PROSPECTUS
January 31, 1996
CALVERT WORLD VALUES FUND, INC.
CAPITAL ACCUMULATION FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
INVESTMENT OBJECTIVE
Calvert Capital Accumulation Fund (the "Fund") is a nondiversified
series of Calvert World Values Fund, Inc., an open-end management
investment company. The Fund seeks long-term capital appreciation by
investing primarily in the stock of small- to medium-sized companies
using the talent of multiple investment subadvisors. The market
capitalization of companies chosen for investment will generally range
between $100 million and $5 billion, but the Fund may also invest in
larger and smaller companies as deemed appropriate. It is the Advisor's
intent that on average, the market capitalization of the companies
represented in the Fund's portfolio will be mid-sized, with a slight
bias toward the growth-style of investing. Other investments may include
foreign securities, convertible issues, and certain options and futures
transactions. The Fund will take reasonable risks in seeking to achieve
its investment objective.
RESPONSIBLE INVESTING
To the extent possible, investments are made in enterprises that make a
significant contribution to our society through their products and
services and through the way they do business.
PURCHASE INFORMATION
The Fund offers two classes of shares, each with different expense
levels and sales charges. You may choose to purchase (i) Class A shares,
with a sales charge imposed at the time you purchase the shares
("front-end sales charge"); or (ii) Class C shares which impose neither
a front-end sales charge nor a contingent deferred sales charge. Class C
shares are not available through all dealers. Class C shares have a
higher level of expenses than Class A shares, including higher Rule
12b-1 fees. These alternatives permit you to choose the method of
purchasing shares that is most beneficial to you, depending on the
amount of the purchase, the length of time you expect to hold the
shares, and other circumstances. See "Alternative Sales Options" for
further details.
TO OPEN AN ACCOUNT
Call your investment professional, or complete and return the enclosed
Account Application. Minimum initial investment is $2,000 (may be lower
for certain retirement plans).
ABOUT THIS PROSPECTUS
Please read this Prospectus for information you should know before
investing, and keep it for future reference. A Statement of Additional
Information dated January 31, 1996) 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
FEDERAL OR ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. WHEN INVESTORS SELL SHARES
THE AMOUNT ORIGINALLY PAID BE HIGHER OR LOWER THAN
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 Charge None None
B. Annual Fund Operating Expenses (fiscal
year 1995)
(as a percentage of average net assets,
after expense reimbursement/waiver)
Management Fees 0.90% 0.90%
Rule 12b-1 Service and Distribution Fees 0.35% 1.00%
Other Expenses 1.15% 1.89%
Total Fund Operating Expenses<F1> 2.40% 3.79%
<F1> Net Fund Operating Expenses after reduction for fees paid indirectly
for Class C were 3.50%.
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 5 Years 10 Years
Class A $71 $119 $169 $308
Class C $38 $116 $195 $403
The example should not be considered a representation of past or future
expenses. Actual expenses and return may be higher or lower than those
shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the
Fund would bear directly (shareholder transaction costs) or indirectly
(annual fund operating expenses).
A. Shareholder Transaction Costs are charges you pay when you buy
or sell shares of the Fund. See "Reduced Sales Charges" to see if you
qualify for possible reductions in the sales charge. If you request a
wire redemption of less than $1,000, you will be charged a $5 wire fee.
B. Annual Fund Operating Expenses. Management Fees are paid by the Fund to
the Advisor for managing the Funds' 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
Management fees for the Fund are subject to a performance adjustment, after
January 1, 1997, which could cause the fee to be as high as 0.95% or as low as
0.85%, depending on performance. The Fund incurs Other Expenses for maintaining
shareholder records, furnishing shareholder statements and reports, and other
services. Management Fees and Other Expenses have already been reflected in the
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 defer fees or assume expenses of the Fund. Management
reimbursed or waived fees of .05% for Class A shares during fiscal 1995.
expenses for Class A shares have been restated to reflect expenses anticipated
in the current fiscal year. If Management had not reimbursed or waived fees, or
paid fees indirectly, the
current Other Expenses and Total Fund Operating Expenses for Class C shares
would have been 4.68% and 6.58%, respectively. 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.
FINANCIAL HIGHLIGHTS
The following table provides information about the financial history of
the Fund's Class A and C shares. It expresses the information in terms
of a single share outstanding for the Fund throughout each period. The
table has been audited by Coopers & Lybrand, L.L.P., whose reports are
included in the Annual Reports to Shareholders of the Fund. The table
should be read in conjunction with the financial statements and their
related notes. The current Annual Report to Shareholders is incorporated
by reference into the Statement of Additional Information.
Class A Shares
From Inception
(October 31, 1994) To
September 30, 1995
Net asset value, beginning of period $15.00
Income from investment operations
Net investment income (.11)
Net realized and unrealized gain
(loss) on investments 6.61
Total from investment operations 6.50
Distributions from
Net investment income (.02)
Net realized gains --
Total Distributions (.02)
Total increase (decrease) in
net asset value 6.48
Net asset value, end of period $21.48
Total return<F4> 43.40%
Ratio to average net assets:
Net investment income (loss) (1.55%)(a)
Total expenses<F5> 2.35%(a)
Net expenses 2.06%(a)
Expenses reimbursed and/or waived .05%(a)
Portfolio turnover 95%
Net assets, end of period (in thousands) $16,111
Number of shares outstanding
at end of period (in thousands) 750
<F4>Total return is not annualized and does not reflect deduction of
Class A front-end sales charges.
<F5>This ratio reflects total expenses before reduction for fees paid
indirectly.
(a) Annualized
Class C Shares
From Inception
(October 31, 1994) To
September 30, 1995
Net asset value, beginning of period $15.00
Income from investment operations
Net investment income (.15)
Net realized and unrealized gain
(loss) on investments 6.70
Total from investment operations 6.55
Distributions from
Net investment income --
Net realized gains --
Total Distributions --
Total increase (decrease) in
net asset value 6.55
Net asset value, end of period $21.55
Total return<F4> 43.67%
Ratio to average net assets:
Net investment income (loss) (3.13%)(a)
Total expenses<F5> 3.79%(a)
Net expenses 3.50%(a)
Expenses reimbursed and/or waived 2.79%(a)
Portfolio turnover 95%
Net assets, end of period (in thousands) $1,992
Number of shares outstanding
at end of period (in thousands) 92
<F4>Total return is not annualized and does not reflect deduction of
Class A front-end sales charges.
<F5>This ratio reflects total expenses before reduction for fees paid
indirectly.
(a) Annualized
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to provide long-term capital appreciation by investing,
under normal market conditions, at least 65% of its assets in the equity
securities of small- to mid-sized companies.
The Fund seeks to provide long-term capital appreciation by investing
primarily in a nondiversified portfolio of the equity securities of
small- to mid-sized companies that are undervalued but demonstrate a
potential for growth. The Fund will rely on its proprietary research to
identify stocks that may have been overlooked by analysts, investors,
and the media, and which generally have a market value between $100
million and $5 billion, but which may be larger or smaller as deemed
appropriate. Investments may also include, but are not limited to,
preferred stocks, foreign securities, convertible securities, bonds,
notes and other debt securities. The Fund may use certain futures and
options, invest in repurchase agreements, and lend its portfolio
securities. The Fund will take reasonable risks in seeking to achieve
its investment objective. There is, of course, no assurance that the
Fund will be successful in meeting its objective since there is risk
involved in the ownership of all equity securities. The Fund's
investment objective is not fundamental and may be changed without
shareholder approval. The Fund will notify shareholders at least thirty
days in advance of a change in the investment objective of the Fund so
that shareholders may determine whether the Fund's goals continue to
meet their own.
The Fund has a pool of several portfolio managers from which to choose.
The Fund will use the services of several investment subadvisors as
portfolio managers in selecting companies in which to invest. The
portfolio managers will select investments by examining such factors as
company growth prospects, industry economic outlook, new product
development, management, security value, risk, and financial
characteristics. Because of this multi-manager approach, the Fund may
benefit from more than one investment strategy in seeking to achieve its
investment objective. The Fund may employ "growth managers," who
generally concentrate on stocks that have demonstrated, or are expected
to produce, earnings growth rates significantly greater than the market
as a whole, as well as "value managers," who tend to make stock
selections on the basis of perceived relative value as determined by a
defined model in a bottom-up approach. The Advisor will use the services
of a consultant to help it determine the appropriate mix of management
styles to be employed at any given time in an attempt to take advantage
of changing market conditions by allocating asset management among the
selection of talent in the Fund's management pool. Taking into account
the individual styles of the portfolio managers, the Advisor will
allocate assets to achieve the Fund's objective.
INVESTMENT TECHNIQUES AND RISKS
Nondiversified
There may be risks associated with the Fund being nondiversified.
Specificially, since a relatively high percentage of the assets of the
Fund may be invested in the obligations of a limited number of issuers,
the value of the shares of the Fund may be more susceptible to any
single economic, political or regulatory event than the shares of a
diversified fund.
Small Cap Issuers
The securities of small-cap issuers tend to 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. There is no
limit on the percentage of assets that may be invested in small-cap
issuers.
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 100% of its assets in cash or
cash equivalents. Cash equivalents include instruments such as, but not
limited to, U.S. government and agency obligations, certificates of
deposit, bankers' acceptances, time deposits, commercial paper,
short-term corporate debt securities and repurchase agreements.
The Fund currently intends to invest in no more than 5% of its net
assets in noninvestment-grade debt obligations
Although the Fund invests primarily in equity securities, it may invest
in debt securities. These debt securities may consist of
investment-grade and noninvestment-grade obligations. Investment-grade
obligations are those which, at the date of investment, are rated within
the four highest grades established by Moody's Investors Services, Inc.
(Aaa, Aa, A, or Baa) or by Standard and Poor's Corporation (AAA, AA, A,
or BBB), or, if unrated, are deemed to be of comparable quality by the
Advisor. Noninvestment-grade (high-yield/high-risk, or junk bond)
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, and the Fund currently intends to limit such
investments to 5% of its net assets. The Fund will not buy debt
securities rated lower than C.
Interest-rate risk
All fixed income instruments are subject to interest-rate risk: that is,
if market interest rates rise, the current principal value of a bond
will decline. In general, the longer the maturity of the bond, the
greater the decline in value will be.
The Fund may use options and futures as defensive strategies
The Fund may attempt to reduce the overall risk of its investments by
using options and and futures contracts. An option is a legal contract
that gives the holder the right to buy or sell a specified amount of the
underlying interest at a fixed or determinable price (called the
exercise or strike price) upon exercise of the option. A futures
contract is an agreement to take delivery or to make delivery of a
standardized quantity and quality of a certain commodity during a
particular month in the future at a specified price. The Subadvisor will
make decisions whether to invest in these instruments based on market
conditions, regulatory limits and tax considerations. If this strategy
is used, the Fund may be required to cover assets used for this purpose
in a segregated account for the protection of shareholders. See the
Statement of Additional Information for more detail about these
strategies.
Risks of using defensive strategies
There can be no assurance that engaging in options, futures, or any
other defensive strategy will be successful. While defensive strategies
are designed to protect the Fund from potential declines, if the
Subadvisor misgauges market values, interest rates, or other economic
factors, the Fund may be worse off than had it not employed the
defensive strategy. While the Subadvisor attempts to determine price
movements and thereby prevent declines in the value of portfolio
holdings, there is a risk of imperfect or no correlation between price
movements of portfolio investments and instruments used as part of a
defensive strategy so that a loss is incurred. While defensive
strategies can reduce the risk of loss, they can also reduce the
opportunity for gain since they offset favorable price movements. The
use of defensive strategies may result in a disadvantage to the 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
The Fund may engage in repurchase agreements. In a repurchase agreement,
the Fund buys a security subject to the right and obligation to sell it
back at a higher price. In order to minimize any risk involved, the Fund
engages in such transactions only with recognized securities dealers
determined by the Advisor to present a minimal credit risk. Repurchase
agreements are fully collateralized and always have a maturity of less
than one year.
The Fund may invest up to 25% of its assets in the securities of foreign
issuers, although it currently holds or intends to hold no more than 5%
of its assets in such securities
The Fund may purchase foreign securities directly, on foreign markets, or
those represented by American Depositary Receipts ("ADRs"), or other receipts
evidencing ownership of foreign securities, such as International Depository
Receipts and Global Depository Receipts. ADRs are U.S. dollar-denominated and
traded in the U.S. on exchanges or over the counter. Foreign securities may
involve additional risks, including currency fluctuations, risks relating to
political or economic conditions, and the potentially less stringent investor
protection and disclosure standards of foreign markets. These factors could make
foreign investments, especially those in developing countries, less liquid and
more volatile. In addition, the costs of foreign investing, including
withholding taxes, brokerage commisions and custodial costs are generally higher
than for U.S. investments. By investing in ADRs rather than directly in foreign
issuers' stock, the Fund may avoid some currency and some liquidity risks. The
information available for ADRs is subject to the more uniform and more exacting
accounting, auditing and financial reporting standards of the domestic market or
exchange on which they are traded. See the Statement of Additional Information
for more information on investing in foreign securities.
The Fund may lend its portfolio securities
The Fund may lend its portfolio securities to member firms of the New
York Stock Exchange and commercial banks with assets of one billion
dollars or more, although it does not currently intend to lend more than
5% of its portfolio 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. 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.
High Social Impact Investments
The Fund has adopted a nonfundamental policy that permits it to invest
up to three 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 and credit analysis and limited maturity, investment
risk can be reduced, although there can be no assurance that losses will
not occur. The High Social Impact Investments committee of the Board
identifies, evaluates and selects these investments, subject to
ratification by the Board.
