CALVERT SOCIAL INVESTMENT FUND
(Technology Portfolio)
4550 Montgomery Avenue, Bethesda, Maryland 20814
Statement of Additional Information
October 31, 2000
New Account (800) 368-2748 Shareholder
Information: (301) 951-4820 Services: (800) 368-2745
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 Impaired: (800) 541-1524
This Statement of Additional Information ("SAI") is not a prospectus.
Investors should read the Statement of Additional Information in conjunction
with the Fund's Prospectus, dated October 31, 2000. The prospectus may be
obtained free of charge by writing the Fund at the above address or calling the
Fund, or by visiting our website at www.calvert.com.
TABLE OF CONTENTS
Investment Policies and Risks 2
Investment Restrictions 7
Investment Selection Process 8
Dividends, Distributions and Taxes 9
Net Asset Value 9
Purchase and Redemption of Shares 10
Advertising 11
Trustees, Officers and Advisory Council 12
Investment Advisor and Subadvisor 15
Administrative Services Agent 15
Method of Distribution 15
Transfer and Shareholder Servicing Agents 17
Portfolio Transactions 17
Personal Securities Transactions 17
Independent Accountants and Custodians 18
General Information 19
Appendix 20
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INVESTMENT POLICIES AND RISKS
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Foreign Securities
Investments in foreign securities may present risks not typically involved
in domestic investments. 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 Depositary Receipts. ADRs
are US dollar-denominated and traded in the US on exchanges or over the counter.
By investing in ADRs rather than directly in foreign issuers' stock, the
Portfolios may possibly 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.
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 Portfolios change investments from one country to another or
convert foreign securities holdings into US 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. In addition, foreign
countries may impose withholding and taxes on dividends and interest.
Investing in emerging markets in particular, those countries whose
economies and capital markets are not as developed as those of more
industrialized nations, carries its own special risks. Among other risks, the
economies of such countries may be affected to a greater extent than in other
countries by price fluctuations of a single commodity, by severe cyclical
climactic conditions, lack of significant history in operating under a
market-oriented economy, or by political instability, including risk of
expropriation.
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 US dollar, the value of the security in US dollars
will increase or decline correspondingly. The Portfolios will conduct their
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 Portfolios 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 themselves
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 or Subadvisor 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 Funds' securities denominated in such foreign
currency. The precise matching of the forward foreign currency contract amounts
and the value of the Funds' 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 Portfolios do not intend to enter into such forward contracts
under this circumstance on a regular or continuous basis.
MARKET RISK
This is the risk that the value of a Fund's investments will fluctuate as
the stock or bond markets fluctuate and that prices overall will decline over
short or longer-term periods. Market risk also can apply to a particular
industry sector and type of issuer and includes risks associated with investing
substantial amounts in companies located in specific countries or geographic
regions. Factors affecting that sector, issuer, or region could have a major
effect on the value of a Fund's investments. Because the fund may concentrate
25% or more of its assets in the securities of issuers of one industry, it has
increased exposure to any special risks that may effect that industry.
SHORT SALES
The Fund may engage in short sales to gain optimum return on a short
position in a company's stock. A short sale is "against the box" if at all times
during which the short position is open, a Fund owns at least an equal amount of
the securities or securities convertible into, or exchangeable without further
consideration for, securities of the same issue as the securities that are sold
short.
TEMPORARY DEFENSIVE POSITIONS
For temporary defensive purposes - which may include a lack of adequate
purchase candidates or an unfavorable market environment - the Fund may invest
in cash or cash equivalents. Cash equivalents include instruments such as, but
not limited to, US government and agency obligations, certificates of deposit,
banker's acceptances, time deposits commercial paper, short-term corporate debt
securities, and repurchase agreements.
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. 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, US 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 Fund
bears the risk that the market value of the securities it sold may decline below
the agreed-upon repurchase price, in which case the dealer may request the Fund
to post additional collateral.
