PROSPECTUS
January 31, 1997
THE CALVERT FUND:
CALVERT NEW VISION SMALL CAP FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
INVESTMENT OBJECTIVE
The investment objective of Calvert New Vision Small Cap Fund (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. In seeking capital appreciation, the
Fund invests primarily in the equity securities of small capitalized
growth companies (including American Depositary Receipts ("ADRs"))
that have historically exhibited exceptional growth characteristics
and that, in the 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.
*Currently those with a total capitalization of less than $1 billion at the
time of the Fund's initial investment.
WHETHER THIS FUND IS FOR YOU
This Fund employs aggressive investment strategies that have the
potential for yielding high returns. However, share prices may
experience substantial fluctuations so that your shares may be worth
less than when you originally purchased them. As income is not an
objective of the Fund, the Fund should not be used to meet short-term
financial needs.
PURCHASE INFORMATION
The Fund offers two classes of shares with different expense levels
and sales charges. If you purchase Class A shares you will pay a
sales charge at the time you purchase the shares ("front-end sales
charge"), and the Fund pays Rule 12b-1 fees. Class C shares, which
are not available through all dealers, have no front-end or back-end
sales charge, but have higher expenses than Class A shares, including
higher Rule 12b-1 fees. The Class you choose depends on the amount of
the purchase, the length of time you expect to hold the shares, and
other circumstances. See "Alternative Sales Options" for further
details.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE FDIC OR ANY
OTHER AGENCY. WHEN INVESTORS SELL SHARES OF THE FUND, THE VALUE MAY
BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY PAID.
TO OPEN AN ACCOUNT
Call your broker, or complete and return the enclosed Account
Application. Minimum initial investment is $2,000 (may be lower for
certain retirement plans).
ABOUT THIS PROSPECTUS
Please read this Prospectus for information you should know before
investing, and keep it for future reference. A Statement of
Additional Information for the Fund dated January 31, 1997, has been
filed with the Securities and Exchange Commission and is incorporated
by reference. This free Statement is available upon request from the
Fund: 800-368-2748.
FUND EXPENSES
A. Shareholder Transaction Costs Class A Class C
Maximum Front-End Sales Charge on 4.75% None
Purchases (as a percentage of offering
price)
Maximum Contingent Deferred Sales None None
Charge
B. Annual Fund Operating Expenses Fiscal
Year 1997
(as a percentage of average net
assets, net of any applicable expense
reimbursement)
Management Fees 0.90% 0.90%
Rule 12b-1 Service and Distribution
Fees 0.25% 1.00%
Other Expenses (Estimated) 0.35% 0.60%
Total Fund Operating Expenses 1.50% 2.50%
C. Example: You would pay the following expenses on a
$1,000 investment, assuming: (1) 5% annual
return; (2) redemption at the end of each
period; and (3) for Class A, payment of maximum
initial sales charge at time of purchase.
1 Year 3 years
Class A $62 $93
Class C $25 $78
The example, which is hypothetical, should not be considered a
representation of past or future expenses. Actual expenses and return
may be higher or lower than those shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the
Fund would bear directly (shareholder transaction costs) or
indirectly (annual fund operating expenses).
A. Shareholder Transaction Costs are charges you pay when you
buy or sell shares of the Fund. See "Reduced Sales Charges" at
Exhibit A to see if you qualify for possible reductions in the sales
charge. If you request a wire redemption of less than $1,000, you
will be charged a $5 wire fee.
B. Annual Fund Operating Expenses. Management Fees are paid by
the Fund to the Advisor for managing the Fund's investments and
business affairs. Management fees include the subadvisory fee paid by
Calvert Asset Management Company, Inc. (the "Advisor") to Portfolio
Advisory Services, Inc. (the "Subadvisor"), and the administrative
service fee paid to Calvert Administrative Services Company. The Fund
incurs Other Expenses for maintaining shareholder records, furnishing
shareholder statements and reports, and other services. Management
Fees and Other Expenses are reflected in the Fund's daily share price
and are not charged directly to individual shareholder accounts.
Please refer to "Management of the Fund" for further information. The
Advisor may voluntarily reimburse expenses of the Fund. The
Investment Advisory Agreement provides that the Advisor may, to the
extent permitted by law, later recapture any fees it deferred or
expenses it assumed during the two prior years.
The Fund's Rule 12b-1 fees include an asset-based sales charge. Thus,
long-term shareholders in the Fund may pay more in total sales
charges than the economic equivalent of the maximum front-end sales
charge permitted by rules of the National Association of Securities
Dealers, Inc. (the "NASD").
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective
Calvert New Vision Small Cap Fund seeks to provide long-term capital
appreciation by investing primarily in equity securities of companies
that have small market capitalizations. In seeking capital
appreciation, the Fund invests primarily in equity securities of
small capitalized growth companies that have historically exhibited
exceptional growth characteristics and that, in the Advise's
opinion, have strong earnings potential relative to the U.S. market
as a whole. The Fund's investment objective is not fundamental and
may be changed without shareholder approval.
The Fund pursues the objective of capital appreciation by investing
primarily in equity securities of primarily small companies with
promising growth potential. These companies typically are developing
innovative products or services to seize emerging opportunities.
Under normal circumstances, the Fund will invest at least 65% of its
total assets in equity securities of companies publicly traded in the
United States (currently those with a total market capitalization of
under $1 billion at the time of the Fund's initial investment).
The Fund considers issuers of all industries with operations in all
geographic markets, and does not seek interest income or dividends.
Equity securities may include common stocks, preferred stocks,
convertible securities and warrants. In selecting equity investments,
the Fund focuses on individual companies by screening over nine
thousand stocks traded on all major U.S. stock exchanges. By applying
proprietary stock selection criteria, the Fund identifies suitable
investments to buy. The Fund may hold cash or cash equivalents for
temporary defensive purposes or to enable it to take advantage of
buying opportunities. There is, of course, no assurance that the Fund
will be successful in meeting its objective.
Companies whose capitalization increases or decreases after initial
purchase by the Fund continue to be considered small-capitalized for
purposes of the 65% policy. Accordingly, less than 65% of the Fund's
total assets may be invested in securities of issuers of companies
publicly traded in the United States (currently those with a total
market capitalization of less than $1 billion).
The Portfolio will normally be as fully invested as practicable in
common stocks (including ADRs), but also may invest in warrants and
rights to purchase common stocks and in debt securities and preferred
stocks convertible into common stocks (collectively, "equity
securities").
INVESTMENT TECHNIQUES AND RELATED RISKS
Risks
A company's market capitalization is the total market value of its
outstanding equity securities. The value of the Fund's investments
will vary from day to day, and generally reflect market conditions,
interest rates and other company, political, or economic news. In
the short-term, stock prices can fluctuate dramatically in response
to these factors. Over time, however, stocks have shown greater
growth potential than other types of securities.
