PROSPECTUS JULY 31, 1997
REVISED OCTOBER 22, 1997
CALVERT CAPITAL ACCUMULATION FUND
CALVERT NEW VISION SMALL CAP FUND
4550 MONTGOMERY AVENUE, BETHESDA, MARYLAND
20814
.................................................
Calvert Capital Accumulation Fund seeks
long-term capital appreciation by investing
primarily in the stock of small- to
medium-sized companies using the talent of one
or more investment subadvisors. The market
capitalization of companies chosen for
investment will generally be within the range
of capitalization of the S&P 400 Mid-Cap Index,
but the Fund may also invest in larger and
smaller companies as deemed appropriate. It is
the Advisor's intent that on average, the
market capitalization of the companies
represented in the Fund's portfolio will be
mid-sized, with a slight bias toward the
growth-style of investing. Other investments
may include foreign securities, convertible
issues, and certain options and futures
transactions. The Fund will take reasonable
risks in seeking to achieve its investment
objective.
Calvert New Vision Small Cap Fund seeks to
achieve long-term capital appreciation by
investing primarily in the equity securities of
small companies1 publicly traded in the United
States. In seeking capital appreciation, the
Fund invests primarily in the equity securities
of small capitalized growth companies
(including American Depositary Receipts
("ADRs")) that have historically exhibited
exceptional growth characteristics and that, in
the Advisor's opinion, have strong earnings
potential relative to the U.S. market as a
whole. The Fund employs aggressive investment
strategies that have the potential for yielding
high returns. The Fund will take reasonable
risks in seeking to achieve its investment
objective. There is, of course, no assurance
that the Fund will be successful in meeting its
objective since there is risk involved in the
ownership of all equity securities.
Share prices of both funds may experience
substantial fluctuations so that your shares
may be worth less than when you originally
purchased them. Income is not an objective of
either Fund; the Funds should not be used to
meet short-term financial needs.
.................................................
Responsible Investing
To the extent possible, investments are made in
enterprises that make a significant
contribution to our society through their
products and services and through the way they
do business.
- ----------------------------------------------
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 FUNDS 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.
1 Currently those with a total capitalization
of less than $1 billion at the time of the
Fund's initial investment.
<PAGE>
Purchase Information
The Funds both 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.
See "Alternative Sales Options" for further
details.
.................................................
To Open An Account
Call your investment professional, or complete
and return the enclosed Account Application.
Minimum initial investment is $2,000 (may be
lower for certain retirement plans).
.................................................
About This Prospectus
Please read this Prospectus for information you
should know before investing, and keep it for
future reference. A Statement of Additional
Information ("SAI") (dated October 22, 1997) has
been filed with the Securities and Exchange
Commission (the "Commission") and is
incorporated by reference. This free Statement
is available upon request from the Fund:
800-368-2748. The Commission maintains a
website (http://www.sec.gov) that contains the
SAI, material incorporated by reference, and
other information regarding registrants that
file electronically with the Commission.
- -------------------------------------------------
FUND EXPENSES
.................................................
Capital Accumulation New Vision
Fund Small Cap Fund
A.Shareholder Transaction Costs Class A Class C Class A Class C
Maximum Front-End Sales Charge
on Purchases (as a percentage of
offering price) 4.75% None 4.75% None
Maximum Contingent Deferred Sales Charge None None None None
.................................................
B. Annual Fund Operating Expenses (Fiscal Year
1997)
(as a percentage of average net assets)
Management Fees 0.90% 0.90% 1.00% 1.00%
Rule 12b-1 Service and Distribution Fees 0.35% 1.00% 0.25% 1.00%
Other Expenses 0.71% 1.35% 0.25%* 0.50%*
- -------------------------------------------------
Total Fund Operating Expenses** 1.96% 3.25% 1.50% 2.50%
** Net Fund Operating Expenses after reduction
for fees paid indirectly for the Capital
Accumulation fund were:
Class A - 1.86%, Class C - 3.14%
* Estimated
<PAGE>
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 Class A, payment of
maximum initial sales charge at time of
purchase:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
Capital Accumulation Fund Class A $66 $106 $148 $265
Class C $33 $100 $170 $355
New Vision Small Cap Fund Class A $62 $93 N/A N/A
Class C $25 $78 N/A N/A
</TABLE>
The example 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
would bear directly (shareholder transaction
costs) or indirectly (annual fund operating
expenses).
.................................................
Shareholder Transaction Costs
are charges you pay when you buy or sell shares
of the Fund. See "Reduced Sales Charges" 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.
.................................................
Annual Fund Operating Expenses
are based on fiscal 1997 historical expenses
for the Capital Accumulation Fund and are
estimates for the New Vision Small Cap Fund.
Management fees are paid by the Funds to the
Advisor for managing the Fund's investments and
business affairs. Management fees include the
subadvisory fees paid by Calvert Asset
Management Company, Inc. (the "Advisor") to the
various subadvisors and the administrative
service fee paid to Calvert Administrative
Services Company. Management Fees have been
restated to reflect expenses anticipated in the
current fiscal year. (See "Management of the
Fund") The Management fees for the Capital
Accumulation Fund are subject to a performance
adjustment which could cause the fee to be as
high as 0.95% or as low as 0.65%, depending on
performance. The Funds incur 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 Funds' daily
share price and are not charged directly to
individual shareholder accounts. Please refer
to "Management of the Fund" for further
information. The Advisor may voluntarily defer
fees or assume expenses of the Funds. The
respective Investment Advisory Agreements
provide that the Advisor may, to the extent
permitted by law, later recapture any fees it
deferred or expenses it assumed during the two
prior years.
The Funds' Rule 12b-1 fees include an
asset-based sales charge. Thus, long-term
shareholders in each 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. 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 Funds. See the SAI, "Method of
Distribution."
FINANCIAL HIGHLIGHTS
.....................................................
The following table provides information about the
financial history of the Funds' Class A and C
shares. It expresses the information in terms of a
single share outstanding for the Fund throughout
each period. The table has been audited by Coopers
& Lybrand, L.L.P., whose reports are included in
the Annual Reports to Shareholders of the Fund. The
table 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 SAI.
Class A Shares
<TABLE>
<CAPTION>
<S> <C> <C> <C>
From Oct.31,
Period Ended Year Ended 1994(incep-
March 31, Sept. 30, tion)to Sept.
1997 1997 30, 1997
Capital Accumulation Fund
Net asset value, beginning of period $ 22.55 $ 21.48 $ 15.00
Income from investment operations
Net investment income (loss) (.14) (.24) (.11)
Net realized and unrealized gain (loss) 1.12) 1.88 6.61
Total from investment operations 1.26) 1.64 6.50
Distributions from
Net investment income - - (.02)
Net realized gains - (.57) -
Total Distributions - (.57) (.02)
Total increase (decrease) in
net asset value (1.26) 1.07 6.48
Net asset value, ending $ 21.2 $ 22.55 $ 21.48
Total return<F4> (5.59%) 7.92% 43.40%
Ratio to average net assets:
Net investment income (loss) (1.27%)(a) (1.56%) (1.55%)(a)
Total expenses<F5> 1.96%(a) 2.16% 2.35 (a)
Net expenses 1.86%(a) 1.98% 2.06% (a)
Expenses reimbursed - - .05% (a)
Portfolio turnover 117% 114% 95%
Average commission rate paid $ .0541 $ .0563 $ -
Net assets, ending (in thousands) $ 41,070 $ 39,834 $ 16,111
Number of shares outstanding,
ending (in thousands) 1,929 1,767 750
<FN>
<F4> Total return is not annualized and does not
reflect deduction of Class A front-end sales
charges.
<F5> This ratio reflects total expenses before
reduction for fees paid indirectly; such reductions
are included in the ratio
of net expenses.
(a) Annualized
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Class C Shares
From Oct.31,
Period Ended Year Ended 1994(incep-
March 31, Sept. 30, tion)to Sept.
1997 1997 30, 1997
Capital Accumulation Fund
Net asset value, beginning of period $ 22.34 $ 21.55 $ 15.00
Income from investment operations
Net investment income (loss) (.27) (.55) (.15)
Net realized and unrealized gain (loss)
(1.11) 1.91 6.70
Total from investment operations (1.38) 1.36 6.55
Distributions from
Net investment income - - -
Net realized gains - (.57) -
Total Distributions - (.57) -
Total increase (decrease) in
net asset value (1.38) .79 6.55
Net asset value, ending $ 20.96 $ 22.34 $ 21.55
Total return<F6> (6.18%) 6.56% 43.67%
Ratio to average net assets:
Net investment income (loss) (2.56%)(a) (2.82%) (3.13%)(a)
Total expenses<F7> 3.25%(a) 3.42% 3.79%(a)
Net expenses 3.14%(a) 3.24% 3.50%(a)
Expenses reimbursed - - 2.79%(a)
Portfolio turnover 117% 114% 95%
Average commission rate paid $ .0541 $ .0563 $ -
Net assets, ending (in thousands) $ 3,054 $ 3,164 $ 1,992
Number of shares outstanding,
ending (in thousands) 146 142 92
<FN>
<F6> Total return is not annualized and does not
reflect deduction of Class A front-end sales
charges.
<F7> This ratio reflects total expenses before
reduction for fees paid indirectly; such reductions
are included in the ratio
of net expenses.
(a) Annualized
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Class A Shares Class C Shares
From Jan. 31, From Jan, 31
1997 (inception) 1997 (inception)
to March 31, 1997 to March 31, 1997
New Vision Small Cap Fund
Net asset value, beginning of period $ 15.00 $ 15.00
Income from investment operations
Net investment income (loss) - -
Net realized and unrealized gain (loss) (3.01) (3.01)
Total from investment operations (3.01) (3.01)
Distributions from
Net investment income - -
Net realized gains - -
Total Distributions - -
Total increase (decrease) in
net asset value (3.01) (3.01)
Net asset value, ending $ 11.99 $ 11.99
Total return<F8> (20.07%) (20.07%)
Ratio to average net assets:
Net investment income (loss)
Total expense<F9> .82%(a) .82%(a)
Net expenses - -
Expenses reimbursed 8.96%(a) 21.08%(a)
Portfolio turnover 97% 97%
Average commission rate paid $ .0500 $ .0500
Net assets, ending (in thousands) $ 1,215 $ 200
Number of shares outstanding,
ending (in thousands) 101 17
<FN>
<F8> Total return is not annualized and does not
reflect deduction of Class A front-end sales
charges.
