Calvert World Values Fund, Inc.
International Equity Fund
Statement of Additional Information
January 31, 1996
As Revised June 13, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
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Investment Objective 1
Investment Restrictions 6
Investment Selection Process 8
Dividends, Distributions and Taxes 9
Net Asset Value 10
Calculation of Total Return 10
Purchase and Redemption of Shares 11
Reduced Sales Charges (Class A) 12
Advertising 12
Directors and Officers 13
Investment Advisor and Sub-Advisor 15
Method of Distribution 16
Transfer and Shareholder Servicing
Agent 17
Portfolio Transactions 17
Independent Accountants and Custodians 18
General Information 18
Financial Statements 18
Appendix 18
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-January 31, 1996, As revised June 13, 1996
CALVERT WORLD VALUES FUND, INC.
4550 Montgomery Avenue, Bethesda, Maryland 20814
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New Account (800) 368-2748 Shareholder (800) 368-2745
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Information: (301) 951-4820 Services: (301) 951-4810
Broker (800) 368-2746 TDD for the Hearing-
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Services: (301) 951-4850 Impaired: (800) 541-1524
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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, 1996, as revised
June 13, 1996 which may be obtained free of charge by writing the Fund at
the above address or calling the Fund.
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INVESTMENT OBJECTIVE
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Calvert World Values Fund, Inc., International Equity Fund
(the "Fund") seeks to achieve a high total return consistent with reasonable
risk, by investing primarily in a globally diversified portfolio of
equity securities. To the extent possible, investments are made in
enterprises that make a significant contribution to our global society
through their products and services and through the way they do
business.
Foreign Securities
Additional costs may be incurred which are related to any
international investment, since foreign brokerage commissions and the
custodial costs associated with maintaining foreign portfolio securities
are generally higher than in the United States. Fee expense may also be
incurred on currency exchanges when the Fund changes investments from
one country to another or converts foreign securities holdings into U.S.
dollars. Foreign companies and foreign investment practices are not
subject to uniform accounting, auditing and financial reporting
standards and practices or regulatory requirements comparable to those
applicable to United States companies. There may be less public
information available about foreign companies.
United States Government policies have at times, in the past,
through imposition of interest equalization taxes and other
restrictions, discouraged United States investors from making certain
investments abroad. While such taxes or restrictions are not presently
in effect, they may be reinstituted from time to time as a means of
fostering a favorable United States balance of payments. In addition,
foreign countries may impose withholding and taxes on dividends and
interest. See "Risk Factors" in the Prospectus.
Credit Quality
The Fund invests only in investment grade bonds. As has been
the industry practice, this determination of credit quality is made at
the time the Fund acquires the bond. However, because it is possible
that subsequent downgrades could occur, if a bond held by the Fund is
later downgraded, the Fund's Sub-Advisor, under the supervision of the
Fund's Board of Directors, will consider whether it is in the best
interest of the Fund's shareholders to hold or to dispose of the bond.
Among the criteria that may be considered by the Sub-Advisor and the
Board are the probability that the bonds will be able to make scheduled
interest and principal payments in the future, the extent to which any
devaluation of the bond has already been reflected in the Fund net asset
value, and the total percentage, if any, of bonds currently rated below
investment grade held by the Fund.
Non-investment grade securities have moderate to poor
protection of principal and interest payments and have speculative
characteristics. They involve greater risk of default or price declines
due to changes in the issuer's creditworthiness than investment-grade
debt securities. Because the market for lower-rated securities may be
thinner and less active than for higher-rated securities, there may be
market price volatility for these securities and limited liquidity in
the resale market. Market prices for these securities may decline
significantly in periods of general economic difficulty or rising
interest rates.
Options and Futures Contracts
The Fund may purchase put and call options and engage in the
writing of covered call options and secured put options on securities
which meet the Fund's social criteria, and employ a variety of other
investment techniques. Specifically, the Fund may engage in the purchase
and sale of stock index future contracts, foreign currency futures
contracts, interest rate futures contracts, and options on such futures,
as described more fully below. Such investment policies and techniques
may involve a greater degree of risk than those inherent in more
conservative investment approaches.
The Fund will engage in such transactions only to hedge
existing positions. It will not engage in such transactions for the
purposes of speculation or leverage.
The Fund will not engage in such options or futures
transactions unless it receives any necessary regulatory approvals
permitting it to engage in such transactions. The Fund may write
"covered options" on securities in standard contracts traded on national
or foreign securities exchanges, or in individually negotiated contracts
traded over-the-counter. It may write such options in order to receive
the premiums from options that expire and to seek net gains from closing
purchase transactions with respect to such options.
Put and Call Options. The Fund may purchase put options. By buying a
put, the Fund has the right to sell the security at the exercise price,
thus limiting its risk of loss through a decline in the market value of
the security until the put expires. The amount of any appreciation in
the value of the underlying security will be partially offset by the
amount of the premium paid for the put option and any related
transaction costs. Prior to its expiration, a put option may be sold in
a closing sale transaction and any profit or loss from the sale will
depend on whether the amount received is more or less than the premium
paid for the put option plus the related transaction costs.
The Fund may purchase call options. Such transactions may be
entered into in order to limit the risk of a substantial increase in the
market price of the security which the Fund intends to purchase. Prior
to its expiration, a call option may be sold in a closing sale
transaction. Any profit or loss from such a sale will depend on whether
the amount received is more or less than the premium paid for the call
option plus the related transaction costs.
Covered Options. The Fund may write covered options on equity and debt
securities and indices. This means that, in the case of call options, so
long as the Fund is obligated as the writer of a call option, it will
own the underlying security subject to the option and, in the case of
put options, it will, through its custodian, deposit and maintain either
cash or securities with a market value equal to or greater than the
exercise price of the option.
When the Fund writes a covered call option, it gives the
purchaser the right to purchase the security at the call option price at
any time during the life of the option. As the writer of the option, it
receives a premium, less a commission, and in exchange foregoes the
opportunity to profit from any increase in the market value of the
security exceeding the call option price. The premium serves to mitigate
the effect of any depreciation in the market value of the security.
Writing covered call options can increase the income of the Fund and
thus reduce declines in the net asset value per share of the Fund if
securities covered by such options decline in value. Exercise of a call
option by the purchaser, however, will cause the Fund to forego future
appreciation of the securities covered by the option.
When the Fund writes a secured put option, it will gain a
profit in the amount of the premium, less a commission, so long as the
price of the underlying security remains above the exercise price.
However, the Fund remains obligated to purchase the underlying security
from the buyer of the put option (usually in the event the price of the
security funds below the exercise price) at any time during the option
period. If the price of the underlying security falls below the exercise
price, the Fund may realize a loss in the amount of the difference
between the exercise price and the sale price of the security, less the
premium received.