Small cap issuers
While any investment in securities carries a certain degree of risk,
the approach of the Fund is designed to maximize growth in relation
to the risks assumed. The securities of small cap issuers may be less
actively traded than the securities of larger issuers, may trade in a
more limited volume, and may change in value more abruptly than
securities of larger companies. Information concerning these
securities may not be readily available so that the companies may be
less actively followed by stock analysts. Small-cap issuers do not
usually participate in market rallies to the same extent as more
widely-known securities, and they tend to have a relatively higher
percentage of insider ownership.
Investing in smaller, new issuers generally involves greater risk
than investing in larger, established issuers. Companies in which the
Fund is likely to invest may have limited product lines, markets or
financial resources and may lack management depth. The securities in
such companies may also have limited marketability and may be subject
to more abrupt or erratic market movements than securities of larger,
more established companies or the market averages in general.
Accordingly an investment in the Fund may not be appropriate for all
investors.
Temporary defensive positions
Under normal market conditions the Fund strives to be fully invested
in securities. However, for temporary defensive purposes -- which may
include a lack of adequate purchase candidates or an unfavorable
market environment -- the Fund may invest up to 35% of its total
assets in cash or cash equivalents. Cash equivalents include
instruments such as, but not limited to, U.S. government and agency
obligations, certificates of deposit, bankers' acceptances, time
deposits, commercial paper, short-term corporate debt securities and
repurchase agreements.
The Fund may invest in debt obligations
Although the Fund invests primarily in equity securities, it may
invest up to 35% of its total assets in debt securities, excluding
money market instruments. These debt securities may consist of
investment grade and noninvestment grade obligations. Investment
grade obligations are those which, at the date of investment, are
rated within the four highest grades established by Moody's Investors
Services, Inc. (Aaa, Aa, A, or Baa) or by Standard and Poor's
Corporation (AAA, AA, A, or BBB), or, if unrated, are determined by
the investment subadvisor to be of equivalent credit quality.
Noninvestment grade (high-yield/high-risk) securities are those rated
below Baa or BBB, or unrated obligations that the investment
subadvisor has determined are not investment-grade; such securities
are speculative in nature. The Fund intends to limit its investments
in lower than Baa-quality debt securities to 5% of its total assets.
The Fund will not buy debt securities rated lower than C.
Interest-rate risks
All fixed income instruments are subject to interest-rate risk; that
is, if market interest rates rise, the current principal value of a
bond will decline. In general, the longer the maturity of the bond,
the greater the decline in value will be.
The Fund may use options and futures as defensive strategies
In extraordinary circumstances, the Fund may use options and futures
contracts to increase or decrease its exposure to changing security
prices, interest rates, or other factors that affect security values.
These techniques may involve derivative transactions such as buying
and selling options and futures contracts and leveraged notes,
entering into swap agreements, and purchasing indexed securities. The
Fund can use these practices only as protection against an adverse
move of the holdings in the Fund to adjust the risk and return
characteristics of the Fund. The decision to invest in these
instruments will be based on market conditions, regulatory limits and
tax considerations. If market conditions are judged incorrectly, a
strategy does not correlate well with the Fund's investments, or if
the counterparty to the transaction does not perform as promised,
these techniques could result in a loss. These techniques may
increase the volatility of the Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. Any
instruments determined to be illiquid are subject to the Fund's
limitation on illiquid securities. See below and the Statement of
Additional Information for more details about these strategies.
Risk of using the fund's defensive strategies
There can be no assurance that engaging in options, futures, or any
other investment strategy will be successful. While defensive
strategies are designed to protect the Fund from potential declines,
if market values or other economic factors are misgauged, the Fund
may be worse off than had it not employed the defensive strategy.
While an attempt is made to assess market and equity risk and thereby
prevent declines in the value of the Fund's portfolio holdings, there
is a risk of imperfect or no correlation between price movements of
portfolio investments and instruments used as part of an investment
strategy, so that a loss may be incurred. While such strategies can
reduce the risk of loss, they can also reduce the opportunity for
gain since they can or may offset favorable price movements. The use
of these strategies may result in a disadvantage to the Fund if the
Fund is not able to purchase or sell a portfolio holding at an
optimal time due to the need to cover its transaction in its
segregated account, or due to the inability of the Fund to liquidate
its position because of its relative illiquidity.
Repurchase agreements
Repurchase agreements are arrangements under which the Fund buys
securities and the seller simultaneously agrees to repurchase the
securities at a specified time and price. The Fund may engage in
repurchase agreements to earn a higher rate of return than it could
earn simply by investing in the obligation which is the subject of
the repurchase agreement. The Fund will only engage in repurchase
agreements with recognized securities dealers and banks determined to
present minimal credit risk by the Advisor under the direction and
supervision of the Fund's Board of Trustees. In addition, the Fund
will only engage in repurchase agreements reasonably designed to
fully secure during the term of the agreement, the seller's
obligation to repurchase the underlying security. The Fund will
monitor the market value of the underlying security during the term
of the agreement. If the seller defaults on its obligation to
repurchase and the value of the underlying security declines, the
Fund may incur a loss and may incur expenses in selling the
underlying security. Repurchase agreements are always for periods of
less than one year, and are considered illiquid if not terminable
within seven days.
The Fund may invest up to 15% of its total assets in ADRs.
U.S. dollar-denominated ADRs, which are traded in the U.S. on
exchanges or over the counter, are receipts typically issued by a
U.S. bank or trust company which evidence ownership of underlying
securities of a foreign corporation. By investing in ADRs rather than
directly in foreign issuers' stock, the Fund may avoid currency and
some liquidity risks, since the information available for ADRs is
subject to the more uniform and more exacting accounting, auditing
and financial reporting standards of the domestic market or exchange
on which they are traded. In general, there is a large, liquid market
in the U.S. for many ADRs.
Borrowing
The Fund may borrow money from banks (and pledge its assets to secure
such borrowing) for temporary or emergency purposes, but not for
leverage. Such borrowing may not exceed one third of the value of
the Fund's total assets.
High Social Impact Investments
The Fund has adopted a nonfundamental policy that permits it to
invest up to one percent of its assets in investments in securities
that offer a rate of return below the then-prevailing market rate and
that present attractive opportunities for furthering the Fund's
social criteria ("High Social Impact Investments"). These securities
are typically illiquid and unrated and are generally considered
noninvestment grade debt securities, which involve a greater risk of
default or price decline than investment grade securities. Through
diversification, credit analysis and limited maturity, investment
risk can be reduced, although there can be no assurance that losses
will not occur.
SOCIALLY RESPONSIBLE INVESTMENT CRITERIA
The Fund believes that companies that will be successful, will take
steps to reduce their environmental impact, understand the value of
good employee relations, and provide safe and beneficial products and
services.
The Fund carefully reviews company policies and behavior regarding
social issues important to quality of life:
-Environment
-Weapons Systems
-Employee Relations
-Product Criteria
Once equity and debt securities are determined to fall within the
investment objective of the Fund and are deemed financially viable
investments, they are analyzed according to the social criteria
described below. This analysis is applied to potential investment
candidates by the Advisor in consultation with the Subadvisor.