HIGH SOCIAL IMPACT INVESTMENTS
The Fund will not purchase debt securities other than High Social Impact
Investments (or money market instruments). The High Social Impact Investments
program targets a percentage of the Fund's assets to directly support the growth
of community-based organizations for the purposes of promoting business
creation, housing development and economic and social development of urban and
rural communities. These securities are unrated - they are expected to be the
equivalent of non-investment grade debt securities - that is, lower quality
debt securities (generally those rated BB or lower by S&P or Ba or lower by
Moody's, known as "junk bonds"). These securities have moderate to poor
protection of principal and interest payments and have speculative
characteristics. See Appendix for a description of the ratings.) The annual
return on High Social Impact Investments is between 0% and 4%. Thus, rather than
earning a higher rate, as would be expected, to compensate for higher the risk
(i.e., lower credit quality), they earn a rate of return that is lower than the
rate currently earned by high quality U.S. Treasury securities. There is no
secondary market for these securities
The Fund expects to purchase all of its High Social Impact Investments in
notes issued by the Calvert Social Investment Foundation, a non-profit
organization, legally distinct from Calvert Group, organized as a charitable and
educational foundation for the purpose of increasing public awareness and
knowledge of the concept of socially responsible investing. The Foundation
prepares its own careful credit analysis to attempt to identify those community
development 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. The Foundation maintains a
certain required level of capital upon which the Fund could rely if a note were
ever to default.
NON-INVESTMENT GRADE DEBT SECURITIES
Non-investment grade debt securities are lower quality debt securities
(generally those rated BB or lower by S&P or Ba or lower by Moody's, known as
"junk bonds." 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 non-investment grade debt 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.
DERIVATIVES
The Fund 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 Fund can use these practices
either as substitution or as protection against an adverse move in the Fund to
adjust the risk and return characteristics of the Fund. If the Advisor and/or
Subadvisor judges market conditions incorrectly or employs a strategy that does
not correlate well with a Fund'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 Fund and may involve a
small investment of cash relative to the magnitude of the risk assumed.
Derivatives are often illiquid.
OPTIONS AND FUTURES CONTRACTS
The Funds 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, the Fund 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.
The Fund may engage in such transactions only to hedge the existing
positions in the respective Portfolios (or for Managed Index, for liquidity or
to hedge cash exposure). 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.
The Fund may write "covered options" on securities in standard contracts
traded on national securities exchanges. The Fund 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. The Fund 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. The Fund will purchase such options only
to hedge against changes in the value of securities the Fund holds and not for
the purposes of speculation or leverage. By buying a put, the Fund 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.
The Fund 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 Fund 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. The Fund 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, the Fund 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 the Fund writes a covered call option, the Fund 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 Fund 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 Fund and thus reduce declines in the net asset value per share of
the Fund if securities covered by such options decline in value. Exercise of a
call option by the purchaser however will cause the Fund to forego future
appreciation of the securities covered by the option.
When the Fund 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 Fund 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 Fund 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.
The Fund 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. The Fund'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.
Risks Related to Options Transactions. The Fund can close out their
respective positions in exchange-traded options only on an exchange which
provides a secondary market in such options. Although the Fund intends 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 Fund from closing an options position, which could impair the Funds'
ability to hedge effectively. The inability to close out a call position may
have an adverse effect on liquidity because the Fund may be required to hold the
securities underlying the option until the option expires or is exercised.
Futures Transactions. The Fund 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 Fund.
These futures contracts may include, but are not limited to, market index
futures contracts and futures contracts based on US 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 Fund 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 Fund 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.
The Fund 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 the Fund 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 Fund is eligible for exclusion
from the CFTC's definition of "commodity pool operator," meaning that the Fund
may invest in futures contracts under specified conditions without registering
with the CFTC. 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. The Fund may purchase and write put or call
options and sell call options on futures contracts in which the Fund could
otherwise invest and which are traded on a US exchange or board of trade. The
Fund 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 Fund has already sold a
corresponding call option.
The Fund 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 the Fund 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 Fund
will pay a premium for such options purchased or sold. In connection with such
options bought or sold, the Fund 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 portfolios against the risk of declining prices. The Fund may purchase put
options and sell put options on futures contracts that are already owned by that
Portfolio. The Fund 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 Fund
against the risk of declining prices. The purchase of call options on futures
contracts is analogous to the purchase of a futures contract. The Fund may only
buy call options to close an existing position where the Fund has already sold a
corresponding call option, or for a cash hedge. The Fund 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 Fund will retain
the full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Fund's securities holdings.
Risks of Options and Futures Contracts. If the Fund has sold futures or takes
options positions to hedge its portfolio against decline in the market and the
market later advances, the Fund 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 the Fund 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 Fund may decline. If this were to
occur, the Fund might lose money on the futures contracts or options and also
experience a decline in the value of its securities.
The Fund can close out futures positions only on an exchange or board of
trade which provides a secondary market in such futures. Although the Fund
intends 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 Fund from closing a futures position, which could require the Fund 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 Funds' 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
Fund seeks to close their positions. There can be no assurance that such a
market will develop or exist. Therefore, the Fund might be required to exercise
the options to realize any profit.
LENDING PORTFOLIO SECURITIES
The Portfolios may lend its securities to member firms of the New York
Stock Exchange and commercial banks with assets of one billion dollars or more.