<F9> This ratio reflects total expenses before
reduction for fees paid indirectly; such reductions
are included in the ratio of net expenses.
(a) Annualized
</FN>
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
.................................................
The Capital Accumulation Fund seeks to provide
long-term capital appreciation by investing,
under normal market conditions, at least 65% of
its assets in the equity securities of small-
to mid-sized companies.
The Capital Accumulation Fund seeks to provide
long-term capital appreciation by investing
primarily in a nondiversified portfolio of the
equity securities of small- to mid-sized
companies that are undervalued but demonstrate
a potential for growth. The Fund will rely on
its proprietary research to identify stocks
that may have been overlooked by analysts,
investors, and the media, and which will
generally be within the range of capitalization
of the S&P 400 Mid-Cap Index, but which may be
larger or smaller as deemed appropriate.
Investments may also include, but are not
limited to, preferred stocks, foreign
securities, convertible securities, bonds,
notes and other debt securities. The Fund may
use certain futures and options, invest in
repurchase agreements, and lend its portfolio
securities. The Fund will take reasonable risks
in seeking to achieve its investment objective.
There is, of course, no assurance that the Fund
will be successful in meeting its objective
since there is risk involved in the ownership
of all equity securities. The Fund's investment
objective is not fundamental and may be changed
without shareholder approval. The Fund will
notify shareholders at least thirty days in
advance of a change in the investment objective
of the Fund so that shareholders may determine
whether the Fund's goals continue to meet their
own.
.................................................
The Capital Accumulation Fund has a pool of
several portfolio managers from which to choose.
The Capital Accumulation Fund will use the
services of one or more investment subadvisors
as portfolio managers in selecting companies in
which to invest. Taking into account the
individual styles of the portfolio managers,
the Advisor will allocate assets to achieve the
Fund's objective. The portfolio managers will
select investments by examining such factors as
company growth prospects, industry economic
outlook, new product development, management,
security value, risk, and financial
characteristics.
.................................................
New Vision Small Cap Fund
The Calvert New Vision Small Cap Fund seeks to
provide long-term capital appreciation by
investing primarily in equity securities of
companies that have small market
capitalizations. In seeking capital
appreciation, the Fund invests primarily in
equity securities of small capitalized growth
companies that have historically exhibited
exceptional growth characteristics and that, in
the Advisor's opinion, have strong earnings
potential relative to the U.S. market as a
whole. The Fund's investment objective is not
fundamental and may be changed without
shareholder approval.
The New Vision Small Cap Fund pursues the
objective of capital appreciation by investing
primarily in equity securities of primarily
small companies with promising growth
potential. These companies typically are
developing innovative products or services to
seize emerging opportunities.
<PAGE>
Under normal circumstances, the New Vision
Small Cap Fund will invest at least 65% of its
total assets in equity securities of companies
publicly traded in the United States (currently
those with a total market capitalization of
under $1 billion at the time of the Fund's
initial investment).
The New Vision Small Cap Fund considers issuers
of all industries with operations in all
geographic markets, and does not seek interest
income or dividends. Equity securities may
include common stocks, preferred stocks,
convertible securities and warrants. In
selecting equity investments, the Fund focuses
on individual companies by screening over nine
thousand stocks traded on all major U.S. stock
exchanges. The Fund may hold cash or cash equivalents
for temporary defensive purposes or to enable
it to take advantage of buying opportunities.
There is, of course, no assurance that the Fund will be
successful in meeting its objective.
Companies whose capitalization increases or
decreases after initial purchase by the Fund
continue to be considered small-capitalized for
purposes of the 65% policy. Accordingly, less
than 65% of the Fund's total assets may be
invested in securities of issuers of companies
publicly traded in the United States (currently
those with a total market capitalization of
less than $1 billion).
The New Vision Small Cap Fund will normally be
as fully invested as practicable in common
stocks (including ADRs), but also may invest in
warrants and rights to purchase common stocks
and in debt securities and preferred stocks
convertible into common stocks (collectively,
"equity securities").
- -------------------------------------------------
INVESTMENT TECHNIQUES AND RISKS
.................................................
Risks
A company's market capitalization is the total
market value of its outstanding equity
securities. The value of the Fund's investments
will vary from day to day, and generally
reflect market conditions, interest rates and
other company, political, or economic news. In
the short-term, stock prices can fluctuate
dramatically in response to these factors. Over
time, however, stocks have shown greater growth
potential than other types of securities.
.................................................
Nondiversified
There may be risks associated with the Capital
Accumulation Fund being nondiversified.
Specifically, since a relatively high
percentage of the assets of the Capital
Accumulation Fund may be invested in the
obligations of a limited number of issuers, the
value of the shares of the Capital Accumulation
Fund may be more susceptible to any single
economic, political or regulatory event than
the shares of a diversified fund would be.
.................................................
Small Cap Issuers
While any investment in securities carries a
certain degree of risk, the approach of the
Fund is designed to maximize growth in relation
to the risks assumed. The securities of small
cap issuers may be less actively traded than
the securities of larger issuers, may trade in
a more limited volume, and may change in value
more abruptly than securities of larger
companies. Information concerning these
securities may not be readily available so that
the companies may be less actively followed by
stock analysts. Small-cap issuers do not
usually participate in market rallies to the
same extent as more widely-known securities,
and they tend to have a relatively higher
percentage of insider ownership.
Investing in smaller, new issuers generally
involves greater risk than investing in larger,
established issuers. Companies in which the
Fund is likely to invest may have limited
product lines, markets or financial resources
and may lack management depth. The securities
in such companies may also have limited
marketability and may be subject to more abrupt
or erratic market movements than securities of
larger, more established companies or the
market averages in general. Accordingly an
investment in the Fund may not be appropriate
for all investors.
.................................................
Temporary defensive positions
Under normal market conditions the Fund strives
to be fully invested in securities. However,
for temporary defensive purposes -which may
include a lack of adequate purchase candidates
or an unfavorable market environment-the
Capital Accumulation Fund may invest up to 100%
of its total assets, and the New Vision Small
Cap Fund may invest up to 35% of its total
assets, in cash or cash equivalents. Cash
equivalents include instruments such as, but
not limited to, U.S. government and agency
obligations, certificates of deposit, bankers'
acceptances, time deposits, commercial paper,
short-term corporate debt securities and
repurchase agreements.
.................................................
The Fund currently intends to invest in no more
than 5% of its net assets in
noninvestment-grade debt obligations.
Although the Capital Accumulation Fund invests
primarily in equity securities, it may invest
in debt securities and, although the New Vision
Small Cap Fund also invests primarily in equity
securities, it may invest up to 35% of its
total assets in debt securities, excluding
money market instruments. These debt securities
may consist of investment-grade and
noninvestment-grade obligations.
Investment-grade obligations are those which,
at the date of investment, are rated within the
four highest grades established by Moody's
Investors Services, Inc. (Aaa, Aa, A, or Baa)
or by Standard and Poor's Corporation (AAA, AA,
A, or BBB), or, if unrated, are deemed to be of
comparable quality by the Advisor.
Noninvestment-grade securities are those rated
below Baa or BBB, or unrated obligations that
the investment subadvisor has determined are
not investment-grade; such securities are
speculative in nature, the Funds currently
intend to limit such investments to 5% of their
respective net assets. The Funds will not buy
debt securities rated lower than C.
.................................................
Interest-rate risk
All fixed income instruments are subject to
interest-rate risk: that is, if market interest
rates rise, the current principal value of a
bond will decline. In general, the longer the
maturity of the bond, the greater the decline
in value will be.
<PAGE>
The Fund may use options and futures as
defensive strategies.
The Capital Accumulation Fund may attempt to
reduce the overall risk of its investments by
using options and and futures contracts. An
option is a legal contract that gives the
holder the right to buy or sell a specified
amount of the underlying interest at a fixed or
determinable price (called the exercise or
strike price) upon exercise of the option. A
futures contract is an agreement to take
delivery or to make delivery of a standardized
quantity and quality of a certain commodity
during a particular month in the future at a
specified price. The Subadvisors will make
decisions whether to invest in these
instruments based on market conditions,
regulatory limits and tax considerations. If
this strategy is used, the Fund may be required
to cover assets used for this purpose in a
segregated account for the protection of
shareholders.
In extraordinary circumstances, the New Vision
Small Cap Fund may use options and futures
contracts 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 only as protection against an adverse
move of the holdings in the Fund to adjust the
risk and return characteristics of the Fund.
The decision to invest in these instruments
will be based on market conditions, regulatory
limits and tax considerations. If market
conditions are judged incorrectly, a strategy
does not correlate well with the 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 the
Fund 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 limitation on illiquid
securities. See below and the Statement of
Additional Information for more details about
these strategies.
.................................................
Risks of using defensive strategies
There can be no assurance that engaging in
options, futures, or any other defensive
strategy will be successful. While defensive
strategies are designed to protect the Funds
from potential declines, if the Subadvisor
misgauges market values, interest rates, or
other economic factors, the Funds may be worse
off than had they not employed the defensive
strategy. While the Subadvisors attempt to
determine price movements and thereby prevent
declines in the value of portfolio holdings,
there is a risk of imperfect or no correlation
between price movements of portfolio
investments and instruments used as part of a
defensive strategy so that a loss is incurred.
While defensive strategies can reduce the risk
of loss, they can also reduce the opportunity
for gain since they offset favorable price
movements. The use of defensive strategies may
result in a disadvantage to the Funds if a Fund
is not able to purchase or sell a portfolio
holding at an optimal time due to the need to
cover its transaction in its segregated
account, or due to the inability of a Fund to
liquidate its position because of its relative
illiquidity.
.................................................
Repurchase agreements
The Funds may engage in repurchase agreements
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. The Funds 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
Funds' respective Board of Directors/Trustees.
In addition, the Funds will only engage in
repurchase agreements reasonably designed to
fully secure during the term of the agreement,
the seller's obligation to repurchase the
underlying security. The Funds will monitor the
market value of the underlying security during
the term of the agreement. If the seller
defaults on its obligation to repurchase and
the value of the underlying security declines,
the Funds may incur a loss and may incur
expenses in selling the underlying security.
Repurchase agreements are always for periods of
less than one year, and are considered illiquid
if not terminable within seven days.
.................................................
Foreign Securities and ADRs
The New Vision Small Cap Fund may invest up to
15% of its total assets in ADRs. The Capital
Accumulation Fund may also invest in ADRs,
subject to the restrictions applicable to
investments in foreign securities discussed
below. By investing in ADRs rather than
directly in foreign issuers' stock, the Funds
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. U.S. dollar-denominated
ADRs, which are traded in the U.S. on exchanges
or over the counter, are receipts typically
issued by a U.S. bank or trust company which
evidence ownership of underlying securities of
a foreign corporation. In general, there is a
large, liquid market in the U.S. for many ADRs.
