The Calvert Fund:
Calvert New Vision Small Cap Fund
Statement of Additional Information
July 31, 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
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
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 Directors 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 directors/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 Director
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 Portfolio Advisory
Services, Inc. ("Subadvisor" or "PASI"). 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., 8.59%
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.
<PAGE>
The Calvert Fund:
Calvert Strategic Growth Fund
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
TABLE OF CONTENTS
Investment Objective and Policies 1
Investment Restrictions 6
Dividends, Distributions and Taxes 7
Net Asset Value 8
Calculation of Total Return 9
Purchase and Redemption of Shares 10
Reduced Sales Charges (Class A) 11
Advertising 11
Trustees and Officers 11
Investment Advisor and Subadvisor 15
Method of Distribution 16
Transfer and Shareholder Servicing Agent 17
Fund Transactions 17
Independent Accountant and Custodians 17
General Information 17
Financial Statements 18
Appendix 18
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-July 31, 1997
THE CALVERT FUND
CALVERT STRATEGIC GROWTH 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 Strategic Growth Fund (the "Fund") is a nondiversified
series of The Calvert Fund, an open-end management investment company.
The Fund seeks maximum long-term growth primarily through investment in
equity securities, consistent with the Fund's Investment Principles as
developed by the Fund's investment subadvisor. Under normal market
conditions, the Fund strives to be fully invested. In a declining
market, the Fund may raise cash, establish short positions, or employ
other defensive strategies in an attempt to protect against the decline
of its investments. 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.
SPECIAL RISKS OF THE FUND'S INVESTMENT STRATEGIES
The Fund may purchase put and call options, and write (sell)
covered put and call options, on equity and debt securities, foreign
currencies and stock or debt indices. The Fund may purchase or write
both exchange-traded and OTC options. These 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, options and short sales 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, warrants and stock rights for the purpose of hedging, 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. Management
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 a straddle or spread) 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,
security index or a foreign currency, gives the holder (buyer) of the
option the right (but not the obligation) to purchase the underlying
security, security index or foreign currency 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 or foreign currency 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
or foreign currency, 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, security index
or foreign currency. 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 or foreign currency at the exercise price. A put
option on a securities index is similar to a put option on an individual
security or foreign currency, 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 foreign currencies, 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. Options on foreign currencies will be
covered by securities denominated in that currency. 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 or foreign
currencies 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 or foreign currency 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 or foreign
currency. 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 invest in financial futures contracts including
interest rate futures contracts, foreign currency futures contracts, and
securities index futures contracts which are traded on a recognized
exchange or board of trade and may purchase exchange or board-traded put
and call options on financial futures contracts. An interest rate
futures contract obligates the seller of the contract to deliver, and
the purchaser to take delivery of, the interest rate securities called
for in the contract at a specified future time and at a specified price.
A foreign currency futures contract obligates the seller of the contract
to deliver, and the purchaser to take delivery of, the foreign currency
called for in the contract at a specified future time and at a specified
price. (See "Foreign Currency Transactions.") A securities index assigns
relative values to the securities included in the index, and the index
fluctuates with changes in the market values of the securities so
included. A securities index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference
between the index value at the close of the last trading day of the
contract and the price at which the futures contract is originally
struck. An option on a financial futures contract gives the purchaser
the right to assume a position in the contract (a long position if the
option is a call and a short position if the option is a put) at a
specified exercise price at any time during the period of the option.
The Fund 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 of variation
margin 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 or foreign currency exchange rates, 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 high-grade debt obligations 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 - OR JUNK BOND) DEBT SECURITIES
The Fund may invest up to 35% of its 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. 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, which may make them less marketable.
The Fund will not purchase any securities rated lower than C.
The quality limitation set forth in the investment policy is determined
immediately after the Fund's acquisition of a security. Accordingly, any
later change in ratings will not be considered when determining whether
an investment complies with the Fund's investment policy.
When purchasing high-yielding securities, rated or unrated, the
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. Through
portfolio diversification and credit analysis, investment risk can be
reduced, although there can be no assurance that losses will not occur.
FOREIGN SECURITIES
The Fund does not presently invest in foreign securities, nor
does the Subadvisor intend to become involved in foreign markets in the
near future. However, the Fund may make such investments in the future.
In the event the Fund undertakes investment in foreign securities in the
future, additional costs may be incurred, since foreign brokerage
commissions and the custodial costs associated with maintaining foreign
portfolio securities are generally higher than in the United States. Fee
expense may also be incurred on currency exchanges when the Fund changes
investments from one country to another or converts foreign securities
holdings into U.S. dollars. Foreign companies and foreign investment
practices are not subject to uniform accounting, auditing and financial
reporting standards and practices or regulatory requirements comparable
to those applicable to United States companies. There may be less public
information available about foreign companies.
United States Government policies have at times, in the past,
through imposition of interest equalization taxes and other
restrictions, discouraged United States investors from making certain
investments abroad. While such taxes or restrictions are not presently
in effect, they may be reinstituted from time to time as a means of
fostering a favorable United States balance of payments. In addition,
foreign countries may impose withholding and taxes on dividends and
interest.
FOREIGN CURRENCY TRANSACTIONS
Forward Foreign Currency Exchange Contracts. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of
days ("Term") from the date of the contract agreed upon by the parties,
at a price set at the time of the contract. These contracts are traded
directly between currency traders (usually large commercial banks) and
their customers.
The Fund will not enter into such forward contracts or maintain
a net exposure in such contracts where it would be obligated to deliver
an amount of foreign currency in excess of the value of its portfolio
securities and other assets denominated in that currency. The Subadvisor
believes that it is important to have the flexibility to enter into such
forward contracts when it determines that to do so is in the Fund's best
interests.
Foreign Currency Options. A foreign currency option provides
the option buyer with the right to buy or sell a stated amount of
foreign currency at the exercise price at a specified date or during the
option period. A call option gives its owner the right, but not the
obligation, to buy the currency, while a put option gives its owner the
right, but not the obligation, to sell the currency. The option seller
(writer) is obligated to fulfill the terms of the option sold if it is
exercised. However, either seller or buyer may close its position during
the option period for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates.
Conversely, a put rises in value if the underlying currency depreciates.
While purchasing a foreign currency option can protect the Fund against
an adverse movement in the value of a foreign currency, it does not
limit the gain which might result from a favorable movement in the value
of such currency. For example, if the Fund was holding securities
denominated in an appreciating foreign currency and had purchased a
foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. Similarly, if the Fund
had entered into a contract to purchase a security denominated in a
foreign currency and had purchased a foreign currency call to hedge
against a rise in the value of the currency but instead the currency had
depreciated in value between the date of purchase and the settlement
date, it would not have to exercise its call but could acquire in the
spot market the amount of foreign currency needed for settlement.
Foreign Currency Futures Transactions. The Fund may use foreign
currency futures contracts and options on such futures contracts.
Through the purchase or sale of such contracts, it may be able to
achieve many of the same objectives attainable through the use of
foreign currency forward contracts, but more effectively and possibly at
a lower cost.
Unlike forward foreign currency exchange contracts, foreign
currency futures contracts and options on foreign currency futures
contracts are standardized as to amount and delivery period and are
traded on boards of trade and commodities exchanges. It is anticipated
that such contracts may provide greater liquidity and lower cost than
forward foreign currency exchange contracts.
INVESTMENTS IN PRECIOUS METALS
The price of gold and other precious metal mining securities
can face substantial short-term volatility caused by international
monetary and political developments such as currency devaluations or
revaluations, economic and social conditions within a country, or trade
restrictions between countries. Since much of the world's gold reserves
are located in just a few countries, such as South Africa, the United
States, the Commonwealth of Independent States (formerly the Soviet
Union), Australia, Canada and China, the social and economic conditions
in those countries can affect the price of gold and gold-related
companies located elsewhere. The price of gold bullion or coins is more
affected by broad economic and political conditions. Markets in
commodities, such as gold, can be volatile and there may be sharp
fluctuations in prices. Such investments, however, may be beneficial to
the investment performance of the Fund as a hedge against inflation as
well as an investment with possible growth potential.
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 50% of its 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. (The remaining
50% of its total assets may be invested without
restriction except to the extent other investment
restrictions may be applicable).
2. Concentrate 25% or more of the value of its
assets in any one industry; provided, however, that
there is no limitation with respect to investments in
obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities, and
repurchase agreements secured thereby.
3. Make loans of more than one-third of the
assets of the Fund, 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. 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.
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. Invest, in the aggregate, more than 5% of its
net assets in the securities of issuers restricted from
selling to the public without registration under the
Securities Act of 1933, excluding restricted securities
eligible for resale pursuant to Rule 144A under that
statute.
10. 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.
11. Invest in warrants if more than 5% of the
value of the Fund's net assets would be invested in
such securities.
12. 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.
13. 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.
14. Invest for the purpose of exercising control
or management of another issuer.
15. Invest in the shares of other investment
companies, except as permitted by the 1940 Act or
pursuant to Calvert's nonqualified deferred
compensation plan adopted by the Board of Trustees.
16. Purchase more than 10% of the outstanding
voting securities of any issuer.
For purposes of the Fund's concentration policy contained in
restriction (2), above, the Fund classifies the respective industries
based upon William O Neil's Investor's Business Daily industry
classification.
Any investment restriction which involves a maximum percentage
of securities or assets shall not be considered to be violated unless an
excess over the applicable percentage occurs immediately after an
acquisition of securities or utilization of assets and results therefrom.
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.