Any such loans must be secured continuously in the form of cash or cash
equivalents such as US Treasury bills. The amount of the collateral must on a
current basis equal or exceed the market value of the loaned securities, and the
Portfolios must be able to terminate such loans upon notice at any time. The
Portfolios will exercise their right to terminate a securities loan in order to
preserve their right to vote upon matters of importance affecting holders of the
securities.
The advantage of such loans is that the Portfolios continue to receive the
equivalent of the interest earned or dividends paid by the issuers on the loaned
securities while at the same time earning interest on the cash or equivalent
collateral which may be invested in accordance with the Portfolios' investment
objective, policies and restrictions.
Securities loans are usually made to broker-dealers and other financial
institutions to facilitate their delivery of such securities. As with any
extension of credit, there may be risks of delay in recovery and possibly loss
of rights in the loaned securities should the borrower of the loaned securities
fail financially. However, the Portfolios will make loans of their securities
only to those firms the Advisor or Subadvisor deems creditworthy and only on
terms the Advisor believes should compensate for such risk. On termination of
the loan, the borrower is obligated to return the securities to the Portfolio.
The Portfolio will recognize any gain or loss in the market value of the
securities during the loan period. The Portfolio may pay reasonable custodial
fees in connection with the loan.
INVESTMENT RESTRICTIONS
-----------------------
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment restrictions.
These restrictions cannot be changed without the approval of the holders of a
majority of the outstanding shares of the Fund.
(1) The Fund may not make any investment inconsistent with its classification as
a nondiversified investment company under the 1940 Act.
(2) The Fund may concentrate its investments in the securities of issuers
primarily engaged in industries within the technology sector and securities
issued or guaranteed by the US Government or its agencies or instrumentalities
and repurchase agreements secured thereby.
(3) The Fund may not issue senior securities or borrow money, except from banks
for temporary or emergency purposes and then only in an amount up to 33 1/3% of
the value of a Portfolio's total assets or as permitted by law and except by
engaging in reverse repurchase agreements, where allowed. In order to secure any
permitted borrowings and reverse repurchase agreements under this section, the
Fund may pledge, mortgage or hypothecate its assets.
(4) The Fund may not underwrite the securities of other issuers, except as
allowed by law or to the extent that the purchase of obligations in accordance
with a Portfolio's investment objective and policies, either directly from the
issuer, or from an underwriter for an issuer, may be deemed an underwriting.
(5) The Fund may not invest directly in commodities or real estate, although a
Portfolio 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.
(6) The Fund may not 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, or as permitted by law. The purchase of all or a portion
of an issue of publicly or privately distributed debt obligations in accordance
with a the Fund's investment objective, policies and restrictions, shall not
constitute the making of a loan.
NONFUNDAMENTAL INVESTMENT RESTRICTIONS
The Board of Trustees has adopted the following nonfundamental investment
restrictions. A nonfundamental investment restriction can be changed by the
Board at any time without a shareholder vote.
The Fund May Not:
(1) Purchase the obligations of foreign issuers or ADRs if more than 45% of the
value of the Portfolio's net assets would be invested in such securities.
(2) Purchase illiquid securities if more than 15% of the value of the
Portfolio's net assets would be invested in such securities.
(3) Enter into a futures contract or an option on a futures contract if the
aggregate initial margins and premiums required to establish these positions
would exceed 5% of the Portfolio's net assets.
(4) Purchase a put or call option on a security (including a straddle or spread)
if the value of that option premium, when aggregated with the premiums on all
other options securities held by the Portfolio, would exceed 5% of the
Portfolio's total assets.
(5) Enter into reverse repurchase agreements if the aggregate proceeds from
outstanding reverse repurchase agreements, when added to other outstanding
borrowings permitted by the 1940 Act, would exceed 33 1/3% of the Portfolio's
total assets. The Portfolio does not intend to make any purchases of securities
if borrowing exceeds 5% of its total assets.
Any investment restriction that 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.
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 who 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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
----------------------------------
The Fund intends to continue to qualify as regulated investment companies
under Subchapter M of the Internal Revenue Code. If for any reason the Fund
should fail to qualify, it would be taxed as a corporation at the Fund level,
rather than passing through its income and gains to shareholders.
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.
Capital loss carryforwards as of September 30, 1999, for the Money Market
Portfolio was $6,959, Balanced Portfolio was $0, Bond Portfolio was $0, Equity
Portfolio was $0, and Managed Index Portfolio was $492,447.