The following criteria may be changed by the Fund's Board of Trustees
without shareholder approval:
(1) The Fund avoids investing in companies that, in the Advisor's
opinion, have significant or historical patterns of violating
environmental regulations, or otherwise have an egregious
environmental record. Additionally, the Fund will avoid investing in
nuclear power plant operators and owners, or manufacturers of key
components in the nuclear power process.
(2) The Fund will not invest in companies significantly involved in
weapons production.
(3) The Fund will not invest in companies that, in the Advisor's
opinion, have significant patterns of discrimination against
employees on the basis of race, gender, religion, age, disability or
sexual orientation, or in companies that have poor labor relations.
(4) The Fund will not invest in companies that are significantly
involved in the manufacture of tobacco or alcohol products. The Fund
will not invest in companies that make products or offer services
that, under proper use, in the Advisor's opinion, are considered
harmful.
While the Fund may invest in companies that exhibit positive social
characteristics, it makes no explicit claims to seek out companies
with such practices.
Additional policies and restrictions
The Fund's Statement of Additional Information describes additional
policies and restrictions concerning the portfolio investments of the
Fund.
TOTAL RETURN
The Fund may advertise total return for each class. Total return is
based on historical results and is not intended to indicate future
performance.
Total return is calculated separately for each class. It includes not
only the effect of income dividends but also any change in net asset
value, or principal amount, during the stated period. The total
return of the class shows its overall change in value, including
changes in share price and assuming all of the class' dividends and
capital gain distributions are reinvested. A cumulative total return
reflects the performance of the class over a stated period of time.
An average annual total return ("return with maximum load") reflects
the hypothetical annual compounded return that would have produced
the same cumulative total return if the performance had been constant
over the entire period. Because average annual returns tend to smooth
out variations in the returns, you should recognize that they are not
the same as actual year-by-year results. Both types of total return
usually will include the effect of paying the maximum front-end sales
charge in the case of Class A shares. Of course, total returns will
be higher if sales charges are not taken into account. Quotations of
"return without maximum load" do not reflect deduction of the sales
charge. You should consider these return figures only if you qualify
for a reduced sales charge, or for purposes of comparison with
comparable figures which also do not reflect a sales charge, such as
mutual fund averages compiled by Lipper Analytical Services, Inc.
("Lipper"). Further information about the Fund's performance is
contained in its Annual Report to Shareholders, which may be obtained
without charge.
MANAGEMENT OF THE FUND
The Board of Trustees supervises the Fund's activities and reviews
its contracts with companies that provide it with services.
The Fund is a series of The Calvert Fund (the "Trust"), an open-end
management investment company organized as a Massachusetts business
trust on March 15, 1982. The other series of the Trust are the
Calvert Income Fund and Calvert Strategic Growth Fund.
The Trust is not required to hold annual shareholder meetings, but
special meetings may be called for purposes such as electing
Trustees, changing fundamental policies, or approving a management
contract. As a shareholder, you receive one vote for each share of
the Fund you own, except that matters affecting classes differently,
such as Distribution Plans, will be voted on separately by class.
Calvert Asset Management serves as Advisor to the Fund.
Calvert Asset Management Company, Inc. ("CAM" or the "Advisor") is
the Fund's investment advisor. The Advisor provides the Fund with
investment supervision and management, administrative services and
office space; furnishes executive and other personnel to the Fund;
and pays the salaries and fees of all Trustees who are affiliated
persons of the Advisor. The Advisor may also assume and pay certain
advertising and promotional expenses of the Fund and reserves the
right to compensate broker-dealers in return for their promotional or
administrative services. The Fund pays all other operating expenses
as noted in the Statement of Additional Information.
Calvert Group is one of the largest investment management firms in
the Washington, D.C. area.
Calvert Group, Ltd., parent of the Fund's investment advisor,
transfer agent, and distributor, is a subsidiary of Acacia Mutual
Life Insurance Company of Washington, D.C. Calvert Group is one of
the largest investment management firms in the Washington, D.C. area.
Calvert Group, Ltd. and its subsidiaries are located at 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. As of
December 31, 1996, Calvert Group managed and administered assets in
excess of $5.2 billion and more than 220,000 shareholder and
depositor accounts.
The Advisor receives a fee based on a percentage of the Fund's assets.
The Investment Advisory Agreement between the Fund and the Advisor
provides that the Advisor is entitled to a base annual fee, payable
monthly, of 0.90% of the Fund's average daily net assets. The Advisor
may in its discretion defer its fees or assume the Fund's operating
expenses. The Investment Advisory Agreement provides that the Advisor
may, to the extent permitted by law, recapture any fees it defers or
expenses it assumes through December 31, 1997. The Advisor has until
December 31, 1999 to recapture fees deferred or expenses reimbursed
during the previous two-year period.
Portfolio Advisory Services, Inc. is the Fund's Subadvisor.
Portfolio Advisory Services, Inc. ("PASI" or the "Subadvisor") is the
investment subadvisor to the Fund. Its principal business office is
725 South Figueroa Street, Suite 2328, Los Angeles, California,
90017. As of March 31, 1996 PASI managed in excess of $359 million,
including mutual fund assets. The Subadvisor manages the investment
and reinvestment of the assets of the Fund, although the Advisor may
screen potential investments for compatibility with the Fund's social
criteria. PASI's investment style features quantitative screens and
in-depth "bottom-up" fundamental analysis to identify superior growth
stocks.
Portfolio Manager
The portfolio management team for the Calvert New Vision Small Cap
Fund (since inception) is led by Cedd Moses, Director and Managing
Director of Investments of PASI, and PASI's principal shareholder.
Mr. Moses earned a Bachelor of Science in Mechanical Engineering from
UCLA in 1982, and subsequently worked with several securities firms
before founding PASI in 1988.
Mr. Moses is assisted by portfolio managers Kathleen Kalp and Stuart
L. Peterson, both firm vice-presidents. Ms. Kalp, a member of the
investment policy committee, is responsible for the general analysis
of securities. In 1990, she joined Pilgrim America where her
responsibilities included general equity analysis for the $250
million "Magnacap" Growth and Income fund. Ms. Kalp began her career
in 1984 with William O'Neil & Co. as a research analyst. She has an
MBA from Loyola Marymount University, a BA in Business Economics from
the University of California at Santa Barbara, and is currently a CFA
Level III candidate.
Mr. Peterson, also an investment policy committee member, is
responsible for the general analysis of securities and development of
PASI's original security screens. Previously, he worked at Chase
Manhattan Bank in the Financial Products Group (1994), analyzing
investment management industry trends and various derivative
products. Mr. Peterson began his career with Lehman Brothers in
1989, and was a Registered Representative at Dean Witter Reynolds,
Inc. from 1990 to 1993. He received an MBA in Analytic Finance from
the University of Chicago and a BA in Economics from the University
of California, Los Angeles.
