreement. If the value of the underlying security declines and is not at
least equal to the repurchase price due the Fund pursuant to the agreement,
the Fund will require the seller to pledge additional securities or cash to
secure the seller's obligations pursuant to the agreement. If the seller
defaults on its obligation to repurchase and the value of the underlying
security declines, the Fund may incur a loss and may incur expenses in selling
the underlying security. Repurchase agreements are always for periods of less
than one year. Repurchase agreements not terminable within seven days are
considered illiquid.
Reverse Repurchase Agreements
The Fund may also engage in reverse repurchase agreements. Under a
reverse repurchase agreement, the Fund sells portfolio securities to a bank or
securities dealer and agrees to repurchase those securities from such party at
an agreed upon date and price reflecting a market rate of interest. The Fund
invests the proceeds from each reverse repurchase agreement in obligations in
which it is authorized to invest. The Fund intends to enter into a reverse
repurchase agreement only when the interest income provided for in the
obligation in which the Fund invests the proceeds is expected to exceed the
amount the Fund will pay in interest to the other party to the agreement plus
all costs associated with the transactions. The Fund does not intend to borrow
for leverage purposes. The Portfolios will only be permitted to pledge assets
to the extent necessary to secure borrowings and reverse repurchase agreements.
During the time a reverse repurchase agreement is outstanding, the
Fund will maintain in a segregated custodial account an amount of cash, U.S.
Government securities or other liquid, high-quality debt securities equal in
value to the repurchase price. The Fund will mark to market the value of
assets held in the segregated account, and will place additional assets in the
account whenever the total value of the account falls below the amount
required under applicable regulations.
The Fund's use of reverse repurchase agreements involves the risk
that the other party to the agreements could become subject to bankruptcy or
liquidation proceedings during the period the agreements are outstanding. In
such event, the Fund may not be able to repurchase the securities it has sold
to that other party. Under those circumstances, if at the expiration of the
agreement such securities are of greater value than the proceeds obtained by
the Fund under the agreements, the Fund may have been better off had it not
entered into the agreement. However, the Fund will enter into reverse
repurchase agreements only with banks and dealers which the Advisor believes
present minimal credit risks under guidelines adopted by the Fund's Board of
Trustees. In addition, the Portfolio bears the risk that the market value of
the securities sold by the Portfolio may decline below the agreed-upon
repurchase price, in which case the dealer may request the Portfolio to post
additional collateral.
Non-Investment Grade Debt Securities
The Managed Growth, Bond and Equity Portfolios may invest in lower
quality debt securities (generally those rated BB or lower by S&P or Ba or
lower by Moody's, commonly known as "junk bonds"), subject to the Fund's
investment policy which provides that they may not invest more than 20% of
their respective assets in securities rated below B by either rating service,
or in unrated securities determined by the Advisor to be comparable to
securities rated below B by either rating service. These securities have
moderate to poor protection of principal and interest payments and have
speculative characteristics. (See Appendix for a description of the ratings.)
These securities involve greater risk of default or price declines due to
changes in the issuer's creditworthiness than investment-grade debt
securities. Because the market for lower-rated securities may be thinner and
less active than for higher-rated securities, there may be market price
volatility for these securities and limited liquidity in the resale market.
Market prices for these securities may decline significantly in periods of
general economic difficulty or rising interest rates. Unrated debt securities
may fall into the lower quality category. Unrated securities usually are not
attractive to as many buyers as rated securities are, which may make them less
marketable.
The quality limitation set forth in the Fund's investment policy is
determined immediately after the Fund's acquisition of a given security.
Accordingly, any later change in ratings will not be considered when
determining whether an investment complies with the Fund's investment policy.
When purchasing high-yielding securities, rated or unrated, the
Advisors prepare their own careful credit analysis to attempt to identify
those issuers whose financial condition is adequate to meet future obligations
or is expected to be adequate in the future. Through portfolio diversification
and credit analysis, investment risk can be reduced, although there can be no
assurance that losses will not occur.
Options and Futures Contracts
The Managed Growth, Bond and Equity Portfolios may, in pursuit of
their respective investment objectives, purchase put and call options and
engage in the writing of covered call options and secured put options on
securities which meet the Fund's social criteria, and employ a variety of
other investment techniques. Specifically, these Portfolios may also engage in
the purchase and sale of stock index future contracts, foreign currency
futures contracts, interest rate futures contracts, and options on such
futures, as described more fully below.
These Portfolios may engage in such transactions only to hedge the
existing positions in the respective Portfolios. They will not engage in such
transactions for the purposes of speculation or leverage. Such investment
policies and techniques may involve a greater degree of risk than those
inherent in more conservative investment approaches.
Each of these Portfolios may purchase a put or call option on
securities (including a straddle or spread) only if the value of that option
premium, when aggregated with the premiums on all other options on securities
held by the Portfolio, does not exceed 5% of the Portfolio's total assets.
Further, as an operating policy, which may be changed without shareholder
approval, none of the Portfolios intends to enter into futures contracts or
options on futures contracts if the aggregate initial margin and premiums
required to establish these positions would exceed 5% of the Portfolio's net
assets. These Portfolios may write "covered options" on securities in standard
contracts traded on national securities exchanges. These Portfolios may write
such options in order to receive the premiums from options that expire and to
seek net gains from closing purchase transactions with respect to such options.
Put and Call Options. These Portfolios may purchase put and call options, in
standard contracts traded on national securities exchanges, on securities of
issuers which meet the Fund's social criteria. These Portfolios will purchase
such options only to hedge against changes in the value of securities the
Portfolios hold and not for the purposes of speculation or leverage. By buying
a put, a Portfolio has the right to sell the security at the exercise price,
thus limiting its risk of loss through a decline in the market value of the
security until the put expires. The amount of any appreciation in the value of
the underlying security will be partially offset by the amount of the premium
paid for the put option and any related transaction costs. Prior to its
expiration, a put option may be sold in a closing sale transaction and any
profit or loss from the sale will depend on whether the amount received is
more or less than the premium paid for the put option plus the related
transaction costs.
These Portfolios may purchase call options on securities which they
may intend to purchase and which meet the Fund's social criteria. Such
transactions may be entered into in order to limit the risk of a substantial
increase in the market price of the security which the Portfolio intends to
purchase. Prior to its expiration, a call option may be sold in a closing sale
transaction. Any profit or loss from such a sale will depend on whether the
amount received is more or less than the premium paid for the call option plus
the related transaction costs.
Covered Options. These Portfolios may write only covered options on equity and
debt securities in standard contracts traded on national securities exchanges.
This means that, in the case of call options, so long as a Portfolio is
obligated as the writer of a call option, that Portfolio will own the
underlying security subject to the option and, in the case of put options,
that Portfolio will, through its custodian, deposit and maintain either cash
or securities with a market value equal to or greater than the exercise price
of the option.
When a Portfolio writes a covered call option, the Portfolio gives
the purchaser the right to purchase the security at the call option price at
any time during the life of the option. As the writer of the option, the
Portfolio receives a premium, less a commission, and in exchange foregoes the
opportunity to profit from any increase in the market value of the security
exceeding the call option price. The premium serves to mitigate the effect of
any depreciation in the market value of the security. Writing covered call
options can increase the income of the Portfolio and thus reduce declines in
the net asset value per share of the Portfolio if securities covered by such
options decline in value. Exercise of a call option by the purchaser however
will cause the Portfolio to forego future appreciation of the securities
covered by the option.
When a Portfolio writes a covered put option, it will gain a profit
in the amount of the premium, less a commission, so long as the price of the
underlying security remains above the exercise price. However, the Portfolio
remains obligated to purchase the underlying security from the buyer of the
put option (usually in the event the price of the security falls below the
exercise price) at any time during the option period. If the price of the
underlying security falls below the exercise price, the Portfolio may realize
a loss in the amount of the difference between the exercise price and the sale
price of the security, less the premium received.
These Portfolios may purchase securities which may be covered with
call options solely on the basis of considerations consistent with the
investment objectives and policies of the Fund and the affected Portfolio. The
Portfolio's turnover may increase through the exercise of a call option; this
will generally occur if the market value of a "covered" security increases and
the portfolio has not entered into a closing purchase transaction.
To preserve the Fund's status as a regulated investment company under
Subchapter M of the Internal Revenue Code, it is the Fund's policy to limit
any gains on put or call options and other securities held less than three
months to less than 30% of a Portfolio's annual gross income.
Risks Related to Options Transactions. The Portfolios can close out
their respective positions in exchange-traded options only on an exchange
which provides a secondary market in such options. Although these Portfolios
intend to acquire and write only such exchange-traded options for which an
active secondary market appears to exist, there can be no assurance that such
a market will exist for any particular option contract at any particular time.
This might prevent the Portfolios from closing an options position, which
could impair the Portfolios' ability to hedge effectively. The inability to
close out a call position may have an adverse effect on liquidity because the
Portfolio may be required to hold the securities underlying the option until
the option expires or is exercised.
Futures Transactions. These Portfolios may purchase and sell futures
contracts, but only when, in the judgment of the Advisor, such a position acts
as a hedge against market changes which would adversely affect the securities
held by the Portfolios. These futures contracts may include, but are not
limited to, market index futures contracts and futures contracts based on U.S.
Government obligations.
A futures contract is an agreement between two parties to buy and
sell a security on a future date which has the effect of establishing the
current price for the security. Although futures contracts by their terms
require actual delivery and acceptance of securities, in most cases the
contracts are closed out before the settlement date without the making or
taking of delivery of securities. Upon buying or selling a futures contract,
the Portfolio deposits initial margin with its custodian, and thereafter daily
payments of maintenance margin are made to and from the executing broker.