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 reportable dividends and
long-term capital gain distributions paid and 31% of each reportable redemption
transaction 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 Fund (not applicable to Money Market Portfolio): (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 US, a State, the District of Columbia, a US possession, a foreign
government, an international organization, or any political subdivision, agency
or instrumentality of any of the foregoing; US 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 US Government obligations. State law varies considerably
concerning the tax status of dividends derived from US 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. Corporate taxpayers requiring this
information may contact Calvert.
net asset value
---------------
The public offering price of the shares of the Fund is the respective net
asset value per share (plus, for Class A shares, the applicable sales charge).
The net asset value per share of the Fund is determined every business day as of
the close of the regular session 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,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day. The Fund's net asset value
per share is determined by dividing the total net assets (the value of its
assets net of liabilities, including accrued expenses and fees) by the number of
shares outstanding for each class.
The assets of the Fund 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.
Total Return and Other Quotations
The Fund may advertise "total return." Total return is calculated
separately for each class. Total return differs from yield in that yield figures
measure only the income component of a the Fund 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. 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. 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 "return without maximum
load" (or "without CDSC" or "at NAV") 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. Return without maximum load,
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. Class I shares do not have
a sales charge.
purchase and redemption of shares
---------------------------------
Share certificates will not be issued unless requested in writing by the
investor. Share certificates will not be issued unless requested in written
by the investor. If share certificates have been issued, then the certificate
must be delivered to the Fund's transfer agent with any redemption request. This
could result in delays. If the certificate have been lost, the shareholder will
have to pay to post an indemnity bond in case the original certificates are
later presented by another person. No certificates will be issued for fractional
shares.
The Fund has filed a notice of election under Rule 18f-1 with the
Commission. The notice stated that the Fund may honor redemptions that, during
any 90-day period, exceed $250,000 or 1% of the nest assets value of the Fund,
whichever is less, by redemptions-in-kind (distributions of a pro rata share of
the portfolio securities, rather than cash).
Fund shares shall be distributed through the distributor and third party
brokers. See the prospectus for more details on purchased and redemptions.
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.
Calvert Group is the nation's 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, 1999). Calvert Group was also the
first to offer a family of socially responsible mutual fund portfolios.
<PAGE>
------
TRUSTEES, OFFICERS, and advisory council
----------------------------------------
The Fund's Board of Trustees supervises the Fund's activities and reviews
its contracts with companies that provide it with services. Business information
is provided below about the trustees.
PRINCIPAL
OCCUPATION(S) DURING
NAME, ADDRESS & DATE OF BIRTH POSITION WITH FUND LAST 5 YEARS
REBECCA ADAMSON, DIRECTOR PRESIDENT OF THE NATIONAL
11917 MAIN STREET, FREDERICKSBURG NON-PROFIT, FIRST NATIONS
VA 22408 DOB: 09/10/47 FINANCIAL PROJECT.
RICHARD L. BAIRD, JR. DIRECTOR VICE PRESIDENT FOR THE
211 OVERLOOK DRIVE, PITTSBURGH FAMILY HEALTH COUNCIL,
PENNSYLVANIA 15215 DOB:05/09/48 INC. IN PITTSBURGH,
PENNSYLVANIA, A NON-PROFIT
CORPORATION
*JOHN J. GUFFEY, JR. DIRECTOR EXECUTIVE VICE PRESIDENT OF
388 CALLE COLINA SANTA FE, NM SOCIAL INVESTMENT FUND. ORGANIZING
87501 DOB: 05/15/48 DIRECTOR OF THE COMMUNITY CAPITAL
BANK IN BROOKLYN, NEW YORK, AND A
FINANCIAL CONSULTANT TO VARIOUS
ORGANIZATIONS
JOY V. JONES, ESQ., DIRECTOR ATTORNEY AND ENTERTAINMENT
175 WEST 12TH STREET, NEW YORK, MANAGER IN NEW YORK CITY.
NEW YORK 10011 DOB: 07/02/50
*BARBARA J. KRUMSIEK, DIRECTOR PRESIDENT, CHIEF EXECUTIVE
DOB: 08/09/52 OFFICER AND VICE CHAIRMAN
OF CALVERT GROUP, LTD. PRIOR
TO JOINING CALVERT GROUP,
MS. KRUMSIEK SERVED AS A
MANAGING DIRECTOR OF ALLIANCE
FUND DISTRIBUTORS,INC.