The Investment Subadvisory Agreement between the Advisor and the
Subadvisor provides that the Subadvisor is entitled to a base
Subadvisory fee of 0.47% of the Fund's average daily net assets
managed by the Subadvisor. The Subadvisor's fee is paid by the
Advisor out of the fee the Advisor receives from the Fund.
The Fund has obtained an exemptive order from the Securities and
Exchange Commission to permit the Fund, pursuant to approval by the
Board of Trustees, to enter into and materially amend contracts with
the Fund's Subadvisor without shareholder approval. See "Investment
Advisor and Subadvisor" in the SAI for further details.
Calvert Administrative Services Company provides administrative
services for the Fund.
Calvert Administrative Services Company ("CASC"), an affiliate of the
Advisor, 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, payable monthly, of 0.10% of the Fund's
average daily net assets.
Calvert Distributors, Inc. serves as underwriter to market the Fund's
shares.
Calvert Distributors, Inc. ("CDI") is the Fund's principal
underwriter and distributor. Under the terms of its underwriting
agreement with the Fund, CDI markets and distributes the Fund's
shares and is responsible for payment of commissions and service fees
to broker-dealers, banks, and financial services firms, preparation
of advertising and sales literature, and printing and mailing of
prospectuses to prospective investors.
The transfer agent keeps your account records.
Calvert Shareholder Services, Inc. is the Fund's transfer, dividend
disbursing and shareholder servicing agent.
SHAREHOLDER GUIDE
Opening An Account
You can buy shares of the Fund in several ways.
An account application should accompany this prospectus. A completed
and signed application is required for each new account you open,
regardless of the method you choose for making your initial
investment. Additional forms may be required from corporations,
associations, and certain fiduciaries. If you have any questions or
need extra applications, call your broker, or Calvert Group at
800-368-2748. Be sure to specify which class you wish to purchase.
To invest in any of Calvert's tax-deferred retirement plans, please
call Calvert Group at 800-368-2748 to receive information and the
required separate application.
Alternative Sales Options
The Fund offers two classes of shares:
Class A Shares - Front End Load Option
Class A shares are sold with a front-end sales charge at the time of
purchase. Class A shares are not subject to a sales charge when they
are redeemed.
Class C shares - Level Load Option
Class C shares are sold without a sales charge at the time of
purchase or redemption.
Class C shares have higher expenses than Class A shares
The Fund bears some of the costs of selling its shares under
Distribution Plans adopted with respect to its Class A and Class C
shares pursuant to Rule 12b-1 under the 1940 Act. Payments under the
Class A Distribution Plan are limited to 0.25% annually of the
average daily net asset value of Class A shares. The Class C
Distribution Plan provides for the payment of an annual distribution
fee to CDI of up to 0.75%, plus a service fee of up to 0.25%, for a
total of 1.00% of the average daily net assets.
Considerations for deciding which class of shares to buy
Income distributions for Class A shares will probably be higher than
those for Class C shares, as a result of the distribution expenses
described above. (See also "Total Return"). You should consider Class
A shares if you qualify for a reduced sales charge under Class A.
Class A shares may also be more appropriate for larger accounts or if
you plan to hold the shares for several years. Class C shares are not
available for investments of $1 million or more.
Class A Shares
Class A shares are offered at net asset value plus a front-end sales
charge as follows:
Concession
to Dealers
As a % of As a % of Net as a %
Offering Price Amount of Amount
Invested Invested
Amount of Investment
Less than $50,000 4.75% 4.99% 4.00%
$50,000 but less than $100,000 3.75% 3.90% 3.00%
$100,000 but less than $250,000 2.75% 2.83% 2.25%
$250,000 but less than $500,000 1.75% 1.78% 1.25%
$500,000 but less than $1,000,000
1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
* CDI reserves the right to recoup any portion of the amount paid to
the dealer if the investor redeems some or all of the shares from the
Fund within twelve months of the time of purchase.
Sales charges on Class A shares may be reduced or eliminated in
certain cases. See Exhibit A to this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a
portion to your broker-dealer. Upon written notice to broker-dealers
with which it has selling agreements, CDI may reallow up to the full
applicable sales charge. Broker-dealers to whom 90% or more of the
entire sales charge is reallowed may be deemed to be underwriters
under the Securities Act of 1933.
In addition to any sales charge reallowance or finder's fee, your
broker-dealer, or other financial service firm through which your
account is held, currently will be paid periodic service fees at an
annual rate of up to 0.25% of the average daily net asset value of
Class A shares held in accounts maintained by that firm.
Class A Distribution Plan
The Fund has adopted a Distribution Plan with respect to its Class A
shares (the "Class A Distribution Plan"), which provides for payments
at a maximum annual rate of 0.25% of the average daily net asset
value of Class A shares, to pay expenses associated with the
distribution and servicing of Class A shares. Amounts paid by the
Fund to CDI under the Class A Distribution Plan are used to pay to
broker-dealers and others, including CDI salespersons who service
accounts, service fees at an annual rate of up to 0.25% of the
average daily net asset value of Class A shares, and to pay CDI for
its marketing and distribution expenses, including, but not limited
to, preparation of advertising and sales literature and the printing
and mailing of prospectuses to prospective investors.
Class C Shares
Class C shares are not available through all broker-dealers. Class C
shares are offered at net asset value, without a front-end sales
charge or a contingent deferred sales charge. Class C expenses are
higher than those of Class A.
Class C Distribution Plan
The Fund has adopted a Distribution Plan with respect to its Class C
shares (the "Class C Distribution Plan"), which provides for payments
at an annual rate of up to 1.00% of the average daily net asset value
of Class C shares, to pay expenses of the distribution and servicing
of Class C shares. Amounts paid by the Fund under the Class C
Distribution Plan are currently used by CDI to pay broker-dealers and
other selling firms quarterly compensation at an annual rate of up to
0.75%, plus a service fee, as described above under "Class A
Distribution Plan," of up to 0.25% of the average daily net asset
value of each share sold by such others.
Arrangements with Broker-Dealers and Others
CDI may also pay additional concessions, including non-cash
promotional incentives, such as merchandise or trips, to dealers
employing registered representatives who have sold or are expected to
sell a minimum dollar amount of shares of the Fund and/or shares of
other Funds underwritten by CDI. CDI may make expense reimbursements
for special training of a broker-dealer's registered representatives,
advertising or equipment, or to defray the expenses of sales
contests. Eligible marketing and distribution expenses may be paid
pursuant to the Fund's Rule 12b-1 Distribution Plan and in compliance
with the rules of the NASD.
Broker-dealers or others may receive different levels of compensation
depending on which class of shares they sell. Payments pursuant to a
Distribution Plan are included in the operating expenses of the class.