Generally, dividends (including short-term capital gains) and
distributions are taxable to the shareholder in the year they are paid.
However, any dividends and distributions paid in January but declared
during the prior three months are taxable in the year declared.
Investors should note that the Internal Revenue Code ("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 long-term capital
gain 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 capital gain 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
Internal Revenue Code. Shareholders claiming exemption from backup
withholding and broker reporting should call or write the Fund for
further information.
Nondiversified Status
The Fund is a "nondiversified" investment company under the
Investment Act of 1940 (the "Act"), which means the Fund is not limited
by the Act in the proportion of its assets that may be invested in the
securities of a single issuer. A nondiversified fund may invest in a
smaller number of issuers than a diversified fund. Thus, an investment
in the Fund may, under certain circumstances, present greater risk of
loss to an investor than an investment in a diversified fund. However,
the Fund intends to conduct its operations so as to qualify to be taxed
as a "regulated investment company" for purposes of the Code, which will
relieve the Fund of any liability for federal income tax to the extent
its earnings are distributed to shareholders. To qualify for this
Subchapter M tax treatment, the Fund will limit its investments to
satisfy the Code diversification requirements so that, at the close of
each quarter of the taxable year, (i) not more than 25% of the fund's
assets will be invested in the securities of a single issuer
or of two or more issuers which the Fund controls and which are
determined to be engaged in the same or similar trades or businesses or
related trades or businesses, and (ii) with respect to 50% of its
assets, not more than 5% of its assets will be invested in the
securities of a single issuer and the Fund will not own more than 10% of
the outstanding voting securities issuer. Investments in United States
Government securities are not subject to these limitations; while
securities issued or guaranteed by foreign governments are subject to
the above tests in the same manner as the securities of non-governmental
issuers. The Fund intends to comply with the SEC staff position that
securities issued or guaranteed as to principal and interest by any
single foreign government are considered to be securities of issuers in
the same industry.
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.
Securities primarily traded on foreign securities exchanges are
generally valued at the preceding closing values on their respective
exchanges where primarily traded. Equity options are valued at the last
sale price and if not available then the previous days 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. Because
of the need to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of the Fund's net asset
value does not take place contemporaneously with the determination of
the prices of U.S. portfolio securities. For purposes of determining the
net asset value, all assets and liabilities initially expressed in
foreign currency values will be converted into United States dollar
values at the mean between the bid and offered quotations of such
currencies against United States dollars at last quoted by any
recognized dealer. If an event were to occur after the value of an
investment was so established but before the net asset value per share
was determined which was likely to materially change the net asset
value, then the instrument would be valued using fair value
consideration by the Trustees or their delegates.
Net Asset Value and Offering Price Per Share
Class A net asset value per share
($94,624,910/6,798,190 shares $13.92
Maximum sales charge
(4.75% of Class A offering price) 0.69
Offering price per Class A share $14.61
Class C net asset value and offering price per share
($16,523,655/1,207,832 shares) $13.68
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, 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 actual return, 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.
Returns for the Fund's Class A and C shares for periods ended March 31,
1996 are as follows:
Class A Shares Class A Shares Class C
Shares
Return Without Average Annual Return
Without
Maximum Return Maximum
Sales Load With Maximum Sales Load
Sales Load
One Year -21.17% -24.92% -21.75%
Since Inception
(May 5, 1994) 1.02% -.66% .23%
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 investors whose purchase checks are returned
for insufficient funds.
Telephone redemption requests are processed upon the date of
receipt, if received prior to 4:00 p.m. Redemption proceeds are normally
transmitted or mailed the next business day, although payment by check
of redemption proceeds may take up to five business days; however,
telephone redemption requests which would require the redemption of
shares purchased by check or electronic funds transfer within the
previous 10 business days may not be honored. The Fund reserves the
right to modify the telephone redemption privilege.
Amounts redeemed by telephone may be mailed by check to the
investor to the address of record without charge. Amounts of more than
$50 and less than $300,000 may be transferred electronically at no
charge to the investor. Amounts of $1,000 or more will be transmitted by
wire without charge by the Fund to the investor's account at a domestic
bank or savings association that is a member of the Federal Reserve
System or to a correspondent bank. A charge of $5 is imposed on wire
transfers of less than $1,000. If the institution is not a Federal
Reserve System member, failure of immediate notification to that
institution by the correspondent bank could result in a delay in
crediting the funds to the investor's account at the institution.
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 Fund's redemption check normally will be mailed to the
investor on the next business day following the date of receipt by the
Fund of a written redemption request. If the investor so instructs in
such written redemption request, the check will be mailed or the
redemption proceeds wired or transferred electronically to a
preauthorized account at the investor's bank or savings association.
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 mailed, wired or transferred electronically the
next business day but in no event later than seven days after a proper
redemption request has been received, unless redemptions have been
suspended or postponed as described above.
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.
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 portfolio holdings or give examples
of securities that may have been considered for inclusion in the
Portfolio, whether held or not.
The Fund or its affiliates may supply comparative performance
data and rankings from independent sources such as Donoghue's Money Fund
Report, Bank Rate Monitor, Money, Forbes, Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Wiesenberger Investment
Companies Service, 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.
TRUSTEES AND OFFICERS
Trustee, RICHARD L. BAIRD, JR., 211 Overlook Drive, Pittsburgh,
Pennsylvania 15216, 05/09/48. 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 World Fund, Inc. and Calvert World Values Fund, Inc.
Trustee, FRANK H. BLATZ, JR., Esq., 308 East Broad Street, P.O. Box
2007, Westfield, New Jersey 07091, 10/29/35. 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
Trustee, FREDERICK T. BORTS, M.D., 2040 Nuuanu Avenue #1805, Honolulu,
Hawaii, 96817, 07/23/49. Dr. Borts is a radiologist with Kaiser
Permanente. Prior to that, he was a radiologist at Bethlehem Medical
Imaging in Allentown, Pennsylvania.
*Trustee, CHARLES E. DIEHL, 1658 Quail Hollow Court, McLean, Virginia
22101, 10/13/22. 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.
Trustee, DOUGLAS E. FELDMAN, M.D., 7536 Pepperell Drive, Bethesda,
Maryland 20817, 05/23/48. Dr. Feldman practices head and neck
reconstructive surgery in the Washington, D.C. metropolitan area.
Trustee, PETER W. GAVIAN, CFA, 3005 Franklin Road, North Arlington,
Virginia 22201, 12/08/32. 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.
Trustee, JOHN G. GUFFEY, JR., 7205 Pomander Lane, Chevy Chase, Maryland
20815, 05/15/48. 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, Inc.
*President and Trustee, BARBARA J. KRUMSIEK, 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 investment companies in the Calvert
Group of Funds.
Trustee, M. CHARITO KRUVANT, 5301 Wisconsin Avenue, N.W. Washington,
D.C. 20015, 12/08/45. 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.
Trustee, ARTHUR J. PUGH, 4823 Prestwick Drive, Fairfax, Virginia 22030,
09/24/37. Mr. Pugh serves as a Director of Acacia Federal Savings Bank.
* Senior Vice President and Trustee, DAVID R. ROCHAT, Box 93, Chelsea,
Vermont 05038, 10/07/37. 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.
*Trustee, D. WAYNE SILBY, Esq., 1715 18th Street, N.W. Washington, D.C.
20009, 07/20/48. 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, Inc. 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.
Senior Vice President, RENO J. MARTINI, 01/13/50. 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, Inc.
Treasurer, RONALD M. WOLFSHEIMER, CPA, 07/24/52. 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.
Vice President and Secretary, WILLIAM M. TARTIKOFF, Esq., 08/12/47. 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.
Vice President, EVELYNE S. STEWARD, 11/14/52. 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.
Vice President, DANIEL K. HAYES, 09/09/50. 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.
Assistant Secretary, SUSAN WALKER BENDER, Esq., 01/29/59. Ms. Bender is
Associate General Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer
of each of the other investment companies in the Calvert Group of Funds.
Assistant Secretary, KATHERINE STONER, Esq., 10/21/56. Ms. Stoner is
Associate General Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer
of each of the other investment companies in the Calvert Group of Funds.
Assistant Secretary and Compliance Officer, LISA CROSSLEY, Esq.,
12/31/61. Ms. Crossley is Associate General Counsel of Calvert Group and
an officer of each of its subsidiaries and Calvert-Sloan Advisers,
L.L.C. She is also an officer of each of the other investment companies
in the Calvert Group of Funds.
Assistant Secretary, IVY WAFFORD DUKE, Esq., 09/07/68. Ms. Duke is
Assistant Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer
of each of the other investment companies in the Calvert Group of Funds.
*"Interested persons" of the Fund under the Investment Company Act of
1940.
Each of the above directors/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, Silby and Ms. Krumsiek are
among the trustees, Acacia Capital Corporation, of which only Messrs.
Blatz, Diehl, Pugh and Ms. Krumsiek are among the directors, Calvert
World Values Fund, Inc., of which only Messrs. Guffey, Silby and Ms.
Krumsiek are among the directors, and Calvert New World Fund, Inc., of
which only Mr. Martini and Ms. Krumsiek is among the directors. The
address of directors and officers, unless otherwise noted, is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Trustees and
officers of the Fund as a group own less than 1% of the Fund's
outstanding shares.
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,
Silby and Ms. Krumsiek.
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.
For fiscal year 1996 and 1997, trustees of the Fund not
affiliated with the Fund's Advisor were paid $13,288 and $18,144.