The Fund may purchase securities which may be covered with call
options solely on the basis of considerations consistent with the
investment objectives and policies of the Fund. The Fund's turnover may
increase through the exercise of a call option; this will generally
occur if the market value of a "covered" security increases and the Fund
has not entered into a closing purchase transaction.
To preserve the Fund's status as a regulated investment company
under Subchapter M of the Internal Revenue Code, it is the Fund's policy
to limit any gains on put or call options and other securities held less
than three months to less than 30% of the Fund's annual gross income.
Risks Related to Options Transactions. The Fund can close out
its respective positions in exchange-traded options only on an exchange
which provides a secondary market in such options. Although it intends
to acquire and write only such exchange-traded options for which an
active secondary market appears to exist, there can be no assurance that
such a market will exist for any particular option contract at any
particular time. This might prevent the Fund from closing an options
position, which could impair its ability to hedge effectively. The
inability to close out a call position may have an adverse effect on
liquidity because the Fund may be required to hold the securities
underlying the option until the option expires or is exercised.
Over-the-Counter ("OTC") Options. OTC options differ from
exchange-traded options in several respects. They are transacted
directly with dealers and not with a clearing corporation, and there is
a risk of non-performance by the dealer. However, the premium is paid in
advance by the dealer. OTC options are available for a greater variety
of securities and foreign currencies, and in a wider range of expiration
dates and exercise prices than exchange-traded options. Since there is
no exchange, pricing is normally done by reference to information from a
market maker, which information is carefully monitored or caused to be
monitored by the Sub-Advisor and verified in appropriate cases.
A writer or purchaser of a put or call option can terminate it
voluntarily only by entering into a closing transaction. In the case of
OTC options, there can be no assurance that a continuous liquid
secondary market will exist for any particular option at any specific
time. Consequently, the Fund may be able to realize the value of an OTC
option it has purchased only by exercising it or entering into a closing
sale transaction with the dealer that issued it. Similarly, when the
Fund writes an OTC option, it generally can close out that option prior
to its expiration only by entering into a closing purchase transaction
with the dealer to which it originally wrote the option. If a covered
call option writer cannot effect a closing transaction, it cannot sell
the underlying security or foreign currency until the option expires or
the option is exercised. Therefore, the writer of a covered OTC call
option may not be able to sell an underlying security even though it
might otherwise be advantageous to do so. Likewise, the writer of a
secured OTC put option may be unable to sell the securities pledged to
secure the put for other investment purposes while it is obligated as a
put writer. Similarly, a purchaser of an OTC put or call option might
also find it difficult to terminate its position on a timely basis in
the absence of a secondary market.
The Fund understands the position of the staff of the
Securities and Exchange Commission (the "SEC") to be that purchased OTC
options and the assets used as "cover" for written OTC options are
illiquid securities. The Fund has adopted procedures for engaging in OTC
options transactions for the purpose of reducing any potential adverse
effect of such transactions upon the liquidity of the Fund.
Futures Transactions. The Fund may purchase and sell futures contracts
("futures contracts") but only when, in the judgment of the Sub-Advisor,
such a position acts as a hedge against market changes which would
adversely affect the securities held by the Fund. These futures
contracts may include, but are not limited to, market index futures
contracts and futures contracts based on U.S. Government obligations.
A futures contract is an agreement between two parties to buy
and sell a security on a future date which has the effect of
establishing the current price for the security. Although futures
contracts by their terms require actual delivery and acceptance of
securities, in most cases the contracts are closed out before the
settlement date without the making or taking of delivery of securities.
Upon buying or selling a futures contract, the Fund deposits initial
margin with its custodian, and thereafter daily payments of maintenance
margin are made to and from the executing broker. Payments of
maintenance margin reflect changes in the value of the futures contract,
with the Fund being obligated to make such payments if its futures
position becomes less valuable and entitled to receive such payments if
its positions become more valuable.
The Fund may only invest in futures contracts to hedge its
existing investment positions and not for income enhancement,
speculation or leverage purposes. Although some of the securities
underlying the futures contract may not necessarily meet the Fund's
social criteria, any such hedge position taken by the Fund will not
constitute a direct ownership interest in the underlying securities.
Futures contracts have been designed by boards of trade which
have been designated "contracts markets" by the Commodity Futures
Trading Commission ("CFTC"). As a registered investment company, the
Fund is eligible for exclusion from the CFTC's definition of "commodity
pool operator," meaning that it may invest in futures contracts under
specified conditions without registering with the CFTC. Among these
conditions are requirements that to the extent that the Fund enters into
future contracts and options on futures positions that are not for
bonafide hedging purposes (as defined by the CFTC), the aggregate
initial margin and premiums on these positions (excluding the amount by
which options are "in-the-money") may not exceed 5% of the Fund's net
assets.
Options on Futures Contracts. The Fund may purchase and write put or
call options and sell call options on futures contracts in which it
could otherwise invest and which are traded on a U.S. exchange or board
of trade. It may also enter into closing transactions with respect to
such options to terminate an existing position; that is, to sell a put
option already owned and to buy a call option to close a position where
the Fund has already sold a corresponding call option.
The Fund may only invest in options on futures contracts to
hedge its existing investment positions and not for income enhancement,
speculation or leverage purposes. Although some of the securities
underlying the futures contract underlying the option may not
necessarily meet the Fund's social criteria, any such hedge position
taken by the Fund will not constitute a direct ownership interest in the
underlying securities.
An option on a futures contract gives the purchaser the right,
in return for the premium paid, to assume a position in a futures
contract-a long position if the option is a call and a short position if
the option is a put-at a specified exercise price at any time during the
period of the option. The Fund will pay a premium for such options
purchased or sold. In connection with such options bought or sold, the
Fund will make initial margin deposits and make or receive maintenance
margin payments which reflect changes in the market value of such
options. This arrangement is similar to the margin arrangements
applicable to futures contracts described above.
Put Options on Futures Contracts. The purchase of put options on futures
contracts is analogous to the sale of futures contracts and is used to
protect the portfolio against the risk of declining prices. The Fund may
purchase put options and sell put options on futures contracts it
already owns. The Fund will only engage in the purchase of put options
and the sale of covered put options on market index futures for hedging
purposes.
Call Options on Futures Contracts. The sale of call options on futures
contracts is analogous to the sale of futures contracts and is used to
protect the portfolio against the risk of declining prices. The purchase
of call options on futures contracts is analogous to the purchase of a
futures contract. The Fund may only buy call options to close an
existing position where the Fund has already sold a corresponding call
option, or for a cash hedge. The Fund will only engage in the sale of
call options and the purchase of call options to cover for hedging
purposes.
Writing Call Options on Futures Contracts. The writing of call options
on futures contracts constitutes a partial hedge against declining
prices of the securities deliverable upon exercise of the futures
contract. If the futures contract price at expiration is below the
exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any decline that may have
occurred in the Fund's securities holdings.