The Capital Accumulation Fund may invest up to
25% of its assets in the securities of foreign
issuers, although it currently holds or intends
to hold no more than 5% of its assets in such
securities. The Capital Accumulation Fund may
purchase foreign securities directly, on
foreign markets, or those represented by ADRs,
or other receipts evidencing ownership of
foreign securities, such as International
Depositary Receipts and Global Depositary
Receipts. 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. See
the SAI for more information on investing in
foreign securities.
.................................................
The Funds may lend their portfolio securities.
Both Funds may lend portfolio securities to
member firms of the New York Stock Exchange and
commercial banks with assets of one billion
dollars or more, although the New Vision Small
Cap Fund does not intend to do so and the
Capital Accumulation Fund does not currently
intend to lend more than 5% of its portfolio
securities. The advantage of such loans is that
the Funds 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 Funds' investment
objective, policies and restrictions. 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.
.................................................
Borrowing
The New Vision Small Cap Fund 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 one third of the value of the
Fund's total assets.
High Social Impact Investments
The Funds have both adopted nonfundamental
policies that permit investments which, with
respect to the Capital Accumulation Fund, may
be up to three percent, and with respect to the
New Vision Small Cap Fund, may be up to one
percent, of that Fund's assets in securities
that offer a rate of return below the
then-prevailing market rate and that present
attractive opportunities for furthering each
Fund's social criteria ("High Social Impact
Investments"). These securities are typically
illiquid and unrated and are generally
considered noninvestment-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 of
Directors/Trustees identifies, evaluates and
selects these investments, subject to
ratification by the respective Board.
- -------------------------------------------------
SOCIALLY RESPONSIBLE INVESTMENT CRITERIA
.................................................
The Funds carefully review company policies and
behavior regarding social issues important to
quality of life:
environment employee relations product criteria
weapons systems nuclear energy human rights
Once securities are determined to fall within
the investment objective of a Fund and are
deemed financially viable investments, they are
analyzed according to the social criteria
described below. These social screens are
applied to potential investment candidates by
the Advisor in consultation with the
Subadvisors.
The following criteria may be changed by the
respective Fund's Board of Directors/Trustees
without shareholder approval:
(1) The Funds avoid investing in companies
that, in the Advisor's opinion, have significant
or historical patterns of violating
environmental regulations, or otherwise have an
egregious
environmental record. Additionally, the Funds
will avoid investing in nuclear power plant
operators and owners, or manufacturers of key
components in the nuclear power process.
(2) The Funds will not invest in companies
that are significantly engaged in weapons
production. This includes weapons systems
contractors and major nuclear weapons systems
contractors.
(3) The Funds will not invest in companies
that, in the Advisor's opinion, have
significant or historical patterns of discrimination
against employees on the basis of race, gender,
religion, age, disability or sexual orientation,
or that have major labor-management disputes.
(4) The Funds will not invest in companies
that are significantly involved in the
manufacture of tobacco or alcohol products. The
Funds will not invest in companies that
make products or offer services that, under
proper use, in the Advisor's opinion, are
considered harmful.
The Advisor will seek to review companies'
overseas operations consistent with the social
criteria stated above.
While the Funds may invest in companies that
exhibit positive social characteristics, it
makes no explicit claims to seek out companies
with such practices.
TOTAL RETURN
.................................................
The Funds may advertise total return for each
class of shares. Total return is based on
historical results and is not intended to
indicate future performance.
Total return is calculated separately for each
class. It 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 the
class' dividends and capital gain distributions
are reinvested. A cumulative total return
reflects the class' performance over a stated
period of time. An average annual total return
("return with maximum load") 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 return usually will include the effect
of paying the front-end sales charge, in the
case of Class A shares. Of course, total
returns will be higher if sales charges are not
taken into account. Quotations of "return
without maximum sales load" 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. ("Lipper"). Further information
about the Funds' performance is contained in
its Annual Report to Shareholders, which may be
obtained without charge.
- -------------------------------------------------
MANAGEMENT OF THE FUND
.................................................
The Funds' Board of Directors/Trustees
supervise the Funds' activities and review
their contracts with companies that provide
them with services.
The Capital Accumulation Fund is a series of
Calvert World Values Fund, Inc. an open-end
management investment company organized as a
Maryland corporation on February 14, 1992. The
other series is the International Equity Fund,
a socially-screened portfolio of equity
securities from around the world.
The New Vision Small Cap Fund is a series of
The Calvert Fund (the "Trust"), an open-end
management investment company organized as a
Massachusetts business trust on March 15, 1982.
The other series of the Trust are the Calvert
Income Fund and Calvert Strategic
Growth Fund.
Neither Fund is required to hold annual
shareholder meetings, but special meetings may
be called for certain purposes such as electing
Directors/Trustees, changing fundamental
policies, or approving a management contract.
As a shareholder, you receive one vote for each
share of a Fund you own, except that matters
affecting classes differently, such as
Distribution Plans, will be voted on separately
by class.
Calvert Asset Management Company, Inc. serves
as Advisor to the Funds.
Calvert Asset Management Company, Inc. (the
"Advisor") is both Funds' investment advisor.
The Advisor provides the Funds with investment
supervision and management; administrative
services and office space; furnishes executive
and other personnel to the Funds; and pays the
salaries and fees of all Directors/Trustees who
are affiliated persons of the Advisor. The
Advisor may also assume and pay certain
advertising and promotional expenses of the
Funds and reserves the right to compensate
broker-dealers in return for their promotional
or administrative services. The Funds pay all
other operating expenses as noted in the SAI.
.................................................
Calvert Group is one of the largest investment
management firms in the Washington, D.C. area.
Calvert Group, Ltd., parent of the Fund's
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 March 31, 1997, Calvert
Group managed and administered assets in excess
of $5.1 billion and more than 225,000
shareholder and depositor accounts.
.................................................
The Advisor receives a fee based on a
percentage of the Fund's assets.
The respective Investment Advisory Agreements
between the Funds and the Advisor both provide
that the Advisor is entitled to a base annual
fee, payable monthly, of 0.80% of the Capital
Accumulation Fund's, and 0.90% of the New
Vision Small Cap Fund's, average daily net
assets. For its services during the fiscal year
ended March 31, 1997, pursuant to the
Investment Advisory Agreements, the Advisor
received an investment advisory fee of 0.80% of
the Capital Accumulation Fund's average daily
net assets, and waived the advisory fee for the
New Vision Small Cap Fund.
With respect to the Capital Accumulation Fund,
the Advisor may earn (or have its fee reduced
by) a performance adjustment based on the
extent to which performance of the Fund exceeds
or trails the Standard & Poor's 400 Mid-Cap
Index:
Performance versus the Performance Fee
S&P 400 Mid-Cap Index Adjustment
.................................................
10% to less than 25% 0.01%
25% to less than 40% 0.03%
40% or more 0.05%
For its services for fiscal year 1997, the
Advisor received, pursuant to the Investment
Advisory Agreement, an advisory fee of 0.80% of
the Fund's average daily net assets, which
included a performance adjustment of 0.0028%.
The Advisor may in its discretion defer its
fees or assume the Fund's operating expenses.
The Capital Accumulation Fund may use a
multi-manager approach.
The Capital Accumulation Fund has a pool of
five investment subadvisors ("Subadvisors")
ready to manage the Fund's assets. The
subadvisors are listed below, the asterisk
indicates the subadvisor(s) currently
comprising the management team.
Subadvisor Ownership
.................................................
*Brown Capital African American
Fortaleza Asset Management Hispanic/Women
Apodaca Hispanic American
New Amsterdam Women
Sturdivant African American
.................................................
The Advisor has retained a consultant to make
recommendations on allocations to Subadvisors.
The Advisor will select which Subadvisors will
manage the Capital Accumulation Fund's assets
at any given time and the allocation of assets
among the managers. Each firm has selected a
performance index against which it will be
measured with respect to payment of a
performance fee, as explained in the next
section.
.................................................
Brown Capital Management, Inc.
Brown Capital Management, Inc. of Baltimore,
Maryland 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. Its performance
index is a blended 60% Russell 1000 Growth and
40% Russell 2000.
Eddie C. Brown is founder and President of
Brown Capital Management. He has over 22 years
of investment experience, having served as a
Vice President and Portfolio Manager for 10
years at T. Rowe Price Associates immediately
prior to starting his own firm. Mr. Brown holds
an M.S. in Electrical Engineering from New York
University, and an M.S. in Business
Administration from the Indiana University
School of Business. Additionally, he is a
professionally-designated Chartered Financial
Analyst (CFA) and Chartered Investment
Counselor.
The Capital Accumulation Fund's remaining pool
of Subadvisors are described in the SAI. See
"Investment Advisor and Subadvisors."
<PAGE>
Capital Accumulation Fund subadvisory
compensation
The Investment Subadvisory Agreement between
the Advisor and each of the Subadvisors
provides that the Subadvisors currently
managing Fund assets are entitled to a base
subadvisory fee of 0.25% of that portion of the
Fund's average daily net assets managed by the
Subadvisor, paid by the Advisor out of the fee
the Advisor receives from the Fund. Each
Subadvisor 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 index agreed on with the
Advisor:
Performance versus Performance Fee
the Index Adjustment
.................................................
10% to less than 25% 0.02%
25% to less than 40% 0.05%
40% or more 0.10%
Payment by the Fund of a performance adjustment
will be conditioned on: (1) the performance of
the Fund as a whole having exceeded the S&P 400
Mid-Cap Index; and (2) payment of the
performance adjustment not causing the Fund's
performance to fall below the S&P 400 Mid-Cap
Index. The performance adjustment will be paid
by the Fund to the Advisor, which will then
pass it on to the Subadvisor.
.................................................
Awad & Associates ("AWAD") is the investment
subadvisor to the New Vision Small Cap Fund.
AWAD's principal business office is located at 477
Madison Avenue, New York, New York 10022. As of June
30, 1997, AWAD had $724 million in assets under management.
AWAD adheres to a bottom-up, earnings-driven discipline with
emphasis on internal fundamental research, specializing in small
capitalization stocks, focusing on growth at a reasonable value
price approach to stock selection. AWAD's main objective in
asset management are to protect the investor's capital, generate
capital appreciation substantially in excess of inflation and
reduced-risk returns and provide returns in excess of applicable
stock and bond indices. All portfolio investments are regularly
scrutinized to provide a substantial risk/return benefit and to
ensure that portfolios are properly positioned relative to the
fund's investment objectives.