Payments of maintenance margin reflect changes in the value of the futures
contract, with the Portfolio being obligated to make such payments if its
futures position becomes less valuable and entitled to receive such payments
if its positions become more valuable.
These Portfolios may only invest in futures contracts to hedge their
respective existing investment positions and not for income enhancement,
speculation or leverage purposes. Although some of the securities underlying a
futures contract may not necessarily meet the Fund's social criteria, any such
hedge position taken by these Portfolios will not constitute a direct
ownership interest in the underlying securities.
Futures contracts are designed by boards of trade which are
designated "contracts markets" by the Commodity Futures Trading Commission
("CFTC"). As series of a registered investment company, the Portfolios are
eligible for exclusion from the CFTC's definition of "commodity pool
operator," meaning that the Portfolios may invest in futures contracts under
specified conditions without registering with the CFTC. Among these conditions
are requirements that to the extent that a Portfolio enters into future
contracts and options on futures positions that are not for bonafide hedging
purposes (as defined by the CFTC), the aggregate initial margin and premiums
on these positions (excluding the amount by which options are "in-the-money")
may not exceed 5% of the Portfolio's net assets. Futures contracts trade on
contracts markets in a manner that is similar to the way a stock trades on a
stock exchange and the boards of trade, through their clearing corporations,
guarantee performance of the contracts.
Options on Futures Contracts. These Portfolios may purchase and write put or
call options and sell call options on futures contracts in which a Portfolio
could otherwise invest and which are traded on a U.S. exchange or board of
trade. The Portfolios may also enter into closing transactions with respect to
such options to terminate an existing position; that is, to sell a put option
already owned and to buy a call option to close a position where the Portfolio
has already sold a corresponding call option.
The Portfolios may only invest in options on futures contracts to
hedge their respective existing investment positions and not for income
enhancement, speculation or leverage purposes. Although some of the securities
underlying the futures contract underlying the option may not necessarily meet
the Fund's social criteria, any such hedge position taken by these Portfolios
will not constitute a direct ownership interest in the underlying securities.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract-a long
position if the option is a call and a short position if the option is a
put-at a specified exercise price at any time during the period of the option.
The Portfolios will pay a premium for such options purchased or sold. In
connection with such options bought or sold, the Portfolios will make initial
margin deposits and make or receive maintenance margin payments which reflect
changes in the market value of such options. This arrangement is similar to
the margin arrangements applicable to futures contracts described above.
Put Options on Futures Contracts. The purchase of put options on futures
contracts is analogous to the sale of futures contracts and is used to protect
the portfolio against the risk of declining prices. These Portfolios may
purchase put options and sell put options on futures contracts that are
already owned by that Portfolio. The Portfolios will only engage in the
purchase of put options and the sale of covered put options on market index
futures for hedging purposes.
Call Options on Futures Contracts. The sale of call options on futures
contracts is analogous to the sale of futures contracts and is used to protect
the portfolio against the risk of declining prices. The purchase of call
options on futures contracts is analogous to the purchase of a futures
contract. These Portfolios may only buy call options to close an existing
position where the Portfolio has already sold a corresponding call option, or
for a cash hedge. The Portfolios will only engage in the sale of call options
and the purchase of call options to cover for hedging purposes.
Writing Call Options on Futures Contracts. The writing of call options on
futures contracts constitutes a partial hedge against declining prices of the
securities deliverable upon exercise of the futures contract. If the futures
contract price at expiration is below the exercise price, the Portfolio will
retain the full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Portfolio's securities
holdings.
Risks of Options and Futures Contracts. If one of these Portfolios has sold
futures or takes options positions to hedge its portfolio against decline in
the market and the market later advances, the Portfolio may suffer a loss on
the futures contracts or options which it would not have experienced if it had
not hedged. Correlation is also imperfect between movements in the prices of
futures contracts and movements in prices of the securities which are the
subject of the hedge. Thus the price of the futures contract or option may
move more than or less than the price of the securities being hedged. Where a
Portfolio has sold futures or taken options positions to hedge against decline
in the market, the market may advance and the value of the securities held in
the Portfolio may decline. If this were to occur, the Portfolio might lose
money on the futures contracts or options and also experience a decline in the
value of its portfolio securities. However, although this might occur for a
brief period or to a slight degree, the value of a diversified portfolio will
tend to move in the direction of the market generally.
The Portfolios can close out futures positions only on an exchange or
board of trade which provides a secondary market in such futures. Although the
Portfolios intend to purchase or sell only such futures for which an active
secondary market appears to exist, there can be no assurance that such a
market will exist for any particular futures contract at any particular time.
This might prevent the Portfolios from closing a futures position, which could
require a Portfolio to make daily cash payments with respect to its position
in the event of adverse price movements.
Options on futures transactions bear several risks apart from those
inherent in options transactions generally. The Portfolios' ability to close
out their options positions in futures contracts will depend upon whether an
active secondary market for such options develops and is in existence at the
time the Portfolios seek to close their positions. There can be no assurance
that such a market will develop or exist. Therefore, the Portfolios might be
required to exercise the options to realize any profit.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The Fund has adopted the following investment restrictions which,
together with the foregoing investment objectives and fundamental policies of
a Portfolio, cannot be changed without the approval of the holders of a
majority of the outstanding shares of the affected Portfolio. As defined in
the Investment Company Act of 1940, this means the lesser of the vote of (a)
67% of the shares of the Portfolio at a meeting where more than 50% of the
outstanding shares are present in person or by proxy or (b) more than 50% of
the outstanding shares of the Portfolio. Shares have equal rights as to
voting, except that only shares of a Portfolio are entitled to vote on matters
affecting only that Portfolio (such as changes in investment objective,
policies or restrictions). None of the Portfolios may:
1. Purchase securities of any issuer (other than
obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities) if, as a
result, more than 5% of the value of that Portfolio's total
assets would be invested in securities of that issuer.
2. Concentrate more than 25% of the value of its
assets in any one industry; provided, however, that there is
no limitation with respect to investments in obligations
issued or guaranteed by the United States Government or its
agencies and instrumentalities, and repurchase agreements
secured thereby, and in the case of the Money Market
Portfolio, there is no limitation with respect to
investments in money market instruments of banks.
3. Purchase more than 10% of the outstanding voting
securities of any issuer. In addition, the Fund may not in
the aggregate purchase more than 10% of the outstanding
voting securities of any issuer.
4. Purchase the securities of any issuer with less
than three years' continuous operation if, as a result, more
than 5% of the value of that Portfolio's total assets would
be invested in securities of such issuers.
5. Make loans other than through the purchase of money
market instruments and repurchase agreements or by the
purchase of bonds, debentures or other debt securities. The
purchase by a Portfolio of all or a portion of an issue of
publicly or privately distributed debt obligations in
accordance with its investment objective, policies and
restrictions, shall not constitute the making of a loan.
6. Underwrite the securities of other issuers.
7. Purchase from or sell to any of the Fund's officers
or Trustees, or firms of which any of them are members, any
securities (other than capital stock of the Fund), but such
persons or firms may act as brokers for the Fund for
customary commissions.
8. Borrow money, except from banks for temporary or
emergency purposes and then only in an amount up to 10% of
the value of that Portfolio's total assets and except by
engaging in reverse repurchase agreements; provided,
however, that a Portfolio may only engage in reverse
repurchase agreements so long as, at the time a Portfolio
enters into a reverse repurchase agreement, the aggregate
proceeds from outstanding reverse repurchase agreements,
when added to other outstanding borrowings permitted by this
section, do not exceed 33 1/3% of the Portfolio's total
assets. In order to secure any permitted borrowings and
reverse repurchase agreements under this section, each
Portfolio may pledge, mortgage or hypothecate its assets.
9. Make short sales of securities or purchase any
securities on margin except as provided for the Managed
Growth, Equity and Bond Portfolios with respect to options,
futures contracts and options on futures contracts.
10. Write, purchase or sell puts, calls or combinations
thereof except as provided for the Managed Growth, Equity
and Bond Portfolios with respect to options, futures
contracts and options on futures contracts.
11. Invest for the purpose of exercising control or
management of another issuer.
12. Invest in commodities, commodities futures
contracts, or real estate, although it may invest in
securities which are secured by real estate or real estate
mortgages and securities of issuers which invest or deal in
commodities, commodity futures, real estate or real estate
mortgages and provided that the Managed Growth, Equity and
Bond Portfolios may purchase or sell stock index futures,
foreign currency futures, interest rate futures and options
thereon.
13. Invest in interests in oil, gas, or other mineral
exploration or development programs, although it may invest
in securities of issuers which invest in or sponsor such
programs.
14. Purchase or retain securities issued by investment
companies except to the extent permitted by the Investment
Company Act of 1940, as amended, and in connection with a
trustee's/director's deferred compensation plan.
Non-Fundamental Investment Restrictions
The Fund has adopted the following operating (i.e., non-fundamental)
investment policies and restrictions which may be changed by the Board of
Trustees without shareholder approval. None of the Portfolios may:
15. Purchase the obligations of foreign issuers if, as
a result, such securities would exceed 25% of the value of
that Portfolio's assets.
16. Purchase illiquid securities if more than 15% of
the value of that Portfolio's net assets would be invested
in such securities.
17. Purchase or retain securities of any issuer if the
officers, directors or Trustees of the Fund or its Advisors,
owning beneficially more than 1/2 of 1% of the securities of
such issuer, together own beneficially more than 5% of such
issuer's securities.
18. Invest in warrants if more than 5% of the value of
that Portfolio's net assets would be invested in such
securities. No more than 2% of the Portfolio's net assets
will be invested in warrants and stock rights not listed on
the New York Stock Exchange or the American Stock Exchange.