TERRENCE J. MOLLNER, Ed.D DIRECTOR FOUNDER, CHAIRPERSON, AND
15 EDWARDS SQUARE, NORTHAMPTON, PRESIDENT OF TRUSTEESHIP INSTITUTE,
MASSACHUSETTS 01060 DOB: 12/13/44 INC., A DIVERSE FOUNDATION KNOWN
PRINCIPALLY FOR ITS CONSULTATION TO
CORPORATIONS CONVERTING TO COOPERATIVE
EMPLOYEE-OWNERSHIP
SYDNEY AMARA MORRIS DIRECTOR REV. MORRIS PREVIOUSLY SERVES
2915 WEST 12TH VANCOUVER, BRITISH AS A MINISTER OF THE UNITARIAN-
COLUMBIA, CANADA V6K2R2 DOB: 09/07/49 UNIVERSALIST FELLOWSHIP
*CHARLES T. NASON DIRECTOR CHAIRMAN, PRESIDENT AND CHIEF
7315 WISCONSIN AVENUE, BETHESDA EXECUTIVE OFFICER OF THE ACACIA
MARYLAND 20814 DOB: 04/22/46 GROUP, A WASHINGTON, D.C.-BASED
FINANCIAL SERVICES ORGANIZATION,
INCLUDING ACACIA MUTUAL LIFE
INSURANCE COMPANY AND CALVERT
GROUP, LTD.
*D. WAYNE SILBY, ESQ. DIRECTOR TRUSTEE/DIRECTOR OF EACH OF
1715 18TH STREET, N.W., THE INVESTMENT COMPANIES IN THE
WASHINGTON, D.C. 20009 CALVERT GROUP OF FUNDS, EXCEPT
DOB: 07/20/48 FOR CALVERT VARIABLE SERIES, INC.
AND CALVERT NEW WORLD FUND, INC.
OFFICER, DIRECTOR AND SHAREHOLDER
OF SILBY, GUFFEY AND COMPANY, INC.,
WHICH SERVES AS GENERAL PARTNER OF
CALVERT SOCIAL VENTURE PARTNERS
("CSVP"). DIRECTOR OF ACACIA MUTUAL
LIFE INSURANCE COMPANY AND CHAIRMAN
OF THE CALVERT SOCIAL INVESTMENT
FOUNDATION.
RENO J. MARTINI, DIRECTOR SENIOR VICE PRESIDENT AND
DOB: 01/13/50 CHIEF INVESTMENT OFFICER OF CALVERT
ASSET MANAGEMENT COMPANY, INC.
RONALD M. WOLFSHEIMER, CPA, DIRECTOR SENIOR VICE PRESIDENT AND
DOB: 07/24/52 CHIEF FINANCIAL OFFICER OF
CALVERT GROUP, LTD.
--------------------------------------------------------------------------------
*WILLIAM M. TARTIKOFF, ESQ. DIRECTOR SENIOR VICE PRESIDENT,
DOB: 08/12/47 SECRETARY, AND GENERAL COUNSEL
OF CALVERT GROUP, LTD.
--------------------------------------------------------------------------------
CATHERINE S. BARDSLEY, ESQ. DIRECTOR COUNSEL TO KIRKPATRICK
1800 MASSACHUSETTS AVENUE, N.W., AND LOCKHART, LLP, THE FUND'S
WASHINGTON, D.C. 20036 LEGAL COUNSEL
DOB: 10/04/49
--------------------------------------------------------------------------------
DANIEL K. HAYES DIRECTOR VICE PRESIDENT OF CALVERT
DOB: 09/09/50 ASSET MANAGEMENT COMPANY,
INC.
--------------------------------------------------------------------------------
SUSAN WALKER BENDER, ESQ. OFFICER ASSOCIATE GENERAL COUNSEL
DOB: 01/29/59 OF CALVERT GROUP, AND AN
OFFICER OF EACH OF ITS
SUBSIDIARIES AND CALVERT-SLOAN
ADVISERS, L.L.C.
--------------------------------------------------------------------------------
IVY WAFFORD DUKE, ESQ. OFFICER ASSOCIATE GENERAL COUNSEL
DOB: 09/07/68 OF CALVERT GROUP, AND AN OFFICER
OF EACH OF ITS SUBSIDIARIES AND
CALVERT-SLOAN ADVISERS, L.L.C.
PRIOR TO WORKING AT CALVERT
GROUP, MS. DUKE WAS AN ASSOCIATE
IN THE INVESTMENT MANAGEMENT GROUP
OF THE BUSINESS AND FINANCE DEPARTMENT
OF DRINKER BIDDLE AND REATH
--------------------------------------------------------------------------------
VICTOR FRYE, ESQ. OFFICER COUNSEL AND COMPLIANCE OFFICER
DOB: 10/15/58 OF CALVERT GROUP AND AN OFFICER
OF EACH OF ITS SUBSIDIARIES AND
CALVERT-SLOAN ADVISERS, L.L.C.