Risks of Options and Futures Contracts. If the Fund has sold futures or
takes options positions to hedge its portfolio against decline in the
market and the market later advances, it may suffer a loss on the
futures contracts or options which it would not have experienced if it
had not hedged. Correlation is also imperfect between movements in the
prices of futures contracts and movements in prices of the securities
which are the subject of the hedge. Thus the price of the futures
contract or option may move more than or less than the price of the
securities being hedged. Where the Fund has sold futures or taken
options positions to hedge against decline in the market, the market may
advance and the value of the securities held in the Fund may decline. If
this were to occur, the Fund might lose money on the futures contracts
or options and also experience a decline in the value of its portfolio
securities. However, although this might occur for a brief period or to
a slight degree, the value of a diversified portfolio will tend to move
in the direction of the market generally.
The Fund can close out futures positions only on an exchange or
board of trade which provides a secondary market in such futures.
Although the Fund intends to purchase or sell only such futures for
which an active secondary market appears to exist, there can be no
assurance that such a market will exist for any particular futures
contract at any particular time. This might prevent the Fund from
closing a futures position, which could require the Fund to make daily
cash payments with respect to its position in the event of adverse price
movements.
Options on futures transactions bear several risks apart from
those inherent in options transactions generally. The Fund's ability to
close out its options positions in futures contracts will depend upon
whether an active secondary market for such options develops and is in
existence at the time the Fund seeks to close its positions. There can
be no assurance that such a market will develop or exist. Therefore, the
Fund might be required to exercise the options to realize any profit.
Foreign Currency Transactions
Forward Foreign Currency Exchange Contracts. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of
days ("Term") from the date of the contract agreed upon by the parties,
at a price set at the time of the contract. These contracts are traded
directly between currency traders (usually large commercial banks) and
their customers.
The Fund will not enter into such forward contracts or maintain
a net exposure in such contracts where it would be obligated to deliver
an amount of foreign currency in excess of the value of its portfolio
securities and other assets denominated in that currency. The
Sub-Advisor believes that it is important to have the flexibility to
enter into such forward contracts when it determines that to do so is in
the Fund's best interests.
Foreign Currency Options. A foreign currency option provides
the option buyer with the right to buy or sell a stated amount of
foreign currency at the exercise price at a specified date or during the
option period. A call option gives its owner the right, but not the
obligation, to buy the currency, while a put option gives its owner the
right, but not the obligation, to sell the currency. The option seller
(writer) is obligated to fulfill the terms of the option sold if it is
exercised. However, either seller or buyer may close its position during
the option period for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates.
Conversely, a put rises in value if the underlying currency depreciates.
While purchasing a foreign currency option can protect the Fund against
an adverse movement in the value of a foreign currency, it does not
limit the gain which might result from a favorable movement in the value
of such currency. For example, if the Fund was holding securities
denominated in an appreciating foreign currency and had purchased a
foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. Similarly, if the Fund
had entered into a contract to purchase a security denominated in a
foreign currency and had purchased a foreign currency call to hedge
against a rise in the value of the currency but instead the currency had
depreciated in value between the date of purchase and the settlement
date, it would not have to exercise its call but could acquire in the
spot market the amount of foreign currency needed for settlement.
Foreign Currency Futures Transactions. The Fund may use foreign
currency futures contracts and options on such futures contracts.
Through the purchase or sale of such contracts, it may be able to
achieve many of the same objectives attainable through the use of
foreign currency forward contracts, but more effectively and possibly at
a lower cost.
Unlike forward foreign currency exchange contracts, foreign
currency futures contracts and options on foreign currency futures
contracts are standardized as to amount and delivery period and are
traded on boards of trade and commodities exchanges. It is anticipated
that such contracts may provide greater liquidity and lower cost than
forward foreign currency exchange contracts.
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INVESTMENT RESTRICTIONS
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Fundamental Investment Restrictions
The Fund has adopted the following investment restrictions
which, together with the foregoing investment objectives and fundamental
policies of the Fund, 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 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
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. Purchase more than 10% of the outstanding
voting securities of any issuer.
4. Make loans other than through the purchase of
money market instruments and repurchase agreements or
by the purchase of bonds, debentures or other debt
securities. The purchase by 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.
5. Underwrite the securities of other issuers,
except to the extent that in connection with the
disposition of its portfolio securities, the Fund may
be deemed to be an underwriter.
6. Purchase from or sell to any of the Fund's
officers or Directors, or firms of which any of them
are members, any securities (other than capital stock
of the Fund), but such persons or firms may act as
brokers for the Fund for customary commissions.
7. Borrow money, except from banks for temporary
or emergency purposes and then only in an amount up to
10% of the value of the Fund's total assets; provided,
however, that outstanding borrowings permitted by this
section do not exceed 33 1/3% of the Fund's total
assets. In order to secure any permitted borrowings
under this section, the Fund may pledge, mortgage or
hypothecate its assets.
8. Make short sales of securities or purchase any
securities on margin except that the Fund may obtain
such short-term credits as may be necessary for the
clearance of purchases and sales of securities. The
deposit or payment by the Fund of initial or
maintenance margin in connection with financial futures
contracts or related options transactions is not
considered the purchase of a security on margin.
9. Write, purchase or sell puts, calls or
combinations thereof except that the Fund may (a) write
exchange-traded covered call options on portfolio
securities and enter into closing purchase transactions
with respect to such options, and the Fund may write
exchange-traded covered call options on foreign
currencies and secured put options on securities and
foreign currencies and write covered call and secured
put options on securities and foreign currencies traded
over the counter, and enter into closing purchase
transactions with respect to such options, (b) purchase
exchange-traded call options and put options and
purchase call and put options traded over the counter,
provided that the premiums on all outstanding call and
put options do not exceed 5% of its total assets, and
enter into closing sale transaction with respect to
such options, and (c) engage in financial futures
contracts and related options transactions, provided
that the sum of the initial margin deposits on the
Fund's existing futures and related options positions
and the premiums paid for related options would not
exceed 5% of its total assets.
10. Invest for the purpose of exercising control
or management of another issuer.
11. Invest in commodities, commodities futures
contracts, or real estate, although it may invest in
securities which are secured by real estate or real
estate mortgages and securities of issuers which invest
or deal in commodities, commodity futures, real estate
or real estate mortgages and provided that it may
purchase or sell stock index futures, foreign currency
futures, interest rate futures and options thereon.
12. The Fund may invest in the shares of other
investment companies as permitted by the 1940 Act or
other applicable law, or in connection with a
nonqualified deferred compensation plan adopted by the
Board of Directors, as long as there is no duplicaton
of advisory fees.