Trustees of the Fund not affiliated with the Advisor presently receive
an annual fee of $20,500 for service as a member of the Board of
Trustees of the Calvert Group of Funds, and a fee of $750 to $1,500 for
each regular Board or Committee meeting attended; such fees are
allocated among the respective Funds on the basis of net assets.
Trustees of the Fund not affiliated with the Fund's Advisor may
elect to defer receipt of all or a percentage of their fees and invest
them in any fund in the Calvert Family of Funds through the Trustees
Deferred Compensation Plan (shown as Pension or Retirement Benefits
Accrued as part of Fund Expenses, below). Deferral of the fees is
designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees
Trustee Compensation Table
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name of Director Aggregate Pension or Total
Compensation Retirement Compensation
from Registrant Benefits from
for service Accrued as Registrant and
as Director part of Fund Complex
Registrant paid to
Expenses<F1> Directors<F2>
Richard L. Baird, Jr. $400 $0 $8,725
Frank H. Blatz, Jr. $372 $8,875 $8,875
Frederick T. Borts $372 $0 $8,125
Charles E. Diehl $372 $8,875 $8,875
Douglas E. Feldman $372 $0 $8,125
Peter W. Gavian $372 $2,438 $8,125
John G. Guffey, Jr. $372 $0 $12,654
M. Charito Kruvant $372 $0 $8,125
Arthur J. Pugh $372 $0 $8,125
D. Wayne Silby $372 $0 $14,832
Barbara Krumsiek $0 $0 $0
<FN>
<F1> 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 $428,690, $428,442, $96,333,
and $$156,717, for each trustee, respectively.
<F2> As of March 31, 1997, 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
Advisor serves as investment advisor to seven other registered
investment companies in the Calvert Group of Funds: First Variable Rate
Fund for Government Income; Calvert Tax-Free Reserves; Calvert Cash
Reserves; Calvert Social Investment Fund; Calvert Municipal Fund, Inc.;
Calvert World Values Fund, Inc.; and Acacia Capital Corporation, a
registered investment company whose shares are sold to insurance
companies to fund the benefits under certain variable annuity and
variable life insurance policies; and as sub-advisor to another
registered investment company in the Calvert Group of Funds: Calvert New
World Fund, Inc.
The Advisory Contract between the Fund and the Advisor was
entered into as of May 1, 1994, 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 Portfolio Advisory
Services, Inc. ("Subadvisor or PASI"). Pursuant to an Investment
Subadvisory Agreement with the Advisor, the Subadvisor determines
investment selections for the Fund. PASI has been recognized by the
Nelson's Directory of Investment Managers for its private managed
accounts.
The Advisor provides the Fund with investment supervision and
management, administrative services, office space, furnishes executive
and other personnel to the Fund, and may pay Fund advertising and
promotional expenses. The Advisor reserves the right to compensate
broker-dealers in consideration of their promotional or administrative
services. The Fund pays all other administrative and operating expenses,
including: custodial, registrar, dividend disbursing and transfer agency
fees; federal and state securities registration fees; salaries, fees and
expenses of Trustees, executive officers and employees of the Fund, 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 state or federal law or regulation)
exceeding the most restrictive expense limitation in those states where
the Fund's shares are qualified for sale.
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 a base annual fee of 1.50% of the Fund's average daily
net assets, plus or minus a performance adjustment as described in the
prospectus.
For fiscal years 1997, 1996, and 1995, the Fund paid advisory
fees of $2,368,558, $2,282,948 and $791,257 and was reimbursed $133,668,
$178,157 and $157,095 from the Advisor, respectively. The Advisor may
voluntarily defer its fees or assume expenses of the Fund. For fees
waived or expenses assumed between January 1, 1995 through December 31,
1996, the Advisor may recapture from (charge to) the Fund for any such
expenses provided that such recapture shall be made to the Advisor only
from the two-year period from January 1, 1997 through December 31, 1998,
and the original expense ratio at the time the fees were waived or
expenses assumed is not exceeded. 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. No fees were recaptured for fiscal year 1997 and
1996.
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
0.20% 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 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, 0.35% of the Fund's Class A average daily net assets. For fiscal
years 1997, 1996 and 1995, Class A Distribution Plan expenses totaled
$330,161, $317,541 and $112,467, respectively. Of the Class A
Distribution Plan expenses paid in fiscal year 1997, 1996 and 1995,
$285,996, $270,850 and $66,370 was used for broker/dealer compensation
and the remainder was used for the printing and mailing of prospectuses
and sales materials to investors (other than current shareholders). CDI
received net sales charges of $194,570, $247,094 and $419,511,
respectively. Expenses under the Fund's Class C Plan may not exceed, on
an annual basis, 1.00% of the Fund's Class C average daily net assets.
For fiscal years 1997, 1996, and 1995, Class C Distribution Plan
expenses totaled $255,511, $247,589, $73,949, respectively. Of the Class
C Distribution Plan expenses paid in fiscal year 1997, $243,491 was 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 Plans or in any agreements related to the Plans. The selection and
nomination of the Trustees who are not interested persons of the Fund is
committed to the discretion of such disinterested Trustees. In
establishing the Plans, the Trustees considered various factors
including the amount of the distribution expenses. The Trustees
determined that there is a reasonable likelihood that the Plans will
benefit the Fund and its shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Trustees who have no direct or indirect financial
interest in the Plans, or by vote of a majority of the outstanding
shares of the Fund. Any change in the Plans that would materially
increase the distribution cost to the Fund requires approval of the
shareholders of the affected class; otherwise, the Plans may be amended
by the Trustees, including a majority of the non-interested Trustees as
described above. The Plans will continue in effect for successive
one-year terms provided that such continuance is specifically approved
by (i) the vote of a majority of the Trustees who are not parties to the
Plans or interested persons of any such party and who have no direct or
indirect financial interest in the Plans, and (ii) the vote of a
majority of the entire Board of Trustees.
Apart from the Plans, the Advisor and CDI, at their own
expense, may incur costs and pay expenses associated with the
distribution of shares of the Fund.
Certain broker-dealers, and/or other persons may receive
compensation from the investment advisor, underwriter, or their
affiliates for the sale and distribution of the securities or for
services to the Fund. Such compensation may include additional
compensation based on assets held through that firm beyond the regularly
scheduled rates, and finder's fee payments to firms whose
representatives are responsible for soliciting a new account where the
accountholder does not choose to purchase through that firm.
TRANSFER AND SHAREHOLDER SERVICING AGENT
Calvert Shareholder Services, Inc., a subsidiary of Calvert
Group, Ltd., and Acacia Mutual, has been retained by the Fund to act as
transfer agent, dividend disbursing agent and shareholder servicing
agent. These responsibilities include: responding to shareholder
inquiries and instructions concerning their accounts; crediting and
debiting shareholder accounts for purchases and redemptions of Fund
shares and confirming such transactions; daily updating of shareholder
accounts to reflect declaration and payment of dividends; and preparing
and distributing semi-annual statements to shareholders regarding their
accounts. For these services, Calvert Shareholder Services, Inc.,
receives a fee based on the number of shareholder accounts and the
number of shareholder transactions.
For fiscal years 1997, 1996 and 1995, the Fund paid Calvert
Shareholder Services, Inc. fees of $369,737, $363,268 and $165,615,
respectively.
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. 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 to
materially reduce the Advisor's or Subadvisor's normal research
activities or expenses.
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.
For fiscal years 1997, 1996 and 1995, the portfolio turnover
rate of the Fund was 151%, 402% and 480%, respectively. The decrease is
attributable to the Subadvisor's view of a more stable market
environment which allowed for longer holding periods.
INDEPENDENT ACCOUNTANT AND CUSTODIANS
Coopers and 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 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 1997 Annual
Report to Shareholders is expressly incorporated by reference and made a
part of this Statement of Additional Information. A copy of the Annual
Report may be obtained free of charge by writing or calling the Fund.
APPENDIX
CORPORATE BOND AND COMMERCIAL PAPER RATINGS
Corporate Bonds:
Description of Moody's Investors Service Inc. s/Standard &
Poor's municipal 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 the
A category.
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. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
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.
<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.
<PAGE>
22
CALVERT WORLD VALUES FUND, INC.
CAPITAL ACCUMULATION FUND
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
TABLE OF CONTENTS
Investment Objective and Policies 1
Investment Restrictions 8
Purchase and Redemption of Shares 10
Reduced Sales Charges (Class A) 11
Net Asset Value 11
Calculation of Total Return 11
Advertising 12
Dividends and Taxes 13
Directors and Officers 15
Investment Advisor and Subadvisors 17
Transfer and Shareholder Servicing Agent 19
Method of Distribution 20
Portfolio Transactions 21
Independent Accountants and Custodians 21
General Information 22
Financial Statements 22
Appendix 22
STATEMENT OF ADDITIONAL INFORMATION-July 31, 1997
CALVERT CAPITAL ACCUMULATION 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 AND POLICIES
The Fund seeks to provide long-term capital appreciation by investing
primarily in the equity securities of small- to mid-sized companies that are
undervalued but demonstrate a potential for growth. Currently, and for the
foreseeable future, the Advisor manages the Fund as a mid-cap fund, with a
slight bias toward growth style. The Fund will rely on its proprietary
research to identify stocks that may have been overlooked by analysts,
investors, and the media, and which generally are 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, certain options and
futures transactions, bonds, notes and other debt 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.
Defensive Strategies
The Fund may employ certain defensive strategies (generally options
and futures contracts) in an attempt to protect against the decline of its
investments. 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
particular months in the future at a specified price. Buying or selling
futures contracts -- contracts that establish a price level at a given time
for items to be delivered later -- amounts to insurance against adverse price
changes, or "hedging."