HOW TO BUY SHARES
(BE SURE TO SPECIFY WHICH CLASS YOU ARE BUYING)
Method New Accounts Additional Investments
By Mail $2,000 minimum $250 minimum
Please make your check payable Please make your
to the Fund and mail it with check payable to the
your application to: Fund and mail it with
your investment slip to:
Calvert Group
Calvert Group
P.O. Box 419544
P.O. Box 419739
Kansas City, MO 64141-6544
Kansas City, MO 64141-6739
By Registered, Certified, or Overnight Mail:
Calvert Group
Calvert Group
c/o NFDS, 6th Floor
c/o NFDS, 6th Floor
1004 Baltimore
1004 Baltimore
Kansas City, MO 64105-1807
Kansas City, MO 64105-1807
Through
Your Broker $2,000 minimum $250 minimum
At the Calvert Visit the Calvert Branch Office to make
investments by
Branch Office check. See the back cover page for the
address.
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR BROKER OR CALVERT GROUP AT
800-368-2745
By Exchange $2,000 minimum $250 minimum
(From your account in another Calvert Group Fund)
When opening an account by exchange, your new account must be
established with the same name(s), address and taxpayer
identification number as your existing Calvert account.
By Bank Wire $2,000 minimum $250 minimum
By Calvert Money Not Available $50 minimum
Controller* for Initial Investment
*Please allow sufficient time for Calvert Group to process your
initial request for this service, normally 10 business days. The
maximum transaction amount is $300,000, and your purchase request
must be received by 4:00 p.m. Eastern time.
NET ASSET VALUE
Net asset value, or "NAV," refers to the worth of one share of the
Fund. NAV is computed per class by adding the value of all portfolio
holdings, plus other assets, deducting liabilities, and then dividing
the result by the number of shares outstanding. This value is
calculated at the close of the Fund's business day, which coincides
with the closing of the regular session of the New York Stock
Exchange (normally 4:00 p.m. Eastern time). The Fund is open for
business each day the New York Stock Exchange is open. All purchases
of Fund shares will be confirmed and credited to your account in full
and fractional shares (rounded to the nearest 1/1000th of a share).
Fund securities and other assets are valued based on market
quotations, except that securities maturing within 60 days are valued
at amortized cost. If quotations are not available, securities are
valued by a method that the Board of Trustees believes accurately
reflects fair value. Financial futures are valued at the settlement
price established each day by the board of trade or exchange on which
they are traded.
WHEN YOUR ACCOUNT WILL BE CREDITED
Before you buy shares, please read the following information to make
sure your investment is accepted and credited properly.
Your purchase will be processed at the next offering price based on
the next net asset value calculated after your order is received and
accepted. All your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks. No cash will be accepted. The Fund
reserves the right to suspend the offering of shares for a period of
time or to reject any specific purchase order. If your check does not
clear, your purchase will be canceled and you will be charged a $10
fee plus costs incurred by the Fund. When you purchase by check or
with Calvert Money Controller, the Fund may hold payment on
redemptions until it is reasonably satisfied that the investment is
collected (normally up to 10 business days from purchase date). To
avoid this collection period, you can wire federal funds from your
bank, which may charge you a fee. As a convenience, check purchases
can be received at Calvert's offices for overnight mail delivery to
the transfer agent and will be credited the next business day. Any
check purchase received without an investment slip may cause delayed
crediting.
Certain financial institutions or broker-dealers which have entered
into a sales agreement with the Distributor may enter confirmed
purchase orders on behalf of customers by phone, with payment to
follow within a number of days of the order as specified by the
program. If payment is not received in the time specified, the
financial institution could be held liable for resulting fees or
losses.
EXCHANGES
Each exchange represents the sale of shares of one Fund and the
purchase of shares of another. Therefore, you could realize a taxable
gain or loss on the transaction.
If your investment goals change, the Calvert Group of Funds has a
variety of investment alternatives that includes common stock funds,
tax-exempt and corporate bond funds, and money market funds. The
exchange privilege is a convenient way to buy shares in other Calvert
Group Funds in order to respond to changes in your goals or in market
conditions. However, the Fund is intended as a long-term investment
and not for frequent short-term trades. Before you make an exchange
from a Fund, please note the following:
Call your broker or a Calvert representative for information
and a prospectus for any of Calvert's other Funds registered in
your state. Read the prospectus of the Fund into which you want
to exchange for relevant information, including class offerings.
The exchange privilege is only available in states where shares
of the Fund into which you want to exchange are registered for
sale.
Complete and sign an application for an account in the Fund or
Portfolio into which you want to invest, taking care to register
your new account in the same name and taxpayer identification
number as your existing Calvert account(s). Exchange
instructions may then be given by telephone if you have not
declined telephone transaction privileges and the shares are not
in certificate form. See "Selling Your Shares" and "How to Sell
Your Shares-- By Telephone and-- Exchange to Another Calvert
Group Fund."
Shares on which you have already paid a sales charge at Calvert
Group and shares acquired by reinvestment of dividends or
distributions may be exchanged into another Fund at no
additional charge. Class C shares may be exchanged for shares of
another fund, but will be charged the front-end sales charge, if
applicable.
Shareholders (and those managing multiple accounts) who make
two purchases and two exchange redemptions of shares of the same
Fund during any 6-month period will be given written notice that
they may be prohibited from making additional investments. This
policy does not prohibit a shareholder from redeeming shares of
the Fund, and does not apply to trades solely among money market
funds.
For purposes of the exchange privilege, the Fund is related to
Summit Cash Reserves Fund by investment and investor services.
The Fund reserves the right to terminate or modify the exchange
privilege in the future upon 60 days' written notice.
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour performance and price information
Calvert Group has a round-the-clock telephone service that lets
existing customers obtain prices, yields, performance information,
account balances, and authorize certain transactions.
Calvert Money Controller
Calvert Money Controller eliminates the delay of mailing a check or
the expense of wiring funds. You can request this free service on
your application.
This service allows you to authorize electronic transfers of money to
purchase or sell shares. You use Calvert Money Controller like an
"electronic check" to move money ($50 to $300,000) between your bank
account and your account in the Fund with one phone call. Allow two
business days after the call for the transfer to take place; for
money recently invested, allow normal check clearing time (up to 10
business days) before redemption proceeds are sent to your bank. All
Calvert Money Controller transaction requests must be received by
4:00 p.m. Eastern time.
You may also arrange systematic monthly or quarterly investments
(minimum $50) into your Calvert Group account. After you give us
proper authorization, your bank account will be debited to purchase
Fund shares. A debit entry will appear on your bank statement. Share
purchases made through Calvert Money Controller will be subject to
the applicable sales charge. If you would like to make arrangements
for systematic monthly or quarterly redemptions from your Calvert
account, call your broker or Calvert for a Money Controller
Application.
Telephone Transactions
Calvert may record all telephone calls.