Non-Fundamental Investment Restrictions
The Fund has adopted the following operating (i.e.,non-fundamental)
investment policies and restrictions which may be changed by the Board
of Directors without shareholder approval. The Fund may not:
13. 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.
14. Purchase illiquid securities if more than 15%
of the value of that Fund's net assets would be
invested in such securities. The Fund may buy and sell
securities outside the U.S. that are not registered
with the SEC or marketable in the U.S.
15. Purchase or retain securities of any issuer if
the officers, directors of the Fund or its Advisors,
owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own beneficially
more than 5% of such issuer's securities.
16. Invest in warrants if more than 5% of the
value of the Fund's net assets would be invested in
such securities.
17. 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.
18. As an operating policy, excluding special equities and High
Social Impact Investments, the Fund will limit its investment in
securities of U.S. issuers to 5% of the Fund's net assets.
For purposes of the Fund's concentration policy contained in
restriction (2), above, the Fund intends to comply with the SEC staff
position that securities issued or guaranteed as to principal and
interest by any single foreign government are considered to be
securities of issuers in the same industry.
Any investment restriction which involves a maximum percentage
of securities or assets shall not be considered to be violated unless an
excess over the applicable percentage occurs immediately after an
acquisition of securities or utilization of assets and results therefrom.
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INVESTMENT SELECTION PROCESS
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Investments in the Fund are selected on the basis of their
ability to contribute to the dual objective of the Fund. The Sub-Advisor
uses its best efforts to select investments for the Fund that satisfy
the Fund's investment and social criteria to the greatest practical
extent. The Sub-Advisor has developed a number of techniques for
evaluating the performance of issuers in each of these areas. The
primary sources of information are reports published by the issuers
themselves, the reports of public agencies, and the reports of groups
which monitor performance in particular areas. These sources of
information are sometimes augmented with direct interviews or written
questionnaires addressed to the issuers. It should be recognized,
however, that there are few generally accepted measures by which
achievement in these areas can be readily distinguished; therefore, the
development of suitable measurement techniques is largely within the
discretion and judgment of the Advisors of the Fund.
In making investment selections, the Sub-Advisor determines and
evaluates the appropriate portfolio composition on the basis of asset
prices and the perceived consequences and probabilities of various
economic outcomes that the Sub-Advisor deems possible. The Sub-Advisor
then evaluates numerous individual securities as candidates to fulfill
the Fund's investment objective and policies. Securities remain
candidates for inclusion in the Fund only if their prices and other
characteristics indicate that they have the potential to perform in a
way that is representative of their class of securities under the
different economic outcomes considered more probable by the Sub-Advisor.
Candidates for inclusion in any particular class of assets are
then examined according to the social criteria. The Sub-Advisor
classifies the issuers into three categories of suitability under the
social criteria. In the first category are those issuers which exhibit
unusual positive accomplishment with respect to some of the criteria and
do not fail to meet minimum standards with respect to the remaining
criteria. To the greatest extent possible, investment selections are
made from this group. In the second category are those issuers which
meet minimum standards with respect to all the criteria but do not
exhibit outstanding accomplishment with respect to any criterion. This
category includes issuers which may lack an affirmative record of
accomplishment in these areas but which are not known by the Sub-Advisor
to violate any of the social criteria. The third category under the
social criteria consists of issuers which flagrantly violate, or have
violated, one or more of those values, for example, a company which
repeatedly engages in unfair labor practices. The Fund will not
knowingly purchase the securities of issuers in this third category.
It should be noted that the Fund's social criteria tend to
limit the availability of investment opportunities more than is
customary with other investment companies. The Advisors of the Fund,
however, believe that within the first and second categories there are
sufficient investment opportunities to permit full investment among
issuers which satisfy the Fund's social investment objective.
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DIVIDENDS, DISTRIBUTIONS, AND TAXES
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The Fund declares and pays dividends from net investment income
on an annual basis. Distributions of realized net capital gains, if any,
are normally paid once a year; however, the Fund does not intend to make
any such distributions unless available capital loss carryovers, if any,
have been used or have expired. Dividends and distributions paid may
differ among the classes.
Generally, dividends (including short-term capital gains) and
distributions are taxable to the shareholder in the year they are paid.
However, any dividends and distributions paid in January but declared
during the prior three months are taxable in the year declared.
Investors should note that the Internal Revenue Code ("Code ")
may require investors to exclude the initial sales charge, if any, paid
on the purchase of Fund shares from the tax basis of those shares if the
shares are exchanged for shares of another Calvert Group Fund within 90
days of purchase. This requirement applies only to the extent that the
payment of the original sales charge on the shares of the Fund causes a
reduction in the sales charge otherwise payable on the shares of the
Calvert Group Fund acquired in the exchange, and investors may treat
sales charges excluded from the basis of the original shares as incurred
to acquire the new shares.
The Fund is required to withhold 31% of any long-term capital
gain dividends and 31% of each redemption transaction occurring in the
Fund if: (a) the shareholder's social security number or other taxpayer
identification number ("TIN") is not provided, or an obviously incorrect
TIN is provided; (b) the shareholder does not certify under penalties of
perjury that the TIN provided is the shareholder's correct TIN and that
the shareholder is not subject to backup withholding under section
3406(a)(1)(C) of the Code because of underreporting (however, failure to
provide certification as to the application of section 3406(a)(1)(C)
will result only in backup withholding on capital gain dividends, not on
redemptions); or (c) the Fund is notified by the Internal Revenue
Service that the TIN provided by the shareholder is incorrect or that
there has been underreporting of interest or dividends by the
shareholder. Affected shareholders will receive statements at least
annually specifying the amount withheld.
The Fund is required to report to the Internal Revenue Service
the following information with respect to each redemption transaction:
(a) the shareholder's name, address, account number and taxpayer
identification number; (b) the total dollar value of the redemptions;
and (c) the Fund's identifying CUSIP number.
Certain shareholders are exempt from the backup withholding and
broker reporting requirements. Exempt shareholders include:
corporations; financial institutions; tax-exempt organizations;
individual retirement plans; the U.S., a State, the District of
Columbia, a U.S. possession, a foreign government, an international
organization, or any political subdivision, agency or instrumentality of
any of the foregoing; U.S. registered commodities or securities dealers;
real estate investment trusts; registered investment companies; bank
common trust funds; certain charitable trusts; foreign central banks of
issue. Non-resident aliens, certain foreign partnerships and foreign
corporations are generally not subject to either requirement but may
instead be subject to withholding under sections 1441 or 1442 of the
Internal Revenue Code. Shareholders claiming exemption from backup
withholding and broker reporting should call or write the Fund for
further information.
==========================================================================
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 values 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 Directors determines such method not to be appropriate under the
circumstances; and (c) all other securities and assets for which market
quotations are not readily available will be fairly valued by the
Advisor in good faith under the supervision of the Board of Directors.