.................................................
Portfolio Manager for the New Vision Small Cap Fund
Effective October 1, 1997, the New Vision Small Cap Fund is managed
by a team of investment professionals from AWAD. The senior
investment officer is James D. Awad. Mr. Awad has been in the
investment business since 1965, focusing on research and portfolio
management. Prior to forming AWAD, he was President of BMI Capital,
a money management firm he founded. In addition, he has
managed assets at Neuberger & Berman, Channing Management and First
Investment Corp. Mr. Awad earned an MBA from Harvard Business
School and a BS Cum Laude from Washington & Lee University.
Dennison T. Veru is President of AWAD. Mr. Veru joined AWAD in 1992
coming from Smith Barney Harris Upham where he was Senior Vice President
of the firm's Whiffletree Capital Management division specializing in small
and medium capitalization stocks. From 1988 through 1990, he was Vice
President of Broad Street Investment Management. Prior to that, he
was an Assistant Vice President at Burnham Lambert. Mr. Veru is a
graduate of Franklin and Marshall College.
<PAGE>
The Investment Subadvisory Agreement between
the Advisor and AWAD provides that AWAD is
entitled to a base subadvisory fee of 0.40% of
the Fund's average daily net assets managed by
AWAD. AWAD's fee is paid by the Advisor out of
the fee the Advisor receives from the Fund.
The Funds have obtained an exemptive order from
the Securities and Exchange Commission to
permit them, pursuant to approval by the Board
of Directors/Trustees, to enter into and
materially amend contracts with a Subadvisor
without shareholder approval. See "Investment
Advisor and Subadvisor" in the SAI for further
details.
.................................................
Calvert Administrative Services Company
provides administrative services for the Fund.
Calvert Administrative Services Company
("CASC"), an affiliate of the Advisor, provides
certain administrative services to the Fund,
including the preparation of regulatory filings
and shareholder reports, the daily
determination of its net asset value per share
and dividends, and the maintenance of its
portfolio and general accounting records. For
providing such services, CASC receives an
annual fee, payable monthly, from both Funds of
0.10% of the respective Fund's average daily
net assets.
.................................................
Calvert Distributors, Inc. serves as
underwriter to market the Funds' shares.
Calvert Distributors, Inc. ("CDI") is both
Funds' and distributor.
Under the terms of its underwriting agreement
with the Funds, CDI markets and distributes the
Funds' shares and is responsible for payment of
commissions and service fees to broker-dealers,
banks, and financial services firms,
preparation of advertising and sales
literature, and printing and mailing of
prospectuses to prospective investors.
.................................................
The transfer agent keeps your account records.
Calvert Shareholder Services, Inc. is both
Funds' transfer, dividend disbursing and
shareholder servicing agent.
<PAGE>
SHAREHOLDER GUIDE
.................................................
Opening An Account
You can buy shares of the Fund in several ways.
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 Fund offers 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 than Class
A shares.
Each Fund 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 up to 0.35% with respect to the
Capital Accumulation Fund, and up to 0.25% with
respect to the New Vision Small Cap Fund,
annually of the average daily net asset value
of Class A shares, while payments under 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 "Total
Return") You should consider Class A shares if
you qualify for a reduced sales charge under
Class A. Class A shares may also be more
appropriate for larger accounts or if you plan
to hold the shares for several years. Class C
shares are not available for investments of $1
million or more.
<PAGE>
Class A Shares
Class A shares are offered at net asset value
plus a front-end sales charge as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Concession
As a % of As a % of to Dealers as a
Amount of Offering Net Amount % of Amount
Investment Price Invested Invested
.................................................
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%*
</TABLE>
*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.
Sales charges on Class A 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 or
finder's fee, 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 held in accounts maintained
by that firm.
.................................................
Class A Distribution Plan
Each 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 rate of 0.35% with
respect to the Capital Accumulation Fund, and
0.25% with respect to the New Vision Small Cap
Fund, 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 broker-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. During the fiscal year
ended March 31, 1997, Class A distribution Plan
expenses for the Capital Accumulation Fund were
0.35% and were waived for the New Vision Small
Cap Fund.
<PAGE>
Class C Shares
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
Each 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 broker-dealers
and other selling firms quarterly compensation
at an annual rate of up to 0.75%, plus a
service fee of up to 0.25%, of the average
daily net asset value of each share sold by
such others. During the fiscal year ended March
31, 1997, Class C Distribution Plan expenses
for the Capital Accumulation Fund were 1.00% of
the average daily net assets. For the period
ended March 31, 1997, distribution expenses
were waived for the New Vision Small Cap Fund.
.................................................
Arrangements with Broker-Dealers and Others
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. CDI may receive
reimbursement of eligible marketing and
distribution expenses from the Fund's Rule
12b-1 Distribution Plan and in compliance with
the rules of the NASD.
Broker-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.
<PAGE>
HOW TO BUY SHARES
METHOD INITIAL INVESTMENT ADDITIONAL
INVESTMENT
BY MAIL $2,000 minimum $250 minimum
Please make your check payable Please make your check payable
to the Fund ad mail it to the Fund and mail it
with your application to: with your investment slip to:
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419544
Kansas City, MO 64141-6544 Kansas City, MO 64141-6544
BY REGISTERED, Calvert Group Calvert Group
CERTIFIED, OR c/o NFDS, 6th Floor c/o NFDS, 6th Floor
OVERNIGHT MAIL 1004 Baltimore 1004 Baltimore
Kansas City, MO 64105-1807 Kansas City, MO 64105-1807
THROUGH $2,000 minimum $250 minimum
BROKER
AT THE CALVERT Visit the Calvert Branch Office to make investments by check.
BRANCH OFFICE See the back cover page for the address.
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR
FINANCIAL PROFESSIONAL OR
CALVERT GROUP AT 800-368-2745
BY EXCHANGE $2,000 minimum $250 minimum
(FROM YOUR
ACCOUNT IN When opening an account by exchange, your new account
ANOTHER must be established with the same name (s), address and taxpayer
CALVERT identification number as your existing Calvert account.
FUND)
BY BANK WIRE $2,000 minimum $250 minimum
BY CALVERT Not Available $50 minimum
MONEY for Initial Investment
CONTROLLER
*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.
<PAGE>
NET ASSET VALUE
.................................................
Net asset value per share ("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.
The NAV of each class will vary daily based on
the market values of the Fund'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 Directors/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).
- -------------------------------------------------
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.
Your purchase will be processed at the next
offering price based on the next net asset
value calculated after your order is received
and accepted. All your purchases must be made
in U.S. dollars and checks must be drawn on
U.S. banks. No cash will be accepted. Each 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 is not
paid, 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, the Fund may hold
payment on redemptions until it is reasonably
satisfied that the investment is collected
(normally up to 10 business days from purchase
date). To avoid this collection period, you can
wire federal funds from your bank, which may
charge you a fee. As a convenience, check
purchases can be received at Calvert's offices
for overnight mail delivery to the transfer
agent and will be credited when received by the
transfer agent. Any check purchase received
without an investment slip may cause delayed
crediting.
Certain financial institutions or
broker-dealers which have entered into a sales
agreement with CDI may enter confirmed purchase
orders on behalf of customers by phone, with
payment to follow within a 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.
<PAGE>
EXCHANGES
.................................................
Each exchange represents the sale of shares of
one Fund 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 Family 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.
However, to protect a Fund's performance and to
minimize costs, Calvert Group discourages
frequent exchanges and may prohibit additional
purchases of Fund shares by persons engaged
in too many short-term trades. Before you make
an exchange from a Fund or Portfolio, please
note the following:
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.
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.
Shares on which you have already paid a
sales charge at Calvert Group and shares
acquired by reinvestment of dividends or
distributions may be exchanged into
another Fund at no additional charge.
Class C shares may be exchanged for shares
of another fund, but will be charged the
front-end sales charge, if applicable.
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.
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.
<PAGE>
OTHER CALVERT GROUP SERVICES
.................................................
Calvert Information Network
Calvert Group has a round-the-clock telephone
service that lets existing customers obtain
prices, yields, performance information,
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
requests will be honored. All Calvert Money
Controller transaction requests must be
received by 4:00 p.m. Eastern time.
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. Share
purchases made through Calvert Money Controller
will be subject to the applicable sales charge.
.................................................
Telephone Transactions
Calvert may record all telephone calls.
You may purchase, redeem, or exchange shares,
wire funds and use Calvert Money Controller by
telephone if you have pre-authorized service
instructions. You automatically have telephone
privileges unless you elect otherwise. You
automatically have telephone privileges unless
you elect otherwise. Each 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.
.................................................
Services
Optional Services
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 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,
trust company, savings and loan association,
credit union, 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 while saving
paper and postage expenses.
If you have multiple accounts with Calvert, you
may receive combined mailings of statements,
confirms, prospectuses, semi-annual and annual
reports. Please contact Calvert Investor
Relations at 800-368-2745 to consolidate
mailings and 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 in
the Fund 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 chart on page 21. Also,
reduced sales charges may apply. See "Exhibit
A" - Reduced Sales Charges."
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.
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.
Simplified Employee Pension Plan
(SEP-IRA): available to self-employed
people and their partners, or to
corporations.
403(b)(7) Custodial Accounts: available to
employees of most non-profit organizations
and public schools and universities.
<PAGE>
HOW TO SELL YOUR SHARES
.................................................
You may redeem all or a portion of your shares
on any business day. Your shares will be
redeemed at the next NAV 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). The Fund reserves the right to redeem in
kind (i.e., to give you the value of your
redemption in portfolio securities instead of
in cash).
.................................................
- -------------------------------------------------
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.
.................................................
Minimum account balance is $1,000 per Fund, per
class.
Please maintain a balance in each of your fund
accounts of at least $1,000, per Fund, 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 charged a
service fee or closed and the proceeds mailed
to you. You will be given a notice that your
account will be closed after 30 days if the
balance is not brought up to the required
minimum amount.
.................................................
By Mail To: Calvert Group, P.O. Box 419544
Kansas City, MO 64141-6544.
You may redeem available shares from your
account at any time by sending a letter of
instruction, including your name, account and
Fund 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, Letter of instruction and corporate resolution, signed by
Associations person(s) authorized to act on the account, accompanied
by signature guarantee(s).