SOCIAL SCREENS
The Fund carefully reviews company policies and behavior regarding
social issues important to quality of life:
Once securities are determined to fall within the investment objective
of the Fund and are deemed financially viable investments, they are
screened according to the social criteria described below. These social
screens are 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 Directors
without shareholder approval:
- -environment
- -human rights
- -weapons systems
- -nuclear energy
- -employee relations
- -product criteria
(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 that are significantly engaged
in weapons production. This includes weapons systems contractors and
major nuclear weapons systems contractors.
(3) The Fund will not invest in companies that, in the Advisor's
opinion, have significant or historical patterns of discrimination
against employees on the basis of race, gender, religion, age,
disability or sexual orientation, or that have major labor-management
disputes.
(4) The 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.
The Advisor will seek to review companies' overseas operations
consistent with the social criteria stated above.
While the Fund may invest in companies that exhibit positive social
characteristics, it makes no explicit claims to seek out companies with
such practices.
TOTAL RETURN
The Fund may advertise total return for each class of shares. Total
return is based on historical results and is not intended to indicate
future performance.
Total return is calculated separately for each class of shares. It
includes not only the effect of income dividends but also any change in
net asset value, or principal amount, during the stated period. The
total return of a class shows its overall change in value, including
changes in share price and assuming all of the class' dividends and
capital gain distributions are reinvested. A cumulative total return
reflects the class' performance over a stated period of time. An average
annual total return 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
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 "overall return" do not reflect deduction of the sales
charge. You should consider overall return figures only if you qualify
for a reduced sales charge, or for purposes of comparison with
comparable figures which also do not reflect sales charges, such as
mutual fund averages compiled by Lipper Analytical Services, Inc.
Further information about the Fund's performance is contained in its
Annual Report to Shareholders, which may be obtained without charge by
writing or telephoning the Fund.
MANAGEMENT OF THE FUND
The Fund's Board of Directors supervises the Fund's activities and
reviews its contracts with companies that provide it with services.
The Capital Accumulation Fund is a series of Calvert World Values Fund,
Inc. an open-end management investment company organized as a Maryland
corporation on February 14, 1992. The other series is the Global Equity
Fund, a socially-screened portfolio of equity securities from around the
world.
The Fund is not required to hold annual shareholder meetings, but
special meetings may be called for certain purposes such as electing
Directors, changing fundamental policies, or approving a management
contract. As a shareholder, you receive one vote for each share of
Capital Accumulation 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. (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 Directors who are affiliated persons of the
Advisor. The Advisor may also assume and pay certain advertising and
promotional expenses of the Funds and reserves the right to compensate
broker-dealers in return for their promotional or administrative
services. The 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 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, 1995, Calvert Group managed
and administered assets in excess of $4.8 billion representing more than
200,000 shareholder and depositor accounts.
The Advisor receives a fee based on a percentage of the Fund's assets
and the Fund's performance. From this fee it pays the Subadvisor.
The Investment Advisory Agreement between the Fund and the Advisor
provides that the Advisor is entitled to a base annual fee, payable
monthly, of 0.80% of the Fund's average daily net assets. For its
services during the fiscal year ended September 30, 1995, pursuant to
the Investment Advisory Agreement, the Advisor received an investment
advisory fee of 0.76% of the Fund's respective average daily net assets.
Additionally, during the year, the Advisor voluntarily waived fees or
assumed expenses of $3,256, which were not charged to the Fund. As of
January 1, 1997, the Advisor may earn (or have its fee reduced by) a
performance adjustment based on the extent to which performance of the
Fund exceeds or trails the Standard & Poor's 400 Mid-Cap Index:
Performance versus the Performance Fee
S&P 400 Mid-Cap Index Adjustment
10% to less than 25% 0.01%
25% to less than 40% 0.03%
40% or more 0.05%
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, 1996. The Advisor has
until December 31, 1998 to recapture fees deferred or expenses
reimbursed during the previous two-year period.
The Fund uses a multi-manager approach.
The Fund has a pool of six investment subadvisors ("Subadvisors") ready
to manage the Fund's assets. The three Subadvisors listed below comprise
the current portfolio management team. See the Statement of Additional
Information for information on the other Subadvisors.
Subadvisor Ownership
Apodaca Johnston Hispanic American
Brown Capital African American
Fortaleza Asset Management Hispanic/Women
The Advisor has retained a consultant to make recommendations on
allocations to Subadvisors
The Advisor will select which Subadvisors will manage Fund assets at any
given time and the allocation of assets among the managers. The Advisor
has retained a consultant, Progress Investment Management Company, to
aid it in making these determinations. Progress is a California
state-certified minority business enterprise, registered as an
investment advisor with the Securities and Exchange Commission, that
evaluates and monitors emerging minority/women-owned investment
management firms.
Apodaca-Johnston Capital Management, Inc.
Apodaca-Johnston Capital Management, Inc. of San Francisco, California
is a small-cap growth manager that seeks to discover compelling
investment ideas by focusing on those entrepreneurial companies that
identify and capitalize on positive trends. It looks for companies that
are experiencing a powerful acceleration in earnings, exhibit a strong,
high quality balance sheet or decidedly improving financial statements
and demonstrate strong relative price strength.
Performance Index: Russell 2000
Portfolio Manager: Scott S. Johnston
Mr. Johnston is President and Chief Investment Officer of
Apodaca-Johnston. He earned a B.A. from the University of California at
Berkeley, and an M.B.A. from the University of Southern California. Mr.
Johnston was the Vice President and Senior Investment Officer of the
Trust Investment Department of San Diego Trust and Savings Bank from
1976 to 1981. He joined Security Pacific Corporation in 1981 where he
was the Managing Director and CEO of the Pacific Century Group, with
$2.5 billion in discretionary assets under management. In 1985 Mr.
Johnston founded Sterling Financial Group, an independent SEC-registered
investment advisory firm, which was merged into Apodaca-Johnston Capital
Management.
Portfolio Manager: Jerry C. Apodaca, Jr.
Mr. Apodaca is Vice President of Apodaca-Johnston. He earned a B.A. from
the University of New Mexico in 1983, and has had active business
experience since that time.
Brown Capital Management, Inc.
Brown Capital Management, Inc. of Baltimore, Maryland believes that
capital can be enhanced in times of opportunity and preserved in times
of adversity without timing the market. The firm uses a bottom-up
approach that incorporates growth-adjusted price earnings. Stocks
purchased are generally undervalued and have momentum, have EPS growth
rates greater than the market, are more profitable than the market, and
have relatively low price-earnings ratios.
Performance Index: Blended: 60% Russell 1000 Growth and 40% Russell 2000
Portfolio Manager: Eddie C. Brown
Mr. Brown is founder and President of Brown Capital Management. He has
over 22 years of investment experience, having served as a Vice
President and Portfolio Manager for 10 years at T. Rowe Price Associates
immediately prior to starting his own firm. Mr. Brown holds a B.S. in
Electrical Engineering from Howard University, an M.S. in Electrical
Engineering from New York University, and an M.S. in Business
Administration from the Indiana University School of Business.
Additionally, he is a professionally-designated Chartered Financial
Analyst (CFA) and Chartered Investment Counselor (CIC).
Mr. Brown is active in community affairs. He is currently a Commissioner
for Maryland Public Broadcasting (a Gubernatorial appointment), member
of the Board of Directors of the Baltimore Community Foundation (where
he chairs the investment committee for the foundation's $30 million
endowment), member of the Dean's Advisory Council of Indiana University
School of Business, and a member of The President's Roundtable.
Portfolio Manager: Joel Oppenheim
Mr. Oppenheim has had 24 years investment experience for institutions
including the State of Maryland, T. Rowe Price Associates, Inc., the
National Rural Electric Pension and Brown Capital Management. He holds a
B.S. in Economics and Juris Doctor from the University of Wisconsin, and
is a Chartered Financial Analyst (CFA).
Portfolio Manager: Robert E. Hall
Mr. Hall has over 30 years investment experience including 18 years with
T. Rowe Price Associates, Inc., seven years with Emerging Growth
Partners, Inc., and four years with The Investment Center prior to
joining Brown Capital Management. Mr. Hall is a former Trustee of the
Peabody Institute of Johns Hopkins University.
Fortaleza Asset Management, Inc.
Fortaleza Asset Management, Inc., of Chicago, Illinois, is a small-cap
growth manager that bases its investment principles on three key
elements: (1) a proprietary stock valuation system that incorporates
technical and market sentiment indicators to determine optimal buy
points; (2) an emphasis on the preservation of capital through the
implementation of a strict selling discipline to lock in capital gains
and reduce losses; and (3) a discipline that does not force equity
commitment in overvalued markets. The investment approach is based on a
bottom-up stock selection process.
Performance Index: Russell 2000
Portfolio Manager: Margarita Perez
Ms. Perez is the founder, President and Portfolio Manager of Fortaleza,
and has over 13 years of investment experience. Prior to forming
Fortaleza, Ms. Perez was Vice President and Portfolio Manager for
Monetta Financial Services, Inc., where she was directly involved in the
management of equity accounts totalling in excess of $100 million.
Ms. Perez is a native of Puerto Rico and has lived in the Chicago area
since the late 1960s. She earned an MBA from DePaul University School of
Commerce. Ms. Perez is a member of various professional organizations
including the American Institute of CPAs, National Society of Hispanic
MBAs, Association for Investment Management and Research (AIMR), and the
National Association of Securities Professionals (NASP). She is also a
trustee of the Chicago Historical Society.
Portfolio Manager: James Boves
Mr. Boves brings over 25 year of investment management and research
experience to Fortaleza. He has a master's degree in Economics from
Northern Illinois University and is a member of the Investment Analysts
Society in Chicago.
Subadvisory compensation
The Investment Subadvisory Agreement between the Advisor and each of the
Subadvisors provides that the Subadvisors currently managing Fund assets
are entitled to a base Subadvisory fee of 0.25% of that portion of the
Fund's average daily net assets managed by the Subadvisor, paid by the
Advisor out of the fee the Advisor receives from the Fund. As of January
1, 1997, each Subadvisor may earn (or have its base fee reduced by) a
performance adjustment based on the extent to which performance of the
Fund exceeds or trails the index agreed on with the Advisor:
Performance versus Performance Fee
the Index Adjustment
10% to less than 25% 0.02%
25% to less than 40% 0.05%
40% or more 0.10%
Payment by the Fund of a performance adjustment will be conditioned on:
(1) the performance of the Fund as a whole having exceeded the S&P 400
Mid-Cap Index; and (2) payment of the performance adjustment not causing
the Fund's performance to fall below the S&P 400 Mid-Cap Index. The
performance adjustment will be paid by the Fund to the Advisor, which
will then pass it on to the Subadvisor.
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, payable monthly,
from the Fund 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 accompanies this prospectus. A completed and
signed application is required for each new account you open, regardless
of the method you choose for making your initial investment. Additional
forms may be required from corporations, associations, and certain
fiduciaries. If you have any questions or need extra applications, call
your broker, or Calvert Group at 800-368-2748. Be sure to specify which
class you wish to purchase.
To invest in any of Calvert's tax-deferred retirement plans, please call
Calvert Group at 800-368-2748 to receive information and the required
separate application.
Alternative Sales Options
The Fund offers three 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 up to 0.35% 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 paid by the Fund with respect to Class B and Class
C shares will generally be less than those paid with respect to Class A
shares. 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
As a % of Dealers as a %
As a % of Net Amount of Amount
Amount of Investment Offering Price Invested Invested
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Less than $50,000 4.75% 4.99% 4.00%
$50,000 but less than $100,000 3.75% 3.90% 3.00%
$100,000 but less than $250,000 2.75% 2.83% 2.25%
$250,000 but less than $500,000 1.75% 1.78% 1.25%
$500,000 but less than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
*For new investments (new purchases but not exchanges) of $1 million or
more, a broker-dealer will have the choice of being paid a finder's fee
by CDI according to one of the following methods: (1) CDI may pay
broker-dealers, on a monthly basis for 12 months, an annual rate of
0.30%. Payments will be made monthly at the rate of 0.025% of the amount
of the investment, less redemptions; (2) CDI may pay broker-dealers
0.25% of the amount of the purchase; however, CDI reserves the right to
recoup any portion of the amount paid to the broker-dealer if the
investor redeems some or all of the shares from the Fund within thirteen
months of the time of purchase.
Sales charges on Class A shares may be reduced or eliminated in certain
cases. See Exhibit A to this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a
portion to your broker-dealer. Upon written notice to dealers with whom
it has dealer agreements, CDI may reallow up to the full applicable
sales charge. Dealers to whom 90% or more of the entire sales charge is
reallowed may be deemed to be underwriters under the Securities Act of
1933.
In addition to any sales charge reallowance or finder's fee, your
broker-dealer, or other financial service firm through which your
account is held, currently will be paid periodic service fees at an
annual rate of up to 0.25% of the average daily net asset value of Class
A shares held in accounts maintained by that firm.
Class A Distribution Plan
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 rate of 0.35% of the average daily net asset value of Class A
shares, to pay expenses associated with the distribution and servicing
of Class A shares. Amounts paid by the Fund to CDI under the Class A
Distribution Plan are used to pay to broker-dealers and others,
including CDI salespersons who service accounts, service fees at an
annual rate of up to 0.25% of the average daily net asset value of Class
A shares, and to pay CDI for its marketing and distribution expenses,
including, but not limited to, preparation of advertising and sales
literature and the printing and mailing of prospectuses to prospective
investors. During the fiscal year ended September 30, 1995, Class A
Distribution Plan expenses for the Fund were 0.35%.