19. Invest in oil, gas, or other mineral leases.
Any investment restriction which involves a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the applicable percentage occurs immediately after an acquisition of
securities or utilization of assets and results therefrom.
INVESTMENT SELECTION PROCESS
Investments in the Fund are selected on the basis of their ability to
contribute to the dual objective of the Fund, (i.e., those that satisfy the
Fund's investment and social criteria). The Fund has developed a number of
techniques for evaluating the performance of issuers in each of these areas.
The primary sources of information are reports published by the issuers
themselves, the reports of public agencies, and the reports of groups which
monitor performance in particular areas. These sources of information are
sometimes augmented with direct interviews or written questionnaires addressed
to the issuers. It should be recognized, however, that there are few generally
accepted measures by which achievement in these areas can be readily
distinguished; therefore, the development of suitable measurement techniques
is largely within the discretion and judgment of the Advisors of the Fund.
In making selections for the Managed Growth, Equity and Bond
Portfolios, the Advisors determine and evaluate the appropriate portfolio
composition on the basis of asset prices and the perceived consequences and
probabilities of various economic outcomes. Individual securities are then
evaluated as candidates to fulfill the Portfolio's investment objective and
policies. Securities remain candidates for inclusion in the Portfolios only if
their prices and other characteristics indicate that they have the potential
to perform in a way that is representative of their class of securities under
the different economic outcomes considered more probable by the Advisors.
Candidates for inclusion in any particular class of assets are then
examined according to the social criteria. Issuers are classified into three
categories of suitability under the social criteria. In the first category are
those issuers which exhibit unusual positive accomplishment with respect to
some of the criteria and do not fail to meet minimum standards with respect to
the remaining criteria. To the greatest extent possible, investment selections
are made from this group. In the second category are those issuers which meet
minimum standards with respect to all the criteria but do not exhibit
outstanding accomplishment with respect to any criterion. This category
includes issuers which may lack an affirmative record of accomplishment in
these areas but which are not known by Advisors to violate any of the social
criteria. The third category under the social criteria consists of issuers
which flagrantly violate, or have violated, one or more of those values, for
example, a company which repeatedly engages in unfair labor practices. The
Fund will not knowingly purchase the securities of issuers in this third
category.
It should be noted that the Fund's social criteria tend to limit the
availability of investment opportunities more than is customary with other
investment companies. The Advisors of the Fund, however, believe that within
the first and second categories there are sufficient investment opportunities
to permit full investment among issuers which satisfy the Fund's social
investment objective.
To the greatest extent possible, the Advisors apply the same social
criteria to the purchase of non-equity securities as it applies to equity
investments. With respect to government securities, the Money Market Portfolio
invests primarily in debt obligations issued or guaranteed by agencies or
instrumentalities of the Federal Government whose purposes further or are
compatible with the Fund's social criteria, such as obligations of the Bank
for Cooperatives and the Student Loan Marketing Association, rather than
general obligations of the Federal Government, such as Treasury securities.
Bank certificates of deposit, commercial paper, repurchase agreements, and
corporate bonds are judged in the same way as a prospective purchase of the
bank's or issuing company's common stock. The Fund may invest, however, in
certificates of deposit of banks and savings and loan associations in which
the Fund would not otherwise invest because such institutions have assets of
$1 billion or less, but generally only to the extent all such investments are
fully insured as to principal by the Federal Deposit Insurance Corporation.
Obligations issued by the U.S. Treasury, such as U.S. Treasury bills,
notes and bonds, are supported by the full faith and credit of the U.S.
Government. Certain obligations issued or guaranteed by a U.S. Government
agency or instrumentality are supported by the full faith and credit of the
U.S. Government. These include obligations issued by the Export-Import Bank,
Farmers Home Administration, Government National Mortgage Association, Postal
Service, Merchant Marine, and Washington Metropolitan Area Transit Authority.
The Fund may also invest in other U.S. Government agency or instrumentality
obligations which are supported only by the credit of the agency or
instrumentality and may be further supported by the right of the issuer to
borrow from the U.S. Treasury. Such obligations include securities issued by
the Bank for Cooperatives, Federal Intermediate Credit Bank, Federal Land
Bank, Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and
Federal National Mortgage Association.
DIVIDENDS AND TAXES
It is the policy of the Equity Portfolio to declare and pay dividends
from net investment income on an annual basis. It is the Bond Portfolio's
policy to declare and pay dividends from net investment income on a monthly
basis. The Managed Growth Portfolio declares and pays dividends on a quarterly
basis. Dividends and distributions may differ among the classes. The Money
Market Portfolio accrues daily and pays monthly dividends of its net
investment income to its shareholders of record as of the close of business
that day. Distributions of realized net capital gains, if any, are normally
paid once a year; however, the Fund does not intend to make any such
distributions unless available capital loss carryovers, if any, have been used
or have expired.
Generally, dividends (including short-term capital gains) and
distributions are taxable to the shareholder in the year they are paid.
However, any dividends and distributions paid in January but declared during
the prior three months are taxable in the year declared.
The Fund is required to withhold 31% of any dividends and long-term
capital gain distributions paid and 31% of each redemption transaction
occurring in the Managed Growth, Equity and Bond Portfolios if: (a) the
shareholder's social security number or other taxpayer identification number
("TIN") is not provided or an obviously incorrect TIN is provided; (b) the
shareholder does not certify under penalties of perjury that the TIN provided
is the shareholder's correct TIN and that the shareholder is not subject to
backup withholding under section 3406(a)(1)(C) of the Internal Revenue Code
because of underreporting (however, failure to provide certification as to the
application of section 3406(a)(1)(C) will result only in backup withholding on
dividends, not on redemptions); or (c) the Fund is notified by the Internal
Revenue Service that the TIN provided by the shareholder is incorrect or that
there has been underreporting of interest or dividends by the shareholder.
Affected shareholders will receive statements at least annually specifying the
amount withheld.
In addition, the Fund is required to report to the Internal Revenue
Service the following information with respect to each redemption transaction
occurring in the Managed Growth, Equity and Bond Portfolios: (a) the
shareholder's name, address, account number and taxpayer identification
number; (b) the total dollar value of the redemptions; and (c) the Fund's
identifying CUSIP number.
Certain shareholders are, however, exempt from the backup withholding
and broker reporting requirements. Exempt shareholders include: corporations;
financial institutions; tax-exempt organizations; individual retirement plans;
the U.S., a State, the District of Columbia, a U.S. possession, a foreign
government, an international organization, or any political subdivision,
agency or instrumentality of any of the foregoing; U.S. registered commodities
or securities dealers; real estate investment trusts; registered investment
companies; bank common trust funds; certain charitable trusts; foreign central
banks of issue. Non-resident aliens, certain foreign partnerships and foreign
corporations are generally not subject to either requirement but may instead
be subject to withholding under sections 1441 or 1442 of the Internal Revenue
Code. Shareholders claiming exemption from backup withholding and broker
reporting should call or write the Fund for further information.
Many states do not tax the portion of the Fund's dividends which is
derived from interest on U.S. Government obligations. State law varies
considerably concerning the tax status of dividends derived from U.S.
Government obligations. Accordingly, shareholders should consult their tax
advisors about the tax status of dividends and distributions from the Fund in
their respective jurisdictions.
Dividends paid by the Fund may be eligible for the dividends received
deduction available to corporate taxpayers. Information concerning the tax
status of dividends and distributions and the amount of dividends withheld, if
any, is mailed annually to Fund shareholders.
Investors should note that they may be required to exclude the
initial sales charge, if any, paid on the purchase of Fund shares from the tax
basis of those shares if the shares are exchanged for shares of another
Calvert Group Fund within 90 days of purchase. This requirement applies only
to the extent that the payment of the original sales charge on the shares of
the Fund causes a reduction in the sales charge otherwise payable on the
shares of the Calvert Group Fund acquired in the exchange, and investors may
treat sales charges excluded from the basis of the original shares as incurred
to acquire the new shares.
NET ASSET VALUE
Shares of the Money Market Portfolio are issued and redeemed at the
net asset value per share of the Portfolio. The public offering price of the
shares of the Managed Growth, Equity and Bond Portfolios is the respective net
asset value per share (plus, for Class A shares, the applicable sales charge).
Shares of the Managed Growth, Equity and Bond Portfolios are redeemed at their
respective net asset values per share. The Money Market Portfolio attempts to
maintain a constant net asset value of $1.00 per share; the net asset values
of the Managed Growth, Equity and Bond Portfolios fluctuate based on the
respective market value of the Portfolios' investments. The net asset value
per share of each of the Portfolios is determined every business day at the
close of the New York Stock Exchange (normally 4:00 p.m. Eastern time) and at
such other times as may be necessary or appropriate. The Fund does not
determine net asset value on certain national holidays or other days on which
the New York Stock Exchange is closed: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. Each Portfolio's net asset value per share is determined per
class by dividing its total net assets (the value of its assets net of
liabilities, including accrued expenses and fees) by the number of shares
outstanding for that class.
The assets of the Managed Growth, Equity and Bond Portfolios are
valued as follows: (a) securities for which market quotations are readily
available are valued at the most recent closing price, mean between bid and
asked price, or yield equivalent as obtained from one or more market makers
for such securities; (b) securities maturing within 60 days may be valued at
cost, plus or minus any amortized discount or premium, unless the Board of
Trustees determines such method not to be appropriate under the circumstances;
and (c) all other securities and assets for which market quotations are not
readily available will be fairly valued by the Advisor in good faith under the
supervision of the Board of Trustees.