You may purchase, redeem, or exchange shares, wire funds and use
Calvert Money Controller by telephone if you have pre-authorized
service instructions. You automatically have telephone privileges
unless you elect otherwise. The Fund, the transfer agent and their
affiliates are not liable for acting in good faith on telephone
instructions relating to your account, so long as they follow
reasonable procedures to determine that the telephone instructions
are genuine. Such procedures may include recording the telephone
calls and requiring some form of personal identification. You should
verify the accuracy of telephone transactions immediately upon
receipt of your confirmation statement.
Optional Services
Complete the application for the easiest way to establish services.
The easiest way to establish optional services on your Calvert Group
account is to select the options you desire when you complete your
account application. If you wish to add other options later, you may
have to provide us with additional information and a signature
guarantee. Please call your broker or Calvert Investor Relations at
800-368-2745 for further assistance. For our mutual protection, we
may require a signature guarantee on certain written transaction
requests. A signature guarantee verifies the authenticity of your
signature, and may be obtained from any bank, savings and loan
association, credit union, trust company, broker-dealer firm or
member of a domestic stock exchange. A signature guarantee cannot be
provided by a notary public.
Householding of General Mailings
Householding reduces Fund expenses and saves paper and trees for the
environment.
If you have multiple accounts with Calvert, you may receive combined
mailings of some shareholder information, such as semi-annual and
annual reports. Please contact Calvert Investor Relations at
800-368-2745 to receive additional copies of information.
Special Services and Charges
The Fund pays for shareholder services but not for special services
that are required by a few shareholders, such as a request for a
historical transcript of an account. You may be required to pay a
research fee for these special services.
If you are purchasing shares of the Fund through a program of
services offered by a broker-dealer or financial institution, you
should read the program materials in conjunction with this
Prospectus. Certain features of the Fund may be modified in these
programs, and administrative charges may be imposed for the services
rendered.
Tax-Saving Retirement Plans
Contact Calvert Group for complete information kits discussing the
plans, and their benefits, provisions and fees.
Calvert Group can set up your new account in the Fund under one of
several tax-deferred plans. These plans let you invest for retirement
and shelter your investment income from current taxes. Minimums may
differ from those listed in the "How to Buy Shares" chart. Also,
reduced sales charges may apply. See "Exhibit A - Reduced Sales
Charges."
Individual retirement accounts (IRAs): available to anyone who
has earned income. You may also be able to make investments in
the name of your spouse, if your spouse has no earned income.
Qualified Profit-Sharing and Money-Purchase Plans (including
401(k) Plans): available to self-employed people and their
partners, or to corporations and their employees.
Simplified Employee Pension Plan (SEP-IRA): available to
self-employed people and their partners, or to corporations.
403(b)(7) Custodial Accounts: available to employees of most
non-profit organizations and public schools and universities.
HOW TO SELL YOUR SHARES
You may redeem all or a portion of your shares on any business day.
Your shares will be redeemed at the next net asset value calculated
after your redemption request is received and accepted. See below for
specific requirements necessary to make sure your redemption request
is accepted. Remember that the Fund may hold payment on the
redemption of your shares until it is reasonably satisfied that
investments made by check or by Calvert Money Controller have been
collected (normally up to 10 business days).
Redemption Requirements To Remember
To ensure acceptance of your redemption request, please follow the
procedures described here and below.
Once your shares are redeemed, the proceeds will normally be sent to
you on the next business day, but if making immediate payment could
adversely affect the Fund, it may take up to 7 days. Calvert Money
Controller redemptions generally will be credited to your bank
account on the second business day after your phone call. When the
New York Stock Exchange is closed (or when trading is restricted) for
any reason other than its customary weekend or holiday closings, or
under any emergency circumstances as determined by the Securities and
Exchange Commission, redemptions may be suspended or payment dates
postponed.
Minimum account balance is $1,000 per Fund, per class.
Please maintain a balance in your account of at least $1,000 per
Fund, per class. If, due to redemptions, it falls below $1,000, your
account may be closed and the proceeds mailed to you at the address
of record. You will be given notice that your account will be closed
after 30 days unless you make an additional investment to increase
your account balance to the $1,000 minimum.
By Mail To:
Calvert Group
P.O. Box 419544
Kansas City, MO 64179-6544
You may redeem available funds from your account at any time by
sending a letter of instruction, including your name, account and
Fund number, the number of shares or dollar amount, and where you
want the money to be sent. Additional requirements, below, may apply
to your account. The letter of instruction must be signed by all
required authorized signers. If you want the money to be wired to a
bank not previously authorized, then a voided bank check must be
enclosed with your letter. If you do not have a voided check or if
you would like funds sent to a different address or another person,
your letter must be signature guaranteed.
Type of Registration Requirements
Corporations, Associations Letter of
instruction and
corporate
resolution,
signed by
person(s)
authorized to
act on the
account,
accompanied by
signature
guarantee(s).
Trusts Letter of
instruction
signed by the
Trustee(s) (as
Trustees), with
a signature
guarantee. (If
the Trustee's
name is not
registered on
your account,
provide a copy
of the trust
document,
certified within
the last 60
days.)
By Telephone
Please call 800-368-2745. You may redeem shares from your account by
telephone and have your money mailed to your address of record or
wired to an address or bank you have previously authorized. A charge
of $5 is imposed on wire transfers of less than $1,000. See
"Telephone Transactions." If for any reason you are unable to reach
the Fund by telephone, whether due to mechanical difficulties, heavy
market volume, or otherwise, you may send a written redemption
request to the Fund by overnight mail, or, if your account is held
through a broker, see "Through Your Broker" below.
Calvert Money Controller
Please allow sufficient time for Calvert Group to process your
initial request for this service (normally 10 business days). Your
request for a redemption by this service must be received by 4:00
p.m. Eastern time. Accounts cannot be closed by this service.
Exchange to Another Calvert Group Fund
You must meet the minimum investment requirement of the other Calvert
Group Fund. You can only exchange between accounts with identical
names, addresses and taxpayer identification number, unless
previously authorized with a signature-guaranteed letter. See
"Exchanges."
Systematic Check Redemptions
If you have an account with a balance of $10,000 or more, you may
have up to two (2) redemption checks for a fixed amount sent to you
on the 15th of each month, simply by sending a letter with all
information, including your account number, and the dollar amount
($100 minimum). If you would like a regular check mailed to another
person or place, your letter must be signature guaranteed.
Through your Broker
If your account is held in your broker's name ("street name"), you
should contact your broker directly to transfer, exchange or redeem
shares.
DIVIDENDS AND TAXES
Each year, the Fund distributes substantially all of its net
investment income and capital gains to shareholders.
Dividends from the Fund's net investment income are declared and paid
annually. Net investment income consists of the interest income,
profits from securities loans, net short-term capital gains, if any,
and dividends, less expenses. Distributions of net long-term capital
gains, if any, are normally declared and paid by the Fund once a
year; however, the Fund does not anticipate making any such
distributions unless available capital loss carryovers have been used
or have expired. Dividend and distribution payments will vary between
classes because of different fees. Dividend payments are anticipated
generally to be higher for Class A shares.