Class C Shares
Class C shares are not available through all dealers. Class C shares are
offered at net asset value, without a front-end sales charge or a
contingent deferred sales charge. Class C expenses are higher than those
of Class A.
Class C Distribution Plan
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 of up to 0.25%, of the average daily net asset value of each
share sold by such others. During the fiscal year ended September 30,
1995, Class C Distribution Plan expenses for the Fund were 1.00%.
Arrangements with Broker-Dealers and Others
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing
registered representatives who have sold or are expected to sell a
minimum dollar amount of shares of the Fund and/or shares of other Funds
underwritten by CDI. CDI may make expense reimbursements for special
training of a dealer's registered representatives, advertising or
equipment, or to defray the expenses of sales contests. CDI may receive
reimbursement of eligible marketing and distribution expenses from the
Fund's Rule 12b-1 Distribution Plan.
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 Please make your check
payable to the Fund and payable to the Fund and
mail it with your mail it with your
application to: investment slip to:
Calvert Group Calvert Group
4550 Montgomery Avenue P.O. Box 64146
Suite 1000N Baltimore, Maryland
Bethesda, Maryland 20814 21264-4146
West Coast Investors
use:
Calvert Group
P.O. Box 883610
San Francisco, CA
94188-3610
By Registered, Certified, or Overnight Mail:Calvert Group
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Through Your Broker $2,000 minimum $250 minimum
At the Calvert Visit the Calvert Branch Office to make investments
Branch Office by check. See 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 for $50 minimum
Controller* 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 per share ("NAV)" refers to the worth of one share. NAV
is computed by adding the value of all portfolio holdings, plus other
assets, deducting liabilities and then dividing the result by the number
of shares outstanding. The NAV of each class will vary daily based on
the market values of the Fund's investments.
Portfolio securities and other assets are valued based on market
quotations, except that securities maturing within 60 days are valued at
amortized cost. If quotations are not available, securities are valued
by a method that the Board of Directors believes accurately reflects
fair value.
The NAV is calculated at the close of the Fund's business day, which
coincides with the closing of the regular session of the New York Stock
Exchange (normally 4:00 p.m. Eastern time). The Fund is open for
business each day the New York Stock Exchange is open. All purchases of
Fund shares will be confirmed and credited to your account in full and
fractional shares (rounded to the nearest 1/1000 of a share).
WHEN YOUR ACCOUNT WILL BE CREDITED
Before you buy shares, please read the following information to make
sure your investment is accepted and credited properly.
Your purchase will be processed at the next offering price based on the
next net asset value calculated after your order is received and
accepted. If your purchase is received by 4:00 p.m. Eastern time, your
account will be credited on the day of receipt. If your purchase is
received after 4:00 p.m. Eastern time, it will be credited the next
business day. All 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 cancelled 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 can hold payment on proceeds of redemptions against
those funds until it is reasonably satisfied that the purchase is
collected (normally 10 business days). To avoid this collection period,
you can wire federal funds from your bank, which may charge you a fee.
Certain financial institutions or broker-dealers which have entered into
a sales agreement with CDI may enter confirmed purchase orders on behalf
of customers by phone, with payment to follow within a number of days of
the order as specified by the program. If payment is not received in the
time specified, the financial institution could be held liable for
resulting fees or losses.
EXCHANGES
You may exchange shares of the Fund for shares of the same class of
other Calvert Group Funds.
If your investment goals change, the Calvert Group Family of Funds has a
variety of investment alternatives that includes common stock funds,
tax-exempt and corporate bond funds, and money market funds. The
exchange privilege is a convenient way to buy shares in other Calvert
Group Funds in order to respond to changes in your goals or in market
conditions. However, to protect a Fund's performance and to minimize
costs, Calvert Group discourages frequent exchanges and may prohibit
additional purchases of Fund shares by persons engaged in too many
short-term trades. Before you make an exchange from a Fund or Portfolio,
please note the following:
Call your broker or a Calvert representative for information
and a prospectus for any of Calvert's other Funds registered in your
state. Read the prospectus of the Fund or Portfolio into which you want
to exchange for relevant information, including class offerings.
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.
Complete and sign an application for an account in that Fund or
Portfolio, taking care to register your new account in the same name and
taxpayer identification number as your existing Calvert account(s).
Exchange instructions may then be given by telephone if telephone
redemptions have been authorized and the shares are not in certificate
form.
Shares on which you have already paid a sales charge at Calvert
Group and shares acquired by reinvestment of dividends or distributions
may be exchanged into another Fund at no additional charge.
Shareholders (and those managing multiple accounts) who make
two purchases and two exchange redemptions of shares of the same
Portfolio during any 6-month period will be given written notice that
they may be prohibited from making additional investments. This policy
does not prohibit a shareholder from redeeming shares of the Fund, and
does not apply to trades solely among money market funds.
For purposes of the exchange privilege, effective July 31,
1996, 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 total return quotations and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers use a push button phone to obtain prices, performance
information, account balances, and authorize certain transactions.
Calvert Money Controller
Calvert Money Controller eliminates the delay of mailing a check or the
expense of wiring funds. You can request this free service on your
application.
This service allows you to authorize electronic transfers of money to
purchase or sell shares. You use Calvert Money Controller like an
"electronic check" to move money ($50 to $300,000 ) between your bank
account and your Calvert Group account with one phone call. Allow one or
two business days after the call for the transfer to take place; for
money recently invested, allow normal check clearing time (up to 10
business days) before redemption proceeds are sent to your bank.
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 Group
account, call your broker or Calvert Group for a Money Controller
Application.
Telephone Transactions
Calvert may record all telephone calls.
If you have telephone transaction privileges, you may purchase, redeem,
or exchange shares, wire funds and use Calvert Money Controller by
telephone. 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 account application for the easiest way to establish
services.
The easiest way to establish optional services on your Calvert Group
account is to select the options you desire when you complete your
account application. If you wish to add other options later, you may
have to provide us with additional information and a signature
guarantee. Please call Calvert Investor Relations at 800-368-2745 for
further assistance. For our mutual protection, we may require a
signature guarantee on certain written transaction requests. A signature
guarantee verifies the authenticity of your signature, and may be
obtained from any bank, trust company, savings and loan association,
credit union, broker-dealer firm or member of a domestic stock exchange.
A signature guarantee cannot be provided by a notary public.
Householding of General Mailings
Householding reduces Fund expenses 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 may be modified in these programs, and administrative charges
may be imposed by the broker-dealer or financial institution for the
services rendered.
Tax-Saving Retirement Plans
Contact Calvert Group for complete information kits discussing the
plans, and their benefits, provisions and fees.
Calvert Group can set up your new account in the Fund under one of
several tax-deferred plans. These plans let you invest for retirement
and shelter your investment income from current taxes. Minimums may
differ from those listed in the chart on page _____. 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. Salary
reduction pension plans (SAR-SEP IRAs) are also available to employers
with 25 or fewer employees.
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
acceptable. Remember that the Fund may hold payment on the redemption of
your shares until it is reasonably satisfied that investments made by
check or by Calvert Money Controller have been collected (normally up to
10 business days). The Fund reserves the right to redeem in kind (i.e.,
to give you the value of your redemption in portfolio securities instead
of in cash).
Redemption Requirements To Remember
To ensure acceptance of your redemption request, please follow the
procedures described here and below.
Once your shares are redeemed, the proceeds will normally be sent to you
on the next business day, but if making immediate payment could
adversely affect the Fund, it may take up to seven (7) days. Calvert
Money Controller redemptions generally will be credited to your bank
account on the second business day after your phone call. When the New
York Stock Exchange is closed (or when trading is restricted) for any
reason other than its customary weekend or holiday closings, or under
any emergency circumstances as determined by the Securities and Exchange
Commission, redemptions may be suspended or payment dates postponed.
Minimum account balance is $1,000 per Fund, per class.
Please maintain a balance in your account of at least $1,000, per class.
If, due to redemptions, the account falls below $1,000, or you fail to
invest at least $1,000, it may be closed and the proceeds mailed to you
at the address of record. You will have 30 days notice that your
account will be closed 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 shares from your account at any time by sending
a letter of instruction, including your name, account and Fund number,
the number of shares or dollar amount, and where you want the money to
be sent. Additional requirements, below, may apply to your account. The
letter of instruction must be signed by all required authorized signers.
If you want the money to be wired to a bank not previously authorized,
then a voided bank check must be enclosed with your letter. If you do
not have a voided check or if you would like funds sent to a different
address or another person, your letter must be signature guaranteed.
Type of Registration Requirements
Corporations, Associations Letter of
instruction and a
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 Trustee),
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" on page ___. If for any reason you are unable to reach the
Fund by telephone, whether due to mechanical difficulties, heavy market
volume or otherwise, you may send a written redemption request to the
Fund by overnight mail. If your account is held through a broker, see
"Through Your Broker" below.
Calvert Money Controller
Please allow sufficient time for Calvert Group to process your initial
request for this service (normally 10 business days). You may also
authorize automatic fixed amount redemptions by Calvert Money
Controller. All requests 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 or Portfolio. You can only exchange between accounts with
identical names, addresses and taxpayer identification number, unless
previously authorized with a signature-guaranteed letter. See
"Exchanges."
Systematic Check Redemptions
If you maintain an account with $10,000 or more, you may have up to two
(2) redemption checks for $100 or more sent to you on the 15th of each
month, simply by sending a letter with all the information, including
your account number, and the dollar amount ($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 to shareholders.
Dividends from the Fund's net investment income are declared and paid
annually. Net investment income consists of the interest income, net
short-term capital gains, if any, and dividends declared and paid on
investments, less expenses. Distributions of the Fund's net short-term
capital gains (treated as dividends for tax purposes) and its net
long-term capital gains, if any, are normally declared and paid by 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; dividend payments will generally be higher for Class A shares.
Dividend and Distribution Payment Options
Dividends and any distributions are automatically reinvested in the same
Fund at net asset value (no sales charge), unless you elect to have the
dividends of $10 or more paid in cash (by check or by Calvert Money
Controller). Dividends and distributions may be automatically invested
in an identically registered account with the same account number in any
other Calvert Group Fund at net asset value. If reinvested in the same
Fund account, new shares will be purchased at net asset value on the
reinvestment date, which is generally 1 to 3 days prior to the payment
date. You must notify the Fund in writing prior to the record date to
change your payment options. If you elect to have dividends and/or
distributions paid in cash, and the U.S. Postal Service cannot deliver
the check, or if it remains uncashed for six months, it, as well as
future dividends and distributions, will be reinvested in additional
shares.
"Buying a Dividend"
At the time of purchase, the share price of 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. On the record date for a
distribution, the Fund's share value is reduced by the amount of the
distribution. If you buy shares just before the record date ("buying a
dividend") you will pay the full price for the shares and then receive a
portion of the price back as a taxable distribution.
Federal Taxes
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
If we do not have your correct Social Security or Corporate Tax
Identification Number ("TIN") and a signed certified application or Form
W-9, Federal law requires the Fund to withhold 31% of your dividends and
certain redemptions. In addition, you may be subject to a fine. You will
also be prohibited from opening another account by exchange. If this TIN
information is not received within 60 days after your account is
established, your account may be redeemed at the current NAV on the date
of redemption. The Fund reserves the right to reject any new account or
any purchase order for failure to supply a certified TIN.
EXHIBIT A REDUCED SALES CHARGES (CLASS A ONLY)
You may qualify for a reduced sales charge through several purchase
plans available. You must notify the 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 (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Fund shares at a
discount, and (iii) satisfies uniform criteria which enable CDI and
dealers offering Fund shares to realize economies of scale in
distributing such shares. A qualified group must have more than 10
members, must be available to arrange for group meetings between
representatives of CDI or dealers distributing the Fund's shares, must
agree to include sales and other materials related to the Fund in its
publications and mailings to members at reduced or no cost to CDI or
dealers, 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 ("Code"), or for a plan qualifying under Section 403(b)(7) of the Code
if, at the time of purchase, Calvert Group has been notified in writing
that the 403(b)(7) plan has at least 200 eligible employees.
Furthermore, there is no sales charge on shares purchased for the
benefit of a retirement plan qualifying under Section 401(k) of the Code if,
at the time of such purchase, the 401(k) plan administrator has notified
Calvert Group in writing that a) its 401(k) plan has at least 200
eligible employees; or b) the cost or current value of shares the plan
has in Calvert Group of Funds (except money market funds) is at least $1
million.
Neither the 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 the 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 used to fund those plans, including, but not limited to, those
defined in Section 401(a) or Section 403(b) of the I.R.C., and "rabbi trusts."
Dividends and Capital Gain Distributions from other Calvert Group Funds.
You may prearrange to have your dividends and capital gain distributions
from another Calvert Group Fund automatically invested in your account
with no additional sales charge.
Purchases made at net asset value ("NAV"). Except for money market
funds, if you make a purchase at NAV, you may exchange that amount to
another fund at no additional sales charge.
Reinstatement Privilege. If you redeem Fund shares and then within 30
days decide to reinvest in the same Fund, you may do so at the 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: Prospectus
800-368-2748 January 31, 1996
Performance and Prices:
Calvert Information Network CALVERT WORLD VALUES FUND, INC.
24 hours, 7 days a week CAPITAL ACCUMULATION FUND
800-368-2745
Service for Existing Account:
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 Risks
Social Screens
Total Return
Management of the Fund
SHAREHOLDER GUIDE:
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>
PROSPECTUS
January 31, 1996
CALVERT WORLD VALUES FUND, INC.