The Money Market Portfolio's assets, including securities subject to
repurchase agreements, are normally valued at their amortized cost which does
not take into account unrealized capital gains or losses. This involves
valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact
of fluctuating interest rates on the market value of the instrument. While
this method provides certainty in valuation, it may result in periods during
which value, as determined by amortized cost, is higher or lower than the
price that would be received upon sale of the instrument.
Rule 2a-7 under the Investment Company Act of 1940 permits the Fund
to value the Money Market Portfolio's assets at amortized cost if the
Portfolio maintains a dollar-weighted average maturity of 90 days or less and
only purchases obligations having remaining maturities of 13 months or less.
Rule 2a-7 requires, as a condition of its use, that the Money Market Portfolio
invest only in obligations determined by the Trustees to be of good quality
with minimal credit risks and requires the Trustees to establish procedures
designed to stabilize, to the extent reasonably possible, the Portfolio's
price per share as computed for the purpose of sales and redemptions at $1.00.
Such procedures include review of the Portfolio's investment holdings by the
Trustees, at such intervals as they may deem appropriate, to determine whether
the Portfolio's net asset value calculated by using available market
quotations or equivalents deviates from $1.00 per share based on amortized
cost. If such deviation exceeds 0.50%, the Trustees will promptly consider
what action, if any, will be initiated. In the event the Trustees determine
that a deviation exists which may result in material dilution or other unfair
results to investors or existing shareholders, the Trustees will take such
corrective action as they regard as necessary and appropriate, including: the
sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity; the withholding of dividends
or payment of distributions from capital or capital gains; redemptions of
shares in kind; or the establishment of a net asset value per share based upon
available market quotations.
CALCULATION OF YIELD AND TOTAL RETURN
Money Market Portfolio: Yield
From time to time the Money Market Portfolio advertises its "yield"
and "effective yield." Both yield figures are based on historical earnings and
are not intended to indicate future performance. The "yield" of the Money
Market Portfolio refers to the actual income generated by an investment in the
Portfolio over a particular base period of time. If the base period is less
than one year, the yield is then "annualized." That is, the net change,
exclusive of capital changes, in the value of a share during the base period
is divided by the net asset value per share at the beginning of the period,
and the result is multiplied by 365 and divided by the number of days in the
base period. Capital changes excluded from the calculation of yield are: (1)
realized gains and losses from the sale of securities, and (2) unrealized
appreciation and depreciation. The Money Market Portfolio's "effective yield"
for a seven-day period is its annualized compounded yield during the period,
calculated according to the following formula:
Effective yield = (base period return + 1)365/7 -1
For the seven-day period ended September 30, 1996, the Money Market
Portfolio's yield was 4.67% and its effective yield was 4.78%.
Bond Portfolio: Yield
The Bond Portfolio may also advertise its yield from time to time.
Yield quotations are historical and are not intended to indicate future
performance. Yield quotations for the Bond Portfolio are calculated separately
by class and refer to the aggregate imputed yield-to-maturity of each of the
Portfolio's investments based on the market value as of the last day of a
given thirty-day or one-month period, less accrued expenses (net of
reimbursement), divided by the average daily number of outstanding shares for
that class entitled to receive dividends times the maximum offering price on
the last day of the period (so that the effect of the sales charge is included
in the calculation), compounded on a "bond equivalent," or semiannual, basis.
The Bond Portfolio's yield is computed according to the following formula:
Yield = 2 (+1)6 - 1
where a = dividends and interest earned during the period using the aggregate
imputed yield-to maturity for each of the Portfolio's investments as noted
above; b = expenses accrued for the period (net of reimbursement); c = the
average daily number of shares outstanding during the period that were
entitled to receive dividends; and d = the maximum offering price per share on
the last day of the period. Using this calculation, the Bond Portfolio's yield
for the month ended September 30, 1996 was 5.36% for Class A shares, and 4.34%
for Class C shares.
The yield of both the Money Market and Bond Portfolios will fluctuate
in response to changes in interest rates and general economic conditions,
portfolio quality, portfolio maturity, and operating expenses. Yield is not
fixed or insured and therefore is not comparable to a savings or other similar
type of account. Yield during any particular time period should not be
considered an indication of future yield. It is, however, useful in evaluating
a Portfolio's performance in meeting its investment objective.
Managed Growth, Equity and Bond Portfolios: Total Return and Other Quotations
The Managed Growth, Bond and Equity Portfolios may each advertise
"total return." Total return is calculated separately for each class. Total
return is computed by taking the total number of shares purchased by a
hypothetical $1,000 investment after deducting any applicable sales charge,
adding all additional shares purchased within the period with reinvested
dividends and distributions, calculating the value of those shares at the end
of the period, and dividing the result by the initial $1,000 investment. Note:
"Total Return" as quoted in the Financial Highlights section of the Fund's
Prospectus and Annual Report to Shareholders, however, per SEC instructions,
does not reflect deduction of the sales charge, and corresponds to "overall"
return as referred to herein. For periods of more than one year, the
cumulative total return is then adjusted for the number of years, taking
compounding into account, to calculate average annual total return during that
period.
Total return is computed according to the following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $1,000; T = total return; n =
number of years; and ERV = the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the period.
Total return is historical in nature and is not intended to indicate
future performance. All total return quotations reflect the deduction of the
Portfolio's maximum sales charge, except quotations of "overall return," which
do not deduct sales charge, and "actual return," which reflect deduction of
the sales charge only for those periods when a sales charge was actually
imposed. Overall return, which will be higher than total return, should be
considered only by investors, such as participants in certain pension plans,
to whom the sales charge does not apply, or for purposes of comparison only
with comparable figures which also do not reflect sales charges, such as
Lipper averages.
Return for the Managed Growth, Bond and Equity Portfolios' shares for
the periods indicated are as follows:
Periods Ended Class A Class A Class C
September 30, 1996 Overall Return Average Annual Return Average
Annual Return
Managed Growth Portfolio
One Year 10.27% 5.02% 8.85
Five Years 45.38% 7.77% N/A
Ten Years 131.81% 8.77% N/A
Class C: Since inception
(March 1, 319.52% 10.85% 7.80%
1994)
Periods Ended Class A Class A
September 30, 1996 Overall Return Average Annual Return
Bond Portfolio
One Year 3.96% 0.04%
Five Years 33.54% 5.96%
From Inception<F1>1 102.58% 8.08%
Periods Ended Class A Class A Class C
September 30, 1996 Overall Return Average Annual Return Average
Annual Return
Equity Portfolio
One Year 16.62% 11.10% 14.85%
Five Years 38.38% 6.70% N/A
From Inception<F2> 86.42% 7.09% 5.66%
<F1>1 Class A, August 24, 1987.
<F2>2 Class A, August 24, 1987. Class C, March 1, 1994.
The Class A total return figures above and the Bond Portfolio yield figures
above were calculated using the maximum sales charge in effect at that time.
Class C shares of the Bond Portfolio were converted to Class A shares on October
29, 1996. CAM assumed active management of the Bond Portfolio effective March,
1997; new sub-advisors assumed management of the Equity Portfolio effective
February, 1994; and new sub-advisors assumed management of the Managed Growth
Portfolio effective July, 1995. Total return, like yield and net asset value per
share, fluctuates in response to changes in market conditions. Neither total
return nor yield for any particular time period should be considered an
indication of future return.
PURCHASE AND REDEMPTION OF SHARES
Share certificates will not be issued unless requested in writing by
the investor. No charge will be made for share certificate requests. No
certificates will be issued for fractional shares of any Portfolio. A service
fee of $10, plus any costs incurred by the Fund, will be charged investors
whose purchase checks are returned for insufficient funds.
Shareholders in the Money Market Portfolio wishing to have drafts
should complete the signature card enclosed with the Investment Application.
Existing shareholders may arrange for draft writing by contacting the Fund for
a signature card. Other documentation may be required from corporations,
fiduciaries and institutional investors. This draft writing service will be
subject to the customary rules and regulations governing checking accounts,
and the Fund reserves the right to change or suspend the service. Generally,
there is no charge to you for the maintenance of this service or for the
clearance of drafts, but the Fund reserves the right to charge a service fee
for drafts returned for insufficient or uncollected funds. As a service to
shareholders, the Fund may automatically transfer the dollar amount necessary
to cover drafts you have written on the Fund to your Fund account from any
other of your identically registered accounts in Calvert money market funds or
Calvert Insured Plus. The Fund may charge a fee for this service.
When a payable through draft is presented for payment, a sufficient
number of full and fractional shares from the shareholder's account to cover
the amount of the draft will be redeemed at the net asset value next
determined. If there are insufficient shares in the shareholder's account, the
draft may be returned. This draft writing procedure for redemption enables
shareholders to receive the daily dividends declared on the shares to be
redeemed until such time as the draft is presented to the custodian bank for
payment. Drafts presented to the bank for payment which would require the
redemption of shares purchased by check or electronic funds transfer within
the previous 10 business days may not be honored.
Telephone redemption requests are processed upon the date of receipt,
if received prior to 4:00 p.m. Redemption proceeds are normally transmitted or
mailed the next business day, although payment by check of redemption proceeds
of Managed Growth, Equity and Bond Portfolio shares may take up to five
business days. Telephone redemption requests which would require the
redemption of shares purchased by check or electronic funds transfer within
the previous 10 business days may not be honored. The Fund reserves the right
to modify the telephone redemption privilege.
Amounts redeemed by telephone may be mailed by check to the investor
to the address of record without charge. Amounts of more than $50 and less
than $300,000 may be transferred electronically at no charge to the investor.
Amounts of $l,000 or more will be transmitted by wire without charge by the
Fund to the investor's account at a domestic bank or savings association. A
charge of $5 is imposed on wire transfers of less than $1,000.