PRIOR TO WORKING AT CALVERT GROUP,
MR. FRYE WAS COUNSEL AND MANAGER OF
THE COMPLIANCE DEPARTMENT AT THE
ADVISORS GROUP
--------------------------------------------------------------------------------
JENNIFER STREAKS, ESQ. OFFICER ASSISTANT GENERAL COUNSEL OF
DOB: 08/02/71 CALVERT GROUP AND AN OFFICER
OF EACH OF ITS SUBSIDIARIES
AND CALVERT-SLOAN ADVISERS,
L.L.C. PRIOR TO JOINING
CALVERT GROUP IN 1999, MS. STREAKS
HAD BEEN A REGULATORY ANALYST IN THE
MARKET REGULATION DEPARTMENT
OF THE NATIONAL ASSOCIATION
OF SECURITIES DEALERS SINCE
1997. PRIOR TO THIS,
MS. STREAKS HAD BEEN A LAW
CLERK TO THE HONORABLE
MAURICE FOLEY AT THE U.S.
TAX COURT FOR THE YEAR SINCE
GRADUATING FROM HOWARD
UNIVERSITY SCHOOL OF LAW,
WHERE SHE WAS A STUDENT
1993-1996.
--------------------------------------------------------------------------------
MICHAEL V. YUHAS JR., CPA OFFICER DIRECTOR OF FUND
DOB: 08/04/61 ADMINISTRATION OF
CALVERT GROUP, LTD.
The address of Trustee 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 any class of each Portfolio's
outstanding shares. Trustees marked with an *, above, are "interested persons"
of the Fund, under the Investment Company Act of 1940.
Mr. Baird, Dr. Mollner, Ms. Adamson, Ms. Jones, and Rev. Morris serve on
the Fund's Audit Committee. 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 and Silby serve on the Fund's Special Equities Committee
which assists the Fund in identifying, evaluating, and selecting appropriate
special equity investment opportunities for the Fund.
The Advisory Council is a resource to the Fund's Board of Trustees
regarding communications networks for the Fund and the application and
refinement of the Fund's social criteria. 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 and Mollner, and Ms.
Krumsiek serve as directors of the 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 1999, Trustees of the Fund not affiliated with the Fund's
Advisor were paid $39,781 by the Money Market Portfolio, $142,545 by the
Balanced Portfolio, $15,264 by the Bond Portfolio, $37,479 by the Equity
Portfolio, and $8,228 by the Managed Index 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 serve only the CSIF Board receive an annual
fee of $15,430, 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.
Trustee Compensation Table
Fiscal Year 1999
(unaudited numbers)
Aggregate Compensation Pension or Retirement Total Compensation
from
from Registrant for Service Benefits Accrued as part Registrant and
Fund
Name of Trustee/Officer as Trustee/Officer of Registrant Expenses*
Complex paid to Trustee**
Rebecca Adamson $32,283 $0 $32,283
Richard L. Baird, Jr. $2,999 $0 $39,250
John G. Guffey, Jr. $11,114 $1,896 $56,365
Joy V. Jones $29,580 $0 $29,580
Terrence J. Mollner $24,830 $0 $33,830
Sydney Amara Morris $22,630 $12,000 $22,630
D. Wayne Silby $20,332 $0 $60,831
Trustee Compensation Table
Fiscal Year 1999
(unaudited numbers)
Aggregate Pension or Total
Compensation Retirement Compensation
from Registrant Benefits from
for Service Accrued as Registrant and
as Trustee/ part of Fund Complex
Officer Registrant to Trustee**
Expenses*
Name of Trustee/Officer
Rebecca Adamson $32,283 $0 $32,283
Richard L. Baird, Jr. $2,999 $0 $39,250
John G. Guffey, Jr. $11,114 $1,896 $56,365
Joy V. Jones $29,580 $0 $29,580
Terrence J. Mollner $24,830 $0 $33,830
Sydney Amara Morris $22,630 $12,000 $22,630
D. Wayne Silby $20,332 $0 $60,831
*Ms. Adamson, Ms. Jones, Rev. Morris, and Mr. Guffey have chosen to defer a
portion of their compensation. As of September 30, 1999, total deferred
compensation, including dividends and capital appreciation, was $54,604,
$17,765, $31,559 and $11,022, for each of them, respectively.