GLOBAL EQUITY FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
INVESTMENT OBJECTIVE
The investment objective of Calvert World Values Fund, Inc., Global
Equity Fund (the "Fund") is 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. In particular, the Fund intends to invest a part of its assets
in companies with strong interest in the environment, human rights and
health care. Investments must satisfy both the financial and social
criteria of the Fund.
PURCHASE INFORMATION
The Fund offers two classes of shares, each with different expense
levels and sales charges. You may choose to purchase (i) Class A shares,
with a sales charge imposed at the time you purchase the shares
("front-end sales charge"); or (ii) Class C shares which impose neither
a front-end sales charge nor a contingent deferred sales charge. Class C
shares are not available through all dealers. Class C shares have a
higher level of expenses than Class A shares, including higher Rule
12b-1 fees. These alternatives permit you to choose the method of
purchasing shares that is most beneficial to you, depending on the
amount of the purchase, the length of time you expect to hold the
shares, and other circumstances. See "Alternative Sales Options" for
further details.
ADVISORS
Calvert Asset Management Company, Inc. is the Fund's Advisor,
responsible for overall management and supervision of the Fund's
investment and day-to-day management. Murray Johnstone International,
Ltd. is the Fund's Sub-Advisor, responsible for asset allocation and
selection of the specific investments for the Fund. See "Management of
the Fund."
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 before investing. It is designed to provide
you with information you ought to know before investing and to help you
decide if the Fund's goals match your own. Keep this document for future
reference.
A Statement of Additional Information (dated January 31, 1996) for the
Fund 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.
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 UPON 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 FEDERALLY INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. WHEN INVESTORS SELL SHARES
OF THE FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY
PAID.
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)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses - Fiscal
Year 1995
(as a percentage of average net assets,
after expense reimbursement/fee waiver)
Management Fees 1.10% 1.10%
Rule 12b-1 Service and Distribution Fees
0.25% 1.00%
Other Expenses 0.58% 1.02%
Total Fund Operating Expenses<F1> 1.93% 3.12%
C. Example: You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return; (2)
redem period; and (3) for Class A, payment of
maximum initial sales charge at time of purchase:
1 Year 3 Years 5 Years 10 Years
Class A $66 $105 $147 $262
Class C $31 $96 $164 $343
<F1> Net Fund Operating Expenses after reduction for fees paid indirectly
were: Class A 1.79% and Class C 2.99%.
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 Calvert Asset Management Company, Inc. ("Investment Advisor")
for managing the Fund's investments and business affairs. Management
fees include the Sub-Advisory fee paid by the Investment Advisor to
Murray Johnstone International, Ltd., ("Sub-Advisor"), 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 have already been 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 defer fees or assume expenses of the Fund. For
the year ended September 30, 1995, no fees were waived or and some expenses were
reimbursed for Class C Shares. However, 0.14% of fees were paid indirectly.
Without the fee reduction, Other Expenses would have been 1.16%, and Total Fund
Operating Expenses for Class C Shares would have been 3.25%. The Investment
Advisory Agreement provides that the Advisor may later, to the extent permitted
by law, recapture any fees it deferred or expenses it assumed during the two
prior years provided, however, that total Annual fund Operating Expenses for
Class A shall not exceed 2.00% of average net assets during any year in which
the Advisor elects to exercise the recapture provision. The above table reflects
these agreements, although there was no recapture of fees in fiscal year 1995.
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.
FINANCIAL HIGHLIGHTS
The following table provides information about the financial history of
the Fund's Class A and C shares. It expresses the information in terms
of a single share outstanding for the Fund throughout each period. The
table has been audited by Coopers & Lybrand, independent accountants,
whose report on the period from July 2, 1992 (commencement of
operations) through September 30, 1995 is included in the Annual Report
to Shareholders of the Fund. The table should be read in conjunction
with the financial statements and their related notes. The current
Annual Report to Shareholders is incorporated by reference into the
Statement of Additional Information.
Class A Shares
Year Ended
September 30, 1995
Net asset value, beginning of period $17.99
Income from investment operations
Net investment income .11
Net realized and unrealized gain
(loss) on investments .38
Total from investment operations .49
Distributions to shareholders
Dividends from net investment income --
Distribution in excess of net
investment income --
Distribution from net realized gains (.86)
Total Distributions (.86)
Total increase (decrease) in
net asset value (.37)
Net asset value, end of period $17.62
Total return<F4> 3.19%
Ratio to average net assets:
Net investment income (loss) .68%
Total expenses<F5> 1.93%
Net expenses 1.79%
Expenses reimbursed and/or waived --
Portfolio turnover 73%
Net assets, end of period (in thousands) $191,586
Number of shares outstanding
at end of year (in thousands) 10,876
<F4>Total return is not annualized for periods of less than one year and
does not reflect deduction of Class A front-end sales charge.
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
Class A Shares
Year Ended
September 30, 1994
Net asset value, beginning of period $16.35
Income from investment operations
Net investment income --
Net realized and unrealized gain
(loss) on investments 2.14
Total from investment operations 2.14
Distributions to shareholders
Dividends from net investment income (.03)
Distribution in excess of net
investment income (.04)
Distribution from net realized gains (.43)
Total Distributions (.50)
Total increase (decrease) in
net asset value 1.64
Net asset value, end of period $17.99
Total return<F4> 13.44%
Ratio to average net assets:
Net investment income (loss) (.04%)
Total expenses<F5> --
Net expenses 1.96%
Expenses reimbursed and/or waived .04%
Portfolio turnover 78%
Net assets, end of period (in thousands) $175,543
Number of shares outstanding
at end of year (in thousands) 9,755
<F4>Total return is not annualized for periods of less than one year and
does not reflect deduction of Class A front-end sales charge.
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
Class A Shares
Year Ended
September 30, 1993
Net asset value, beginning of period $14.31
Income from investment operations
Net investment income .08
Net realized and unrealized gain
(loss) on investments 2.04
Total from investment operations 2.12
Distributions to shareholders
Dividends from net investment income (.05)
Distribution in excess of net
investment income --
Distribution from net realized gains (.03)
Total Distributions (.08)
Total increase (decrease) in
net asset value 2.04
Net asset value, end of period $16.35
Total return<F4> 14.95%
Ratio to average net assets:
Net investment income (loss) .80%
Total expenses<F5> --
Net expenses 1.50%
Expenses reimbursed and/or waived .20%
Portfolio turnover 35%
Net assets, end of period (in thousands) $54,280
Number of shares outstanding
at end of year (in thousands) 3,319
<F4>Total return is not annualized for periods of less than one year and
does not reflect deduction of Class A front-end sales charge.
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
Class A Shares
From Inception
July 2, 1992
Through
September 30, 1992
Net asset value, beginning of period $15.00
Income from investment operations
Net investment income .02
Net realized and unrealized gain
(loss) on investments (.71)
Total from investment operations (.69)
Distributions to shareholders
Dividends from net investment income --
Distribution in excess of net
investment income --
Distribution from net realized gains --
Total Distributions --
Total increase (decrease) in
net asset value (.69)
Net asset value, end of period $14.31
Total return<F4> (4.60%)
Ratio to average net assets:
Net investment income (loss) 1.23%(a)
Total expenses<F5> --
Net expenses 1.01%(a)
Expenses reimbursed and/or waived .60%(a)
Portfolio turnover --
Net assets, end of period (in thousands) $8,440
Number of shares outstanding
at end of year (in thousands) 590
(a) Annualized
<F4>Total return is not annualized for periods of less than one year and
does not reflect deduction of Class A front-end sales charge.
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
Class C Shares
Year Ended
September 30, 1995
Net asset value, beginning of period $17.86
Income from investment operations
Net investment income (.05)
Net realized and unrealized gain
(loss) on investments .32
Total from investment operations .27
Distributions to shareholders
Dividends from net investment income --
Distribution in excess of net
investment income --
Distribution from net realized gains (.85)
Total Distributions (.85)
Total increase (decrease) in
net asset value (.58)
Net asset value, end of period $17.28
Total return<F4> 1.95%
Ratio to average net assets:
Net investment income (loss) (.47%)
Total expenses<F5> 3.12%
Net expenses 2.99%
Expenses reimbursed and/or waived .13%
Portfolio turnover 73%
Net assets, end of period (in thousands) $6,061
Number of shares outstanding
at end of year (in thousands) 351
<F4>Total return is not annualized for periods of less than one year and
does not reflect deduction of Class A front-end sales charge.
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
Class C Shares
From Inception
March 1, 1994
Through
September 30, 1994
Net asset value, beginning of period $18.24
Income from investment operations
Net investment income (.06)
Net realized and unrealized gain
(loss) on investments (.32)
Total from investment operations (.38)
Distributions to shareholders
Dividends from net investment income --
Distribution in excess of net
investment income --
Distribution from net realized gains --
Total Distributions --
Total increase (decrease) in
net asset value (.38)
Net asset value, end of period $17.86
Total return<F4> (1.27%)
Ratio to average net assets:
Net investment income (loss) (1.16%(a)
Total expenses<F5> --
Net expenses 3.32%(a)
Expenses reimbursed and/or waived .50%(a)
Portfolio turnover 78%
Net assets, end of period (in thousands) $3,620
Number of shares outstanding
at end of year (in thousands) 203
(a) Annualized
<F4>Total return is not annualized for periods of less than one year and
does not reflect deduction of Class A front-end sales charge.
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective
The Fund seeks to provide a high total return consistent with reasonable
risk by investing primarily in a globally diversified portfolio of
equity securities. All investments are screened for financial and social
criteria. There is, of course, no assurance that the Fund will be
successful in meeting its objective.
Under normal circumstances, the Fund will invest at least 65% of its
assets in equity securities.
The Fund will invest primarily in common stocks of established foreign
and U.S. companies believed by the Sub-Advisor to have potential for
capital growth, income or both. Companies are considered established if
their securities are traded on a recognized stock exchange. However, the
Fund may invest in any other type of security including, but not limited
to, convertible securities, preferred stocks, bonds, notes and other
debt securities of companies, (including Euro-currency instruments and
securities) or of any international agency (such as the Asian
Development Bank or Inter-American Development Bank) or obligations of
domestic or foreign governments and their political subdivisions, and in
foreign currency transactions. See "Debt Obligations." The Fund may
establish and maintain reserves for temporary defensive purposes or to
enable it to take advantage of buying opportunities. The Fund's reserves
may be invested in domestic as well as foreign short-term money market
instruments including, but not limited to, U.S. and foreign government
and agency obligations, and obligations of supranational entities,
certificates of deposit, bankers' acceptances, time deposits, commercial
paper, short-term corporate debt securities and repurchase agreements.
Any money market instruments will be rated at least A-2/P-2 or better by
a nationally recognized statistical rating organization such as Standard
and Poor's or Moody's, or, if unrated, determined by the Advisor or
Sub-Advisor to be of equivalent credit quality. The Fund may also engage
in certain options transactions, and enter into futures contracts and
related options for hedging purposes. (See "Investment Techniques and
Risks.")
Under normal circumstances, the Fund will invest at least 65% of its
assets in the securities of issuers in no less than three countries, one
of which may be the USA.
The Fund makes investments in various countries. Under normal
circumstances, business activities in a number of different foreign
countries will be represented in the Fund's investments. The Fund may,
from time to time, have more than 25% of its assets invested in any
major industrial or developed country which in the view of the
Sub-Advisor poses no unique investment risk. The Sub-Advisor considers
an investment in a given foreign country to have "no unique investment
risk" if the Fund's investment in that country is not disproportionate
to the relative size of the country's market versus the Morgan Stanley
Capital International Europe-Far East-Asia (EFEA) or World Index or
other comparable index, and if the capital markets in that country are
mature, and of sufficient liquidity and depth. Under exceptional
economic or market conditions, the Fund may invest substantially all of
its assets in only one or two countries, or in U.S. government
obligations or securities of companies incorporated in and having their
principal activities in the U.S.
The Sub-Advisor considers several factors in determining the various
countries in which to invest.
In determining the appropriate distribution of investments among various
countries and geographic regions, the Sub-Advisor ordinarily will
consider the following factors: prospects for relative economic growth
among foreign countries; expected levels of inflation; relative price
levels of the various capital markets; government policies influencing
business conditions; the outlook for currency relationships and the
range of individual investment opportunities available to the global
investor. The Fund may make investments in developing countries, which
involve exposure to economic structures that are generally less diverse
and mature than in the United States, and to political systems which may
be less stable. A country is considered to be a developing country if it
is not included in the Morgan Stanley Capital International World Index.
Examples of developing countries would currently include countries such
as Argentina, Brazil, Indonesia, Taiwan, Mexico, Turkey, Chile, India,
and Korea. Investing in developing countries often involves risk of high
inflation, high sensitivity to commodity prices, and government
ownership of the biggest industries in that country. Investing in
developing countries also involves a higher probability of occurrence of
the risks of investing in foreign securities in general, including but
not limited to, less financial information available, relatively
illiquid markets, and the possibility of adverse government action (see
"Risk Factors" below). No more than 30% of the Fund's net assets may be
invested in the securities of issuers located in developing countries.
In the past, markets of developing countries have been more volatile
than the markets of developed countries; however, such markets often
have provided higher long-term rates of return to investors. The
Sub-Advisor believes that these characteristics may be expected to
continue in the future.
Generally, the Fund will not trade in securities for short-term profits,
but, when circumstances warrant, securities may be sold without regard
to the length of time held.