Existing shareholders who at any time desire to change instructions
already given must send a notice either to the broker through which shares
were purchased or to the Fund with a voided check from the bank account to
receive the redemption proceeds. New wiring instructions may be accompanied by
a voided check in lieu of a signature guarantee. Further documentation may be
required from corporations, fiduciaries, pension plans, and institutional
investors.
The Fund's redemption check normally will be mailed to the investor
on the next business day following the date of receipt by the Fund of a
written redemption request. If the investor so instructs in such written
redemption request, the check will be mailed or the redemption proceeds wired
or transferred electronically to a preauthorized account at the investor's
bank. Redemption proceeds are normally paid in cash. However, at the sole
discretion of the Fund, the Fund has the right to redeem shares in assets
other than cash for redemption amounts exceeding, in any 90-day period,
$250,000 or 1% of the net asset value of the Fund, whichever is less, or as
allowed by law.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is closed
(other than customary weekend and holiday closings), when trading on the New
York Stock Exchange is restricted, or an emergency exists, as determined by
the Securities and Exchange Commission, or if the Commission has ordered such
a suspension for the protection of shareholders. Redemption proceeds are
normally mailed, wired or transferred electronically the next business day but
in no event later than seven days after a proper redemption request has been
received, unless redemptions have been suspended or postponed as described
above.
REDUCED SALES CHARGES (CLASS A)
The Fund imposes reduced sales charges for Class A shares in certain
situations in which the Principal Underwriter and the dealers selling Fund
shares may expect to realize significant economies of scale with respect to
such sales. Generally, sales costs do not increase in proportion to the dollar
amount of the shares sold; the per-dollar transaction cost for a sale to an
investor of shares worth, say, $5,000 is generally much higher than the
per-dollar cost for a sale of shares worth $1,000,000. Thus, the applicable
sales charge declines as a percentage of the dollar amount of shares sold as
the dollar amount increases.
When a shareholder agrees to make purchases of shares over a period
of time totaling a certain dollar amount pursuant to a Letter of Intent, the
Underwriter and selling dealers can expect to realize the economies of scale
applicable to that stated goal amount. Thus the Fund imposes the sales charge
applicable to the goal amount. Similarly, the Underwriter and selling dealers
also experience cost savings when dealing with existing Fund shareholders,
enabling the Fund to afford existing shareholders the Right of Accumulation.
The Underwriter and selling dealers can also expect to realize economies of
scale when making sales to the members of certain qualified groups which agree
to facilitate distribution of Fund shares to their members. See "Exhibit A -
Reduced Sales Charges" in the Prospectus.
ADVERTISING
The Fund or its affiliates may provide information such as, but not
limited to, the economy, investment climate, investment principles,
sociological conditions and political ambiance. Discussion may include
hypothetical scenarios or lists of relevant factors designed to aid the
investor in determining whether the Fund is compatible with the investor's
goals. The Fund may list portfolio holdings or give examples or securities
that may have been considered for inclusion in the Portfolio, whether held or
not.
The Fund or its affiliates may supply comparative performance data
and rankings from independent sources such as Donoghue's Money Fund Report,
Bank Rate Monitor, Money, Forbes, Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., Wiesenberger Investment Companies Service,
Russell 2000/Small Stock Index, Mutual Fund Values Morningstar Ratings, Mutual
Fund Forecaster, Barron's, The Wall Street Journal, and Schabacker Investment
Management, Inc. Such averages generally do not reflect any front- or back-end
sales charges that may be charged by Funds in that grouping. The Fund may also
cite to any source, whether in print or on-line, such as Bloomberg, in order
to acknowledge origin of information. The Fund may compare itself or its
portfolio holdings to other investments, whether or not issued or regulated by
the securities industry, including, but not limited to, certificates of
deposit and Treasury notes. The Fund, its Advisor, and its affiliates reserve
the right to update performance rankings as new rankings become available.
Calvert Group is the leading family of socially responsible mutual
funds, both in terms of socially responsible mutual fund assets under
management, and number of socially responsible mutual fund portfolios offered
(source: Social Investment Forum, December 31, 1996). Calvert Group was also
the first to offer a family of socially responsible mutual fund portfolios.
TRUSTEES, OFFICERS, AND ADVISORY COUNCIL
REBECCA ADAMSON, Trustee. Since 1983, Ms. Adamson has served as
President of the national non-profit, First Nations Financial Project. Founded
by her in 1980, First Nations is the only American Indian alternative
development institute in the country. Address: 69 Kelley Road, Falmouth,
Virginia 22405.
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Director of Finance for
the Family Health Council, Inc. in Pittsburgh, Pennsylvania. The Family Health
Council is a non-profit corporation which provides family planning services,
nutrition, maternal/child health care, and various health screening services.
Mr. Baird is a trustee/director of each of the investment companies in the
Calvert Group of Funds, except for Calvert New World Fund, Inc., Acacia
Capital Corporation, and Calvert World Values Fund, Inc. Address: 211 Overlook
Drive, Pittsburgh, Pennsylvania 15216.
*JOHN G. GUFFEY, JR., Executive Vice President and Trustee. Mr.
Guffey is chairman of the Calvert Social Investment Foundation, organizing
director of the Community Capital Bank in Brooklyn, New York, and a financial
consultant to various organizations. In addition, he is a Director of the
Community Bankers Mutual Fund of Denver, Colorado, and the Treasurer and
Director of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey
is a trustee/director of each of the other investment companies in the Calvert
Group of Funds, except for Calvert New World Fund, Inc. and Acacia Capital
Corporation. Address: 7205 Pomander Lane, Chevy Chase, Maryland 20815.
JOY V. JONES, Esq., Trustee. Ms. Jones is an attorney and
entertainment manager in New York City, and was formerly a partner with the
firm Rogers & Wells in New York City, specializing in real estate law and
municipal finance. Ms. Jones is also a Trustee of Sarah Lawrence College, a
member of the Association of Black Women Attorneys, Inc., and a Trustee of the
Community Service Society of New York. Address: 175 West 12th Street, New
York, New York 10011.
TERRENCE J. MOLLNER, Ed.D., Trustee. Dr. Mollner is Founder and
Chairperson of Trusteeship Institute, Inc., a diverse foundation known
principally for its consultation to corporations converting to cooperative
employee-ownership. He is also a director of Calvert World Values Fund, Inc.
He served as a Trustee of the Cooperative Fund of New England, Inc., and is
now a member of its Board of Advisors. In addition, Dr. Mollner is a founder
and member of the Board of Trustees of the Foundation for Soviet-American
Economic Cooperation. Address: 15 Edwards Square, Northampton, Massachusetts
01060.
SYDNEY AMARA MORRIS, Trustee. Rev. Morris is Senior Minister of the
Unitarian Church of Vancouver, Canada. She previously served as Minister of
the Unitarian-Universalist Fellowship in Ames, Iowa. Rev. Morris is a graduate
of the Harvard Divinity School. Address: 1225 W. 26th Avenue, Vancouver,
British Columbia, Canada V6H2A8.
*CHARLES T. NASON, Trustee. Mr. Nason serves as Chairman, President
and Chief Executive Officer of The Acacia Group, a Washington, D.C.-based
financial services organization, including Acacia Mutual Life Insurance
Company and Calvert Group, Ltd. Address: 51 Louisiana Avenue, N.W.,
Washington, D.C. 20001.
*D. WAYNE SILBY, Esq., President and Trustee. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert Group of
Funds, except for Calvert New World Fund, Inc. and Acacia Capital Corporation.
Mr. Silby is an officer, director and shareholder of Silby, Guffey & Company,
Inc., which serves as general partner of Calvert Social Venture Partners
("CSVP"). CSVP is a venture capital firm investing in socially responsible
small companies. Address: 1715 18th Street, N.W., Washington, D.C. 20009.
*CLIFTON S. SORRELL, JR., President and Trustee. Mr. Sorrell serves
as President, Chief Executive Officer and Vice Chairman of Calvert Group, Ltd.
and as an officer and director of each of its affiliated companies. He is a
director of Calvert-Sloan Advisers, L.L.C., and a trustee/director of each of
the investment companies in the Calvert Group of Funds.
RENO J. MARTINI, Senior Vice President. Mr. Martini is Senior Vice
President of Calvert Group, Ltd., and Senior Vice President and Chief
Investment Officer of Calvert Asset Management Company, Inc. Mr. Martini is
also a director and President of Calvert-Sloan Advisers, L.L.C., and a
director and officer of Calvert New World Fund.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior Vice
President and Controller of Calvert Group, Ltd. and its subsidiaries and an
officer of each of the other investment companies in the Calvert Group of
Funds. Mr. Wolfsheimer is Vice President and Treasurer of Calvert-Sloan
Advisers, L.L.C., and a director of Calvert Distributors, Inc.
WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant Secretary.
Mr. Tartikoff is an officer of each of the investment companies in the Calvert
Group of Funds, and is Senior Vice President, Secretary, and General Counsel
of Calvert Group, Ltd., and each of its subsidiaries. Mr. Tartikoff is also
Vice President and Secretary of Calvert-Sloan Advisers, L.L.C., a director of
Calvert Distributors, Inc., and is an officer of Acacia National Life
Insurance Company.
EVELYNE S. STEWARD, Vice President. Ms. Steward is Senior Vice
President of Calvert Group, Ltd., and a director of Calvert-Sloan Advisers,
L.L.C. She is the sister of Philip J. Schewetti, the portfolio manager of the
CSIF Equity Portfolio.
STEVEN J. SCHUETH, Vice President. Mr. Schueth serves as President of
Calvert Distributors, Inc., and as Vice President of Calvert-Sloan Advisers,
L.L.C.