Securities primarily traded on foreign securities exchanges are
generally valued at the preceding closing values on their respective
exchanges where primarily traded. Equity options are valued at the last
sale price unless the bid price is higher or the asked price is lower,
in which event such bid or asked price is used. Exchange traded fixed
income options are valued at the last sale price unless there is no sale
price, in which event current prices provided by market makers are used.
Over-the-counter fixed income options are valued based upon current
prices provided by market makers. Financial futures are valued at the
settlement price established each day by the board of trade or exchange
on which they are traded. Because of the need to obtain prices as of the
close of trading on various exchanges throughout the world, the
calculation of the Fund's net asset value does not take place for
contemporaneously with the determination of the prices of U.S. portfolio
securities. For purposes of determining the net asset value all assets
and liabilities initially expressed in foreign currency values will be
converted into United States dollar values at the mean between the bid
and offered quotations of such currencies against United States dollars
at last quoted by any recognized dealer. If an event were to occur after
the value of an investment was so established but before the net asset
value per share was determined which was likely to materially change the
net asset value, then the instrument would be valued using fair value
consideration by the Directors or their delegates.
==========================================================================
CALCULATION OF TOTAL RETURN
==========================================================================
The Fund may advertise "total return." Total return is
calculated separately for each class. Total return is computed by taking
the total number of shares purchased by a hypothetical $1,000 investment
after deducting any applicable sales charge, adding all additional
shares purchased within the period with reinvested dividends and
distributions, calculating the value of those shares at the end of the
period, and dividing the result by the initial $1,000 investment. 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 sales charge, except quotations of "overall
return," which do not deduct sales charge, and "actual return," which
reflect deduction of the sales charge only for those periods when a
sales charge was actually imposed. Overall and total return for the
Fund's shares for the periods indicated are as follows:
Periods Ended Class A Class A Class C
September 30, 1995 Overall Return Average Annual Average Annual
Return Return
==============================================================================
One year 3.19% -1.73% 1.95%
From date of inception<F1> 8.00% 6.39% -0.11%
Total return, like net asset value per share, fluctuates in
response to changes in market conditions. It should not be considered an
indication of future return.
<F1>June 29, 1992 for Class A; March 1, 1994 for Class C.
==========================================================================
PURCHASE AND REDEMPTION OF SHARES
==========================================================================
Investments in the Fund made by mail, bank wire or electronic
funds transfer, or through the Fund's branch offices, Calvert
Distributors, Inc., or other 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, Calvert Distributors, Inc., or the Fund's custodian
bank or lockbox facility, plus the applicable sales charge as set forth
in the Fund's Prospectus.
All purchases of the Fund shares will be confirmed and credited
to shareholder accounts in full and fractional shares (rounded to the
nearest 1/1000th of a share). Share certificates will not be issued
unless requested in writing by the investor. No charge will be made for
share certificate requests. No certificates will be issued for
fractional shares. A service fee of $10.00, plus any costs incurred by
the Fund, will be charged investors whose purchase checks are returned
for insufficient funds.
Telephone redemption requests are processed upon the date of
receipt, if received prior to 4:00 p.m. Redemption proceeds are normally
transmitted or mailed the next business day, although payment by check
of redemption proceeds shares may take up to five business days;
however, telephone redemption requests which would require the
redemption of shares purchased by check or electronic funds transfer
within the previous 10 business days may not be honored. The Fund
reserves the right to modify the telephone redemption privilege.
Amounts redeemed by telephone may be mailed by check to the
investor to the address of record without charge. Amounts of more than
$50 and less than $300,000 may be transferred electronically at no
charge to the investor. Amounts of $l,000 or more will be transmitted by
wire without charge by the Fund to the investor's account at a domestic
bank or savings association that is a member of the Federal Reserve
System or to a correspondent bank. A charge of $5 is imposed on wire
transfers of less than $1,000. If the institution is not a Federal
Reserve System member, failure of immediate notification to that
institution by the correspondent bank could result in a delay in
crediting the funds to the investor's account at the institution.
To change redemption instructions already given, shareholders
must send a notice to the Fund, with a voided copy of a check for the
bank wiring instructions to be added. If a voided check does not
accompany the request, then the request must be signature guaranteed by
a commercial bank, trust company, savings association or member firm of
any national securities exchange. Other documentation may be required
from corporations, fiduciaries and institutional investors.
The Fund's redemption check normally will be mailed to the
investor on the next business day following the date of receipt by the
Fund of a written redemption request. If the investor so instructs in
such written redemption request, the check will be mailed or the
redemption proceeds wired or transferred electronically to a
preauthorized account at the investor's bank or savings association.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is
closed (other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency exists, as
determined by the Commission, or if the Commission has ordered such a
suspension for the protection of shareholders. Redemption proceeds are
normally mailed, wired or transferred electronically the next business
day but in no event later than seven days after a proper redemption
request has been received, unless redemptions have been suspended or
postponed as described above.
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
Portfolio 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 Portfolio shares to their members.
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. See "Exhibit A - Reduced Sales Charges" in the Prospectus.
==========================================================================
ADVERTISING
==========================================================================
The Fund or its affiliates may provide information such as, but
not limited to, the economy, investment climate, investment principles,
sociological conditions and political ambiance. Discussion may include
hypothetical scenarios or lists of relevant factors designed to aid the
investor in determining whether the Fund is compatible with the
investor's goals. The Fund may list portfolio holdings or give examples
or securities that may have been considered for inclusion in the
Portfolio, whether held or not.
The Fund or its affiliates may supply comparative performance
data and rankings from independent sources such as Donoghue's Money Fund
Report, Bank Rate Monitor, Money, Forbes, Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Wiesenberger Investment
Companies Service, Russell 2000/Small Stock Index, Mutual Fund Values
Morningstar Ratings, Mutual Fund Forecaster, Barron's, The Wall Street
Journal, and Schabacker Investment Management, Inc., and including other
socially responsible investment companies, and unmanaged market indices
such as Morgan Stanley Capital International World Index or Europe-Far
East-Asia Index. Such averages generally do not reflect any front- or
back-end sales charges that may be charged by Funds in that grouping.
The Fund may also cite to any source, whether in print or on-line, such
as Bloomberg, in order to acknowledge origin of information. The Fund
may compare itself or its portfolio holdings to other investments,
whether or not issued or regulated by the securities industry,
including, but not limited to, certificates of deposit and Treasury
notes. The Fund, its Advisor, and its affiliates reserve the right to
update performance rankings as new rankings become available.
Calvert Group is the leading family of socially responsible
mutual funds, both in terms of socially responsible mutual fund assets
under management, and number of socially responsible mutual fund
portfolios offered (source: Social Investment Forum, December 31, 1994).
Calvert Group was also the first to offer a family of socially
responsible mutual fund portolios.