Trusts Letter of instruction signed by the Trustee(s)(as
Trustees), 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 a bank you have previously authorized. A
charge of $5 is imposed on wire transfers of
less than $1,000. See "Telephone Transactions."
If for any reason you are unable to reach the
Fund by telephone, whether due to mechanical
difficulties, heavy market volume or otherwise,
you may send a written redemption request to
the Fund by overnight mail. If your account is
held through a broker, see "Through Your
Broker."
.................................................
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. See "Exchanges."
.................................................
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. 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, CAPITAL GAINS AND TAXES
.................................................
Each year, both Funds distribute substantially
all of their respective net investment income
to their shareholders.
Dividends from a Fund's net investment income
are declared and paid annually. Net investment
income consists of the interest income, net
short-term capital gains, if any, and dividends
declared and paid on investments, less
expenses. Distributions of a Fund's net
short-term capital gains (treated as dividends
for tax purposes) and its net long-term capital
gains, if any, are normally declared and paid
by a Fund once a year; however, a 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 will generally be higher for Class A
shares.
<PAGE>
Dividend and Distribution Payment Options
Dividends and any distributions are
automatically reinvested in the same Fund at
NAV (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 may be
automatically invested in an identically
registered account with the same account number
in any other Calvert Group Fund at NAV. If
reinvested in the same Fund account, new shares
will be purchased at NAV on the reinvestment
date, which is generally 1 to 3 days prior to
the payment date. You must notify the Fund in
writing prior to the record date 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 a
Fund 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
Each Fund normally distributes all net income
and capital gain to shareholders. These
distributions are taxable to you regardless of
whether they are taken in cash or reinvested.
Distributions of net investment income are
taxable as ordinary income; distributions of
long-term capital gains are taxable as
long-term capital gains regardless of how long
you have held the shares. Dividends and
distributions declared during October, November
or December and paid in January of the
following year are taxable in the year they are
declared. The Funds will mail you Form 1099-DIV
in January indicating the federal tax status of
your dividends. If distributions exceed the
respective Fund's net investment income and
capital gain for the year, the excess will
reduce your tax basis for your shares in that
Fund.
.................................................
You may realize a capital gain or loss when you
sell or exchange shares.
If you sell or exchange your Fund shares you
will have a short or long-term capital gain or
loss, depending on how long you owned the
shares which were sold. In January, each Fund
will mail you Form 1099-B indicating the
proceeds from 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.
.................................................
Taxpayer Identification Number
If we do not have your correct Social Security
or Corporate Tax Identification Number ("TIN")
and a signed certified application or Form W9,
Federal law requires the Funds to withhold 31%
of your dividends and 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 at
the current NAV on the date of redemption. The
Funds reserve 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 Funds 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 a 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 Funds, 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) Directors, Trustees, Officers, Advisory
Council Members, employees of the Calvert Group
of Funds or affiliated companies, employees of
broker dealers distributing the Funds' shares
and family members of the above; (2) Purchases
made through a Registered Investment Advisor;
(3) Trust departments of banks or savings
institutions for trust clients of such bank or
institution; and (4) Purchases through a broker
maintaining an omnibus account with the Fund
and 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."
.................................................
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 your
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 NAV next computed after the
reinvestment order is received, without a sales
charge. You may use the reinstatement privilege
only once. The Funds reserve the right to
modify or eliminate this privilege.
<PAGE>
The Calvert Fund:
Calvert New Vision Small Cap Fund
Statement of Additional Information
July 31, 1997
Revised October 24, 1997
Statement of Additional Information
July 31, 1997
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
TRANSFER AGENT
Calvert Shareholder Services, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
217 E. Redwood Street
Baltimore, Maryland 21202-3316
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SUBADVISOR
Awad & Associates
477 Madison Avenue
New York, NY 10022
TABLE OF CONTENTS
Investment Objective and Policies 1
Investment Restrictions 4
Dividends, Distributions and Taxes 5
Net Asset Value 7
Calculation of Total Return 8
Purchase and Redemption of Shares 8
Reduced Sales charge (Class A) 9
Advertising 9
Trustees and Officer 10
Investment Advisor and Subadvisor 12
Method of Distribution 12
Transfer and Shareholder Servicing Agent 13
Fund Transactions 13
Independent Accountant and Custodians 14
General Informatio 14
Financial Statements 14
Appendix 14
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-July 31, 1997, Revised October 24, 1997
THE CALVERT FUND
CALVERT NEW VISION SMALL CAP FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account (800) 368-2748
Information: (301) 951-4820
Shareholder Services: (800) 368-2745
Broker (800) 368-2746
Services: (301) 951-4850
TDD for the Hearing-Impaired: (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 July 31, 1997, which may be
obtained free of charge by writing the Fund at the above address or
calling the Fund.
INVESTMENT OBJECTIVE
Calvert New Vision Small Cap Fund (the "Fund") is a diversified
series of The Calvert Fund, an open-end management investment company.
The investment objective of the Fund is to achieve long-term capital
appreciation by investing primarily in the equity securities of small
companies* publicly traded in the United States. The following
discussion supplements the discussion in the Prospectus. Unless
otherwise specified, the investment objective, programs and restrictions
of the Fund are not fundamental policies. The operating policies of the
Fund are subject to change by its Board of Trustees without shareholder
approval.
In seeking capital appreciation, the Fund invests primarily in
equity securities of small capitalized growth companies that have
historically exhibited exceptional growth characteristics and that, in
the Adviser's opinion, have strong earnings potential relative to the
U.S. market as a whole. The Fund will take reasonable risks in seeking
to achieve its investment objective. There is, of course, no assurance
that the Fund will be successful in meeting its objective since there is
risk involved in the ownership of all equity securities. The Fund will
invest in enterprises that make a significant positive contribution to
our society through their products and services and through the way they
do business.
The Fund's investment philosophy emphasizes sustained growth
and concentrates on the securities of issuers not generally recognized
by the investment community that have a consistent earnings-per-share
growth, a unique product or service, conservative accounting and
financial policies, and management capable of long-term growth. While
the Fund's policies may, from time to time, result in income return, any
such return will be incidental to the objective of long-term capital
appreciation.
Under normal market conditions, the Fund strives to be fully
invested. In a declining market, the Fund may raise cash or employ other
defensive strategies in an attempt to protect against the decline of its
investments.
*Currently those with a total capitalization for initial purchases of less
than $1 billion at the time of the Fund's initial investment.
<PAGE>
SPECIAL RISKS OF THE FUND'S DEFENSIVE STRATEGIES
The Fund may purchase put and call options, and write (sell)
covered put and call options on equity and debt securities and stock or
debt indices. The Fund may purchase or write both exchange-traded and
OTC options. These defensive strategies may also be used with respect to
futures.
An option is a legal contract that gives the holder the right
to buy or sell a specified amount of the underlying interest at a fixed
or determinable price (called the exercise or strike price) upon
exercise of the option. A futures contract is an agreement to take
delivery or to make delivery of a standardized quantity and quality of a
certain commodity during a particular month in the future at a specified
price. Successful use of the Fund's investment strategies with respect
to futures and options depends on the ability to predict movements of
the overall securities, currency and interest rate markets, which is a
different skill than that required to select equity and debt
investments. There can be no assurance that a chosen strategy will
succeed.
There may not be an expected correlation between price
movements of a hedging instrument and price movements of the investment
being hedged, so that the Fund may lose money notwithstanding employment
of the hedging strategy.
While the Fund's investment strategies can reduce risk of loss
by offsetting the negative effect of unfavorable price movements, they
can also reduce the opportunity for gain by offsetting the positive
effect of a favorable price movement. If the variance is great enough, a
decline in the price of an instrument may result in a loss to the Fund.
The Fund may be required to cover its assets in a segregated
account. If an investment cannot be liquidated at the time the
Subadvisor believes it is best for the Fund, the Fund might be required
to keep assets on reserve that it otherwise would not have had to
maintain. Similarly, it might have to sell a security at an inopportune
time in order to maintain the reserves.
futures and options
The Fund is authorized to invest in certain types of futures,
options on equities and equity indexes, warrants and stock rights for
hedging purposes only, that is, protecting against the risk of market
movements that may adversely affect the value of the Fund's securities
or the price of securities that the Fund is considering purchasing.
Although a hedging transaction may partially protect the Fund from a
decline in the value of a particular security or its portfolio
generally, the cost of the transaction will reduce the potential return
on the security or the portfolio. The Fund may only write call options
on securities that it owns (i.e., that are "covered"). No more than 50%
of the Fund's total assets shall be subject to outstanding options
contracts. The Fund presently intends to cease writing options in the
event that 25% of total assets are subject to outstanding options
contracts. As an operating policy, the Fund may purchase a call or put
option on securities (including combinations of options such as
straddles or spreads) only if the value of that option premium, when
aggregated with the premiums of all other options on securities held by
the Fund, does not exceed 5% of the Fund's assets. Following is a
summary of the futures, options, warrants and stock rights in which the
Fund may invest:
In exchange for a premium, a call option on a security or
security index gives the holder (buyer) of the option the right (but not
the obligation) to purchase the underlying security or security index at
a specified price (the exercise price) at any time until a certain date
(the expiration date). The writer (seller) of a call option has the
corresponding obligation to deliver the underlying security in the event
the option is exercised by the holder of the option. A call option on a
securities index is similar to a call option on an individual security,
except that the value of the option depends on the weighted value of the
group of securities comprising the index and all settlements are to be
made in cash. A call option may be terminated by the writer (seller) by
entering into a closing purchase transaction in which the writer
purchases an option of the same series as the option previously written.
The Fund may purchase put options on a security or security
index. A put option gives the holder (buyer) of the option the right
(but not the obligation) to sell a security at the exercise price at any
time until the expiration date. Upon exercise by the purchaser, the
writer of a put option has the obligation to purchase the underlying
security at the exercise price. A put option on a securities index is
similar to a put option on an individual security, except that the value
of the option depends on the weighted value of the group of securities
comprising the index and all settlements are made in cash. Purchasing a
call or put option involves the risk that the Fund may lose the premium
it paid plus transactions costs.
With respect to securities and securities indexes, the Fund may
write (sell) call and put options on an exchange or over-the-counter.
Call options on portfolio securities will be covered since the Fund will
own the underlying securities. Call options on securities indices will
be written only to hedge in an economically appropriate way portfolio
securities which are not otherwise hedged with options or financial
futures contracts and will be covered by maintaining sufficient
collateral to cover the option.