CATHERINE S. BARDSLEY, Esq., Secretary. Ms. Bardsley is counsel to
Kirkpatrick & Lockhart, LLP, the Fund's legal counsel. Address: 1800
Massachusetts Avenue, N.W., Washington, D.C. 20036.
DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President of
Calvert Asset Management Company, Inc., and is an officer of each of the other
investment companies in the Calvert Group of Funds, except for Calvert New
World Fund, Inc.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of each
of the other investment companies in the Calvert Group of Funds.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is Assistant
Counsel of Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the other
investment companies in the Calvert Group of Funds. DOB: 10/21/56.
LISA CROSSLEY, Esq., Assistant Secretary and Compliance Officer. Ms.
Crossley is Assistant Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of each
of the other investment companies in the Calvert Group of Funds. DOB: 12/31/61.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Assistant
Counsel of Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the other
investment companies in the Calvert Group of Funds. DOB: 09/07/68.
The address of directors and officers, unless otherwise noted, is
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Trustees and
officers of the Fund as a group own less than 1% of the Fund's outstanding
shares. Trustees marked with an *, above, are "interested persons" of the
Fund, under the Investment Company Act of 1940.
The Audit Committee of the Board is composed of Messrs. Baird, Blatz,
Feldman, Guffey and Pugh. The Board's Investment Policy Committee is composed
of Messrs. Borts, Diehl, Gavian, Rochat, Silby and Sorrell.
Mr. Baird and Dr. Mollner serve as the Fund's representatives to the
respective Audit Committees of the other investment companies in the Calvert
Group of Funds; and Rev. Morris and Ms. Jones serve as the Fund's
representatives to the respective Investment Policy Committees of the other
investment companies in the Calvert Group of Funds. Ms. Adamson, Dr. Mollner,
and Mr. Silby serve on the Fund's High Social Impact Investments Committee
which assists the Fund in identifying, evaluating and selecting investments in
securities that offer a rate of return below the then-prevailing market rate
and that present attractive opportunities for furthering the Fund's social
criteria. Ms. Jones, Rev. Morris, and Messrs. Guffey, Silby, and Sorrell serve
on the Fund's Special Equities Committee which assists the Fund in
identifying, evaluating, and selecting appropriate private placement
investment opportunities for the Fund that are not high social impact
investments. The Advisory Council has no power, authority or responsibility
with respect to the management of the Fund or the conduct of the affairs of
the Fund. Messrs. Silby, Guffey, Sorrell, Mollner and Baird, Ms. Adamson, Ms.
Jones, Rev. Morris, and Ms. LeClair and Mr. Sarkady of the Advisory Council,
serve as trustees of Calvert Social Investment Foundation, a non-profit
organization formed to increase awareness and educate the general public about
the benefits of socially conscious investing. The Foundation is not directly
affiliated with Calvert Group.
During fiscal 1996, trustees of the Fund not affiliated with the
Fund's Advisor were paid $43,479 by the Money Market Portfolio, $156,610 by
the Managed Growth Portfolio, $17,612 by the Bond Portfolio, and $25,953 by
the Equity Portfolio. Trustees of the Fund not affiliated with the Advisor
presently receive an annual fee of $20,500 for service as a member of the
Board of Trustees of the Calvert Group of Funds, and a fee of $750 to $1500
for each regular Board or Committee meeting attended; such fees are allocated
among the respective Portfolios based upon their relative net assets. Trustees
who do not serve on the Board of other Funds sponsored by the Advisor receive
an annual fee of $12,400, plus $600 for each Board and Committee meeting
attended.
Trustees of the Fund not affiliated with the Fund's Advisor may elect
to defer receipt of all or a percentage of their fees and invest them in any
fund in the Calvert Family of Funds through the Trustees Deferred Compensation
Plan (shown as "Pension or Retirement Benefits Accrued as part of Fund
Expenses," below). Deferral of the fees is designed to maintain the parties in
the same position as if the fees were paid on a current basis. Management
believes this will have a negligible effect on the Fund's assets, liabilities,
net assets, and net income per share, and will ensure that there is no
duplication of advisory fees.
Trustee Compensation Table
Fiscal Year 1996 Aggregate Pension or Total Compensation
(unaudited numbers) Compensation Retirement from Registrant
from Registrant Benefits Accrued and Fund Complex
for service as as part of paid to Trustees<F4>
Trustee Registrant
Expenses<F3>
Rebecca Adamson $15,473 $5,158 $20,631
Richard L. Baird, Jr. $ 317 $0 $34,925
John G. Guffey, Jr. $ 7,575 $0 $49,433
Joy V. Jones $30,730 $0 $30,730
Terrence J. Mollner $33,448 $0 $44,109
Sydney Amara Morris $20,130 $0 $20,130
D. Wayne Silby $17,472 $0 $56,398
<F3> Ms. Adamson has chosen to defer a portion of her compensation. Her total
deferred compensation, including dividends and capital appreciation, was
$24,967.11 as of September 30, 1996.
<F4>As of December 31, 1996. The Fund Complex consists of nine (9) registered
investment companies.
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio, as the
case may be, here indicated.
INVESTMENT ADVISOR
The Fund's Investment Advisor is Calvert Asset Management Company,
Inc., 4550 Montgomery Avenue, 1000N, Bethesda, Maryland 20814, a subsidiary of
Calvert Group Ltd., which is a subsidiary of Acacia Mutual Life Insurance
Company of Washington, D.C. ("Acacia Mutual").
The Advisory Contract between the Fund and the Advisor was entered
into on January 3, 1984, (May 24, 1994 for the Equity Portfolio) and will
remain in effect indefinitely, provided continuance is approved at least
annually by the vote of the holders of a majority of the outstanding shares of
the Fund or by the Board of Trustees of the Fund; and further provided that
such continuance is also approved annually by the vote of a majority of the
trustees of the Fund who are not parties to the Contract or interested persons
of parties to the Contract or interested persons of such parties, cast in
person at a meeting called for the purpose of voting on such approval. The
Contract may be terminated without penalty by either party upon 60 days' prior
written notice; it automatically terminates in the event of its assignment.
Under the Contract, the Advisor provides investment advice to the
Fund and oversees its day-to-day operations, subject to direction and control
by the Fund's Board of Trustees. For its services, the Advisor receives an
annual fee of 0.70% of the first $500 million of the Managed Growth
Portfolio's average daily net assets, 0.675% of the next $500 million of such
assets, and 0.65% of all assets over $1 billion (plus/minus up to 0.15%
incentive fee); 0.65% of the Bond Portfolio's average daily net assets; and
0.50% of the Money Market Portfolio's average daily net assets which fee is
payable monthly. See "Management of the Fund" in the Prospectus for the
Managed Growth and Equity Portfolio advisory and sub-advisory fees, which
include a performance adjustment fee. The Advisor reserves the right (i) to
waive all or a part of its fee and (ii) to reallocate a part of its fee to
broker-dealers in consideration of their promotional or administrative
services.
The Managed Growth Portfolio is managed by multiple investment
sub-advisors. With the multi-manager approach, there will be several investment
strategies in place at any given time in order to help the Portfolio pursue its
investment objectives. Specifically, CAM has retained a pool of five investment
sub-advisors to manage the Managed Growth Portfolio's equity assets, though they
will not necessarily be managing the Portfolio's money at the same time. CAM has
retained NCM Capital Management Group, Inc., Brown Capital Management, Inc.,
United States Trust Company of Boston, Fortaleza Asset Management, Inc. and
Frontier Capital Management, Inc. as sub-advisors for the Portfolio. See
"Management of the Fund" in the Prospectus for the Managed Growth and Equity
Portfolio sub-advisory fees, which include a performance adjustment fee.
The Managed Growth Portfolio's current Sub-advisors are described in the
Prospectus. See "Management of the Fund." The remaining pool of Sub-Advisors are
described below.
Fortaleza Asset Management, Inc. of 200 West Adams, Suite 1901, Chicago,
Illinois, 60606, is a small-cap growth manager that bases its investment
principles on three key elements: (1) a proprietary stock valuation system that
incorporates technical and market sentiment indicators to determine optimal buy
points; (2) an emphasis on the preservation of capital through the
implementation of a strict selling discipline to lock in capital gains and
reduce losses; and (3) a discipline that does not force equity commitment in
overvalued markets. The investment approach is based on a bottom-up selection
process, and concentrates on small-cap growth stocks.
Margarita Perez is the founder, President and Portfolio Manager of
Fortaleza, and has over 13 years of investment experience. Prior to forming
Fortaleza, Ms. Perez was Vice President and Portfolio Manager for Monetta
Financial Services, Inc., where she was directly involved in the management of
equity accounts totaling in excess of $100 million. Ms. Perez earned an MBA
from DePaul University School of Commerce. James Boves, also a Portfolio
Manager, brings over 25 years of investment management and research experience
to Fortaleza. He has an MA in Economics from Northern Illinois University and
is a member of the Investment Analysts Society in Chicago.
Frontier Capital Management is a Boston-based, independent investment
management firm. Founded in 1980, Frontier is a research driven firm
specializing in the management of growth-oriented portfolios with particular
focus on the small to medium capitalization sectors of the market. As of
December 31, 1994 the firm managed approximately $1.6 billion in client
assets, including over $200 million in portfolios subject to socially
responsible guidelines. Frontier concentrates on small-/mid-cap growth stocks.
Frontier has a large team of investment and trading professionals. Those
responsible for investing assets of the Portfolio would be determined at the
time the Advisor determines to allocate to Frontier the management of a
portion of Portfolio assets.