The Fund may purchase put and call options, and write (sell) covered
put and call options, on equity and debt securities, foreign currencies and
stock or debt indices. The Fund may purchase or write both exchange-traded and
OTC options. These strategies may also be used with respect to futures.
Special Risks of Defensive Strategies
Successful use of defensive strategies 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 defensive 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 used for defensive purposes may result in a loss to the Fund.
The Fund may be required to cover its assets in a segregated account.
If an investment is not able to be liquidated at the time the Subadvisor
believes it is best for the Fund to do so, 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.
Instruments used as part of a Defensive Strategy
The Fund may write covered call options and purchase call and put
options on securities and securities indices, and may write secured put
options and enter into option transactions on foreign currency. It may also
engage in transactions in financial futures contracts and related options for
hedging purposes, and invest in repurchase agreements. A call option on a
security, security index or a foreign currency gives the purchaser of the
option, in return for the premium paid to the writer (seller), the right to
buy the underlying security, index or foreign currency at the exercise price
at any time during the option period. Upon exercise by the purchaser, the
writer of a call option on an individual security or foreign currency has the
obligation to sell the underlying security or currency at the exercise price.
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 it
purchases an option of the same series as the option previously written.
A put option on a security, security index, or foreign currency gives
the purchaser of the option, in return for the premium paid to the writer
(seller), the right to sell the underlying security, index, or foreign
currency at the exercise price at any time during the option period. Upon
exercise by the purchaser, the writer of a put option has the obligation to
purchase the underlying security or foreign currency 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. The Fund may write exchange-traded call options on its securities.
Call options may be written on portfolio securities, securities indices, or
foreign currencies. With respect to securities and foreign currencies, the
Fund may write 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 against anticipated changes in the
market value of portfolio securities which are not otherwise hedged with
options or financial futures contracts and will be "covered" by identifying
the specific portfolio securities being hedged.
Options on foreign currencies will be covered by securities
denominated in that currency. Options on securities indices will be covered by
securities that substantially replicate the movement of the index.
The Fund may not write options on more than 50% of its total assets.
Management presently intends to cease writing options if and as long as 25% of
such total assets are subject to outstanding options contracts or if required
under regulations of state securities administrators. The Fund may purchase a
put or call option on securities (including a straddle or spread) only if the
value of that option premium, when aggregated with the premiums on all other
options on securities held by the Fund, does not exceed 5% of the Fund's total
assets.
The Fund may write 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 or foreign currencies 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. It retains the risk of loss should the price of the
underlying security or foreign currency decline. Writing call options also
involves risks relating to the Fund's ability to close out options it has
written. During the option period, the writer of a put option has assumed the
risk that the price of the underlying security or foreign currency will
decline below the exercise price. However, the writer of the put option has
retained the opportunity for an appreciation above the exercise price should
the market price of the underlying security or foreign currency increase.
Writing put options also involves risks relating to the Fund's ability to
close out options it has written.
The Fund may sell a call option or a 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 or foreign currency. 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. Purchasing a call or put option
involves the risk that the Fund may lose the premium it paid plus transaction
costs.
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
in warrants and stock rights not listed on the New York Stock Exchange or the
American Stock Exchange.
The Fund may enter into financial futures contracts and related
options as a hedge against anticipated changes in the market value of
portfolio securities or securities which it or the Fund intends to purchase or
in the exchange rate of foreign currencies. Hedging is the initiation of an
offsetting position in the futures market which is intended to minimize the
risk associated with a position's underlying securities in the cash market.
Investment techniques related to financial futures and options are summarized
below.
Financial futures contracts in which the Fund may invest include
interest rate futures contracts, foreign currency futures contracts and
securities index futures contracts. An interest rate futures contract
obligates the seller of the contract to deliver, and the purchaser to take
delivery of, the interest rate securities called for in the contract at a
specified future time and at a specified price. A foreign currency futures
contract obligates the seller of the contract to deliver, and the purchaser to
take delivery of, the foreign currency called for in the contract at a
specified future time and at a specified price. (See "Foreign Currency
Transactions.") A securities index assigns relative values to the securities
included in the index, and the index fluctuates with changes in the market
values of the securities so included. A securities index futures contract is a
bilateral agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of the last trading day of the
contract and the price at which the futures contract is originally struck. An
option on a financial futures contract gives the purchaser the right to assume
a position in the contract (a long position if the option is a call and a
short position if the option is a put) at a specified exercise price at any
time during the period of the option.
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 or foreign currency
exchange rates, 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 may purchase and sell financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase exchange or
board-traded put and call options on financial futures contracts. It will
engage in transactions in financial futures contracts and related options only
for hedging purposes and not for speculation. In addition, 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 high-grade debt obligations 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 requirements of the Internal Revenue
Code of 1986 for qualification as a regulated investment company.
Noninvestment-grade (High Yield/High Risk - or Junk Bond) Debt Securities
The Fund may invest in lower quality debt securities (generally those
rated BB or lower by S&P or Ba or lower by Moody s), which provides that no
more than 35% of its assets is in securities rated below BBB, or in unrated
securities determined by the Advisor to be comparable to securities rated
below BBB. These securities involve greater risk of default or price declines
due to changes in the issuer's creditworthiness than investment-grade debt
securities. Because the market for lower-rated securities may be thinner and
less active than for higher-rated securities, there may be market price
volatility for these securities and limited liquidity in the resale market.
Market prices for these securities may decline significantly in periods of
general economic difficulty or rising interest rates. Unrated debt securities
may fall into the lower quality category. Unrated securities usually are not
attractive to as many buyers as are rated securities, which may make them less
marketable.
The quality limitation set forth in the investment policy is
determined immediately after the Fund's acquisition of a security.
Accordingly, any later change in ratings will not be considered when
determining whether an investment complies with the Fund's investment policy.
If an obligation held by the Fund is later downgraded, the Fund's Advisor,
under the supervision of the Fund's Board of Directors, will consider whether
it is in the best interest of the Fund's shareholders to hold or to dispose of
the obligation. Among the criteria that may be considered by the Advisor and
the Board are the probability that the obligations will be able to make
scheduled interest and principal payments in the future, the extent to which
any devaluation of the obligation has already been reflected in the Fund's net
asset value, and the total percentage, if any, of obligations currently rated
below investment grade held by the Fund.
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. Through portfolio diversification
and credit analysis, investment risk can be reduced, although there can be no
assurance that losses will not occur.
Foreign Securities
The Fund may purchase foreign securities. Foreign brokerage
commissions and the custodial costs associated with maintaining foreign
portfolio securities are generally higher than in the United States. Fee
expense may also be incurred on currency exchanges when the Fund changes
investments from one country to another or converts foreign securities
holdings into U.S. dollars. Foreign companies and foreign investment practices
are not subject to uniform accounting, auditing and financial reporting
standards and practices or regulatory requirements comparable to those
applicable to United States companies. There may be less public information
available about foreign companies.
United States Government policies have at times, in the past, through
imposition of interest equalization taxes and other restrictions, discouraged
United States investors from making certain investments abroad and may be
reinstituted from time to time as a means of fostering a favorable United
States balance of payments. In addition, foreign countries may impose
withholding and taxes on dividends and interest.
Foreign Currency Transactions
Forward Foreign Currency Exchange Contracts. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days
("Term") from the date of the contract agreed upon by the parties, at a price
set at the time of the contract. These contracts are traded directly between
currency traders (usually large commercial banks) and their customers.
The Fund will not enter into such forward contracts or maintain a net
exposure in such contracts where it would be obligated to deliver an amount of
foreign currency in excess of the value of its portfolio securities and other
assets denominated in that currency. The Subadvisor believes that it is
important to have the flexibility to enter into such forward contracts when it
determines that to do so is in the Fund's best interests.
Foreign Currency Options. A foreign currency option provides the
option buyer with the right to buy or sell a stated amount of foreign currency
at the exercise price at a specified date or during the option period. A call
option gives its owner the right, but not the obligation, to buy the currency,
while a put option gives its owner the right, but not the obligation, to sell
the currency. The option seller (writer) is obligated to fulfill the terms of
the option sold if it is exercised. However, either seller or buyer may close
its position during the option period for such options any time prior to
expiration.
A call rises in value if the underlying currency appreciates.
Conversely, a put rises in value if the underlying currency depreciates. While
purchasing a foreign currency option can protect the Fund against an adverse
movement in the value of a foreign currency, it does not limit the gain which
might result from a favorable movement in the value of such currency. For
example, if the Fund was holding securities denominated in an appreciating
foreign currency and had purchased a foreign currency put to hedge against a
decline in the value of the currency, it would not have to exercise its put.
Similarly, if the Fund had entered into a contract to purchase a security
denominated in a foreign currency and had purchased a foreign currency call to
hedge against a rise in the value of the currency but instead the currency had
depreciated in value between the date of purchase and the settlement date, it
would not have to exercise its call but could acquire in the spot market the
amount of foreign currency needed for settlement.
Foreign Currency Futures Transactions. The Fund may use foreign
currency futures contracts and options on such futures contracts. Through the
purchase or sale of such contracts, it may be able to achieve many of the same
objectives attainable through the use of foreign currency forward contracts,
but more effectively and possibly at a lower cost.
Unlike forward foreign currency exchange contracts, foreign currency
futures contracts and options on foreign currency futures contracts are
standardized as to amount and delivery period and are traded on boards of
trade and commodities exchanges. It is anticipated that such contracts may
provide greater liquidity and lower cost than forward foreign currency
exchange contracts.