Debt obligations
Although the Fund invests primarily in equity securities, it may invest
up to 35% of its net assets in debt securities, excluding money market
instruments. Of this, at least 30% will be of the highest credit quality
available (rated AAA or Aaa by Standard & Poor's (S&P) or Moody's,
respectively, or if not rated by S&P or Moody's, then determined by the
Sub-Advisor to be of equivalent credit quality). All fixed income
instruments are subject to interest-rate risk; that is, when market
interest rates rise, the current principal value of a bond will decline.
The remaining 5% of Fund assets that may be invested in debt securities
may be rated lower than AAA or Aaa, but in no event lower than BBB or
Baa, or, if unrated, then determined by the Sub-Advisor to be of
equivalent credit quality. The Sub-Advisor does not intend to purchase
any bonds rated lower than AAA unless the instrument provides an
opportunity to invest in an attractive company in which an equity
investment is not currently available or desirable.
The Fund will not buy any bonds rated less than investment grade. If a
change in credit quality after acquisition by the Fund causes the bond
to no longer be investment grade, the Sub-Advisor will generally
dispose of the bond if necessary to keep its holdings, if any, of such
bonds to 5% or less of the Fund's assets. See the Statement of
Additional Information, "Credit Quality" and "Appendix--Corporate Bond
and Commercial Paper Ratings" for more information on bond ratings and
credit quality.
Foreign Government Securities
The Sub-Advisor may from time to time invest in the debt instruments of
foreign sovereign governments. These may include short-term treasury
bills, notes and long-term bonds, and will only be considered for
investment by the Fund if they have the full guarantee of the government
in question. The Sub-Advisor will not invest in foreign government
securities with a rating by Moody's Investors Services lower than AA2.
RISK FACTORS
An investment in the Fund is subject to various risks. The net asset
value will fluctuate in response to changes in market conditions and the
value of the Fund's portfolio investments. The Fund's use of certain
investment techniques, such as foreign currency options, involve special
risks. See "Investment Techniques and Related Risks."
There are substantial and different risks involved in investing in
foreign securities. You should consider these risks carefully. For
example, there is generally less publicly available information about
foreign companies than is available about companies in the U.S. Foreign
companies are not subject to uniform audit and financial reporting
standards, practices and requirements comparable to those in the U.S.
Foreign securities involve currency risks. The U.S. dollar value of a
foreign security tends to decrease when the value of the dollar rises
against the foreign currency in which the security is denominated and
tends to increase when the value of the dollar falls against such
currency. Fluctuations in exchange rates may also affect the earning
power and asset value of the foreign entity issuing the security.
Dividend and interest payments may be returned to the country of origin,
based on the exchange rate at the time of disbursement, and restrictions
on capital flows may be imposed. Losses and other expenses may be
incurred in converting between various currencies in connections with
purchases and sales of foreign securities.
Foreign stock markets are generally not as developed or efficient as
those in the U.S. In most foreign markets volume and liquidity are less
than in the U.S. and, at times, volatility of price can be greater than
that in the U.S. Fixed commissions on foreign stock exchanges are
generally higher than the negotiated commissions on U.S. exchanges.
There is generally less government supervision and regulation of foreign
stock exchanges, brokers and companies than in the U.S.
There is also the possibility of adverse changes in investment or
exchange control regulations, expropriation or confiscatory taxation,
limitations on the removal of funds or other assets, political or social
instability, or diplomatic developments which could adversely affect
investments, assets or securities transactions of the Fund in some
foreign countries. The Fund is not aware of any investment or exchange
control regulations which might substantially impair the operations of
the Fund as described, although this could change at any time.
Many foreign securities are represented by American Depositary Receipts
("ADRs"), or other receipts evidencing ownership of foreign securities,
such as International Depositary Receipts and Global Depositary
Receipts. ADRs are U.S. dollar-denominated and are traded in the U.S. on
exchanges or over the counter. ADRs do not eliminate all the risk
inherent in investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, the
Fund may avoid some currency risks and liquidity risks during the
settlement period for either purchases or sales. 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. The Fund may also invest
in European Depositary Receipts ("EDRs"), which are receipts evidencing
an arrangement with a European bank similar to that for ADRs and are
designed for use in the European securities markets. EDRs are not
necessarily denominated in the currency of the underlying security.
The dividends and interest payable on certain of the Fund's foreign
securities may be subject to foreign withholding taxes, thus reducing
the net amount available for distribution to the Fund's shareholders.
You should understand that the expense ratio of the Fund can be expected
to be higher than those of investment companies investing only in
domestic securities since the costs of operations are higher.
INVESTMENT TECHNIQUES and RELATED RISKS
The Fund may write covered call options and purchase call and put
options on securities and security indices, and may write secured put
options and enter into option transactions on foreign currency. It may
also engage in transactions in financial futures contracts and related
options for hedging purposes, and invest in repurchase agreements. These
investment techniques and the related risks are summarized below and are
described in more detail in the Statement of Additional Information.
Writing (Selling) Call and Put Options
A call option on a security, security index or a foreign currency gives
the purchaser of the option, in return for the premium paid to the
writer (seller), the right to buy the underlying security, index or
foreign currency at the exercise price at any time during the option
period. Upon exercise by the purchaser, the writer of a call option on
an individual security or foreign currency has the obligation to sell
the underlying security or currency at the exercise price. A call option
on a securities index is similar to a call option on an individual
security, except that the value of the option depends on the weighted
value of the group of securities comprising the index and all
settlements are to be made in cash. A call option may be terminated by
the writer (seller) by entering into a closing purchase transaction in
which it purchases an option of the same series as the option previously
written.
A put option on a security, security index, or foreign currency gives
the purchaser of the option, in return for the premium paid to the
writer (seller), the right to sell the underlying security, index, or
foreign currency at the exercise price at any time during the option
period.
Upon exercise by the purchaser, the writer of a put option has the
obligation to purchase the underlying security or foreign currency at
the exercise price. A put option on a securities index is similar to a
put option on an individual security, except that the value of the
option depends on the weighted value of the group of securities
comprising the index and all settlements are made in cash.
The Fund may write exchange-traded call options on its securities. Call
options may be written on portfolio securities, securities indices, or
foreign currencies. With respect to securities and foreign currencies,
the Fund may write call and put options on an exchange or
over-the-counter. Call options on portfolio securities will be covered
since the Fund will own the underlying securities. Call options on
securities indices will be written only to hedge in an economically
appropriate way portfolio securities which are not otherwise hedged with
options or financial futures contracts and will be "covered" by
identifying the specific portfolio securities being hedged. Options on
foreign currencies will be covered by securities denominated in that
currency. Options on securities indices will be covered by securities
that substantially replicate the movement of the index. The Fund may not
write options on more than 50% of its total assets. Management presently
intends to cease writing options if and as long as 25% of such total
assets are subject to outstanding options contracts or if required under
regulations of state securities administrators.
The Fund may write call and put options in order to obtain a return on
its investments from the premiums received and will retain the premiums
whether or not the options are exercised. Any decline in the market
value of portfolio securities or foreign currencies will be offset to
the extent of the premiums received (net of transaction costs). If an
option is exercised, the premium received on the option will effectively
increase the exercise price or reduce the difference between the
exercise price and market value.
During the option period, the writer of a call option gives up the
opportunity for appreciation in the market value of the underlying
security or currency above the exercise price. It retains the risk of
loss should the price of the underlying security or foreign currency
decline. Writing call options also involves risks relating to the Fund's
ability to close out options it has written.
During the option period, the writer of a put option has assumed the
risk that the price of the underlying security or foreign currency will
decline below the exercise price. However, the writer of the put option
has retained the opportunity for an appreciation above the exercise
price should the market price of the underlying security or foreign
currency increase. Writing put options also involves risks relating to
the Fund's ability to close out options it has written.
Purchasing Call and Put Options, Warrants and Stock Rights
The Fund may invest up to an aggregate of 5% of its total assets in
exchange-traded or over-the-counter call and put options on securities
and securities indices and foreign currencies. Purchases of such options
may be made for the purpose of hedging against changes in the market
value of the underlying securities or foreign currencies. The Fund may
invest in call and put options whenever, in the opinion of the Advisor
or Sub-Advisor, a hedging transaction is consistent with its investment
objectives. The Fund may sell a call option or a put option which it has
previously purchased prior to the purchase (in the case of a call) or
the sale (in the case of a put) of the underlying security or foreign
currency. Any such sale would result in a net gain or loss depending on
whether the amount received on the sale is more or less than the premium
and other transaction costs paid on the call or put which is sold.
Purchasing a call or put option involves the risk that the Fund may lose
the premium it paid plus transaction costs.
Warrants and stock rights are almost identical to call options in their
nature, use and effect except that they are issued by the issuer of the
underlying security rather than an option writer, and they generally
have longer expiration dates than call options. The Fund may invest up
to 5% of its net assets in warrants and stock rights, but no more than
2% of its net assets in warrants and stock rights not listed on the New
York Stock Exchange or the American Stock Exchange.
Financial Futures and Related Options
The Fund may enter into financial futures contracts and related options
as a hedge against anticipated changes in the market value of their
portfolio securities or securities which they intend to purchase or in
the exchange rate of foreign currencies. Hedging is the initiation of an
offsetting position in the futures market which is intended to minimize
the risk associated with a position's underlying securities in the cash
market. Investment techniques related to financial futures and options
are summarized below and are described more fully in the Statement of
Additional Information.
Financial futures contracts consist of interest rate futures contracts,
foreign currency futures contracts and securities index futures
contracts. An interest rate futures contract obligates the seller of the
contract to deliver, and the purchaser to take delivery of, the interest
rate securities called for in the contract at a specified future time
and at a specified price. A foreign currency futures contract obligates
the seller of the contract to deliver, and the purchaser to take
delivery of, the foreign currency called for in the contract at a
specified future time and at a specified price. (See "Foreign Currency
Transactions.") A securities index assigns relative values to the
securities included in the index, and the index fluctuates with changes
in the market values of the securities so included. A securities index
futures contract is a bilateral agreement pursuant to which two parties
agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the index value at the close
of the last trading day of the contract and the price at which the
futures contract is originally struck. An option on a financial futures
contract gives the purchaser the right to assume a position in the
contract (a long position if the option is a call and a short position
if the option is a put) at a specified exercise price at any time during
the period of the option.
The Fund may purchase and sell financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase
exchange or board-traded put and call options on financial futures
contracts. It will engage in transactions in financial futures contracts
and related options only for hedging purposes and not for speculation.
In addition, the Fund will not purchase or sell any financial futures
contract or related option if, immediately thereafter, the sum of the
cash or U.S. Treasury bills committed with respect to its existing
futures and related options positions and the premiums paid for related
options would exceed 5% of the market value of its total assets. At the
time of purchase of a futures contract or a call option on a futures
contract, an amount of cash, U.S. Government securities or other
appropriate high-grade debt obligations equal to the market value of the
futures contract minus the Fund's initial margin deposit with respect
thereto, will be deposited in a segregated account with the Fund's
custodian bank to collateralize fully the position and thereby ensure
that it is not leveraged. The extent to which the Fund may enter into
financial futures contracts and related options may also be limited by
requirements of the Internal Revenue Code of 1986 for qualification as a
regulated investment company.
Closing out a Futures Position -- Risks
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, the Fund
could be required to make continuing daily cash payments of variation
margin in the event of adverse price movements. In such situations, if
the Fund has insufficient cash, it may have to sell portfolio securities
to meet daily 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's ability to hedge
effectively. 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 success of a hedging strategy
depends on the Sub-Advisor's ability to predict the direction of
interest rates and other economic factors. The correlation is imperfect
between movements in the prices of futures or options 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.
Foreign Currency Transactions
The value of the Fund's assets as measured in United States dollars may
be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations, and the Fund may incur
costs in connection with conversions between various currencies. The
Fund will conduct its foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through forward contracts to purchase or
sell foreign currencies. 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 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.
When the Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may want to establish the
United States dollar cost or proceeds, as the case may be. By entering
into a forward contract in United States dollars for the purchase or
sale of the amount of foreign currency involved in the underlying
security transaction, the Fund is able to protect itself against a
possible loss between trade and settlement dates resulting from an
adverse change in the relationship between the United States dollar and
such foreign currency. However, this tends to limit potential gains
which might result from a positive change in such currency
relationships. The Fund may also hedge its foreign currency exchange
rate risk by engaging in currency financial futures and options
transactions.
When the Advisor or the Sub-Advisor believes that the currency of a
particular foreign country may suffer a substantial decline against the
United States dollar, it may enter into a forward contract to sell an
amount of foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency. The
forecasting of short-term currency market movement is extremely
difficult and whether such a short-term hedging strategy will be
successful is highly uncertain.
It is impossible to forecast with precision the market values of
portfolio securities at the expiration of a contract. Accordingly, it
may be necessary for the Fund to purchase additional currency on the
spot market (and bear the expense of such purchase) if the market value
of the security is less than the amount of foreign currency the Fund is
obligated to deliver when a decision is made to sell the security and
make delivery of the foreign currency in settlement of a forward
contract. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the
Fund is obligated to deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction, it will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the
Fund engages in an offsetting transaction, it may subsequently enter
into a new forward contract to sell the foreign currency. Should forward
prices decline during the period between the Fund's entering into a
forward contract for the sale of a foreign currency and the date it
enters into an offsetting contract for the purchase of the foreign
currency, it would realize gains to the extent the price of the currency
it has agreed to sell exceeds the price of the currency it has agreed to
purchase. Should forward prices increase, the Fund would suffer a loss
to the extent the price of the currency it has agreed to purchase
exceeds the price of the currency it has agreed to sell. Although such
contracts tend to minimize the risk of loss due to a decline in the
value of the hedged currency, they also tend to limit any potential gain
which might result should the value of such currency increase. The Fund
may have to convert its holdings of foreign currencies into United
States dollars from time to time. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying
and selling various currencies.