United States Trust Company of Boston is a Massachusetts-chartered
commercial bank with full trust powers. It is wholly-owned by and the principal
subsidiary of UST Corp., a Massachusetts bank holding company. It is located at
30 Court Street, Boston, Massachusetts 02108. The Trust Department of U.S. Trust
has managed funds as a fiduciary since 1895. U.S. Trust pioneered the concept
and practice of socially responsible investing and has managed socially screened
portfolios for over two decades.
Effective February 1, 1994, Loomis, Sayles & Company, L.P. ("Loomis")
serves as Sub-Advisor to the Equity Portfolio. See Prospectus, "Management of
the Fund." The computation of the Investment Performance Fee and the Investment
Record Period will be made in accordance with Rule 205-1 under the Investment
Advisors Act of 1940 or any other applicable rule as, from time to time, may be
adopted or amended. In addition to the sub-advisory fee, the Advisor pays a
marketing fee of 0.05% to Loomis, based on the Equity Portfolio's average daily
net assets.
The Advisor provides the Fund with investment supervision and
management, administrative services, office space, furnishes executive and
other personnel to the Fund, and may pay Fund advertising and promotional
expenses. The Advisor reserves the right to compensate broker-dealers in
consideration of their promotional or administrative services. The Fund pays
all other administrative and operating expenses, including: custodial,
registrar, dividend disbursing and transfer agency fees; federal and state
securities registration fees; salaries, fees and expenses of trustees,
executive officers and employees of the Fund, and Advisory Council members,
who are not "affiliated persons" of the Advisor or the Sub-Advisors within the
meaning of the Investment Company Act of 1940; insurance premiums; trade
association dues; legal and audit fees; interest, taxes and other business
fees; expenses of printing and mailing reports, notices, prospectuses, and
proxy material to shareholders; annual shareholders' meeting expenses; and
brokerage commissions and other costs associated with the purchase and sale of
portfolio securities. The Advisor has agreed to reimburse the Money Market,
Managed Growth, and Bond Portfolios for their respective operating expenses
(excluding brokerage, taxes, interest, Distribution Plan expenses and
extraordinary items, and, with respect to the Managed Growth Portfolio,
performance fees earned) exceeding, on a pro rata basis, 1.5% of the first $30
million of the respective Portfolio's average daily net assets, and 1% of such
assets in excess of $30 million.
The advisory fees paid to the Advisor by the Money Market Portfolio
for the fiscal years ended September 30, 1994, 1995, and 1996 were $705,750,
$727,343, and $809,573 respectively. The advisory fees paid to the Advisor by
the Managed Growth Portfolio for the same years were $3,700,925, $3,645,338,
and $4,054,218, respectively. The advisory fees paid to the Advisor for these
years by the Bond Portfolio were $419,490, $400,253 and $421,016, respectively;
and the Equity Portfolio paid $601,189, $569,589, and $496,208, respectively.
METHOD OF DISTRIBUTION
The Fund has entered into an agreement with Calvert Distributors,
Inc. ("CDI") whereby CDI, acting as principal underwriter for the Fund, makes
a continuous offering of the Fund's securities on a "best efforts" basis.
Under the terms of the agreement, CDI is entitled to receive, pursuant to the
Distribution Plans, a distribution fee from the Fund based on the average
daily net assets of each Portfolio's Class A shares, and 1.00% of each of the
Managed Growth, Equity and Bond Portfolios' Class C average daily net assets.
The Equity and Bond Portfolios did not pay distribution expenses prior to
fiscal 1994, and the Money Market Portfolio has never paid Distribution Plan
expenses. For the fiscal years ended September 30, 1994, 1995, and 1996, the
Managed Growth Portfolio paid Class A distribution plan expenses of
$1,245,946, $1,219,694, and $1,361,666 respectively. Of the Class A
distribution expenses paid in fiscal 1996, $828,625 was used to compensate
dealers for their share distribution promotional services, $99,350 was for the
printing and mailing of prospectuses and sales materials to investors (other
than current shareholders), $217,628 financed advertising, $78,864 financed
compensation to the underwriter, and the remainder was for other direct
distribution expenses. For fiscal year 1994, the Bond and Equity Portfolios
paid Class A distribution plan expenses of $52,256 and $83,170, respectively,
for fiscal year 1995, $121,992 and $203,878, respectively, and for fiscal year
1996, $127,042 and $217,340, respectively. Of the distribution expenses paid
by Class A Shares of the Bond Portfolio in fiscal 1996, the full amount was
used to compensate dealers for their share distribution promotional services.
Of the distribution expenses paid by Class A Shares of the Equity Portfolio in
fiscal 1996, $203,340 was used to compensate dealers for their share
distribution promotional services, while the remainder partially financed the
printing and mailing of prospectuses and sales materials to investors (other
than current shareholders). For Class A Managed Growth, Equity and Bond
Portfolio shares, CDI also receives the portion of the sales charge in excess
of the dealer reallowance. During the fiscal year ended September 30, 1994,
Calvert Securities Corporation, the predecessor of CDI, received net sales
charges of $529,807. During fiscal year 1995, CDI received net sales charges
of $203,099, $27,038, and $63,459, for the Managed Growth, Bond, and Equity
Portfolios, respectively. During fiscal year 1996, CDI received net sales
charges of $405,789, $56,699, and $129,525, for the Managed Growth, Bond, and
Equity Portfolios, respectively.
For the period from inception (March 1, 1994) to September 30, 1994,
the Managed Growth and Equity Portfolios paid Class C Distribution Plan
expenses of $5,583 and $1,757, respectively. For fiscal 1995, Class C
Distribution Plan expenses were $28,447 and $11,918 for the Managed Growth and
Equity Portfolios, respectively. Fiscal year 1996 Class C Distribution Plan
expenses were $52,406 and $22,628 for the Managed Growth and Equity Portfolios
respectively.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Fund has adopted Distribution Plans (the "Plans") which permit the Fund to pay
certain expenses associated with the distribution and servicing of its shares.
Such expenses for Class A shares may not exceed, on an annual basis, 0.35% of
the Managed Growth, Equity and Bond Portfolios' respective average daily net
assets and 0.25% of the Money Market Portfolio's average daily net assets.
However, the Fund's Board of Trustees has determined that, until further
action by the Board, no Portfolio shall pay Class A distribution expenses in
excess of 0.25% of its average daily net assets; and further, that Class A
distribution expenses only be charged on the average daily net assets of the
Managed Growth Portfolio in excess of $30,000,000.
Expenses under the Fund's Class C Plans may not exceed, on an annual
basis, 1.00% of the Managed Growth and Equity Portfolios' Class C average
daily net assets.
The Fund's Distribution Plans were approved by the Board of Trustees,
including the Trustees who are not "interested persons" of the Fund (as that
term is defined in the Investment Company Act of 1940) and who have no direct
or indirect financial interest in the operation of the Plans or in any
agreements related to the Plans. The selection and nomination of the Trustees
who are not interested persons of the Fund is committed to the discretion of
such disinterested Trustees. In establishing the Plans, the Trustees
considered various factors including the amount of the distribution expenses.
The Trustees determined that there is a reasonable likelihood that the Plans
will benefit the Fund and its shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Trustees who have no direct or indirect financial interest in
the Plans, or by vote of a majority of the outstanding shares of the affected
class or Portfolio of the Fund. Any change in the Plans that would materially
increase the distribution cost to a Portfolio requires approval of the
shareholders of the affected class; otherwise, the Plans may be amended by the
Trustees, including a majority of the non-interested Trustees as described
above. The Plans will continue in effect for successive one-year terms
provided that such continuance is specifically approved by (i) the vote of a
majority of the Trustees who are not parties to the Plans or interested
persons of any such party and who have no direct or indirect financial
interest in the Plans, and (ii) the vote of a majority of the entire Board of
Trustees.
Apart from the Plans, the Advisor and CDI, at their own expense, may
incur costs and pay expenses associated with the distribution of shares of the
Fund.
Certain broker-dealers, and/or other persons may receive compensation
from the investment advisor, underwriter, or their affiliates for the sale and
distribution of the securities or for services to the Fund. Such compensation
may include additional compensation based on assets held through that firm
beyond the regularly scheduled rates, and finder's fees payments to firms
whose representatives are responsible for soliciting a new account where the
accountholder does not choose to purchase through that firm.
TRANSFER AND SHAREHOLDER SERVICING AGENT
Calvert Shareholder Services, Inc., a subsidiary of Calvert Group,
Ltd., and Acacia Mutual, has been retained by the Fund to act as transfer
agent, dividend disbursing agent and shareholder servicing agent. These
responsibilities include: responding to shareholder inquiries and instructions
concerning their accounts; crediting and debiting shareholder accounts for
purchases and redemptions of Fund shares and confirming such transactions;
daily updating of shareholder accounts to reflect declaration and payment of
dividends; and preparing and distributing semi-annual statements to
shareholders regarding their accounts. For these services, Calvert Shareholder
Services, Inc., receives a fee based on the number of shareholder accounts and
the number of shareholder transactions. For these services, in fiscal years
1994, 1995, and 1996, the Money Market Portfolio paid Calvert Shareholder
Services, Inc. fees of $524,627, $508,112, and $647,180 respectively. The
Managed Growth Portfolio paid $904,274, $851,590 and $1,035,494 in the same
fiscal years, respectively. The Bond Portfolio paid $120,933, $119,859, and
$152,852 in fiscal years 1994, 1995, and 1996, respectively, and the Equity
Portfolio paid $229,225, $246,195, and $305,430 for the same periods,
respectively.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and the
choice of brokers and dealers are made by the Fund's Advisor and Sub-Advisor
under the direction and supervision of the Fund's Board of Trustees.