Lending Portfolio Securities
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, provided the value of the securities loaned from the Fund will not
exceed one-third of the Fund's assets. 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 such 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 realize 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.
Nondiversified Status
The Fund is a "nondiversified" investment company under the
Investment Act of 1940 (the "Act"), which means the Fund is not limited by the
Act in the proportion of its assets that may be invested in the securities of
a single issuer. A nondiversified fund may invest in a smaller number of
issuers than a diversified fund. Thus, an investment in the Fund may, under
certain circumstances, present greater risk of loss to an investor than an
investment in a diversified fund. However, the Fund intends to conduct its
operations so as to qualify to be taxed as a "regulated investment company"
for purposes of the Code, which will relieve the Fund of any liability for
federal income tax to the extent its earnings are distributed to shareholders.
To qualify for this Subchapter M tax treatment, the Fund will limit its
investments to satisfy the Code diversification requirements so that, at the
close of each quarter of the taxable year, (i) not more than 25% of the fund's
assets will be invested in the securities of a single issuer or of two or more
issuers which the Fund controls and which are determined to be engaged in the
same or similar trades or businesses or related trades or businesses, and (ii)
with respect to 50% of its assets, not more than 5% of its assets will be
invested in the securities of a single issuer and the Fund will not own more
than 10% of the outstanding voting securities of a single issuer. Investments
in United States Government securities are not subject to these limitations;
while securities issued or guaranteed by foreign governments are subject to
the above tests in the same manner as the securities of non-governmental
issuers. The Fund intends to comply with the SEC staff position that
securities issued or guaranteed as to principal and interest by any single
foreign government are considered to be securities of issuers in the same
industry.
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 50% of its 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. (The remaining 50% of its total assets may be
invested without restriction except to the extent other
investment restrictions may be applicable.)
2. Concentrate 25% or more of the value of its assets
in any one industry; provided, however, that there is no
limitation with respect to investments in obligations issued
or guaranteed by the United States Government or its
agencies and instrumentalities, and repurchase agreements
secured thereby.
3. Make loans of more than one-third of the assets of
the Fund, 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 Directors 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. Purchase from or sell to any of the Fund's officers
or directors, 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.
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 sell stock index futures,
foreign currency futures, interest rate futures and options
thereon.
7. 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 Directors in an amount not to
exceed 10% or as permitted by law.
8. Purchase more than 10% of the outstanding voting
securities of any issuer.
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
Directors without shareholder approval. The Fund may not:
9. 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.
10. 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.
11. Invest, in the aggregate, more than 5% of its net
assets in the securities of issuers restricted from selling
to the public without registration under the Securities Act
of 1933, excluding restricted securities eligible for resale
pursuant to Rule 144A under that statute. Purchases of
securities outside the U.S. that are not registered with the
SEC or marketable in the U.S. are not per se restricted.
12. Make short sales of securities or purchase any
securities on margin except that the Fund may obtain such
short-term credits as may be necessary for the clearance of
purchases and sales of securities. The depositor payment by
the Fund of initial or maintenance margin in connection with
financial futures contracts or related options transactions
is not considered the purchase of a security on margin.
13. Purchase or retain securities of any issuer if the
officers, Directors 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.
14. Invest in warrants if more than 5% of the value of
the Fund's net assets would be invested in such securities.
15. 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.
16. Borrow money, except from banks for temporary or
emergency purposes, and then only in an amount not to exceed
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.
17. Invest for the purpose of exercising control or
management of another issuer.
For purposes of the Fund's concentration policy contained in
restriction (2), above, the Fund intends to comply with the SEC staff position
that securities issued or guaranteed as to principal and interest by any
single foreign government are considered to be securities of issuers in the
same industry.
Any investment restriction which involves a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the applicable percentage occurs immediately after an acquisition of
securities or utilization of assets and results therefrom.
PURCHASE AND REDEMPTION OF SHARES
Share certificates will not be issued unless requested in writing by
the investor. No charge will be made for share certificate requests. No
certificates will be issued for fractional shares.
Amounts redeemed by check redemption may be mailed to the investor
without charge. Amounts of more than $50 and less than $300,000 may be
transferred electronically at no charge to the investor. Amounts of $1,000 or
more will be transmitted by wire without charge by the Fund to the investor's
account at a domestic commercial bank that is a member of the Federal Reserve
System or to a correspondent bank. A charge of $5 is imposed on wire transfers
of less than $1,000. If the investor's bank is not a Federal Reserve System
member, failure of immediate notification to that bank by the correspondent
bank could result in a delay in crediting the funds to the investor's bank
account.
Telephone redemption requests which would require the redemption of
shares purchased by check or electronic funds transfer within the previous 10
business days may not be honored. The Fund reserves the right to modify the
telephone redemption privilege.
New shareholders wishing to use the Fund's telephone redemption
procedure must so indicate on their Investment Applications and, if desired,
designate a commercial bank or securities broker and account to receive the
redemption proceeds. Existing shareholders who at any time desire to arrange
for the telephone redemption procedure, or to change instructions already
given, must send a written notice to the Fund, with a voided check for the
bank wiring instructions to be added. If a voided check does not accompany the
request, then the request must be signature guaranteed by a commercial bank,
savings and loan association, trust company, member firm of any national
securities exchange, or certain credit unions. Further documentation may be
required from corporations, fiduciaries, pension plans, and institutional
investors.
The Fund's redemption check normally will be mailed to the investor
on the next business day following the date of receipt by the Fund of the
written or telephone redemption request. If the investor so instructs in the
redemption request, the check will be mailed or the redemption proceeds wired
to a predesignated account at the investor's bank. Redemption proceeds are
normally paid in cash. However, at the sole discretion of the Fund, the Fund
has the right to redeem shares in assets other than cash for redemption
amounts exceeding, in any 90-day period, $250,000 or 1% of the net asset value
of the Fund, whichever is less, or as allowed by law.
The right of redemption of Fund shares 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 SEC, or if the Commission has ordered such a suspension for
the protection of shareholders. Redemption proceeds are normally mailed or
wired the next business day after a proper redemption request has been
received unless redemptions have been suspended or postponed as described
above.
REDUCED SALES CHARGES (CLASS A)
The Fund imposes reduced sales charges for Class A shares in certain
situations in which the Principal Underwriter and the dealers selling Fund
shares may expect to realize significant economies of scale with respect to
such sales. Generally, sales costs do not increase in proportion to the dollar
amount of the shares sold; the per-dollar transaction cost for a sale to an
investor of shares worth, say, $5,000 is generally much higher than the
per-dollar cost for a sale of shares worth $1,000,000. Thus, the applicable
sales charge declines as a percentage of the dollar amount of shares sold as
the dollar amount increases.
When a shareholder agrees to make purchases of shares over a period
of time totaling a certain dollar amount pursuant to a Letter of Intent, the
Underwriter and selling dealers can expect to realize the economies of scale
applicable to that stated goal amount. Thus the Fund imposes the sales charge
applicable to the goal amount. Similarly, the Underwriter and selling dealers
also experience cost savings when dealing with existing Fund shareholders,
enabling the Fund to afford existing shareholders the Right of Accumulation.
The Underwriter and selling dealers can also expect to realize economies of
scale when making sales to the members of certain qualified groups which agree
to facilitate distribution of Fund shares to their members. See "Exhibit A -
Reduced Sales Charges" in the Prospectus.
NET ASSET VALUE
The net asset value per share of the Fund, the price at which the
Fund's shares are redeemed, is determined every business day as of the close of
the New York Stock Exchange (generally, 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 public offering price of the Fund's shares is the net asset value
per share (plus, for Class A shares, the applicable sales charge). The net
asset value per share is computed separately for each class by dividing the
value of the Fund's total assets, less its liabilities, by the total number of
shares outstanding for that class. The Fund's securities 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 are valued at cost, plus or
minus any amortized discount or premium, unless the Board of Directors
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 are fairly valued by the Advisor in good faith under the supervision
of the Board of Directors.
CALCULATION OF TOTAL RETURN
The Fund may, from time to time, advertise "total return." Total
return is calculated separately for each class. Total return is computed by
taking the total number of shares purchased by a hypothetical $1,000
investment, after deducting the applicable sales charge for Class A shares,
adding all additional shares purchased within the period with reinvested
dividends and distributions, calculating the value of those shares at the end
of the period, and dividing the result by the initial $1,000 investment. Note:
"Total Return" when quoted in the Financial Highlights section of the Fund's
Prospectus and the Annual Report to Shareholders, however, per SEC
instructions, does not reflect deduction of the sales charge, and corresponds
to "return without maximum sales load" return as referred to herein. For
periods of more than one year, the cumulative total return is then adjusted
for the number of years, taking compounding into account, to calculate average
annual total return during that period.
Total return is computed according to the following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $l,000 (less the maximum sales
charge imposed during the period calculated); 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.
Performance is historical in nature and is not intended to indicate
future performance. All total return quotations reflect the deduction of the
Fund's maximum sales charge, except quotations of "return without maximum
sales load" which do not reflect deduction of the sales charge. Return without
maximum sales load, which will be higher than total return, should be
considered only by investors, such as participants in certain pension plans,
to whom the sales charge does not apply, or for purposes of comparison only
with comparable figures which also do not reflect sales charges, such as
Lipper averages. Thus, in the above formula, for return without maximum sales
load, P = the entire $1,000 hypothetical initial investment and does not
reflect deduction of any sales charge. Return may be advertised for other
periods, such as by quarter, or cumulatively for more than one year.