The Fund may write (sell) call and put options in order to
obtain a return on its investments from the premiums received and will
retain the premiums whether or not the options are exercised. Any
decline in the market value of portfolio securities will be offset to
the extent of the premiums received (net of transaction costs). If an
option is exercised, the premium received on the option will effectively
increase the exercise price or reduce the difference between the
exercise price and market value. During the option period, the writer of
a call option gives up the opportunity for appreciation in the market
value of the underlying security or currency above the exercise price.
The writer retains the risk of loss should the price of the underlying
security decline.
The Fund may also write a call or put option which it has
previously purchased prior to the purchase (in the case of a call) or
the sale (in the case of a put) of the underlying security. Any such
sale would result in a net gain or loss depending on whether the amount
received on the sale is more or less than the premium and other
transaction costs paid on the call or put which is sold.
The Fund may close out its position in a futures contract or an
option on a futures contract only by entering into an offsetting
transaction on the exchange on which the position was established and
only if there is a liquid secondary market for the futures contract. If
it is not possible to close a futures position entered into by the Fund,
it could be required to make continuing daily cash payments to meet
margin requirements in the event of adverse price movements. In such
situations, if the Fund has insufficient cash, it may have to sell
portfolio securities to meet daily variation margin requirements at a
time when it would be disadvantageous to do so. The inability to close
futures or options positions could have an adverse effect on the Fund.
There is also risk of loss by the Fund of margin deposits in the event
of bankruptcy of a broker with whom the Fund has an open position in a
futures contract. The correlation is imperfect between movements in the
prices of futures or option contracts, and the movements of prices of
the securities which are subject to the hedge. If the Fund used a
futures or options contract to hedge against a decline in the market,
and the market later advances (or vice-versa), the Fund may suffer a
greater loss than if it had not hedged.
Engaging in transactions in financial futures contracts
involves certain risks, such as the possibility of an imperfect
correlation between futures market prices and cash market prices and the
possibility that the Advisor or Subadvisor could be incorrect in its
expectations as to the direction or extent of various interest rate
movements, in which case the Fund's return might have been greater had
hedging not taken place. There is also the risk that a liquid secondary
market may not exist. The risk in purchasing an option on a financial
futures contract is that the fund will lose the premium it paid. Also,
there may be circumstances when the purchase of an option on a financial
futures contract would result in a loss to the Fund while the purchase
or sale of the contract would not have resulted in a loss.
The Fund will not purchase or sell any financial futures
contract or related option if, immediately thereafter, the sum of the
cash or U.S. Treasury bills committed with respect to its existing
futures and related options positions and the premiums paid for related
options would exceed 5% of the market value of its total assets. At the
time of purchase of a futures contract or a call option on a futures
contract, an amount of cash, U.S. Government securities or other
appropriate liquid debt or equity securities equal to the market value
of the futures contract, minus the Fund's initial margin deposit with
respect thereto, will be deposited in a segregated account with the
Fund's custodian bank to collateralize fully the position and thereby
ensure that it is not leveraged. The extent to which the Fund may enter
into financial futures contracts and related options may also be limited
by the requirements of the Internal Revenue Code of 1986 for
qualification as a regulated investment company.
Warrants and stock rights are almost identical to call options
in their nature, use and effect except that they are issued by the
issuer of the underlying security rather than an option writer, and they
generally have longer expiration dates than call options. The Fund may
invest up to 5% of its net assets in warrants and stock rights, but no
more than 2% of its net assets may be invested in warrants and stock
rights not listed on the New York Stock Exchange or the American Stock
Exchange.
NONINVESTMENT GRADE (HIGH YIELD/HIGH RISK) DEBT SECURITIES
The Fund may invest up to 5% of its total assets in lower
quality debt securities (generally those rated BB or lower by S&P or Ba
or lower by Moody's), or in unrated securities determined by the Advisor
to be comparable. These securities have moderate to poor protection of
principal and interest payments and have speculative characteristics.
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. This may also impact the Fund's Board of Trustees'
ability to accurately value these securities and the Fund's assets.
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 are rated securities,
and any adverse publicity and investor perceptions, whether or not based
on fundamental analysis, may make them less marketable.
The Fund will not purchase any securities rated lower than C
(for an explanation of Corporate Bond and Commercial Paper ratings, see
Appendix). The quality limitation set forth in the investment policy is
determined immediately upon the Fund's acquisition of a security.
Accordingly, any later change in ratings may not be considered when
determining whether an investment complies with the Fund's investment
policy. Credit ratings evaluate the safety of principal and interest
payments, not market value risk of the securities.
When purchasing high-yielding securities, rated or unrated, the
Subadvisor prepares its 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. The
Subadvisor also continuously monitors the issuers of the securities in
the Fund to assure that their financial condition continues to be
adequate. Through portfolio diversification and credit analysis,
investment risk can be reduced, although there can be no assurance that
losses will not occur.
LENDING PORTFOLIO SECURITIES
Although it does not currently intend to do so, the Fund may
lend its portfolio securities to member firms of the New York Stock
Exchange and commercial banks with assets of one billion dollars or
more. Loans must be secured continuously in the form of cash or cash
equivalents such as U.S. Treasury bills; the amount of the collateral
must on a current basis equal or exceed the market value of the loaned
securities, and the Fund must be able to terminate such loans upon
notice at any time. The Fund will exercise its right to terminate a
securities loan in order to preserve its right to vote upon matters of
importance affecting holders of the securities.
The advantage of such loans is that the Fund continues 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 Fund's 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 Fund will make
loans of its portfolio 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 Fund. The Fund
will recognize any gain or loss in the market value of the securities
during the loan period. The Fund may pay reasonable custodial fees in
connection with the loan.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The Fund has adopted the following investment restrictions
which cannot be changed without the approval of the holders of a
majority of the outstanding shares of the Fund. As defined in the
Investment Company Act of 1940, this means the lesser of the vote of (a)
67% of the shares of the Fund 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 Fund. The Fund may not:
1. With respect to 75% of its total assets,
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 its total
assets would be invested in securities of that issuer.
2. Concentrate 25% or more of the value of its
total 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.
3. Make loans of more than one-third of the total
assets of the Fund, other than through the purchase of
money market instruments and repurchase agreements
or by the purchase of bonds, debentures or other debt
securities, or the lending of portfolio securities as
detailed in the prospectus, or as permitted by law.
The purchase by the Fund 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.
4. Underwrite the securities of other issuers,
except as permitted by the Board of Trustees
within applicable law, and except to the extent that in
connection with the disposition of its portfolio
securities, the Fund may be deemed to be an
underwriter.
5. Issue senior securities or borrow money in an
amount exceeding one-third of the Fund's total
assets, or as permitted by law. In order to secure any
permitted borrowings under this section, the Fund may
pledge, mortgage or hypothecate its assets.
6. Except as required in connection with
permissible options, futures and commodity activities
of the Fund, invest in commodities, commodity
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 it may purchase or enter into futures
contracts and options on futures contracts, foreign
currency futures, interest rate futures and
options thereon.
NONFUNDAMENTAL 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. The Fund
may not:
7. Purchase the securities of any issuer with
less than three years' continuous operation if, as a
result, more than 5% of the value of its total assets
would be invested in securities of such
issuers.
8. Invest, in the aggregate, more than 15% of its
net assets in illiquid securities. Purchases of
securities outside the U.S. that are not registered
with the SEC or marketable in the U.S. are not per se
illiquid.
9. Purchase or retain securities of any issuer if
the officers, 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.
10. Invest in warrants if more than 5% of the
value of the Fund's net assets would be invested in
such securities.
11. Invest in interests in oil, gas, or other
mineral exploration or development programs or
leases, although it may invest in securities of issuers
which invest in or sponsor such programs.
12. Purchase from or sell to any of the Fund's
officers or trustees, or companies
of which any of them are directors, officers or
employees, any securities (other than
shares of beneficial interest of the Fund), but such
persons or firms may act as brokers for the Fund for
customary commissions.
13. Invest in the shares of other investment
companies, except as permitted by the 1940
Act or other applicable law, or pursuant to Calvert's
nonqualified deferred compensation plan
adopted by the Board of Trustees, in any
event, not to exceed 5% of the Fund's net assets.
14. With respect to 75% of its total assets,
invest 10% or more of its assets in the voting
securities of any one issuer.
For purposes of the Fund's concentration policy contained in
restriction (2), above, the Fund classifies the respective industries
according to a revised version of William O'Neil's Investor's Business
Daily industry classification.
Any investment restriction (with the exception of borrowings
and illiquid holdings) 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.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
The Fund declares and pays dividends from net investment income
on an annual basis. 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. Dividends and distributions paid may
differ among the classes.
Investors should note that the Internal Revenue Code (the
"Code") may require investors 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.
The Fund is required to withhold 31% of any dividends and 31%
of each redemption transaction occurring in the Fund 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 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.
The Fund is required to report to the Internal Revenue Service
the following information with respect to each redemption transaction:
(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 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
Code. Shareholders claiming exemption from backup withholding and broker
reporting should call or write the Fund for further information.
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 fluctuates based on the
respective market value of the Fund's investments. The net asset value
per share for each class is determined every business day at 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, 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 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 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.
Equity options are valued at the last sale price; if not available, then
the previous day's sales price is used. If the bid price is higher or
the asked price is lower than the previous last sales price, the higher
bid or lower asked prices may be used. Exchange traded fixed income
options are valued at the last sale price unless there is no sale price,
in which event current prices provided by market makers are used.
Over-the-counter fixed income options are valued based upon current
prices provided by market makers. Financial futures are valued at the
settlement price established each day by the board of trade or exchange
on which they are traded.
CALCULATION OF TOTAL RETURN
The Fund may advertise "total return." Total return is
calculated separately for each class. Total return is computed per class
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 maximum class A front-end sales charge ("return with
maximum load"), except quotations of "return without maximum load,"
which do not deduct sales charge. Thus, in the formula above, for return
without maximum load, P = the entire $1,000 hypothetical initial
investment and does not reflect the deduction of any sales charge; for
return with maximum load, P = a hypothetical initial investment of
$1,000 less any sales charge actually imposed at the beginning of the
period for which the performance is being calculated.
Return for the Funds' shares for the period from inception (January 31,
1997) to March 31, 1997, are as follows:
Class A Shares Class A Shares Class C
without Maximum total Return Shares
Sales Load with Maximum Total Return
Sales Load
Since Inception -20.07 -23.87 -20.07
Total return, like net asset value per share, fluctuates in response to
changes in market conditions. Performance for any particular time period
should not be considered an indication of future return.