Broker-dealers who execute portfolio transactions on behalf of the
Fund are selected on the basis of their professional capability and the value
and quality of their services. The Advisor and Sub-Advisor reserve the right
to place orders for the purchase or sale of portfolio securities with
broker-dealers who have sold shares of the Fund or who provide the Fund with
statistical, research, or other information and services. Although any
statistical research or other information and services provided by
broker-dealers may be useful to the Advisor and the Sub-Advisor, the dollar
value of such information and services is generally indeterminable, and its
availability or receipt does not serve to materially reduce the Advisor's or
Sub-Advisor's normal research activities or expenses. In fiscal years 1994,
1995, and 1996, no commissions were paid to any officer, trustee or Advisory
Council member of the Fund or any of their affiliates.
The Advisor and Sub-Advisor may also execute portfolio transactions
with or through broker-dealers who have sold shares of the Fund. However, such
sales will not be a qualifying or disqualifying factor in a broker-dealer's
selection nor will the selection of any broker-dealer be based on the volume
of Fund shares sold. The Advisor or Sub-Advisor may compensate, at its
expense, such broker-dealers in consideration of their promotional and
administrative services.
Depending upon market conditions, portfolio turnover, generally
defined as the lesser of annual sales or purchases of portfolio securities
divided by the average monthly value of the Fund's portfolio securities
(excluding from both the numerator and the denominator all securities whose
maturities or expiration dates as of the date of acquisition are one year or
less), expressed as a percentage, is under normal circumstances expected to be
within 50% to 150%. For 1994, the portfolio turnover rates of the Managed
Growth, Bond, and Equity Portfolios were 34%, 19%, and 94%, respectively. The
1995 fiscal year portfolio turnover rates of the Managed Growth, Bond, and
Equity Portfolios were 114%, 29%, and 35%, respectively. For the 1996 fiscal
year, the portfolio turnover rates of the Managed Growth, Bond, and Equity
Portfolios were 111%, 22%, and 118%, respectively.
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
Coopers & Lybrand, L.L.P., has been selected by the Board of Trustees
to serve as independent accountants for fiscal year 1997. State Street Bank &
Trust Company, N.A., 225 Franklin Street, Boston, MA 02110, serves as
custodian of the Fund's investments. First National Bank of Maryland, 25 South
Charles Street, Baltimore, Maryland 21203 also serves as custodian of certain
of the Fund's cash assets. The custodians have no part in deciding the Fund's
investment policies or the choice of securities that are to be purchased or
sold for the Fund's Portfolios.
GENERAL INFORMATION
The Fund was approved as a Massachusetts business trust on November
30, 1981. The Fund's Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Fund. The shareholders of
a Massachusetts business trust might, however, under certain circumstances, be
held personally liable as partners for its obligations. The Declaration of
Trust provides for indemnification and reimbursement of expenses out of Fund
assets for any shareholder held personally liable for obligations of the Fund.
The Declaration of Trust also provides that the Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the Fund and satisfy any judgment thereon. The Declaration of
Trust further provides that the Fund may maintain appropriate insurance (for
example, fidelity bonding and errors and omissions insurance) for the
protection of the Fund, its shareholders, trustees, officers, employees and
agents to cover possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which both inadequate insurance exists and the
Fund itself is unable to meet its obligations.
Each share of each series represents an equal proportionate interest
in that series with each other share and is entitled to such dividends and
distributions out of the income belonging to such series as declared by the
Board. The Managed Growth and Equity Portfolios each offer two separate
classes of shares: Class A and Class C. Each class represents interests in the
same portfolio of investments but, as further described in the prospectus,
each class is subject to differing sales charges and expenses, which
differences will result in differing net asset values and distributions. Upon
any liquidation of the Fund, shareholders of each class are entitled to share
pro rata in the net assets belonging to that series available for distribution.
The Fund will send its shareholders confirmations of purchase and
redemption transactions, as well as periodic transaction statements and
unaudited semi-annual and audited annual financial statements of the Fund's
investment securities, assets and liabilities, income and expenses, and
changes in net assets.
The Prospectus and this Statement of Additional Information do not
contain all the information in the Fund's registration statement. The
registration statement is on file with the Securities and Exchange Commission
and is available to the public.
FINANCIAL STATEMENTS
The Fund's audited financial statements included in its Annual Report
to Shareholders dated September 30, 1996, are expressly incorporated by
reference and made a part of this Statement of Additional Information. A copy
of the Annual Report may be obtained free of charge by writing or calling the
Fund.
APPENDIX
CORPORATE BOND AND COMMERCIAL PAPER RATINGS
Corporate Bonds:
Description of Moody's Investors Service Inc.'s/Standard & Poor's bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. This rating indicates an extremely strong capacity to pay
principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree. They are rated
lower than the best bonds because margins of protection may not be as large as
in Aaa securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present which make long-term risks
appear somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which make the bond somewhat more susceptible to the adverse effects of
circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay principal
and interest. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in higher rated categories.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay interest
and repay principal. The higher the degree of speculation, the lower the
rating. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposure to adverse conditions.
C/C: This rating is only for income bonds on which no interest is
being paid.
D: Debt in default; payment of interest and/or principal is in
arrears.
Commercial Paper Ratings:
MOODY'S INVESTORS SERVICE, INC.:
The Prime rating is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation
of the issuer's products in relation to competition and customer acceptance;
(4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings
over a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by management
of obligations which may be present or may arise as a result of public
interest questions and preparations to meet such obligations. Issuers within
this Prime category may be given ratings 1, 2, or 3, depending on the relative
strengths of these factors.
STANDARD & POOR'S CORPORATION:
Commercial paper rated A by Standard & Poor's has the following
characteristics: (i) liquidity ratios are adequate to meet cash requirements;
(ii) long-term senior debt rating should be A or better, although in some
cases BBB credits may be allowed if other factors outweigh the BBB; (iii) the
issuer should have access to at least two additional channels of borrowing;
(iv) basic earnings and cash flow should have an upward trend with allowances
made for unusual circumstances; and (v) typically the issuer's industry should
be well established and the issuer should have a strong position within its
industry and the reliability and quality of management should be unquestioned.
Issuers rated A are further referred to by use of numbers 1, 2 and 3 to denote
the relative strength within this highest classification.
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the Letter
of Intent option on my Fund Account Application Form, I agree to be bound by
the terms and conditions applicable to Letters of Intent appearing in the
Prospectus and the Statement of Additional Information for the Fund and the
provisions described below as they may be amended from time to time by the
Fund. Such amendments will apply automatically to existing Letters of Intent.
I intend to invest in the shares of: (Fund or Portfolio name*)during the
thirteen (13) month period from the date of my first purchase pursuant to this
Letter (which cannot be more than ninety (90) days prior to the date of this
Letter or my Fund Account Application Form, whichever is applicable), an
aggregate amount (excluding any reinvestments of distributions) of at least
fifty thousand dollars ($50,000) which, together with my current holdings of the
Fund (at public offering price on date of this Letter or my Fund Account
Application Form, whichever is applicable), will equal or exceed the amount
checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the terms of
escrow, to which I hereby agree, each purchase occurring after the date of
this Letter will be made at the public offering price applicable to a single
transaction of the dollar amount specified above, as described in the Fund's
prospectus. No portion of the sales charge imposed on purchases made prior to
the date of this Letter will be refunded.
I am making no commitment to purchase shares, but if my purchases
within thirteen months from the date of my first purchase do not aggregate the
minimum amount specified above, I will pay the increased amount of sales
charges prescribed in the terms of escrow described below. I understand that
4.75% of the minimum dollar amount specified above will be held in escrow in
the form of shares (computed to the nearest full share). These shares will be
held subject to the terms of escrow described below.
From the initial purchase (or subsequent purchases if necessary),
4.75% of the dollar amount specified in this Letter shall be held in escrow in
shares of the Fund by the Fund's transfer agent. For example, if the minimum
amount specified under the Letter is $50,000, the escrow shall be shares
valued in the amount of $2,375 (computed at the public offering price adjusted
for a $50,000 purchase). All dividends and any capital gains distribution on
the escrowed shares will be credited to my account.
If the total minimum investment specified under the Letter is
completed within a thirteen month period, escrowed shares will be promptly
released to me. However, shares disposed of prior to completion of the
purchase requirement under the Letter will be deducted from the amount
required to complete the investment commitment.
Upon expiration of this Letter, the total purchases pursuant to the
Letter are less than the amount specified in the Letter as the intended
aggregate purchases, Calvert Distributors, Inc. ("CDI") will bill me for an
amount equal to the difference between the lower load I paid and the dollar
amount of sales charges which I would have paid if the total amount purchased
had been made at a single time. If not paid by the investor within 20 days,
CDI will debit the difference from my account. Full shares, if any, remaining
in escrow after the aforementioned adjustment will be released and, upon
request, remitted to me.
I irrevocably constitute and appoint CDI as my attorney-in-fact, with
full power of substitution, to surrender for redemption any or all escrowed
shares on the books of the Fund. This power of attorney is coupled with an
interest.
The commission allowed by Calvert Distributors, Inc. to the
broker-dealer named herein shall be at the rate applicable to the minimum
amount of my specified intended purchases.
The Letter may be revised upward by me at any time during the
thirteen-month period, and such a revision will be treated as a new Letter,
except that the thirteen-month period during which the purchase must be made
will remain unchanged and there will be no retroactive reduction of the sales
charges paid on prior purchases.
In determining the total amount of purchases made hereunder, shares
disposed of prior to termination of this Letter will be deducted. My
broker-dealer shall refer to this Letter of Intent in placing any future
purchase orders for me while this Letter is in effect.
Dealer Name of Investor(s)
By
Authorized Signer Address
Date Signature of Investor(s)
Date Signature of Investor(s)