Return for the Fund's shares are as follows:
Class A Shares Class A Shares
Without Total Return
Maximum With Maximum Class C Shares
Sales Load Sales Load Total Return
9/30/96 to 3/31/97 -5.59% -10.05% -6.18%
Since inception,
10/31/94 16.97% 14.63% 16.15%
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.
ADVERTISING
The Fund or its affiliates may provide information such as, but not
limited to, the economy, investment climate, investment principles,
sociological conditions and political ambiance. Discussion may include
hypothetical scenarios or lists of relevant factors designed to aid the
investor in determining whether the Fund is compatible with the investor's
goals. The Fund may list portfolio holdings or give examples or securities
that may have been considered for inclusion in the Portfolio, whether held or
not.
The Fund or its affiliates may supply comparative performance data
and rankings from independent sources such as Donoghue's Money Fund Report,
Bank Rate Monitor, Money, Forbes, Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., Wiesenberger Investment Companies Service,
Russell 2000/Small Stock Index, Mutual Fund Values Morningstar Ratings, Mutual
Fund Forecaster, Barron s, The Wall Street Journal, and Schabacker Investment
Management, Inc. Such averages generally do not reflect any front- or back-end
sales charges that may be charged by Funds in that grouping. The Fund may also
cite to any source, whether in print or on-line, such as Bloomberg, in order
to acknowledge origin of information. The Fund may compare itself or its
portfolio holdings to other investments, whether or not issued or regulated by
the securities industry, including, but not limited to, certificates of
deposit and Treasury notes. The Fund, its Advisor, and its affiliates reserve
the right to update performance rankings as new rankings become available.
Calvert Group is the 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.
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
because of different expenses.
Certain options, futures contracts, and options on futures contracts
are section 1256 contracts. Any gains or losses on section 1256 contracts are
generally considered 60% long-term and 40% short-term capital gains or losses
("60/40 gains or losses"). Also, section 1256 contracts held by the Fund at
the end of each taxable year are treated for federal income tax purposes as
being sold on such date for their fair market value. The resultant gains or
losses are treated as 60/40 gains or losses. When the section 1256 contract is
subsequently disposed of, the actual gain or loss will be adjusted by the
amount of the year-end gain or loss. The use of section 1256 contracts may
increase the amount of short-term capital gain realized by the Fund and taxed
as ordinary income when distributed to shareholders.
Hedging transactions in options, futures contracts and straddles or
other similar transactions will subject the Fund to special tax rules
(including mark-to-market, straddle, wash sale and short sales rules). The
effect of these rules may be to accelerate income to the Fund, defer losses to
the Fund, cause adjustments in the holding periods of the Fund's securities or
convert short-term capital losses into long-term capital losses. Hedging
transactions may increase the amount of short-term capital gain realized by
the Fund which is taxed as ordinary income when distributed to shareholders.
The Fund may make one or more of the various selections available under the
Code with respect to hedging transactions. If the Fund makes any of the
elections, the amount, character and timing of the recognition of gains or
losses from the affected positions will be determined under rules that vary
according to the elections made. The Fund will use its best efforts to make
any available elections pertaining to the foregoing transactions in a manner
believed to be in the best interests of the Fund. The 30% limit on gains from
the sale of securities held for less than three months and the diversification
requirements applicable to the Fund's assets may limit the extent to which the
Fund will be able to engage in transactions in options, futures contracts, or
options on futures contracts.
The Fund's transactions in foreign currency-denominated debt and
equity securities, certain foreign currency options, futures contracts, and
forward contracts may give rise to ordinary income or loss to the extent such
income or loss results from fluctuations in the value of the foreign currency
concerned.
If more than 50% of the Fund's assets at year end consist of the debt
and equity securities of foreign corporations, the Fund may elect to permit
shareholders to claim a credit or deduction on their income tax returns for
their pro rata portion of qualified taxes paid by the Fund to foreign
countries. In such a case, shareholders will include in gross income from
foreign sources their pro rata shares of such taxes. A shareholder's ability
to claim a foreign tax credit or deduction in respect of foreign taxes paid by
the Fund may be subject to certain limitations imposed by the Code, as a
result of which a shareholder may not get a full credit or deduction for the
amount of such taxes. Shareholders who do not itemize on their federal income
tax returns may claim a credit (but no deduction) for such foreign taxes.
Dividends and distributions may be subject to state and local taxes.
Dividends paid by the Fund from income attributable to interest on obligations
of the U.S. Government and certain of its agencies and instrumentalities may
be exempt from state and local taxes in certain states. The Fund will advise
shareholders of the proportion of its dividends consisting of such
governmental interest. Shareholders should consult their tax advisors
regarding the possible exclusion of this portion of their dividends for state
and local tax purposes.
Investors should note that the Internal Revenue 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 or redemption
payments 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; or foreign
central banks of issue. Non-resident aliens, certain foreign partnerships and
foreign corporations are generally not subject to either requirement but may
instead be subject to withholding under sections 1441 or 1442 of the Internal
Revenue Code. Shareholders claiming exemption from backup withholding and
broker reporting should call or write the Fund for further information.
DIRECTORS AND OFFICERS
JOHN G. GUFFEY, JR., Director. Mr. Guffey is chairman of the Calvert
Social Investment Foundation, organizing director of the Community Capital
Bank in Brooklyn, New York, and a financial consultant to various
organizations. In addition, he is a Director of the Community Bankers Mutual
Fund of Denver, Colorado, and the Treasurer and Director of Silby, Guffey, and
Co., Inc., a venture capital firm. Mr. Guffey is a trustee/director of each of
the other investment companies in the Calvert Group of Funds, except for
Calvert New World Fund, Inc., and Acacia Capital Corporation. Address: 7205
Pomander Lane, Chevy Chase, Maryland 20815. DOB: 05/15/48.
*BARBARA J. KRUMSIEK, President and Director. 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
President and Director of Calvert-Sloan Advisers, L.L.C., and a
trustee/director of each of the investment companies in the Calvert Group of
Funds. DOB: 08/09/52.
TERRENCE J. MOLLNER, Ed.D, Director. Dr. Mollner is Founder and
Chairperson of Trusteeship Institute, Inc., a diverse foundation known
principally for its consultation to corporations converting to cooperative
employee-ownership. He served as a Trustee of the Cooperative Fund of New
England, Inc., and is now a member of its Board of Advisors. Mr. Mollner also
serves as Trustee for the Calvert Social Investment Fund. He is also a founder
and member of the Board of Trustees of the Foundation for Soviet-American
Economic Cooperation. Address: 15 Edwards Square, Northampton, Massachusetts
01060. DOB: 12/13/44.
RUSTUM ROY, Director. Mr. Roy is the Evan Pugh Professor of the Solid
State Geochemistry at Pennsylvania State University, and Corporation Chair,
National Association of Science, Technology, and Society. Address: Material
Research Laboratory, Room 102A, Pennsylvania State University, University
Park, Pennsylvania, 16802. DOB: 7/3/24.
*D. WAYNE SILBY, Esq., Director. Mr. Silby is a trustee/director of
each of the investment companies in the Calvert Group of Funds, except for
Calvert New World Fund, Inc., and Acacia Capital Corporation. Mr. Silby is an
officer, director and shareholder of Silby, Guffey & Company, Inc., which
serves as general partner of Calvert Social Venture Partners ("CSVP"). CSVP is
a venture capital firm investing in socially responsible small companies. He
is also a Director of Acacia Mutual Life Insurance Company. Address: 1715 18th
Street, N.W., Washington, D.C. 20009. DOB: 07/20/48.
TESSA TENNANT, Director. Ms. Tennant is the head of green and ethical
investing for National Provident Investment Managers Ltd. Previously, she was
in charge of the Environmental Research Unit of Jupiter Tyndall Merlin Ltd.,
and was the Director of the Jupiter Tyndall Merlin investment managers.
Address: 55 Calverley Road, Tunbridge Wells, Kent, TN1 2UE, United Kingdom.
DOB: 5/29/59.
MOHAMMAD YUNUS, Director. Mr. Yunus is a Managing Director of Grameen
Bank in Bangladesh. Address: Grameen Bank, Mirpur Two, Dhaka 1216, Bangladesh.
DOB: 6/28/40.
RENO J. MARTINI, Senior Vice President. Mr. Martini is Senior Vice
President of Calvert Group, Ltd. and Senior Vice President and Chief
Investment Officer of Calvert Asset Management Company, Inc. DOB: 01/13/50.
WILLIAM M. TARTIKOFF, Esq., Vice President and 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 Vice
President and Secretary of Calvert-Sloan Advisers, L.L.C., and is an officer
of Acacia National Life Insurance Company. DOB: 08/12/47.
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. DOB: 09/09/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior Vice
President and Controller of Calvert Group, Ltd. and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. He is also an officer of each
of the other investment companies in the Calvert Group of Funds. DOB: 07/24/52.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of each
of the other investment companies in the Calvert Group of Funds. DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is Associate
General Counsel of Calvert Group and an officer of each of its subsidiaries
and Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the other
investment companies in the Calvert Group of Funds. DOB: 10/21/56.
LISA CROSSLEY, Esq., Assistant Secretary and Compliance Officer. Ms.
Crossley is Associate General Counsel of Calvert Group and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer
of each of the other investment companies in the Calvert Group of Funds. DOB:
12/31/61.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Assistant
Counsel of Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the other
investment companies in the Calvert Group of Funds. DOB: 09/07/68.
*"Interested persons" of the Fund under the Investment Company Act of 1940.