Dividend Payment Options
Dividends and distributions are automatically reinvested in
additional shares, unless on the account application you request to
have them paid to you in cash (by check or by Calvert Money
Controller). You may also request to have your dividends and
distributions from the Fund invested at net asset value ("NAV") in
shares of any other Calvert Group Fund. If you choose to have them
reinvested in the same Fund, the new shares will be purchased at the
NAV (no sales charge) on the reinvest date, which is generally 1 to 3
days prior to the payment date. You must be a shareholder on the
record date to receive dividends. You must notify the Fund in writing
prior to the record date if you want to change your payment options.
If you elect to have dividends and/or distributions paid in cash, and
the U.S. Postal Service cannot deliver the check, or if it remains
uncashed for six months, it, as well as future dividends and
distributions, will be reinvested in additional shares.
"Buying a Dividend"
At the time of purchase, the share price of the Fund may reflect
undistributed income, capital gains or unrealized appreciation of
securities. Any income or capital gains from these amounts which are
later distributed to you are fully taxable as dividends or capital
gains distributions. On the record date for a distribution, the
Fund's per share value is reduced by the amount of the distribution.
If you buy shares just before the record date ("buying a dividend")
you will pay the full price for the shares and then receive a portion
of the price back as a taxable distribution.
Federal Taxes
The Fund normally distributes all net income and capital gain to
shareholders. These distributions are taxable to you regardless of
whether they are taken in cash or reinvested. Distributions of net
investment income are taxable as ordinary income; distributions of
long-term capital gains are taxable as long-term capital gains
regardless of how long you have held the shares. Dividends and
distributions declared during October, November or December and paid
in January of the following year are taxable in the year they are
declared. The Fund will mail you Form 1099-DIV in January indicating
the federal tax status of your dividends. If distributions exceed the
Fund's net investment income and capital gain for the year, the
excess will reduce your tax basis for your shares in the Fund.
You may realize a capital gain or loss when you sell or exchange
shares.
If you sell or exchange your Fund shares you will have a short or
long-term capital gain or loss, depending on how long you owned the
shares which were sold. In January, the Fund will mail you Form
1099-B indicating the proceeds from all sales, including exchanges.
You should keep your annual year-end account statements to determine
the cost (basis) of the shares to report on your tax returns.
Taxpayer Identification Number, Back-up Withholding
If we do not have your correct Social Security or Taxpayer
Identification Number ("TIN") and a signed certified application or
Form W-9, federal law requires the Fund to withhold 31% of your
dividends, capital gain distributions, and redemptions. In addition,
you may be subject to a fine. You will also be prohibited from
opening another account by exchange. If this TIN information is not
received within 60 days after your account is established, your
account may be redeemed at the current NAV on the date of redemption.
The Fund reserves the right to reject any new account or any purchase
order for failure to supply a certified TIN.
EXHIBIT A (CLASS A ONLY)
REDUCED SALES CHARGES
You may qualify for a reduced sales charge through several purchase
plans available. You must notify the Fund at the time of purchase to
take advantage of the reduced sales charge.
Right of Accumulation. The sales charge is calculated by taking into
account not only the dollar amount of a new purchase of shares, but
also the higher of cost or current value of shares previously
purchased in Calvert Group Funds that impose sales charges. This
automatically applies to your account for each new purchase.
Letter of Intent. If you plan to purchase $50,000 or more of Fund
shares over the next 13 months, your sales charge may be reduced
through a "Letter of Intent." You pay the lower sales charge
applicable to the total amount you plan to invest over the 13-month
period, excluding any money market fund purchases. Part of your
shares will be held in escrow, so that if you do not invest the
amount indicated, you will have to pay the sales charge applicable to
the smaller investment actually made. For more information, see the
Statement of Additional Information.
Group Purchases. If you are a member of a qualified group, you may
purchase shares of the Fund at the reduced sales charge applicable to
the group taken as a whole. The sales charge is calculated by taking
into account not only the dollar amount of the shares you purchase,
but also the higher of cost or current value of shares previously
purchased and currently held by other members of your group.
A "qualified group" is one which (1) has been in existence for more
than six months, (2) has a purpose other than acquiring Fund shares
at a discount, and (3) satisfies uniform criteria which enable CDI
and dealers offering Fund shares to realize economies of scale in
distributing such shares. A qualified group must have more than 10
members, must be available to arrange for group meetings between
representatives of CDI or dealers distributing the Fund's shares,
must agree to include sales and other materials related to the Fund
in its publications and mailings to members at reduced or no cost to
CDI or dealers, and must seek to arrange for payroll deduction or
other bulk transmission of investments to the Fund.
Pension plans may not qualify participants for group purchases;
however, such plans may qualify for reduced sales charges under a
separate provision (see below). Members of a group are not eligible
for a Letter of Intent.
Retirement Plans Under Section 457, Section 403(b)(7), or Section
401(k). There is no sales charge on shares purchased for the benefit
of a retirement plan under Section 457 of the Internal Revenue Code of
1986, as amended (the "Code"), or for a plan qualifying under Section
403(b)(7) of the Code if, at the time of purchase, Calvert Group has
been notified in writing that the 403(b)(7) plan has at least 200
eligible employees (see below). Furthermore, there is no sales charge
on shares purchased for the benefit of a retirement plan qualifying
under Section 401(k) of the Code if, at the time of such purchase, the
401(k) plan administrator has notified Calvert Group in writing that
a) its 401(k) plan has at least 200 eligible employees (see below); or
b) the cost or current value of shares the plan has in Calvert Group
of Funds (except money market funds) is at least $1 million.
Neither the Fund, nor CDI, nor any affiliate thereof will reimburse a
plan or participant for any sales charges paid prior to receipt of
such written communication and confirmation by Calvert Group. Plan
administrators should send requests for the waiver of sales charges
based on the above conditions to: Calvert Group Retirement Plans,
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
Other Circumstances. There is no sales charge on shares of any fund
(Portfolio or Series) of the Calvert Group of Funds sold to: (1)
current and retired members of the Board of Trustees/Directors of the
Calvert Group of Funds, (and the Advisory Council of the Calvert
Social Investment Fund); (2) directors, officers and employees of the
Advisor, Distributor, and their affiliated companies; (3) directors,
officers and registered representatives of brokers distributing the
Fund's shares; and immediate family members of persons listed in (1),
(2), or (3) above; (4) dealers, brokers, or registered investment
advisors that have entered into an agreement with CDI providing
specifically for the use of shares of the Fund (Portfolio or Series)
in particular investment programs or products (where such program or
product already has a fee charged therein) made available to the
clients of such dealer, broker, or registered investment advisor; (5)
trust departments of banks or savings institutions for trust clients
of such bank or savings institution; and (6) purchases placed through
a broker maintaining an omnibus account with the Fund (Portfolio or
Series) and the purchases are made by (a) investment advisors or
financial planners placing trades for their own accounts (or the
accounts of their clients) and who charge a management, consulting,
or other fee for their services; or (b) clients of such investment
advisors or financial planners who place trades for their own
accounts if such accounts are linked to the master account of such
investment advisor or financial planner on the books and records of
the broker or agent; or (c) retirement and deferred compensation
plans and trusts, including, but not limited to, those defined in Section
401(a) or Section 403(b) of the Code, and "rabbi trusts."