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. Repurchase agreements are not, however, without
risk. In the event of the bankruptcy of a seller during the term of a
repurchase agreement, a legal question exists as to whether the Fund
would be deemed the owner of the underlying security or would be deemed
only to have a security interest in and lien upon such security. The
Fund will only engage in repurchase agreements with recognized
securities dealers and banks determined to present minimal credit risk
by the Advisor under the direction and supervision of the Fund's Board
of Directors. In addition, the Fund will only engage in repurchase
agreements reasonably designed to secure fully during the term of the
agreement the seller's obligation to repurchase the underlying security
and will monitor the market value of the underlying security during the
term of the agreement. If the value of the underlying security declines
and is not at least equal to the repurchase price due the Fund pursuant
to the agreement, the Fund will require the seller to pledge additional
securities or cash to secure the seller's obligations pursuant to the
agreement. If the seller defaults on its obligation to repurchase and
the value of the underlying security declines, the Fund may incur a loss
and may incur expenses in selling the underlying security. Repurchase
agreements are always for periods of less than one year, and are
considered illiquid if not terminable within seven days.
The Fund may lend its portfolio securities.
The Fund may lend its portfolio securities to member firms of the New
York Stock Exchange and commercial banks with assets of one billion
dollars or more, provided the value of the securities loaned from the
Fund will not exceed 10% of the Fund's assets. Any such 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
Sub-Advisor deems creditworthy and only on such terms the Advisor or
Sub-Advisor believes should compensate for such risk. On termination of
the loan the borrower is obligated to return the securities to the Fund.
The Fund will realize any gain or loss in the market value of the
securities during the loan period. The Fund may pay reasonable custodial
fees in connection with the loan.
The Fund's investment objective and those policies set forth as
fundamental investment restrictions may not be changed without
shareholder approval. The Fund's Statement of Additional Information
describes additional policies and restrictions concerning the portfolio
investments of the Fund.
High Social Impact Investments
The Fund has adopted a non-fundamental policy that permits it to invest
up to three 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"). In applying this
restriction, the percentage of assets in such securities shall be based
upon the aggregate cumulative value at the time of the respective
acquisitions of such securities currently held by the Fund. Such
securities are typically illiquid and unrated and generally considered
non-investment grade debt securities which involve a greater risk of
default or price decline than investment-grade securities. Through
diversification and credit analysis and limited maturity, investment
risk can be reduced, although there can be no assurance that losses will
not occur.
Special Equities and Private Placements
Due to the particular social objective of the Fund, opportunities may
exist to promote especially promising approaches to social goals through
privately placed investments. The Special Equities Committee of the
Board of Directors identifies, evaluates, and selects these investments,
subject to ratification by the Board. The private placement investments
undertaken by the Fund, if any, may be subject to a high degree of risk.
Such investments may involve relatively small and untried enterprises
that have been selected in the first instance because of some attractive
social objectives or policies.
Many private placement investments have no readily available market and
may therefore be considered illiquid. Fund investments in private
placements and other securities for which market quotations are not
readily available are valued at fair market value as determined by the
Advisor or Sub-Advisor under the direction and control of the Board.
SOCIAL SCREENS
The Fund carefully reviews company policies and behavior regarding
social issues important to global quality of life:
- -environment
- -human rights
- -nuclear energy
- -weapons systems
- -alcohol/tobacco
- -health care.
The Fund currently observes the following operating policies which may
be changed by the Fund's Board of Directors without shareholder
approval: (1) the Fund actively seeks to invest in companies that
achieve excellence in both financial return and environmental soundness,
selecting issuers that take positive steps toward preserving and
enhancing our natural environment through their operations and products,
and avoiding companies with poor environmental records; (2) the Fund
will not invest in issuers which the Advisor or Sub-Advisor ascertains
contribute to human rights abuses in other countries; (3) the Fund will
not invest in producers of nuclear power or nuclear weapons, or
companies with more than 10% of revenues derived from the production or
sale of weapons systems; and (4) the Fund will not invest in companies
which derive more than 10% of revenues from the production of alcohol or
tobacco products, and actively seeks to invest in companies whose
products or services improve the quality of or access to health care,
including public health and preventative medicine.
The Fund believes that there are long-term benefits inherent in an
investment philosophy that demonstrates concern for the environment,
human rights, economic priorities, and international relations. Those
enterprises which exhibit a social awareness measured in terms of the
above attributes and considerations should be better prepared to meet
future societal needs for goods and services. By responding to social
concerns, these enterprises should not only avoid the liability that may
be incurred when a product or service is determined to have a negative
social impact or has outlived its usefulness, but also be better
positioned to develop opportunities to make a profitable contribution to
society. These enterprises should be ready to respond to external
demands and ensure that over the longer term they will be viable to
provide a positive return to both investors and society as a whole.
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 a class shows its overall change in value, including changes in share
price and assuming all of the class' dividends and capital gain
distributions are reinvested. A cumulative total return reflects the
class' performance over a stated period of time. An average annual total
return 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 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 "overall return" do not reflect deduction of the sales charge. You
should consider overall return figures only if you qualify for a reduced
sales charge, or for purposes of comparison with comparable figures
which also do not reflect 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 Fund's Board of Directors supervises the Fund's activities and
reviews its contracts with companies that provide it with services.
The Fund is a series of Calvert World Values Fund, Inc., an open-end
diversified management investment company organized as a Maryland
corporation on February 14, 1992. The other series of Calvert World
Values Fund, Inc. is Calvert Capital Accumulation Fund.
The Fund is not required to hold annual shareholder meetings, but
special meetings may be called for purposes such as electing or removing
directors, 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 the affected
class(es).
Calvert Asset Management serves as Advisor to the Fund.
Calvert Asset Management Company, Inc. (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 Directors 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.
The Fund's organizational expenses in the amount of $52,847 were
advanced to the Fund by the Advisor. These expenses are being amortized
over a sixty-month period which commenced on July 2, 1992. In the event
that the Fund liquidates before the deferred organization expenses are
fully amortized, the Advisor shall bear such unamortized deferred
organization expenses.
The Advisor serves as investment advisor to six other registered
investment companies in the Calvert Group of Funds: First Variable Rate
Fund for Government Income; Calvert Tax-Free Reserves; Calvert Cash
Reserves (doing business as Money Management Plus); Calvert Social
Investment Fund; Calvert Municipal Fund, Inc.; and The Calvert Fund. The
Advisor also serves as investment advisor to Acacia Capital Corporation,
a registered investment company whose shares are sold to insurance
companies to fund the benefits under certain variable annuity and
variable life insurance policies.
Portfolio Manager
Investment selections for the Global Equity Fund are made by the
Sub-Advisor, Murray Johnstone International, Ltd. Andrew Preston,
Portfolio Manager, studied at Melbourne University in Australia and
Ritsumeikan University in Japan prior to working for the Australian
Department of Foreign Affairs. He joined Murray Johnstone in 1985 as an
analyst in the U.K. and U.S. departments, became Fund Manager in the
Japanese Department, played a prominent role in the establishment and
operation of Yamaichi-Murray Johnstone, and then began to support Murray
Johnstone's growing U.S. business.
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, 1995, Calvert Group
managed and administered assets in excess of $4.8 billion and more than
200,000 shareholder and depositor accounts.
Murray Johnstone International, Ltd. is the Fund's Sub-Advisor.
Murray Johnstone International, Ltd. (the "Sub-Advisor") is the
Sub-Advisor to the Fund. Its principal business office in the U.S. is
875 N. Michigan Avenue, Suite 3415, Chicago, Illinois 60611. The
Sub-Advisor manages the investment and reinvestment of the assets of the
Fund, although the Advisor may manage the U.S. dollar portion of the
Fund's cash reserves. The Advisor will continuously monitor and evaluate
the performance and investment style of the Sub-Advisor. The Sub-Advisor
is a wholly-owned subsidiary of United Asset Management Company.
The Advisor receives a fee based on a percentage of the Fund's assets.
From this, it pays the Sub-Advisor.
The Investment Advisory Agreement between the Fund and the Advisor
provides that the Advisor is entitled to an annual fee, payable monthly,
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 in its discretion defer its fees or assume the
Fund's operating expenses. For the year ended September 30, 1995, the
Advisor received fees of 1.00% of the Fund's average daily net assets.
For the same period, the Advisor reimbursed expenses equal to 0.13% of
the Class C average daily net assets. The Investment Advisory Agreement
provides that the Advisor may later, to the extent permitted by law,
recapture any fees it deferred, or expenses it assumed during the two
prior years. During the 1995 fiscal year, the Advisor did not recapture
fees.
The Investment Sub-Advisory Agreement between the Advisor and the
Sub-Advisor provides that the Sub-Advisor is entitled to a sub-advisory
fee of 0.45% of the Fund's average daily net assets managed by the
Sub-Advisor up to $250 million, 0.425% on the next $250 million and
0.40% on such assets in excess of $500 million. The Sub-Advisor's fee is
paid by the Advisor, not the Fund.
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, payable monthly,
from the Fund of 0.10% of the Fund's aggregate daily net assets with a
minimum fee of $40,000 per year.
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
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 0.35% 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 attributable to Class C.
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 "Yield and Total Return.") You should
consider Class A shares if you qualify for a reduced sales charge under
Class A. Other factors affecting the class decision include the amount
of the purchase or if you plan to hold the shares for several years.
Class A Shares
Class A shares are offered at net asset value plus a front-end sales
charge as follows:
Concession to
As a % Dealers as a %
As a % of of Net of Amount
Offering Amount Invested
Amount of Investment Price Invested
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Less than $50,000 4.75% 4.99% 4.00%
$50,000 but less than $100,000 3.75% 3.90% 3.00%
$100,000 but less than $250,000 2.75% 2.83% 2.25%
$250,000 but less than $500,000 1.75% 1.78% 1.25%
$500,000 but less than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
*For new investments (new purchases but not exchanges) of $1 million or
more a broker-dealer will have the choice of being paid a finder's fee
by CDI in one of the following methods: (1) CDI may pay broker-dealer,
on a monthly basis for 12 months, an annual rate of 0.30%. Payments will
be made monthly at the rate of 0.025% of the amount of the investment,
less redemptions; or (2) CDI may pay broker-dealers 0.25% of the amount
of the purchase; however, 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 thirteen months of the time of purchase.
Sales charges on Class A shares may be reduced or eliminated in certain
cases. See Exhibit A to this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a
portion to your broker-dealer. Upon written notice to dealers with whom
it has dealer agreements, CDI may reallow up to the full applicable
sales charge. Dealers to whom 90% or more of the entire sales charge is
reallowed may be deemed to be underwriters under the Securities Act of
1933.
In addition to any sales charge reallowance or finder's fee, your
broker-dealer, or other financial service firm through which your
account is held, currently will be paid periodic service fees at an
annual rate of up to 0.25% of the average daily net asset value of Class
A shares held in accounts maintained by that firm.
Class A Distribution Plan
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 0.35% 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 dealers and others,
including CDI salespersons who service accounts, service fees at an
annual rate of up to 0.25% of the average daily net asset value of Class
A shares, and to pay CDI for its marketing and distribution expenses,
including, but not limited to, preparation of advertising and sales
literature and the printing and mailing of prospectuses to prospective
investors. During the fiscal year ended September 30, 1995, the Fund
paid Class A Distribution Plan expenses of 0.25% of average net assets.
Each of the Distribution Plans may be terminated at any time by vote of
the Independent Directors or by vote of a majority of the outstanding
voting shares of the respective class.
Class C Shares
Class C shares are not available through all dealers. Class C shares are
offered at net asset value, without a front-end sales charge or a
contingent deferred sales charge. Class C expenses are higher than those
of Class A.
Class C Distribution Plan
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 dealers and other selling firms
dealer-paid 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. For the fiscal year ended September 30, 1995, the
Fund paid Class C Distribution Plan expenses of 1.00% of average net
assets.
Arrangements with Broker-Dealers and Others
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing
registered representatives who have sold or are expected to sell a
minimum dollar amount of shares of the Fund and/or shares of other funds
underwritten by CDI. CDI may make expense reimbursements for special
training of a dealer's registered representatives, advertising or
equipment, or to defray the expenses of sales contests. Eligible
marketing and distribution expenses may be paid pursuant to the Fund's
Rule 12b-1 Distribution Plan.
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 Initial investment Additional
Investments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the Fund and payable to the Fund and
mail it with your mail it with your
application to: investment slip to:
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas City, MO 64141-6544 Kansas City, MO 64105-6739
By Registered, Certified, or Overnight Mail: Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
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. NAV is
computed by adding the value of all portfolio holdings, plus other
assets, deducting liabilities and then dividing the result by the number
of shares outstanding. The NAV of each class will vary daily based on
the market values of its investments. 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 Directors believes accurately reflects fair value.
Securities which are primarily traded on foreign securities exchanges
are generally valued at the preceding closing values of such securities
on their respective exchanges (See the Statement of Additional
Information -- "Determination of Net Asset Value") relating to the
valuation of foreign securities. Financial futures are valued at the
settlement price established each day by the board of trade or exchange
on which they are traded. All assets and liabilities initially expressed
in foreign currency values will be converted into United States dollars
as last quoted by any recognized dealer.