The address of directors and officers, unless otherwise noted, is
4550 Montgomery Avenue, Bethesda, Maryland 20814. Directors and officers as a
group own less than one percent of the total outstanding shares of the Fund.
During fiscal 1997, Directors of the Fund not affiliated with the
Fund's Advisor were paid aggregate fees and expenses of $3,072.
Directors of the Fund not affiliated with the Fund's Advisor may
elect to defer receipt of all or a percentage of their fees and invest them in
any fund in the Calvert Family of Funds through the Trustees Deferred
Compensation Plan (shown as "Pension or Retirement Benefits Accrued as part of
Fund Expenses," below). Deferral of the fees is designed to maintain the
parties in the same position as if the fees were paid on a current basis.
Management believes this will have a negligible effect on the Fund's assets,
liabilities, net assets, and net income per share, and will ensure that there
is no duplication of advisory fees.
Director Compensation Table
(Fiscal Year 1997)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name of Director Aggregate Pension or Total
Compensation Retirement Compensation
from Portfolio Benefits from Registrant
for service Accrued as and Fund
as Director part of Complex paid
Registrant to Directors <F2>
Expenses<F1>
John Guffey, Jr. $101 $0 $12,564
Terrence J. Mollner $0 $0 $10,158
Rustum Roy $0 $0 $2,000
D. Wayne Silby $101 $0 $14,832
Tessa Tennant $0 $2,000 $2,000
Mohammad Yunus $0 $2,000 $2,000
<FN>
<F1> None of the Directors have chosen to defer a portion of their
compensation as of March 31, 1997
<F2> As of March 31, 1997, the Fund complex consists of nine (9)
registered investment companies.
</FN>
</TABLE>
INVESTMENT ADVISOR AND SUB-ADVISORS
The Fund's Investment Advisor is Calvert Asset Management Company,
Inc., 4550 Montgomery Avenue, 1000N, Bethesda, Maryland 20814, a subsidiary of
Calvert Group Ltd., which is a subsidiary of Acacia Mutual Life Insurance
Company of Washington, D.C. ("Acacia Mutual").
The Advisory Contract between the Fund and the Advisor was entered
into on May 21, 1992, 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 Directors of
the Fund; and further provided that such continuance is also approved annually
by the vote of a majority of the trustees of the Fund who are not parties to
the Contract or interested persons of parties to the Contract or interested
persons of such parties, cast in person at a meeting called for the purpose of
voting on such approval. The Contract may be terminated without penalty by
either party upon 60 days' prior written notice; it automatically terminates
in the event of its assignment.
Under the Contract, the Advisor provides investment advice to the
Fund and oversees its day-to-day operations, subject to direction and control
by the Fund's Board of Directors. For its services, the Advisor receives an
annual base fee, payable monthly, of 0.80% of the Fund's average daily net
assets. For the 1995 fiscal period, the Advisor received a fee of $50,418,
reimbursed $12,183, and voluntarily waived or assumed $3,256 of expenses. For
the 1996 fiscal period, the Advisor received a fee of $243,241 and there were
no expenses reimbursed or fees voluntarily waived. For the 1997 fiscal period,
the Advisor received a fee of $177,369. There were no expenses reimbursed or
fees voluntarily waived.
The Advisor provides the Fund with investment supervision and
management, administrative services, office space, furnishes executive and
other personnel to the Fund, and may pay Fund advertising and promotional
expenses. The Advisor reserves the right to compensate broker-dealers in
consideration of their promotional or administrative services. The Fund pays
all other administrative and operating expenses, including: custodial,
registrar, dividend disbursing and transfer agency fees; federal and state
securities registration fees; salaries, fees and expenses of directors,
executive officers and employees of the Fund, who are not "affiliated persons"
of the Advisor or the Subadvisors 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 Fund's current Subadvisor is described in the Prospectus. See
"Management of the Fund." The remaining pool of Sub-Advisors are described
below.
Apodaca Investment Group, Inc.: Apodaca Investment Group, Inc. of San
Francisco, California is a small-cap growth manager that seeks to discover
compelling investment ideas by focusing on those entrepreneurial companies
that identify and capitalize on positive trends. It looks for companies that
are experiencing a powerful acceleration in earnings, exhibit a strong, high
quality balance sheet or decidedly improving financial statements and
demonstrate strong relative price strength. Its performance index is the
Russell 2000.
Jerry Apodaca is Vice President of Apodaca Investment Group, Inc. He
earned a B.A. from the University of New Mexico in 1983, and has had active
business experience since that time.
Fortaleza Asset Management, Inc.: Fortaleza Asset Management, Inc., of
Chicago, Illinois, is a small-cap growth manager that bases its investment
principles on three key elements: (1) a proprietary stock valuation system
that incorporates technical and market sentiment indicators to determine
optimal buy points; (2) an emphasis on the preservation of capital through the
implementation of a strict selling discipline to lock in capital gains and
reduce losses; and (3) a discipline that does not force equity commitment in
overvalued markets. The investment approach is based on a bottom-up stock
selection process. Its performance index is the Russell 2000.
Ms. Margarita Perez is the founder, President and Portfolio Manager
of Fortaleza, and has over 14 years of investment experience. Prior to forming
Fortaleza, Ms. Perez was Vice President and Portfolio Manager for Monetta
Financial Services, Inc., where she was directly involved in the management of
equity accounts totaling in excess of $100 million.
Ms. Perez is a native of Puerto Rico. She earned an MBA fro DePaul
University School of Commerce. Ms. Perez is a member of various professional
organizations including the American Institute of CPA s, National Society of
Hispanic MBA s, Association for Investment Management and Research, and the
National Association of Securities Professionals. She is also a trustee of the
Chicago Historical Society.
New Amsterdam Partners, L.P.: New Amsterdam Partners, L.P. is a mid-cap value
investment manager in New York, New York. New Amsterdam Partners is a
quantitative investment firm, evaluating investment opportunities by comparing
expected investment returns. The firm believes that the disciplined use of
their valuation techniques, in conjunction with fundamental analysis of
companies, is the key to understanding and maximizing investment returns.
Michelle Clayman, General Partner of New Amsterdam, was a founding
partner of the company, which was started in 1986. Prior to co-founding New
Amsterdam, Ms. Clayman was a Vice President of Salomon Brothers in charge of
STOCKFACTS, an on-line computer system that combines analytical tools for
equity analysis and databases and was designed and developed by Ms. Clayman.
Ms. Clayman received her Bachelor of Arts from Oxford University and an MBA
from Stanford University. She is a CFA and is past President of the Society of
Quantitative Analysts.
Keith Graham is Vice President and Special Limited Partner of New
Amsterdam. Before joining the company in 1987, Mr. Graham was an Assistant
Treasurer at the Bankers Trust Company, first in the Trust Administration
Group and later in the Investment Management Consulting Group.
Sturdivant & Co., Inc.: Sturdivant & Co., Inc., of Clementon, New Jersey,
seeks to identify undervalued companies or companies undergoing significant
changes that will enhance shareholder value. The company utilizes a
conservative, disciplined and consistently-applied decision making process
designed to achieve lower risk than the market.
Ralph Sturdivant is Chairman and CEO who, prior to founding the firm,
was a Vice President at Prudential-Bache Securities and an Account Executive
with Merrill Lynch. Mr. Sturdivant holds a Bachelor of Arts from Morgan State
University and is a member of the Financial Analysts of Philadelphia.
Albert Sturdivant is President and CIO, and was a principal and
manager of the capital markets division of Grigsby, Brandford & Company prior
to co-founding Sturdivant & Co. Mr. Sturdivant earned an MBA from the Wharton
Business School of the University of Pennsylvania.
Administrative Services
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. For
the 1995, 1996 and 1997 fiscal periods, CASC received $6,251, $30,405 and
$22,248 in administrative fees, respectively.
TRANSFER AND SHAREHOLDER SERVICING AGENT
Calvert Shareholder Services, Inc. ("CSSI"), 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; updating of shareholder accounts to reflect declaration and
payment of dividends; and preparing and distributing quarterly statements to
shareholders regarding their accounts. For such services, Calvert Shareholder
Services, Inc. receives compensation based on the number of shareholder
accounts and the number of shareholder transactions. During fiscal period
1995, 1996 and 1997, CSSI received $13,179, $134,497, and $77,552 from the
Fund, respectively.
METHOD OF DISTRIBUTION
The Fund has entered into an agreement with Calvert Distributors,
Inc. ("CDI") whereby CDI, acting as principal underwriter for the Fund, makes
a continuous offering of the Fund's securities on a "best efforts" basis.
Under the terms of the agreement, CDI is entitled to receive reimbursement of
distribution expenses pursuant to the Distribution Plan (see below). For
fiscal period 1997, CDI received distribution fees of $72,378 under the Class
A Distribution Plan. Of the Class A distribution expenses paid in fiscal 1997,
$44,432 was used to compensate dealers for their share distribution
promotional services, and the remainder was used for Advertising. CDI also
receives the portion of the sales charge in excess of the dealer reallowance.
CDI received net sales charges of $23,647, $151,785, and $49,218 for fiscal
periods ending 1995, 1996 and 1997, respectively.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Fund has adopted Distribution Plans (the "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, 0.35% of the Fund's Class A
average daily net assets. Expenses under the Fund's Class C Plan may not
exceed, on an annual basis, 1.00% of the average daily net assets of Class C.