PURCHASE AND REDEMPTION OF SHARES
Investments in the Fund made by mail, bank wire or electronic
funds transfer, or through the Fund's branch office or brokers
participating in the distribution of Fund shares, are credited to a
shareholder's account at the public offering price which is the net
asset value next determined after receipt by the Fund, plus the sales
charge, if applicable, as set forth in the Fund's Prospectus.
All purchases of Fund shares will be confirmed and credited to
shareholder accounts in full and fractional shares (rounded to the
nearest 1/1000th of a share). 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. A service fee of $10.00, plus any costs incurred by
the Fund, will be charged to investors whose purchase checks are
returned for insufficient funds.
To change redemption instructions already given, shareholders
must send a notice to Calvert Group, with a voided copy of a check for
the bank wiring instructions to be added, to c/o NFDS, P.O. Box 419544,
Kansas City, MO 64141-6544. If a voided check does not accompany the
request, then the request must be signature guaranteed by a commercial
bank, trust company, savings association or member firm of any national
securities exchange. Other documentation may be required from
corporations, fiduciaries and institutional investors.
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 Commission, or if the Commission has ordered a
suspension of trading for the protection of shareholders.
Redemption proceeds are normally paid in cash. However, 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.
Net Asset Value and Offering Price Per Share
Class A net asset value per share
($1,214,896/101,347 shares) $11.99
Maximum sales charge
(4.75% of Class A offering price) 0.60
Offering Price per Class A share 12.59
Class C net asset value and offering price per share
($200,089/16,690 shares) $11.99
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. Please see
"Exhibit A - Reduced Sales Charges" in the Prospectus. For shareholders
who intend to invest at least $50,000, a Letter of Intent is included in
the Appendix to this Statement of Additional Information.
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 its holdings or give examples of
securities that may have been considered for inclusion in the Fund,
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, Mutual Fund Values Morningstar Ratings, Mutual Fund
Forecaster, Barron's, Nelson's and The Wall Street Journal. The Fund may
also cite to any source, whether in print or on-line, such as Bloomberg,
in order to acknowledge origin of information, and may provide
biographical information on, or quote, portfolio managers or Fund
officers. 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 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,
1996). Calvert Group was also the first to offer a family of socially
responsible mutual fund portfolios.
TRUSTEES AND OFFICERS
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Director of Finance for the
Family Health Council, Inc. in Pittsburgh, Pennsylvania, 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 Acacia Capital Corporation, Calvert New WorldFund and Calvert
World Values Fund. DOB: 05/09/48. Address: 211 Overlook Drive, Pittsburgh,
Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in the law firm
of Snevily, Ely, Williams, Gurrieri & Blatz. He was formerly a partner with
Abrams, Blatz, Gran, Hendricks & Reina, P.A. DOB: 10/29/35. Address: 308 East
Broad Street, PO Box 2007, Westfield, New Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist with Kaiser
Permanente. Prior to that, he was a radiologist at Bethlehem Medical Imaging in
Allentown, Pennsylvania. DOB: 07/23/49. Address: 2040 Nuuanu Avenue #1805,
Honolulu, Hawaii, 96817.
<F1> CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and
Treasurer Emeritus of the George Washington University, and has retired from
University Support Services, Inc. of Herndon, Virginia. He is also a
Director of Acacia Mutual Life Insurance Company. DOB: 10/13/22. Address:
1658 Quail Hollow Court, McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices head and neck
reconstructive surgery in the Washington, D.C., metropolitan area. DOB:
05/23/48. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian was a principal of Gavian De Vaux
Associates, an investment banking firm. He continues to be President of
Corporate Finance of Washington, Inc. DOB: 12/08/32. Address: 3005 Franklin Road
North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., 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 Acacia Capital
Corporation and Calvert New World Fund. DOB: 05/15/48. Address: 7205 Pomander
Lane, Chevy Chase, Maryland 20815.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President of Creative
Associates International, Inc., a firm that specializes in human resources
development, information management, public affairs and private enterprise
development. DOB: 12/08/45. Address: 5301 Wisconsin Avenue, N.W. Washington,
D.C. 20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of Acacia Federal
Savings Bank. DOB: 09/24/37. Address: 4823 Prestwick Drive, Fairfax, Virginia
22030.
<F1> DAVID R. ROCHAT, Senior Vice President and Trustee. Mr. Rochat is
Executive Vice President of Calvert Asset Management Company, Inc., Director and
Secretary of Grady, Berwald and Co., Inc., and Director and President of Chelsea
Securities, Inc. DOB: 10/07/37. Address: Box 93, Chelsea, Vermont 05038.
<F1> D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a trustee/director of each
of the investment companies in the Calvert Group of Funds, except for Acacia
Capital Corporation and Calvert New World Fund. 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. He is also a
Director of Acacia Mutual Life Insurance Company. DOB: 07/20/48. Address: 1715
18th Street, N.W., Washington, D.C. 20009.
<F1> BARBARA J. KRUMSIEK, President and Trustee. Ms. Krumsiek 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. She is director
of Calvert-Sloan Advisers, L.L.C., and a trustee/director of each of the invest-
ment companies in the Calvert Group of Funds.
<F1> RENO J. MARTINI, Senior Vice President. Mr. Martini is a director and
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. DOB: 01/13/50.
<F1> 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. DOB: 07/24/52.
<F1> 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.
DOB: 08/12/47
<F1> EVELYNE S. STEWARD, Vice President. Ms. Steward is a director and
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. DOB: 11/14/52.
<F1> 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. DOB: 09/09/50.
<F1> SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. 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: 01/29/59.
<F1> Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of their affiliation with
the Fund's Advisor.
Each of the above trustees and officers is a
director/trustee or officer of each of the investment companies in the
Calvert Group of Funds with the exception of Calvert Social Investment
Fund, of which only Messrs. Baird, Guffey and Silby and Ms. Krumsiek are
among the trustees, Acacia Capital Corporation, of which only Messrs.
Blatz, Diehl and Pugh and Ms. Krumsiek are among the directors, Calvert
World Values Fund, Inc., of which only Messrs. Guffey and Silby and Ms.
Krumsiek are among the directors, and Calvert New World Fund, Inc., of
which only Ms.Krumsiek and Mr. Martini is among the directors. The
address of directors and officers, unless otherwise noted, is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
The Audit Committee of the Board is composed of Messrs. Baird,
Blatz, Feldman, Guffey and Pugh, and Ms. Kruvant. The Board's Investment
Policy Committee is composed of Messrs. Borts, Diehl, Gavian, Rochat and
Silby.
Messrs. Baird, Guffey and Silby serve on the 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.
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. 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<F1>
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal Year 1997 Aggregate Compensation from Pension or Retirement
(unaudited numbers) Portfolio for service as Benefits Accrued as part
Trustee of Fund Expenses<F2>
Name of Trustee
Richard L. Baird, Jr. $-0- $-0-
Frank H. Blatz, Jr. $-0- $8,875
Frederick T. Borts $-0- $-0-
Charles E. Diehl $-0- $8,875
Douglas E. Feldman $-0- $-0-
Peter W. Gavian $-0- $2,438
John Guffey, Jr. $-0- $-0-
M. Charito Kruvant $-0- $-0-
Arthur J. Pugh $-0- $-0-
D. Wayne Silby $-0- $-0-
Total Compensation from
Registrant and Fund
Complex paid to Trustees<F3>
Name of Director
Richard L. Baird, Jr. $8,725
Frank H. Blatz, Jr. $8,875
Frederick T. Borts $8,125
Charles E. Diehl $8,875
Douglas E. Feldman $8,125
Peter W. Gavian $8,125
John Guffey, Jr. $12,654
M. Charito Kruvant $8,125
Arthur J. Pugh $8,125
D. Wayne Silby 14,832
<FN>
<F1> For the period since inception (January 31, 1997) through March 31, 1997.
<F2> Messrs. Blatz, Diehl, Gavian, and Pugh have chosen to defer a portion
of their compensation. As of March 31, 1997, total deferred
compensation, including dividends and capital appreciation, was
$428,689, $428,442, $96,333 and $156,717 for each trustee, respectively.
<F3> As of December 31, 1996, the Fund Complex consists of nine (9) registered
investment companies.
</FN>
</TABLE>
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 Mutual"). The Advisory Contract between the Fund and
the Advisor was entered into as of January 30, 1997, 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. The Fund's Subadvisor is Awad &
Associates ("Subadvisor" or "AWAD"). Pursuant to an Investment Subadvisory
Agreement with the Advisor, the Subadvisor determines investment selections for
the Fund. 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 changed in the Investment
Subadvisory Agreement, the Fund 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 Fund. The Fund 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.
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, registration, 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, who are not ''affiliated persons" of the Advisor or the Subadvisor 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 Fund for all expenses
(excluding brokerage, taxes, interest, and all or a portion of distribution and
certain other expenses, to the extent allowed by federal law or regulation).
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 0.90% of the Fund's average daily net assets. For fiscal year 1997, the Fund
paid advisory fees of $1,796. The Advisor may voluntarily defer its fees or
assume expenses of the Fund. For fiscal year 1997, the Advisor reimbursed the
Fund $20,861 for fees and expenses. The Advisor may recapture from (charge to)
the Fund (through December 31, 1999) for such expenses incurred, provided that
such recapture would not cause the Fund's aggregate expenses to exceed the
annual expense limit. The Advisor may voluntarily agree to further defer its
fees or assume Fund expenses from January 1, 1997 through December 31, 1998
("Additional Deferral/Assumption Period"). If so, the Advisor may recapture from
(charge to) the Fund for any such expenses incurred during the Additional
Deferral/Assumption Period, provided that such recapture would not cause the
Fund's aggregate expenses to exceed the annual expense limit, and that such
recapture shall be made to the Advisor only from the two-year period from
January 1, 1999 through December 31, 2000. Each year's current advisory fees
(incurred in that year) will be paid in full before any recapture for a prior
year is applied. Recapture then will be applied beginning with the most recent
year first. 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, the daily determination of its net
asset value per share and dividends, and the maintenance of its portfolio and
general accounting records. For providing such services, CASC receives an annual
fee from the Fund of 0.10% of the Fund's average daily net assets.
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 reimbursement of distribution expenses pursuant to the
Distribution Plan (see below). For Class A Shares, CDI also receives the
portion of the sales charge in excess of the dealer reallowance.