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. If your purchase is made by federal funds wire, or exchange,
and is received by 4:00 p.m. (Eastern time), your account will be
credited on the day of receipt. If your purchase is received after 4:00
p.m. Eastern time, it will be credited the next business day. 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
cancelled 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 can hold payment on redemptions until it is reasonably satisfied
that the investment is collected (normally 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.
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
You may exchange shares of the Fund for shares of the same class of
other Calvert Group Funds.
If your investment goals change, the Calvert Group Family of Funds has a
variety of investment alternatives that includes common stock funds,
tax-exempt and corporate bond funds, and money market funds. The
exchange privilege is a convenient way to buy shares in other Calvert
Group Funds in order to respond to changes in your goals or in market
conditions. However, 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.
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.
Complete and sign an application for an account in that fund,
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--By 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.
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, effective July 31, 1996, 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 yield and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers use a push button phone with tone capabilities to obtain
prices, 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 one or
two business days after the call for the transfer to take place; for
money recently invested, allow normal check clearing time (up to 10
business days) before redemption 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. You will receive a confirmation from us for these transactions,
and 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 us for
a Money Controller Application.
Telephone Transactions
Calvert may record all telephone calls.
If you have telephone transaction privileges, you may purchase, redeem,
or exchange shares, wire funds and use Calvert Money Controller by
telephone. 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 account application for the easiest way to establish
services.
The easiest way to establish optional services on your Calvert Group
account is to select the options you desire when you complete your
account application. If you wish to add other options later, you may
have to provide us with additional information and a signature
guarantee. Please call 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 chart on page __. 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. Salary
reduction pension plans (SAR-SEP IRAs) are also available to employers
with 25 or fewer employees.
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 seven (7) days. Calvert
Money Controller redemptions generally will be credited to your bank
account on the second business day after your phone call. When the New
York Stock Exchange is closed (or when trading is restricted) for any
reason other than its customary weekend or holiday closings, or under
any emergency circumstances as determined by the Securities and Exchange
Commission, redemptions may be suspended or payment dates postponed.
Minimum account balance is $1,000.
Please maintain a balance in your account of at least $1,000, 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
64141-6544
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" on page ___. 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 maintain an account with $10,000 or more, you may have up to two
(2) redemption checks for $100 or more sent to you on the 15th of each
month, simply by sending a letter with all the information, including
your account number, and the dollar amount ($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, net
short-term capital gains, if any, and dividends declared and paid on
investments, 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; dividend
payments are anticipated to be generally 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 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 dividends
and net realized short-term capital gains are taxable as ordinary
income; capital gains distributions are taxable as long-term capital
gains regardless of how long you have held the shares. Dividends and
distributions declared in December and paid in January 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.
Distributions resulting from the sale of certain foreign currencies and
debt securities are taxed as ordinary income gain or loss. If these
transactions result in reducing the Fund's net income, a portion of the
dividends may be classified as a return of capital (which lowers your
tax base). If the Fund pays taxes to foreign governments during the
year, the taxes will reduce the Fund's dividends but will still be
included in your taxable income. However, you may be able to claim an
offsetting credit or deduction on your tax return for your portion of
foreign taxes paid by 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 Corporate Tax
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
REDUCED SALES CHARGES (CLASS A ONLY)
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 (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Fund shares at a
discount, and (iii) satisfies uniform criteria which enable CDI and
dealers offering Fund shares to realize economies of scale in
distributing such shares. A qualified group must have more than 10
members, must be available to arrange for group meetings between
representatives of CDI or dealers distributing the Fund's shares, must
agree to include sales and other materials related to the Fund in its
publications and mailings to members at reduced or no cost to CDI or
dealers, 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 ("Code"), or for a plan qualifying under Section 403(b)(7) of the Code
if, at the time of purchase, Calvert Group has been notified in writing
that the 403(b)(7) plan has at least 200 eligible employees.
Furthermore, there is no sales charge on shares purchased for the
benefit of a retirement plan qualifying under Section 401(k) of the Code if,
at the time of such purchase, the 401(k) plan administrator has notified
Calvert Group in writing that a) its 401(k) plan has at least 200
eligible employees; or b) the cost or current value of shares the plan
has in Calvert Group of Funds (except money market funds) is at least $1
million.
Neither the 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 I.R.C., and "rabbi trusts."
Dividends and Capital Gain Distributions from other Calvert Group Funds.
You may prearrange to have your dividends and capital gain distributions
from another Calvert Group Fund automatically invested in your account
with no additional sales charge.
Purchases made at net asset value ("NAV"). Except for money market
funds, if you make a purchase at NAV, you may exchange that amount to
another fund at no additional sales charge.
Reinstatement Privilege. If you redeem Fund shares and then within 30
days decide to reinvest in the same Fund, you may do so at the 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, 1996
CALVERT WORLD
VALUES FUND, INC.
Global Equity Fund
Performance and Prices:
Calvert Information Network
24 hours, 7 days a week
800-368-2745
Service for Existing Account:
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
Financial Highlights
Investment Objective and Policies
Risk Factors
Investment Techniques and Related Risks
Social Screens
Total Return
Management of the Fund
SHAREHOLDER GUIDE:
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>
CALVERT WORLD VALUES FUND, INC.
CAPITAL ACCUMULATION FUND
Statement of Additional Information
January 31, 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
Investment Objective and Policies 1
Investment Restrictions 9
Purchase and Redemption of Shares 8
Reduced Sales Charges (Class A) 9
Net Asset Value 9
Calculation of Total Return 9
Advertising 10
Dividends and Taxes 10
Directors and Officers 13
Investment Advisor and Subadvisors 14
Transfer and Shareholder Servicing Agent 16
Method of Distribution 16
Portfolio Transactions 17
Independent Accountants and Custodians 17
General Information 18
Financial Statements 18
Appendix 18
--------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION-January 31, 1996
CALVERT WORLD VALUES FUND, INC.
CAPITAL ACCUMULATION FUND
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
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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, 1996, which
may be obtained free of charge by writing the Fund at the above address
or calling the Fund.
==========================================================================
INVESTMENT OBJECTIVE AND POLICIES
==========================================================================
The Fund seeks to provide long-term capital appreciation by
investing primarily in the equity securities of small- to mid-sized
companies that are undervalued but demonstrate a potential for growth.
Currently, and for the foreseeable future, the Advisor manages the Fund
as a mid-cap fund, with a slight bias toward growth style. The Fund will
rely on its proprietary research to identify stocks that may have been
overlooked by analysts, investors, and the media, and which generally
have a market value between $100 million and $5 billion, but which may
be larger or smaller as deemed appropriate. The investment style of the
Fund can be shown graphically as follows: (insert grid box here)
large
value
growth
small
Investments may also include, but are not limited to, preferred
stocks, foreign securities, convertible securities, certain options and
futures transactions, bonds, notes and other debt securities The Fund
will take reasonable risks in seeking to achieve its investment
objective. There is, of course, no assurance that the Fund will be
successful in meeting its objective since there is risk involved in the
ownership of all equity securities. The Fund's investment objective is
not fundamental and may be changed without shareholder approval.
Defensive Strategies
The Fund may employ certain defensive strategies (generally
options and futures contracts) in an attempt to protect against the
decline of its investments. An option is a legal contract that gives the
holder the right to buy or sell a specified amount of the underlying
interest at a fixed or determinable price (called the exercise or strike
price) upon exercise of the option. A futures contract is an agreement
to take delivery or to make delivery of a standardized quantity and
quality of a certain commodity during a particular months in the future
at a specified price. By buying or selling futures contracts --
contracts that establish a price level at a given time for items to be
delivered later -- amounts to insurance against adverse price changes,
or "hedging."
The Fund may purchase put and call options, and write (sell)
covered put and call options, on equity and debt securities, foreign
currencies and stock or debt indices. The Fund may purchase or write
both exchange-traded and OTC options. These strategies may also be used
with respect to futures.
Special Risks of Defensive Strategies
Successful use of defensive strategies depends on the ability
to predict movements of the overall securities, currency and interest
rate markets, which is a different skill than that required to select
equity and debt investments. There can be no assurance that a chosen
strategy will succeed.
There may not be an expected correlation between price
movements of a hedging instrument and price movements of the investment
being hedged, so that the Fund may lose money notwithstanding employment
of the hedging strategy.
While defensive strategies can reduce risk of loss by
offsetting the negative effect of unfavorable price movements, they can
also reduce the opportunity for gain by offsetting the positive effect
of a favorable price movement. If the variance is great enough, a
decline in the price of an instrument used for defensive purposes may
result in a loss to the Fund.
The Fund may be required to cover its assets in a segregated
account. If an investment is not able to be liquidated at the time the
Subadvisor believes it is best for the Fund to do so, the Fund might be
required to keep assets on reserve that it otherwise would not have had
to maintain. Similarly, it might have to sell a security at an
inopportune time in order to maintain the reserves.
Instruments used as part of a Defensive Strategy
The Fund may write covered call options and purchase call and
put options on securities and securities indices, and may write secured
put options and enter into option transactions on foreign currency. It
may also engage in transactions in financial futures contracts and
related options for hedging purposes, and invest in repurchase
agreements. A call option on a security, security index or a foreign
currency gives the purchaser of the option, in return for the premium
paid to the writer (seller), the right to buy the underlying security,
index or foreign currency at the exercise price at any time during the
option period. Upon exercise by the purchaser, the writer of a call
option on an individual security or foreign currency has the obligation
to sell the underlying security or currency at the exercise price. A
call option on a securities index is similar to a call option on an
individual security, except that the value of the option depends on the
weighted value of the group of securities comprising the index and all
settlements are to be made in cash. A call option may be terminated by
the writer (seller) by entering into a closing purchase transaction in
which it purchases an option of the same series as the option previously
written.
A put option on a security, security index, or foreign currency
gives the purchaser of the option, in return for the premium paid to the
writer (seller), the right to sell the underlying security, index, or
foreign currency at the exercise price at any time during the option
period. Upon exercise by the purchaser, the writer of a put option has
the obligation to purchase the underlying security or foreign currency
at the exercise price. A put option on a securities index is similar to
a put option on an individual security, except that the value of the
option depends on the weighted value of the group of securities
comprising the index and all settlements are made in cash.The Fund may
write exchange-traded call options on its securities. Call
options may be written on portfolio securities, securities indices, or
foreign currencies. With respect to securities and foreign currencies,
the Fund may write call and put options on an exchange or
over-the-counter. Call options on portfolio securities will be covered
since the Fund will own the underlying securities. Call options on
securities indices will be written only to hedge in an economically
appropriate way portfolio securities which are not otherwise hedged with
options or financial futures contracts and will be "covered" by
identifying the specific portfolio securities being hedged.
Options on foreign currencies will be covered by securities
denominated in that currency. Options on securities indices will be
covered by securities that substantially replicate the movement of the
index. The Fund may not write options on more than 50% of its total
assets. Management presently intends to cease writing options if and as
long as 25% of such total assets are subject to outstanding options
contracts or if required under regulations of state securities
administrators.
The Fund may write call and put options in order to obtain a
return on its investments from the premiums received and will retain the
premiums whether or not the options are exercised. Any decline in the
market value of portfolio securities or foreign currencies will be
offset to the extent of the premiums received (net of transaction
costs). If an option is exercised, the premium received on the option
will effectively increase the exercise price or reduce the difference
between the exercise price and market value. During the option period,
the writer of a call option gives up the opportunity for appreciation in
the market value of the underlying security or currency above the
exercise price. It retains the risk of loss should the price of the
underlying security or foreign currency decline. Writing call options
also involves risks relating to the Fund's ability to close out options
it has written. During the option period, the writer of a put option has
assumed the risk that the price of the underlying security or foreign
currency will decline below the exercise price. However, the writer of
the put option has retained the opportunity for an appreciation above the
exercise price should the market price of the underlying security or
foreign currency increase. Writing put options also involves risks
relating to the Fund's ability to close out options it has written.
The Fund may sell a call option or a put option which it has
previously purchased prior to the purchase (in the case of a call) or
the sale (in the case of a put) of the underlying security or foreign
currency. Any such sale would result in a net gain or loss depending on
whether the amount received on the sale is more or less than the premium
and other transaction costs paid on the call or put which is sold.
Purchasing a call or put option involves the risk that the Fund may lose
the premium it paid plus transaction costs.
Warrants and stock rights are almost identical to call options
in their nature, use and effect except that they are issued by the
issuer of the underlying security rather than an option writer, and they
generally have longer expiration dates than call options. The Fund may
invest up to 5% of its net assets in warrants and stock rights, but no
more than 2% of its net assets in warrants and stock rights not listed
on the New York Stock Exchange or the American Stock Exchange.
The Fund may enter into financial futures contracts and related
options as a hedge against anticipated changes in the market value of
portfolio securities or securities which it or the Fund intends to
purchase or in the exchange rate of foreign currencies. Hedging is the
initiation of an offsetting position in the futures market which is
intended to minimize the risk associated with a position's underlying
securities in the cash market. Investment techniques related to
financial futures and options are summarized below and are described
more fully in the Statement of Additional Information.
Financial futures contracts in which the Fund may invest
include interest rate futures contracts, foreign currency futures
contracts and securities index futures contracts. An interest rate
futures contract obligates the seller of the contract to deliver, and
the purchaser to take delivery of, the interest rate securities called
for in the contract at a specified future time and at a specified price.