For the period from inception (October 31, 1994) to September 30, 1995, Class
C Distribution Plan expenses totaled $4,448. That amount was used entirely to
compensate dealers distributing shares, and to compensate the underwriter. For
the fiscal year 1996, Class C Distribution Plan expenses totaled $27,695. That
amount was used entirely to compensate dealers distributing shares, and to
compensate the underwriter. For the fiscal year 1997, Class C Distribution
Plan expenses totaled $15,686.
The Fund's Distribution Plans were approved by the Board of
Directors, including the Directors who are not "interested persons" of the
Fund (as that term is defined in the Investment Company Act of 1940) and who
have no direct or indirect financial interest in the operation of the Plans or
in any agreements related to the Plans. The selection and nomination of the
Directors who are not interested persons of the Fund is committed to the
discretion of such disinterested Directors. In establishing the Plans, the
Directors considered various factors including the amount of the distribution
expenses. The Directors determined that there is a reasonable likelihood that
the Plans will benefit the Fund and its shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Directors who have no direct or indirect financial interest in
the Plans, or by vote of a majority of the outstanding shares of the Fund. Any
change in the Plans that would materially increase the distribution cost to
the Fund requires approval of the shareholders of the affected class;
otherwise, the Plans may be amended by the Directors, including a majority of
the non-interested Directors as described above. The Plans will continue in
effect for successive one-year terms provided that such continuance is
specifically approved by (i) the vote of a majority of the Directors who are
not parties to the Plans or interested persons of any such party and who have
no direct or indirect financial interest in the Plans, and (ii) the vote of a
majority of the entire Board of Directors.
Apart from the Plans, the Advisor and CDI, at their own expense, may
incur costs and pay expenses associated with the distribution of shares of the
Fund.
Certain broker-dealers, and/or other persons may receive compensation
from the investment advisor, underwriter, or their affiliates for the sale and
distribution of the securities or for services to the Fund. Such compensation
may include additional compensation based on assets held through that firm
beyond the regularly scheduled rates, and finder's fee payments to firms whose
representatives are responsible for soliciting a new account where the
accountholder does not choose to purchase through that firm.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and choice of
brokers and dealers are made by the Fund's Advisor under the direction and
supervision of the Fund's Board of Directors.
The Fund's policy is to limit portfolio turnover to transactions
necessary to carry out its investment policies and to obtain cash for
redemption of its shares. Depending upon market conditions, the Fund's
turnover expressed as a percentage may in some years exceed 100%, but is not
expected to exceed 200%. For the 1995, 1996 and 1997 fiscal periods, the
portfolio turnover rates of the Fund were 95%, 114% and 117%, respectively. In
all transactions, the Fund seeks to obtain the best price and most favorable
execution and selects broker-dealers on the basis of their professional
capability and the value and quality of their services. Broker-dealers may be
selected who provide the Fund with statistical, research, or other information
and services. Such broker-dealers may receive compensation for executing
portfolio transactions that is in excess of the compensation another
broker-dealer would have received for executing such transactions, if the
Advisor determines in good faith that such compensation is reasonable in
relation to the value of the information and services provided. Although any
statistical, research, or other information or services provided by
broker-dealers may be useful to the Advisor, its dollar value is generally
indeterminable and its availability or receipt does not materially reduce the
Advisor's normal research activities or expenses. During fiscal 1995, no
commissions were paid to any officer or director of the Fund, or to any of
their affiliates. During fiscal year 1996, $177,000 in aggregate brokerage
commissions were paid to broker-dealers. During fiscal year 1997, $17,728 in
aggregate brokerage commissions were paid to broker-dealers.
The Advisor may also execute Fund 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.
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
Coopers and Lybrand, L.L.P., has been selected by the Board of
Directors to serve as independent accountants of the Fund for fiscal year
1998. State Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, MA
02110 acts 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. Neither custodian has a part
in deciding the Fund's investment policies or the choice of securities that
are to be purchased or sold for the Fund.
GENERAL INFORMATION
The Fund was organized as a Maryland Corporation on February 14,
1992. The other series of the Fund is the Calvert International Equity 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 Fund's audited financial statements included in its Annual Report
to Shareholders dated March 31, 1997, are expressly incorporated by reference
and made a part of this Statement of Additional Information. A copy of the
Annual Report may be obtained free of charge by writing or calling The Calvert
Fund.
APPENDIX
Corporate Bond Ratings:
Description of Moody's Investors Service Inc. s/Standard & Poor's bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. This rating indicates an extremely strong capacity to pay
principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree. They are rated
lower than the best bonds because margins of protection may not be as large as
in Aaa securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present which make long-term risks
appear somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which make the bond somewhat more susceptible to the adverse effects of
circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay principal
and interest. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in higher rated categories.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay interest
and repay principal. The higher the degree of speculation, the lower the
rating. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposure to adverse conditions.
C/C: This rating is only for income bonds on which no interest is
being paid.
D: Debt in default; payment of interest and/or principal is in
arrears.
Commercial Paper Ratings:
MOODY's INVESTORS SERVICE, INC.:
The Prime rating is the highest commercial paper rating assigned by
Moody s. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation
of the issuer's products in relation to competition and customer acceptance;
(4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings
over a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by management
of obligations which may be present or may arise as a result of public
interest questions and preparations to meet such obligations. Issuers within
this Prime category may be given ratings 1, 2, or 3, depending on the relative
strengths of these factors.
STANDARD & POOR's CORPORATION:
Commercial paper rated A by Standard & Poor's has the following
characteristics: (i) liquidity ratios are adequate to meet cash requirements;
(ii) long-term senior debt rating should be A or better, although in some
cases BBB credits may be allowed if other factors outweigh the BBB; (iii) the
issuer should have access to at least two additional channels of borrowing;
(iv) basic earnings and cash flow should have an upward trend with allowances
made for unusual circumstances; and (v) typically the issuer's industry should
be well established and the issuer should have a strong position within its
industry and the reliability and quality of management should be unquestioned.
Issuers rated A are further referred to by use of numbers 1, 2 and 3 to denote
the relative strength within this highest classification.
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the Letter
of Intent option on my Fund Account Application Form, I agree to be bound by
the terms and conditions applicable to Letters of Intent appearing in the
Prospectus and the Statement of Additional Information for the Fund and the
provisions described below as they may be amended from time to time by the
Fund. Such amendments will apply automatically to existing Letters of Intent.
I intend to invest in the shares of: (Fund or Portfolio name*)
during the thirteen (13) month period from the date of my first purchase
pursuant to this Letter (which cannot be more than ninety (90) days prior to
the date of this Letter or my Fund Account Application Form, whichever is
applicable), an aggregate amount (excluding any reinvestments of
distributions) of at least fifty thousand dollars ($50,000) which, together
with my current holdings of the Fund (at public offering price on date of this
Letter or my Fund Account Application Form, whichever is applicable), will
equal or exceed the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the terms of
escrow, to which I hereby agree, each purchase occurring after the date of
this Letter will be made at the public offering price applicable to a single
transaction of the dollar amount specified above, as described in the Fund's
prospectus. No portion of the sales charge imposed on purchases made prior to
the date of this Letter will be refunded.
I am making no commitment to purchase shares, but if my purchases
within thirteen months from the date of my first purchase do not aggregate the
minimum amount specified above, I will pay the increased amount of sales
charges prescribed in the terms of escrow described below. I understand that
4.75% of the minimum dollar amount specified above will be held in escrow in
the form of shares (computed to the nearest full share). These shares will be
held subject to the terms of escrow described below.
From the initial purchase (or subsequent purchases if necessary),
4.75% of the dollar amount specified in this Letter shall be held in escrow in
shares of the Fund by the Fund's transfer agent. For example, if the minimum
amount specified under the Letter is $50,000, the escrow shall be shares
valued in the amount of $2,375 (computed at the public offering price adjusted
for a $50,000 purchase). All dividends and any capital gains distribution on
the escrowed shares will be credited to my account.
If the total minimum investment specified under the Letter is
completed within a thirteen month period, escrowed shares will be promptly
released to me. However, shares disposed of prior to completion of the
purchase requirement under the Letter will be deducted from the amount
required to complete the investment commitment.
Upon expiration of this Letter, the total purchases pursuant to the
Letter are less than the amount specified in the Letter as the intended
aggregate purchases, Calvert Distributors, Inc. ("CDI") will bill me for an
amount equal to the difference between the lower load I paid and the dollar
amount of sales charges which I would have paid if the total amount purchased
had been made at a single time. If not paid by the investor within 20 days,
CDI will debit the difference from my account. Full shares, if any, remaining
in escrow after the aforementioned adjustment will be released and, upon
request, remitted to me.
I irrevocably constitute and appoint CDI as my attorney-in-fact, with
full power of substitution, to surrender for redemption any or all escrowed
shares on the books of the Fund. This power of attorney is coupled with an
interest.
The commission allowed by Calvert Distributors, Inc. to the
broker-dealer named herein shall be at the rate applicable to the minimum
amount of my specified intended purchases.
The Letter may be revised upward by me at any time during the
thirteen-month period, and such a revision will be treated as a new Letter,
except that the thirteen-month period during which the purchase must be made
will remain unchanged and there will be no retroactive reduction of the sales
charges paid on prior purchases.
In determining the total amount of purchases made hereunder, shares
disposed of prior to termination of this Letter will be deducted. My
broker-dealer shall refer to this Letter of Intent in placing any future
purchase orders for me while this Letter is in effect.
Dealer
Name of Investor(s)
By
Authorized Signer
Address
Date
Signature of Investor(s)
Date
Signature of Investor(s)
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio, as the
case may be, here indicated.