Pursuant to Rule 12b-1 under the Investment Company Act of
1940, the Fund has adopted Distribution Plans (the "Distribution Plans")
which permits the Fund to pay certain expenses associated with the
distribution of its shares. Such expenses may not exceed, on an annual
basis, 0.25% of the Fund's Class A average daily net assets, and 1.00%
of the Fund's Class C average daily net assets. For fiscal year 1997,
Class A Distribution Plan expenses totaled $437. Of the Class A
Distribution Plan expenses paid in fiscal year 1997, $255 was used
almost entirely for broker/dealer compensation and the remainder for the
printing and mailing of prospectuses and sales materials to investors
(other than current shareholders). During the same period, CDI received
net sales charges of $1,444. For fiscal year 1997, Class C Distribution
Plan expenses totaled $246. Of the Class Distribution Plan expenses paid
in fiscal year 1997, almost entirely all of the expenses were used for
broker/dealer compensation.
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 Distribution Plans or in any agreements related to the Distribution
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 Distribution Plans, the
Trustees considered various factors including the amount of the
distribution expenses. The Trustees determined that there is a
reasonable likelihood that the Distribution Plans will benefit the Fund
and its shareholders.
The Distribution Plans may be terminated by vote of a majority
of the non-interested Trustees who have no direct or indirect financial
interest in the Distribution Plans, or by vote of a majority of the
outstanding shares of the Fund. Any change in the Distribution Plans
that would materially increase the distribution cost to the Fund
requires approval of the shareholders of the affected class; otherwise,
the Distribution Plans may be amended by the Trustees, including a
majority of the non-interested Trustees as described above. The
Distribution 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 Distribution
Plans or interested persons of any such party and who have no direct or
indirect financial interest in the Distribution Plans, and (ii) the vote
of a majority of the entire Board of Trustees.
Apart from the Distribution Plans, the Advisor and CDI, at their
own expense, may incur costs and pay expenses associated with the
distribution of shares of the Fund.
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.
FUND TRANSACTIONS
Fund 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
Subadvisor 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 Fund may pay brokerage
commissions to broker-dealers who provide the Fund with statistical,
research, or other information and services. Notwithstanding the quality
of execution and other services provided, the Fund may pay commissions
that are higher than those available elsewhere. Any such payments are
subject to the criteria of Section 28(e) of the Securities Exchange Act
of 1934. Although any statistical research or other information and
services provided by such broker-dealers may be useful to the Advisor
and the Subadvisor, the dollar value of such information and services is
generally indeterminable, and its availability or receipt does not serve
materially to reduce the Advisor's or Subadvisor's normal research
activities or expenses. During fiscal year 1997, $988 in aggregate
brokerage commissions were paid to broker-dealers.
The Advisor and Subadvisor 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.
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. For fiscal year 1997, it was 97%.
INDEPENDENT ACCOUNTANT AND CUSTODIANS
Coopers & Lybrand, L.L.P. has been selected by the Board of Trustees to
serve as independent accountant for fiscal year 1998. 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 custodian has 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 Calvert Fund was organized as a Massachusetts business
trust on March 15, 1982. The series of the Fund include Calvert Income
Fund, Calvert Strategic Growth Fund and Calvert New Vision Small Cap
Fund.
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 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 audited financial statements in the Fund's Annual Report to
Shareholders will be expressly incorporated by reference and made a part
of this Statement of Additional Information once available. Once
available, a copy of the Annual Report may be obtained free of charge by
writing or calling the Fund.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of June 30, 1997, the following shareholders owned of record
5% of the Class A shares of the Fund:
Name and Address % of Ownership
Calvert Distributors, Inc. 16.51%
4550 Montgomery Ave., Ste. 1000N
Bethesda, MD 20814
Portfolio Advisory Services, Inc.
725 S. Figueroa St., Ste. 2328
Los Angeles, CA 90017-5425
Norwin Wong 7.93%
c/o Portfolio Advisor Services, Inc.,
725 S. Figueroa St., Ste. 2328
Los Angeles, CA 90017-5425
As of June 30, 1997, the following shareholders owned of record
5% or more of the Class C shares of the Fund:
Name and Address % of Ownership
Calvert Distributors, Inc. 8.92%
4550 Montgomery, Ave., Ste. 1000N
Bethesda, MD 20814-3343
Robin Van Doren 21.49%
323 E. Matilija #110-138
Ojai, CA 93023
Frances A. Rothman 20.68%
323 E. Matilija #110-138
Ojai, CA 93023
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:
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.
GLOSSARY OF PERMITTED INVESTMENTS
The following is a description of permitted investments and other
applicable terms for the Fund:
American Depositary Receipts ("ADRs"): ADRs are securities typically
issued by a U.S. financial institution that evidence ownership interest
in a security or a pool of securities issued by a foreign issuer and
deposited with the depository. ADRs may be available for investment
through "sponsored" or "unsponsored" facilities. A sponsored facility is
established jointly by the issuer of the security underlying the receipt
and a depository, whereas an unsponsored facility may be established by
a depository without participation by the issuer of the receipt's
underlying security.
Banker's Acceptance: A bill of exchange or time draft drawn on and
accepted by a commercial bank. It is used by corporations to finance the
shipment and storage of goods and to furnish dollar exchange. Maturities
are generally six months or less.
Certificate of Deposit: A negotiable interest bearing instrument with a
specific maturity. Certificates of deposit are issued by banks and
savings and loan institutions in exchange for the deposit of funds and
normally can be traded in the secondary market prior to maturity.
Certificates of deposit generally carry penalties for early withdrawal.
Commercial Paper: The term used to designate unsecured short-term
promissory notes issued by corporations and other entities. Maturities
on these issues typically vary from a few days to nine months.
Convertible Securities: Securities such as rights, bonds, notes and
preferred stocks which are convertible into or exchangeable for common
stocks. Convertible securities have characteristics similar to both
fixed income and equity securities. Because of the conversion feature,
the market value of convertible securities tends to move together with
the market value of the underlying common stock. As a result, the
Portfolio's selection of convertible securities is based, to a great
extent, on the potential for capital appreciation that may exist in the
underlying stock. The value of convertible securities is also affected
by prevailing interest rates, the credit quality of the issuer, and any
call provisions.
Futures Contracts and Options on Futures Contracts: The Fund may enter
into contracts for the purchase or sale of securities. A purchase of a
futures contract means the acquisition of a contractual right to obtain
delivery to the Fund of securities called for by the contract at a
specified price during a specified future month. When a futures contract
is sold, the Fund incurs a contractual obligation to deliver the
securities underlying the contract at a specified price on a specified
date during a specified future month. The Fund may sell stock index
futures contracts in anticipation of, or during, a market decline to
attempt to offset the decrease in market value of its common stocks that
might otherwise result; and it may purchase such contracts in order to
offset increases in the cost of common stocks that it intends to
purchase.
The Fund may also purchase and write options to buy or sell
futures contracts. The Fund may write options on futures only on a
covered basis. Options on futures are similar to options on securities
except that options on futures give the purchaser the right, in return
for the premium paid, to assume a position in a futures contract, rather
than actually to purchase or sell the futures contract, at a specified
exercise price at any time during the period of the option. When the
Fund enters into a futures transaction it must deliver to the futures
commission merchant selected by the Fund, an amount referred to as
"initial margin." This amount is maintained by the futures commission
merchant in a segregated account at the custodian bank. Thereafter, a
"variation margin" may be paid by the Fund to, or drawn by the Fund
from, such account in accordance with controls set for such accounts,
depending upon changes in the price of the underlying securities to the
futures contract.
Options: The Fund may invest in put and call options for various stocks
and stock indices that are traded on national securities exchanges, from
time to time as the Subadvisor deems to be appropriate. Options will be
used for hedging purposes and will not be engaged in for speculative
purposes.
A put option gives the purchaser of the option the right to
sell, and the writer the obligation to buy, the underlying security at
any time during the option period. A call option gives the purchaser of
the option the right to buy, and the writer of the option the obligation
to sell, the underlying security at any time during the option period.
The premium paid to the writer is the consideration for undertaking the
obligations under the option contract. Although the Fund will engage in
option transactions only as hedging transactions and not for speculative
purposes, there are risks associated with such investment including the
following: (i) the success of a hedging strategy may depend on the
ability of the Subadvisor to predict movements in the prices of the
individual securities, fluctuations in markets and movements in interest
rates; (ii) there may be an imperfect correlation between the changes in
market value of the stocks held by the Fund and the prices of options;
(iii) there may not be liquid secondary market for options; and (iv)
while the Fund will receive a premium when it writes covered call
options, it may not participate fully in a rise in the market value of
the underlying security. When writing options (other than covered call
options), the Fund must establish and maintain a segregated account with
the Fund's Custodian containing cash or liquid, high grade debt
securities in an amount at least equal to the market value of the option.
Rabbi Trust: Nonqualified deferred compensation plan which is an
irrevocable trust established by an employer to hold assets to provide
deferred compensation for such employer's employees.
Repurchase Agreements: Agreements by which a person obtains a security
and simultaneously commits to return it to the seller at any agreed upon
price (including principal and interest) on an agreed upon date within a
number of days from the date of purchase. The Fund's Custodian or its
agents will hold the security as collateral for the repurchase
agreement. The Fund bears a risk of loss in the event the other party
defaults on its obligations and the Fund is delayed or prevented from
its right to dispose of the collateral securities.
Time Deposit: A non-negotiable receipt issued by a bank in exchange for
the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it
cannot be traded in the secondary market. Time deposits with a
withdrawal penalty are considered to be illiquid securities.
U.S. Government Agency Obligations: Certain Federal agencies such as the
Government National Mortgage Association ("GNMA") have been established
as instrumentalities of the United States Government to supervise and
finance certain types of activities. Issues of these agencies, while not
direct obligations of the United States Government, are either backed by
the full faith and credit of the United States (i.e., GNMA securities)
or supported by the issuing agencies' right to borrow from the Treasury.
The issues of other agencies are supported by the credit of the
instrumentality (i.e., Federal National Mortgage Association securities).
U.S. Government Securities: Bills, notes and bonds issued by the U.S.
Government and backed by the full faith and credit of the United States.
U.S. Treasury Obligations: Bills, notes and bonds issued by the U.S.
Treasury, and separately traded interest and principal component parts
of such obligations that are transferable through the Federal book-entry
system known as Separately Traded Registered Interest and Principal
Securities ("STRIPS").
Warrants: Instruments giving holders the right, but not the obligations,
to buy shares of a company at a given price during a specified period.
<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 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(not available for mid-load funds) __ $100,000 __
$250,000
__ $500,000 __ $1,000,000 __ $2,500,000
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 escorted 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)
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