**As of September 30, 1999, The Fund Complex consists of nine (9) registered
investment companies.
investment advisor and subadvisor
---------------------------------
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"). Acacia is a subsidiary of Ameritas Acacia Mutual
Holding Company. Under the Advisory 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. The Advisor provides the Funds with
investment supervision and management, and office space; furnishes executive and
other personnel to the Funds; and pays the salaries and fees of all
Trustees/Directors who are employees of the Advisor or its affiliates. The Fund
pays all other administrative and operating expenses, including: custodial,
registrar, dividend disbursing and transfer agency fees; administrative service
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 employees of the Advisor or of its affiliates;
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 reserves the right to (i) waive all or a part of its fee; (ii)
reimburse the Fund for expenses; and (iii) pay broker-dealers in consideration
of their promotional or administrative services.
Turner Investment Partners, Inc. is 100% employee owned. The subadvisor
receives a subadvisory fee, paid by the Advisor, of 1.00% of the Fund's first
$100 million of average net assets and 0.90% of any such assets over $100
million.
The Fund has received an exemptive order to permit the Fund and the Advisor
to enter into and materially amend the Investment Subadvisory Agreement without
shareholder approval. Within 90 days of the hiring of any Subadvisor or the
implementation of any proposed material change in the Investment Subadvisory
Agreement, the Portfolio will furnish its shareholders information about the new
Subadvisor or Investment Subadvisory Agreement that would be included in a proxy
statement. Such information will include any change in such disclosure caused by
the addition of a new Subadvisor or any proposed material change in the
Investment Subadvisory Agreement of the Portfolio. The Portfolio will meet this
condition by providing shareholders, within 90 days of the hiring of the
Subadvisor or implementation of any material change to the terms of an
Investment Subadvisory Agreement, with an information statement to this effect.
<PAGE>
administrative services agent
-----------------------------
Calvert Administrative Services Company ("CASC"), an affiliate of the
Advisor, has been retained by the Fund to provide certain administrative
services necessary to the conduct of its affairs, including the preparation of
regulatory filings and shareholder reports. For providing such services, CASC
receives an annual administrative service fee payable monthly (as a percentage
of net assets) as follows:
Class A, B, and C Class I
Technology 0.25% 0.05%
Administrative services fees are allocated among classes as a class-level
expense based on net assets.
method of distribution
----------------------
Calvert Distributors, Inc. ("CDI") is the principal underwriter and
distributor for the Fund. CDI is an affiliate of the Fund's Advisor. Under the
terms of its underwriting agreement with the Funds, 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.
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, 0.25% of
the Fund's Class A average daily net assets.
Expenses under the Fund's Class B and Class C Plans may not exceed, on an
annual basis, 1.00% of the Class B and Class C average daily net assets,
respectively. Class I has no distribution plan. Class A Distribution Plans
reimburse CDI only for expenses it incurs, while the Class B and C Distribution
Plans compensate CDI at a set rate regardless of CDI's expenses. Distribution
Plan expenses may be spent for advertising, printing and mailing of prospectuses
to persons who are not already Fund shareholders, compensation to
broker/dealers, underwriters, and salespersons, and, for Class B, interest and
finance charges.
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, including economies of scale at higher asset levels,
better investment opportunities and more flexibility in managing a growing
portfolio.
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 Fund. If the Fund should
ever switch to a new principal underwriter without terminating the Class B Plan,
the fee would be prorated between CDI and the new principal underwriter. Any
change in the Plans that would materially increase the distribution cost to a
Class 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.
The Advisor and/or CDI has agreed to pay certain firms compensation based on
sales of Fund shares or on assets held in those Firm's accounts for their
marketing and distribution of the Fund shares, above the usual sales charges and
service fees.
CDI, 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 and a service fee from
the Fund based on the average daily net assets of each Class. These fees are
paid pursuant to the Fund's Distribution Plan.
Class A shares are offered at net asset value plus a front-end sales charge as
follows:
AS A % OF AS A % OF ALLOWED TO
AMOUNT OF OFFERING NET AMOUNT BROKERS AS A % OF
INVESTMENT PRICE INVESTED OFFERING 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% 0.00%
CDI receives any front-end sales charge or CDSC paid. A portion of the
front-end sales charge may be reallowed to dealers.
Fund Trustees and certain other affiliated persons of the Fund are exempt
from the sales charge since the distribution costs are minimal to persons
already familiar with the Fund. Other groups (e.g., group retirement plans) are
exempt due to economies of scale in distribution. See Exhibit A to the
Prospectus.
Transfer and shareholder servicing agents
-----------------------------------------
National Financial Data Services, Inc. ("NFDS"), (P.O. Box 19544, Kansas
City, MO, 64121-9544), a subsidiary of State Street Bank & Trust, has been
retained by the Fund to act as transfer agent and dividend disbursing agent.