==========================================================================
DIRECTORS AND OFFICERS
==========================================================================
<F2>CLIFTON S. SORRELL, JR., Chairman and Director. 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.
JOHN G. GUFFEY, JR., Director. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial consultant
to various organizations. In addition, he is a Director of the Community
Bankers Mutual Fund of Denver, Colorado, and the Treasurer and Director
of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey is a
trustee/director of each of the other investment companies in the
Calvert Group of Funds, except for Calvert New World Fund, Inc., and
Acacia Capital Corporation. Address: 7205 Pomander Lane, Chevy Chase,
Maryland 20815.
TERRENCE J. MOLLNER, Ed.D, Director. Dr. Mollner is Founder and
Chairperson of Trusteeship Institute, Inc., a diverse foundation known
principally for its consultation to corporations converting to
cooperative employee-ownership. He served as a Trustee of the
Cooperative Fund of New England, Inc., and is now a member of its Board
of Advisors. Mr. Mollner also serves as Trustee for the Calvert Social
Investment Fund. He is also a founder and member of the Board of
Trustees of the Foundation for Soviet-American Economic Cooperation.
Address: 15 Edwards Square, Northampton, Massachusetts 01060.
RUSTUM ROY, Director. Mr. Roy is the Evan Pugh Professor of the
Solid State Geochemistry at Pennsylvania State University, and
Corporation Chair, National Association of Science, Technology, and
Society. Address: Material Research Laboratory, Room 102A, Pennsylvania
State University, University Park, Pennsylvania, 16802.
<F2> D. WAYNE SILBY, Esq., Director. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Calvert New World Fund, Inc., and Acacia
Capital Corporation. Mr. Silby is an officer, director and shareholder
of Silby, Guffey & Company, Inc., which serves as general partner of
Calvert Social Venture Partners ("CSVP"). CSVP is a venture capital firm
investing in socially responsible small companies. . He is also a
Director of Acacia Mutual Life Insurance Company. Address: 1715 18th
Street, N.W., Washington, D.C. 20009.
TESSA TENNANT, Director. Ms. Tennant is the head of green and
ethical investing for National Provident Investment Managers Ltd.
Previously, she was in charge of the Environmental Research Unit of
Jupiter Tyndall Merlin Ltd., and was the Director of the Jupiter Tyndall
Merlin investment managers. Address: 55 Calverley Road, Tunbridge Wells,
Kent, TN1 2UE, United Kingdom.
MOHAMMAD YUNUS, Director. Mr. Yunus is a Managing Director of
Grameen Bank in Bangladesh. Address: Grameen Bank, Mirpur Two, Dhaka
1216, Bangladesh.
<F2> RENO J. MARTINI, Senior Vice President. Mr. Martini is Senior
Vice President of Calvert Group, Ltd. and Senior Vice President and
Chief Investment Officer of Calvert Asset Management Company, Inc.
<F2> ROBERT L. BENNETT, Vice President. Mr. Bennett is a Director
of Calvert Group, Ltd. and its subsidiaries, President of Calvert
Shareholder Services, Inc., and Executive Vice President of Calvert
Group, Ltd. He is an officer of each of the investment companies in the
Calvert Group of Funds.
<F2> WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary. Mr.
Tartikoff is an officer of each of the investment companies in the
Calvert Group of Funds, and is Senior Vice President, Secretary, and
General Counsel of Calvert Group, Ltd., and each of its subsidiaries.
Mr. Tartikoff is Vice President and Secretary of Calvert-Sloan Advisers,
L.L.C., and is an officer of Acacia National Life Insurance Company.
<F2> DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc. and is an officer of each of
the other investment companies in the Calvert Group of Funds.
<F2> RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is
Senior Vice President and Controller of Calvert Group, Ltd. and an
officer of each of its subsidiaries and Calvert-Sloan Advisers, L.L.C.
He is also an officer of each of the other investment companies in the
Calvert Group of Funds.
<F2> SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds.
The address of directors and officers, unless otherwise noted,
is 4550 Montgomery Avenue, Bethesda, Maryland 20814. Directors and
officers as a group own less than one percent of the total outstanding
shares of the Fund.
During fiscal 1995, Directors of the Fund not affiliated with
the Fund's Advisor were paid aggregate fees and expenses of $29,150.
Directors of the Fund not affiliated with the Fund's Advisor
may elect to defer receipt of all or a percentage of their fees and
invest them in any fund in the Calvert Family of Funds through the
Trustees Deferred Compensation Plan (shown as "Pension or Retirement
Benefits Accrued as part of Fund Expenses," below). Deferral of the fees
is designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees.
<F2>"Interested persons" of the Fund under the Investment Company Act of
1940.
Director Compensation Table
Fiscal Year 1995 Aggregate Pension or Total Compensation
(unaudited numbers) Compensation Retirement from Registrant
from Registrant Benefits and Fund Complex
Name of Director for service as Accrued as paid to
Director part of Director<F4>
Registrant
Expenses<F3>
..............................................................................
John G. Guffey, Jr. $6,600 $0 $40,450
Terrence J. Mollner $3,063 $0 $40,230
Rustum Roy $7,563 $0 $ 7,600
D. Wayne Silby $6,563 $0 $47,965
Tessa Tennant $1,355 $5,250 $ 6,605
Mohammad Yunus $4,000 $4,000 $ 4,000
<F3> Ms. Tennant has chosen to defer a portion of her compensation. Her
total deferred compensation, including dividends and capital
appreciation, was $3,481 as of September 30, 1995. Mr. Yunus has also
chosen to defer a portion of his compensation. His total deferred
compensation, including dividends and capital appreciation, was $10,082
as of September 30, 1995.
<F4> As of December 31, 1995. The Fund Complex consists of eight (8)
registered investment companies.
==========================================================================
INVESTMENT ADVISOR AND SUB-ADVISOR
==========================================================================
The Fund's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, 1000N, Bethesda, Maryland 20814,
a subsidiary of Calvert Group Ltd., which is a subsidiary of Acacia
Mutual Life Insurance Company of Washington, D.C. ("Acacia Mutual").
The Advisory Contract between the Fund and the Advisor was
entered into on May 21, 1992, and will remain in effect indefinitely,
provided continuance is approved at least annually by the vote of the
holders of a majority of the outstanding shares of the Fund or by the
Board of Directors of the Fund; and further provided that such
continuance is also approved annually by the vote of a majority of the
trustees of the Fund who are not parties to the Contract or interested
persons of parties to the Contract or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on
such approval. The Contract may be terminated without penalty by either
party upon 60 days' prior written notice; it automatically terminates in
the event of its assignment.