Dividends and Capital Gain Distributions from other Calvert Group
Funds. You may prearrange to have your dividends and capital gain
distributions from another Calvert Group Fund automatically invested
in another account with no additional sales charge.
Reinstatement Privilege. If you redeem Fund shares and then within 30
days decide to reinvest in the same Fund, you may do so at the net
asset value next computed after the reinvestment order is received,
without a sales charge. You may use the reinstatement privilege only
once. The Fund reserves the right to modify or eliminate this
privilege.
To Open an Account:
800-368-2748
Prospectus
January 31, 1997
THE CALVERT FUND
Calvert New Vision Small Cap Fund
Performance and Prices:
Calvert Information Network
24 hours, 7 days a week
800-368-2745
Service for Existing Accounts:
Shareholders 800-368-2745
Brokers 800-368-2746
TDD for Hearing Impaired:
800-541-1524
Branch Office:
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified
or Overnight Mail:
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105
Calvert Group Web-Site
Address: http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Table of Contents
Fund Expenses
Investment Objective and Policies
Investment Techniques and Related Risks
Socially Responsible Investment Criteria
Total Return
Management of the Fund
SHAREHOLDER GUIDE:
Alternative Sales Options
How to Buy Shares
Net Asset Value
When Your Account Will Be Credited
Exchanges
Other Calvert Group Services
How to Sell Your Shares
Dividends and Taxes
Exhibit A - Reduced Sales Charges
<PAGE>
The Calvert Fund:
Calvert New Vision Small Cap Fund
Statement of Additional Information
January 31, 1997
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANT PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 E. Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
SUBADVISOR
Portfolio Advisory Services, Inc.
725 South Figueroa Street
Suite 2328
Los Angeles, California 90017
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
Officers 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 Information 14
Financial Statements 14
Appendix 14
STATEMENT OF ADDITIONAL INFORMATION-January 31, 1997
THE CALVERT FUND
CALVERT NEW VISION SMALL CAP FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account (800) 368-2748
Shareholder (800) 368-2745
Information: (301) 951-4820
Services: (301) 951-4810
Broker (800) 368-2746
TDD for the Hearing-Services: (301) 951-4850
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 January
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.
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
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.
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.
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.
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, 1994). Calvert Group was also the
first to offer a family of socially responsible mutual fund
portfolios.
TRUSTEES AND OFFICERS
RICHARD L. BAIRD, JR. Trustee
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.
FRANK H. BLATZ, JR., Esq. Trustee
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.
FREDERICK T. BORTS, M.D. Trustee
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.
CHARLES E. DIEHL Trustee
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.
DOUGLAS E. FELDMAN, M.D. Trustee
7536 Pepperell Drive
Bethesda, Maryland 20817
05/23/48
Dr. Feldman practices head and neck reconstructive
surgery in the Washington, D.C. metropolitan area.
PETER W. GAVIAN, CFA Trustee
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.
JOHN G. GUFFEY, JR. Trustee
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.
M. CHARITO KRUVANT Trustee
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.
ARTHUR J. PUGH Trustee
4823 Prestwick Drive
Fairfax, Virginia 22030
09/24/37
Mr. Pugh serves as a Director of Acacia Federal Savings
Bank.
DAVID R. ROCHAT Senior Vice
Box 93 President and
Chelsea, Vermont 05038 Trustee
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.
D. WAYNE SILBY, Esq. Trustee
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.
CLIFTON S. SORRELL, JR. President and
06/26/41 Trustee
Mr. Sorrell serves as President, Chief Executive Officer
and Vice Chairman of Calvert Group, Ltd. and as an
officer and director of each of its affiliated companies.
He is a director of Calvert-Sloan Advisers, L.L.C., and a
trustee/director of each of the investment companies in
the Calvert Group of Funds.
RENO J. MARTINI Senior Vice
01/13/50 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, Inc.
RONALD M. WOLFSHEIMER, CPA Treasurer
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.
WILLIAM M. TARTIKOFF, Esq. Vice President
08/12/47 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 also Vice President and Secretary of Calvert-Sloan
Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance
Company.
EVELYNE S. STEWARD Vice President
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.
DANIEL K. HAYES Vice President
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.
SUSAN WALKER BENDER, Esq. Assistant
01/29/59 Secretary
Ms. Bender is Associate General Counsel of Calvert Group
and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of
each of the other investment companies in the Calvert
Group of Funds.
KATHERINE STONER, Esq. Assistant
10/21/56 Secretary
Ms. Stoner is Assistant Counsel of Calvert Group and an
officer of each of its subsidiaries and Calvert-Sloan
Advisers, L.L.C. She is also an officer of each of the
other investment companies in the Calvert Group of Funds.
LISA CROSSLEY, Esq. Assistant
12/31/61 Secretary and
Compliance
Officer
Ms. Crossley is Assistant Counsel of Calvert Group and an
officer of each of its subsidiaries and Calvert-Sloan
Advisers, L.L.C. She is also an officer of each of the
other investment companies in the Calvert Group of Funds.
IVY WAFFORD DUKE, Esq. Assistant
09/07/68 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 officer of each of the
other investment companies in the Calvert
Group of Funds.
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
Sorrell are among the trustees, Acacia Capital Corporation, of
which only Messrs. Blatz, Diehl, Pugh and Sorrell are among the
directors, Calvert World Values Fund, Inc., of which only Messrs.
Guffey, Silby and Sorrell are among the directors, and Calvert New
World Fund, Inc., of which only Messrs. Sorrell and Martini are
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, Silby and Sorrell.
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.
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 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 0.90% of the
Fund's average daily net assets.
The Advisor may voluntarily defer its fees or assume
expenses of the Fund. The Advisor may recapture from (charge to)
the Fund for such expenses incurred through December 31, 1999,
provided that such recapture would not cause the Fund's aggregate
expenses to exceed an annual expense limit of 2.00%, and that such
recapture shall be made to the Advisor only from the two-year
period from January 1, 1997 through December 31, 1998. 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 an annual expense limit of 2.00%, 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 0.25% 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.
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.
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, is under normal circumstances expected not to exceed 100%.
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 1997.
State Street Bank & Trust Company, N.A., 225 Franklin Street,
Boston, MA 02110, serves as custodian of the Fund's investments.
First National Bank of Maryland, 25 South Charles Street,
Baltimore, Maryland 21203 also serves as custodian of certain of
the Fund's cash assets. The 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.
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.
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
*"Fund" in this Letter of Intent shall refer to the Fund or
Portfolio, as the case may be, here indicated.
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
Signature of Investor(s)
Signature of Investor(s)