These responsibilities include: responding to certain shareholder inquiries and
instructions, crediting and debiting shareholder accounts for purchases and
redemptions of Fund shares and confirming such transactions, and daily updating
of shareholder accounts to reflect declaration and payment of dividends.
Calvert Shareholder Services, Inc. ("CSSI"), a subsidiary of Calvert Group,
Ltd. and Acacia has been retained by the Fund to act as shareholder servicing
agent. Shareholder servicing responsibilities include responding to shareholder
inquiries and instructions concerning their accounts, entering any telephoned
purchases or redemptions into the NFDS system, maintenance of broker-dealer
data, and preparing and distributing statements to shareholders regarding their
accounts.
For these services, CSSI receives a fee of $6 per share shareholder account
and $0.65 per transaction.
portfolio transactions
----------------------
Fund transactions are undertaken on the basis of their desirability from an
investment standpoint. The Fund's Advisor and Subadvisor make investment
decisions and the choice of brokers and dealers 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 execution capability and trading expertise
considering, among other factors, the overall reasonableness of the brokerage
commissions, current market conditions, size and timing of the order, difficulty
of execution, per share price, market familiarity, reliability, integrity, and
financial condition, subject to the Advisor/Subadvisor obligation to seek best
execution. The Advisor or Subadvisor may also consider sales of Fund shares as a
factor in the selection of brokers.
While the Fund's Advisor and Subadvisor select brokers primarily on the
basis of best execution, in some cases they may direct transactions to brokers
based on the quality and amount of the research and research-related services
which the brokers provide to them. These research services include advice,
either directly or through publications or writings, as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or purchasers or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or industries;
providing information on economic factors and trends; assisting in determining
portfolio strategy; providing computer software used in security analyses;
providing portfolio performance evaluation and technical market analyses; and
providing other services relevant to the investment decision making process.
Other such services are designed primarily to assist the Advisor in monitoring
the investment activities of the Subadvisor(s) of the Fund. Such services
include portfolio attribution systems, return-based style analysis, and
trade-execution analysis. The Advisor and/or Subadvisor may also direct
selling concessions and/or discounts in fixed-price offerings for research
services.
If, in the judgment of the Advisor or Subadvisor(s), the Fund or other
accounts managed by them will be benefited by supplemental research services,
they are authorized to pay brokerage commissions to a broker furnishing such
services which are in excess of commissions which another broker may have
charged for effecting the same transaction. It is the policy of the Advisor that
such research services will be used for the benefit of the Fund as well as other
Calvert Group funds and managed accounts.
Personal securities transactions
--------------------------------
The Fund, its Advisor, and principal underwriter have adopted a Code of
Ethics pursuant to Rule 17j-1 of the Investment Company Act of 1940. The Code of
Ethics is designed to protect the public from abusive trading practices and to
maintain ethical standards for access persons as defined in the rule when
dealing with the public. The Code of Ethics permits the Fund's investment
personnel to invest in securities that maybe purchased or held by the Fund. The
Code of Ethics contains certain conditions such as preclearance and restrictions
on use of material information.
independent accountants and custodians
--------------------------------------
Arthur Anderson LLP has been selected by the Board of Trustees to serve as
independent accountants for fiscal year 2000. State Street Bank & Trust Company,
N.A., 225 Franklin Street, Boston, MA 02110, serves as custodian of the Fund's
investments. Allfirst Financial, Inc., 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.
<PAGE>
general information
-------------------
The Fund is an open-end management investment company, organized as a
Massachusetts business trust on December 14, 1981. The Fund is non-diversified.
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 represents an equal proportionate interest with each other share
and is entitled to such dividends and distributions out of the income belonging
to such class as declared by the Board. The Fund offers four separate classes
of shares: Class A, Class B, Class C and Class I. 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 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).
<PAGE>
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.
<PAGE>
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 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. "Fund"
in this Letter of Intent shall refer to the Fund or Portfolio, as the case may
be. 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 CDI 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)
<PAGE>
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Shareholder ServiceS TRANSFER AGENT
Calvert Shareholder Services, Inc. National Financial Data Services, Inc.
4550 Montgomery Avenue 330 West 9th Street
Suite 1000N Kansas City, Missouri 64105
Bethesda, Maryland 20814
PRINCIPAL UNDERWRITER INDEPENDENT accountants
Calvert Distributors, Inc. PricewaterhouseCoopers LLP
4550 Montgomery Avenue 250 West Pratt Street
Suite 1000N Baltimore, Maryland 21201
Bethesda, Maryland 20814