Under the Contract, the Advisor provides investment advice to
the Fund and oversees its day-to-day operations, subject to direction
and control by the Fund's Board of Directors. For its services, the
Advisor receives an annual fee of 1.00% of the Fund's average daily net
assets up to $250 million, 0.975% of the next $250 million, and 0.925%
on assets in excess of $500 million. The Advisor may voluntarily defer
its fees or assume expenses of the Fund. For 1993, the Advisor received
a fee of $125,080, waived $130,613 of its advisory fees, and assumed
$49,980 of expenses. During fiscal year 1994, no fees were waived and
$4,980 of expenses were reimbursed for Class C Shares. For 1995, the
Advisor received a fee of $1,871,430. The Advisor may recapture from
(charge to) the Fund for such expenses incurred through December 31,
1992, 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, 1993 through December 31, 1994. The Advisor may
voluntarily agree to further defer its fees or assume Fund expenses from
January 1, 1993 through December 31, 1994 ("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, 1995 through
December 31, 1996. 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. As of September 30, 1993, the total amount of fees and
expenses subject to recapture is $193,263. For the 1994 fiscal period,
the Advisor recaptured $45,532 of fees it had deferred in 1992 from
Class A Shares. No fees were recaptured during 1995.
The Fund's Sub-Advisor is Murray Johnstone International, Ltd.
("Sub-Advisor" or "Murray Johnstone"). Pursuant to an Investment
Sub-Advisory Agreement with the Advisor, the Sub-Advisor determines
investment selections for the Fund. For its services, the Sub-Advisor
receives an annual fee from the Advisor of 0.45% of the Fund's average
daily net assets under management by the Sub-Advisor up to $250 million,
0.425% on the next $250 million, and 0.40% on assets in excess of $500
million.
Through 85 years experience in investment management, Murray
Johnstone has developed a wealth of expertise in international markets
and has grown into one of the largest independent investment manager in
Scotland. Founded in 1907 and headquartered in Glasgow, Murray Johnstone
has evolved into a diversified group with offices on three continents
and over $6 billion under management. In 1989, responding to growing
investment opportunities, Murray Johnstone International Limited was
registered as an investment advisor with the United States Securities
and Exchange Commission. They have U.S. offices in Chicago and
Minneapolis.
Calvert Administrative Services Company ("CASC", an affiliate
of the Advisor, has been retained by the Fund to provide certain
administrative services necessary to the conduct of its affairs,
including the preparation of regulatory filings and shareholder reports,
the daily determination of its net asset value per share and dividends,
and the maintenance of its portfolio and general accounting records. For
providing such services, CASC receives an annual fee from the Fund of
0.10% of the Fund's average daily net assets, with a minimum annual fee
of $40,000. For fiscal year 1993, 1994, and 1995, CASC received $69,908,
$110,078, and $187,143, respectively, in administrative fees.
The Advisor provides the Fund with investment supervision and
management, administrative services, office space, furnishes executive
and other personnel to the Fund, and may pay Fund advertising and
promotional expenses. The Advisor reserves the right to compensate
broker-dealers in consideration of their promotional or administrative
services. The Fund pays all other administrative and operating expenses,
including: custodial, registrar, dividend disbursing and transfer agency
fees; federal and state securities registration fees; salaries, fees and
expenses of directors, executive officers and employees of the Fund, who
are not ''affiliated persons" of the Advisor or the Sub-Advisor 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,
such as California Rule 260.140.84) exceeding the most restrictive
expense limitation in those states where the Fund's shares are qualified
for sale (currently 2.5% of the Fund's first $30 million of average net
assets, 2% of the next $70 million, and 1.5% of the excess over $100
million).
==========================================================================
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. For fiscal years 1993, 1994, and 1995, CDI received
distribution fees of $0, $241,563, and $454,763, respectively, under the
Class A Distribution Plan. Of the Class A distribution expenses paid in
fiscal 1995, $392,243 was used to compensate dealers for their share
distribution promotional services, and the remainder was used for the
printing and mailing of prospectuses and sales materials to investors
(other than current shareholders). CDI also receives the portion of the
sales charge in excess of the dealer reallowance. For 1993, 1994, and
1995, CDI received net sales charges of $176,121, $526,194, and
$163,702, respectively.
Pursuant to Rule 12b-1 under the Investment Company Act of
1940, the Fund has adopted Distribution Plans (the "Plans") which
permits the Fund to pay certain expenses associated with the
distribution of its shares. Such expenses may not exceed, on an annual
basis, 0.35% of the Fund's Class A average daily net assets. Expenses
under the Fund's Class C Plan may not exceed, on an annual basis, 1.00%
of the average daily net assets of Class C. For the period from
inception (March 1, 1994) to September 30, 1994, Class C Distribution
Plan expenses totaled $9,889. In 1995, Class C Distribution expenses
were $52,378. Fiscal year 1995 Class C Distribution Plan expenses were
used entirely to compensate dealers distributing shares, and to
compensate the underwriter.
The Fund's Distribution Plans were approved by the Board of
Directors, including the Directors who are not "interested persons" of
the Fund (as that term is defined in the Investment Company Act of 1940)
and who have no direct or indirect financial interest in the operation
of the Plans or in any agreements related to the Plans. The selection
and nomination of the Directors who are not interested persons of the
Fund is committed to the discretion of such disinterested Directors. In
establishing the Plans, the Directors considered various factors
including the amount of the distribution expenses. The Directors
determined that there is a reasonable likelihood that the Plans will
benefit the Fund and its shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Directors who have no direct or indirect financial
interest in the Plans, or by vote of a majority of the outstanding
shares of the Fund. Any change in the Plans that would materially
increase the distribution cost to the Fund requires approval of the
shareholders of the affected class; otherwise, the Plans may be amended
by the Directors, including a majority of the non-interested Directors
as described above. The Plans will continue in effect for successive
one-year terms provided that such continuance is specifically approved
by (i) the vote of a majority of the Directors who are not parties to
the Plans or interested persons of any such party and who have no direct
or indirect financial interest in the Plans, and (ii) the vote of a
majority of the entire Board of Directors.
Apart from the Plans, the Advisor and CDI, at their own expense,
may incur costs and pay expenses associated with the distribution of
shares of the Fund.
==========================================================================
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 its fiscal years ended September 30, 1993, 1994, and 1995,
the Fund paid Calvert Shareholder Services, Inc. fees of $74,523,
$284,177, and $432,466, respectively.
==========================================================================
PORTFOLIO 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
Sub-Advisor under the direction and supervision of the Fund's Board of
Directors.
Broker-dealers who execute portfolio transactions on behalf of
the Fund are selected on the basis of their professional capability and
the value and quality of their services. The Fund may pay brokerage
commissions to broker-dealers who provide the Fund with statistical,
research, or other information and services. Although any statistical
research or other information and services provided by such
broker-dealers may be useful to the Advisor and the Sub-Advisor, the
dollar value of such information and services is generally
indeterminable, and its availability or receipt does not serve to
materially reduce the Advisor's or Sub-Advisor's normal research
activities or expenses. During fiscal years 1993, 1994, and 1995, no
commissions were paid to any officer or director of the Fund, or to any
of their affiliates.
The Advisor and Sub-Advisor may also execute portfolio
transactions with or through broker-dealers who have sold shares of the
Fund. However, such sales will not be a qualifying or disqualifying
factor in a broker-dealer's selection nor will the selection of any
broker-dealer be based on the volume of Fund shares sold.
Depending upon market conditions, portfolio turnover, generally
defined as the lesser of annual sales or purchases of portfolio
securities divided by the average monthly value of the Fund's portfolio
securities (excluding from both the numerator and the denominator all
securities whose maturities or expiration dates as of the date of
acquisition are one year or less), expressed as a percentage, is under
normal circumstances expected to be approximately 85%. For the 1993, and
1994, and 1995 fiscal periods, the portfolio turnover rates of the Fund
were 35%, 78%, and 73% respectively.
==========================================================================
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
==========================================================================
Coopers & Lybrand, L.L.P. has been selected by the Board of
Directors to serve as independent auditors for fiscal year 1996. State
Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, MA
02110, serves as custodian of the Fund's investments. First National
Bank of Maryland, 25 South Charles Street, Baltimore, Maryland 21203
also serves as custodian of certain of the Fund's cash assets. The
custodians have no part in deciding the Fund's investment policies or
the choice of securities that are to be purchased or sold for the Fund's
Fund.
==========================================================================
GENERAL INFORMATION
==========================================================================
The Fund was organized as a Maryland Corporation on February
14, 1992. Prior to June 17, 1996, the International Equity Fund was known as
the Global Equity Fund. The other series of the Fund is the Calvert Capital
Accumulation 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 1995 Annual
Report to Shareholders, are expressly incorporated by reference and made
a part of this Statement of Additional Information. A copy of the Annual
Report may be obtained free of charge by writing or calling the Fund.
==========================================================================
APPENDIX
==========================================================================
CORPORATE BOND AND COMMERCIAL PAPER RATINGS
Corporate Bonds:
Description of Moody's Investors Service Inc.'s/Standard & Poor's bond
ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat larger than
in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which make the bond somewhat more susceptible to the adverse
effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in the
A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
Commercial Paper:
MOODY'S INVESTORS SERVICE, INC.:
The Prime rating is the highest commercial paper rating
assigned by Moody's. Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of
the issuer; (2) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be
inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5)
amount and quality of long-term debt; (6) trend of earnings over a
period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by
management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
Issuers within this Prime category may be given ratings 1, 2, or 3,
depending on the relative strengths of these factors.
STANDARD & POOR'S CORPORATION:
Commercial paper rated A by Standard & Poor's has the following
characteristics: (i) liquidity ratios are adequate to meet cash
requirements; (ii) long-term senior debt rating should be A or better,
although in some cases BBB credits may be allowed if other factors
outweigh the BBB; (iii) the issuer should have access to at least two
additional channels of borrowing; (iv) basic earnings and cash flow
should have an upward trend with allowances made for unusual
circumstances; and (v) typically the issuer's industry should be well
established and the issuer should have a strong position within its
industry and the reliability and quality of management should be
unquestioned. Issuers rated A are further referred to by use of numbers
1, 2 and 3 to denote the relative strength within this highest
classification.
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the
Letter of Intent option on my Fund Account Application Form, I agree to
be bound by the terms and conditions applicable to Letters of Intent
appearing in the Prospectus and the Statement of Additional Information
for the Fund and the provisions described below as they may be amended
from time to time by the Fund. Such amendments will apply automatically
to existing Letters of Intent.
I intend to invest in the shares of: (Fund or Portfolio name*)
during the thirteen (13) month period from the date
of my first purchase pursuant to this Letter (which cannot be more than
ninety (90) days prior to the date of this Letter or my Fund Account
Application Form, whichever is applicable), an aggregate amount
(excluding any reinvestments of distributions) of at least fifty
thousand dollars ($50,000) which, together with my current holdings of
the Fund (at public offering price on date of this Letter or my Fund
Account Application Form, whichever is applicable), will equal or exceed
the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the terms
of escrow, to which I hereby agree, each purchase occurring after the
date of this Letter will be made at the public offering price applicable
to a single transaction of the dollar amount specified above, as
described in the Fund's prospectus. No portion of the sales charge
imposed on purchases made prior to the date of this Letter will be
refunded.
I am making no commitment to purchase shares, but if my
purchases within thirteen months from the date of my first purchase do
not aggregate the minimum amount specified above, I will pay the
increased amount of sales charges prescribed in the terms of escrow
described below. I understand that 4.75% of the minimum dollar amount
specified above will be held in escrow in the form of shares (computed
to the nearest full share). These shares will be held subject to the
terms of escrow described below.
From the initial purchase (or subsequent purchases if
necessary), 4.75% of the dollar amount specified in this Letter shall be
held in escrow in shares of the Fund by the Fund's transfer agent. For
example, if the minimum amount specified under the Letter is $50,000,
the escrow shall be shares valued in the amount of $2,375 (computed at
the public offering price adjusted for a $50,000 purchase). All
dividends and any capital gains distribution on the escrowed shares will
be credited to my account.
If the total minimum investment specified under the Letter is
completed within a thirteen month period, escrowed shares will be
promptly released to me. However, shares disposed of prior to completion
of the purchase requirement under the Letter will be deducted from the
amount required to complete the investment commitment.
Upon expiration of this Letter, the total purchases pursuant to
the Letter are less than the amount specified in the Letter as the
intended aggregate purchases, Calvert Distributors, Inc. ("CDI") will
bill me for an amount equal to the difference between the lower load I
paid and the dollar amount of sales charges which I would have paid if
the total amount purchased had been made at a single time. If not paid
by the investor within 20 days, CDI will debit the difference from my
account. Full shares, if any, remaining in escrow after the
aforementioned adjustment will be released and, upon request, remitted
to me.
I irrevocably constitute and appoint CDI as my
attorney-in-fact, with full power of substitution, to surrender for
redemption any or all escrowed shares on the books of the Fund. This
power of attorney is coupled with an interest.
The commission allowed by Calvert Distributors, Inc. to the
broker-dealer named herein shall be at the rate applicable to the
minimum amount of my specified intended purchases.
The Letter may be revised upward by me at any time during the
thirteen-month period, and such a revision will be treated as a new
Letter, except that the thirteen-month period during which the purchase
must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
In determining the total amount of purchases made hereunder,
shares disposed of prior to termination of this Letter will be deducted.
My broker-dealer shall refer to this Letter of Intent in placing any
future purchase orders for me while this Letter is in effect.
Dealer Name of Investor(s)
By
Authorized Signer Address
Date Signature of Investor(s)
Date Signature of Investor(s)
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