A foreign currency futures contract obligates the seller of the contract
to deliver, and the purchaser to take delivery of, the foreign currency
called for in the contract at a specified future time and at a specified
price. (See "Foreign Currency Transactions.") A securities index assigns
relative values to the securities included in the index, and the index
fluctuates with changes in the market values of the securities so
included. A securities index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference
between the index value at the close of the last trading day of the
contract and the price at which the futures contract is originally
struck. An option on a financial futures contract gives the purchaser
the right to assume a position in the contract (a long position if the
option is a call and a short position if the option is a put) at a
specified exercise price at any time during the period of the option.
Engaging in transactions in financial futures contracts
involves certain risks, such as the possibility of an imperfect
correlation between futures market prices and cash market prices and the
possibility that the Advisor or Subadvisor could be incorrect in its
expectations as to the direction or extent of various interest rate
movements or foreign currency exchange rates, in which case the Fund's
return might have been greater had hedging not taken place. There is
also the risk that a liquid secondary market may not exist. The risk in
purchasing an option on a financial futures contract is that the Fund
will lose the premium it paid. Also, there may be circumstances when the
purchase of an option on a financial futures contract would result in a
loss to the Fund while the purchase or sale of the contract would not
have resulted in a loss.
The Fund may purchase and sell financial futures contracts
which are traded on a recognized exchange or board of trade and may
purchase exchange or board-traded put and call options on financial
futures contracts. It will engage in transactions in financial futures
contracts and related options only for hedging purposes and not for
speculation. In addition, the Fund will not purchase or sell any
financial futures contract or related option if, immediately thereafter,
the sum of the cash or U.S. Treasury bills committed with respect to its
existing futures and related options positions and the premiums paid for
related options would exceed 5% of the market value of its total assets.
At the time of purchase of a futures contract or a call option on a
futures contract, an amount of cash, U.S. Government securities or other
appropriate high-grade debt obligations equal to the market value of the
futures contract minus the Fund's initial margin deposit with respect
thereto, will be deposited in a segregated account with the Fund's
custodian bank to collateralize fully the position and thereby ensure
that it is not leveraged. The extent to which the Fund may enter into
financial futures contracts and related options may also be limited by
requirements of the Internal Revenue Code of 1986 for qualification as a
regulated investment company.
Noninvestment-grade (High Yield/High Risk - or Junk Bond) Debt Securities
The Fund may invest in lower quality debt securities (generally
those rated BB or lower by S&P or Ba or lower by Moody's), subject to
the Funds' investment policy which provides that they may not invest
more than 35% of their assets in securities rated below BBB by either
rating service, or in unrated securities determined by the Advisor to be
comparable to securities rated below BBB by either rating service. The
Fund currently intends to invest no more than 5% of its assets in debt
obligations. These securities have moderate to poor protection of
principal and interest payments and have speculative characteristics.
These securities involve greater risk of default or price declines due
to changes in the issuer's creditworthiness than investment-grade debt
securities. Because the market for lower-rated securities may be thinner
and less active than for higher-rated securities, there may be market
price volatility for these securities and limited liquidity in the
resale market. Market prices for these securities may decline
significantly in periods of general economic difficulty or rising
interest rates. Unrated debt securities may fall into the lower quality
category. Unrated securities usually are not attractive to as many
buyers as are rated securities, which may make them less marketable.
The quality limitation set forth in the investment policy is
determined immediately after the Fund's acquisition of a security.
Accordingly, any later change in ratings will not be considered when
determining whether an investment complies with the Fund's investment
policy. If an obligation held by the Fund is later downgraded, the
Fund's Advisor, under the supervision of the Fund's Board of Directors,
will consider whether it is in the best interest of the Fund's
shareholders to hold or to dispose of the obligation. Among the criteria
that may be considered by the Advisor and the Board are the probability
that the obligations will be able to make scheduled interest and
principal payments in the future, the extent to which any devaluation of
the obligation has already been reflected in the Fund's net asset value,
and the total percentage, if any, of obligations currently rated below
investment grade held by the Fund.
When purchasing high-yielding securities, rated or unrated, the
Subadvisor prepares its own careful credit analysis to attempt to
identify those issuers whose financial condition is adequate to meet
future obligations or is expected to be adequate in the future. Through
portfolio diversification and credit analysis, investment risk can be
reduced, although there can be no assurance that losses will not occur.
Foreign Securities
The Fund may purchase foreign securities. Foreign brokerage
commissions and the custodial costs associated with maintaining foreign
portfolio securities are generally higher than in the United States. Fee
expense may also be incurred on currency exchanges when the Fund changes
investments from one country to another or converts foreign securities
holdings into U.S. dollars. Foreign companies and foreign investment
practices are not subject to uniform accounting, auditing and financial
reporting standards and practices or regulatory requirements comparable
to those applicable to United States companies. There may be less public
information available about foreign companies.
United States Government policies have at times, in the past,
through imposition of interest equalization taxes and other
restrictions, discouraged United States investors from making certain
investments abroad. While such taxes or restrictions are not presently
in effect, they may be reinstituted from time to time as a means of
fostering a favorable United States balance of payments. In addition,
foreign countries may impose withholding and taxes on dividends and
interest.
Foreign Currency Transactions
Forward Foreign Currency Exchange Contracts. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of
days ("Term") from the date of the contract agreed upon by the parties,
at a price set at the time of the contract. These contracts are traded
directly between currency traders (usually large commercial banks) and
their customers.
The Fund will not enter into such forward contracts or maintain
a net exposure in such contracts where it would be obligated to deliver
an amount of foreign currency in excess of the value of its portfolio
securities and other assets denominated in that currency. The Subadvisor
believes that it is important to have the flexibility to enter into such
forward contracts when it determines that to do so is in the Fund's best
interests.
Foreign Currency Options. A foreign currency option provides
the option buyer with the right to buy or sell a stated amount of
foreign currency at the exercise price at a specified date or during the
option period. A call option gives its owner the right, but not the
obligation, to buy the currency, while a put option gives its owner the
right, but not the obligation, to sell the currency. The option seller
(writer) is obligated to fulfill the terms of the option sold if it is
exercised. However, either seller or buyer may close its position during
the option period for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates.
Conversely, a put rises in value if the underlying currency depreciates.
While purchasing a foreign currency option can protect the Fund against
an adverse movement in the value of a foreign currency, it does not
limit the gain which might result from a favorable movement in the value
of such currency. For example, if the Fund was holding securities
denominated in an appreciating foreign currency and had purchased a
foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. Similarly, if the Fund
had entered into a contract to purchase a security denominated in a
foreign currency and had purchased a foreign currency call to hedge
against a rise in the value of the currency but instead the currency had
depreciated in value between the date of purchase and the settlement
date, it would not have to exercise its call but could acquire in the
spot market the amount of foreign currency needed for settlement.
Foreign Currency Futures Transactions. The Fund may use foreign
currency futures contracts and options on such futures contracts.
Through the purchase or sale of such contracts, it may be able to
achieve many of the same objectives attainable through the use of
foreign currency forward contracts, but more effectively and possibly at
a lower cost.
Unlike forward foreign currency exchange contracts, foreign
currency futures contracts and options on foreign currency futures
contracts are standardized as to amount and delivery period and are
traded on boards of trade and commodities exchanges. It is anticipated
that such contracts may provide greater liquidity and lower cost than
forward foreign currency exchange contracts.
Lending Portfolio Securities
The Fund may lend its portfolio securities to member firms of
the New York Stock Exchange and commercial banks with assets of one
billion dollars or more, provided the value of the securities loaned
from the Fund will not exceed one-third of the Fund's assets. Loans must
be secured continuously in the form of cash or cash equivalents such as
U.S. Treasury bills; the amount of the collateral must on a current
basis equal or exceed the market value of the loaned securities, and the
Fund must be able to terminate such loans upon notice at any time. The
Fund will exercise its right to terminate a securities loan in order to
preserve its right to vote upon matters of importance affecting holders
of the securities.
The advantage of such loans is that the Fund continues to
receive the equivalent of the interest earned or dividends paid by the
issuers on the loaned securities while at the same time earning interest
on the cash or equivalent collateral which may be invested in accordance
with the Fund's investment objective, policies and restrictions.
Securities loans are usually made to broker-dealers and other
financial institutions to facilitate their delivery of such securities.
As with any extension of credit, there may be risks of delay in recovery
and possibly loss of rights in the loaned securities should the borrower
of the loaned securities fail financially. However, the Fund will make
loans of its portfolio securities only to those firms the Advisor or
Subadvisor deems creditworthy and only on such terms the Advisor
believes should compensate for such risk. On termination of the loan the
borrower is obligated to return the securities to the Fund. The Fund
will realize any gain or loss in the market value of the securities
during the loan period. The Fund may pay reasonable custodial fees in
connection with the loan.
==========================================================================
INVESTMENT RESTRICTIONS
==========================================================================
Fundamental Investment Restrictions
The Fund has adopted the following investment restrictions
which cannot be changed without the approval of the holders of a
majority of the outstanding shares of the Fund. As defined in the
Investment Company Act of 1940, this means the lesser of the vote of (a)
67% of the shares of the Fund at a meeting where more than 50% of the
outstanding shares are present in person or by proxy or (b) more than
50% of the outstanding shares of the Fund. The Fund may not:
1. With respect to 50% of its assets, purchase
securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its
agencies or instrumentalities) if, as a result, more
than 5% of the value of its total assets would be
invested in securities of that issuer. (The remaining
50% of its total assets may be invested without
restriction except to the extent other investment
restrictions may be applicable).
2. Concentrate 25% or more of the value of its
assets in any one industry; provided, however, that
there is no limitation with respect to investments in
obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities, and
repurchase agreements secured thereby.
3. Make loans of more than one-third of the
assets of the Fund, or as permitted by law. The
purchase by the Fund of all or a portion of an issue of
publicly or privately distributed debt obligations in
accordance with its investment objective, policies and
restrictions, shall not constitute the making of a loan.
4. Underwrite the securities of other issuers,
except as permitted by the Board of Directors within
applicable law, and except to the extent that in
connection with the disposition of its portfolio
securities, the Fund may be deemed to be an underwriter.
5. Purchase from or sell to any of the Fund's
officers or directors, or companies of which any of
them are directors, officers or employees, any
securities (other than shares of beneficial interest of
the Fund), but such persons or firms may act as brokers
for the Fund for customary commissions.
6. Except as required in connection with
permissible options, futures and commodity activities
of the Fund, invest in commodities, commodity futures
contracts, or real estate, although it may invest in
securities which are secured by real estate or real
estate mortgages and securities of issuers which invest
or deal in commodities, commodity futures, real estate
or real estate mortgages and provided that it may
purchase or sell stock index futures, foreign currency
futures, interest rate futures and options thereon.
7. Invest in the shares of other investment
companies, except as permitted by the 1940 Act or other
applicable law, or pursuant to Calvert's nonqualified
deferred compensation plan adopted by the Board of
Directors in an amount not to exceed 10% or as
permitted by law.
8. Purchase more than 10% of the outstanding
voting securities of any issuer.
Nonfundamental Investment Restrictions
The Fund has adopted the following operating (i.e.,
non-fundamental) investment policies and restrictions which may be
changed by the Board of Directors without shareholder approval. The Fund
may not:
9. Purchase the securities of any issuer with
less than three years' continuous operation if, as a
result, more than 5% of the value of its total assets
would be invested in securities of such issuers.
10. Invest, in the aggregate, more than 15% of its
net assets in illiquid securities. Purchases of
securities outside the U.S. that are not registered
with the SEC or marketable in the U.S. are not per se
illiquid.
11. Invest, in the aggregate, more than 5% of its
net assets in the securities of issuers restricted from
selling to the public without registration under the
Securities Act of 1933, excluding restricted securities
eligible for resale pursuant to Rule 144A under that
statute. Purchases of securities outside the U.S. that
are not registered with the SEC or marketable in the
U.S. are not per se restricted.
12. Make short sales of securities or purchase any
securities on margin except that the Fund may obtain
such short-term credits as may be necessary for the
clearance of purchases and sales of securities. The
depositor payment by the Fund of initial or maintenance
margin in connection with financial futures contracts
or related options transactions is not considered the
purchase of a security on margin.
13. Purchase or retain securities of any issuer if
the officers, Directors of the Fund or its Advisors,
owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own beneficially
more than 5% of such issuer's securities.
14. Invest in warrants if more than 5% of the
value of the Fund's net assets would be invested in
such securities.
15. Invest in interests in oil, gas, or other
mineral exploration or development programs or leases
although it may invest in securities of issuers which
invest in or sponsor such programs.
16. Borrow money, except from banks for temporary
or emergency purposes, and then only in an amount not
to exceed one-third of the Fund's total assets, or as
permitted by law. In order to secure any permitted
borrowings under this section, the Fund may pledge,
mortgage or hypothecate its assets.
17. Invest for the purpose of exercising control
or management of another issuer.
For purposes of the Fund's concentration policy contained in
restriction (2), above, the Fund intends to comply with the SEC staff
position that securities issued or guaranteed as to principal and
interest by any single foreign government are considered to be
securities of issuers in the same industry.
Any investment restriction which involves a maximum percentage
of securities or assets shall not be considered to be violated unless an
excess over the applicable percentage occurs immediately after an
acquisition of securities or utilization of assets and results therefrom.
==========================================================================
PURCHASE AND REDEMPTION OF SHARES
==========================================================================
Share certificates will not be issued unless requested in
writing by the investor. No charge will be made for share certificate
requests. No certificates will be issued for fractional shares.
Amounts redeemed by check redemption may be mailed to the
investor without charge. Amounts of more than $50 and less than $300,000
may be transferred electronically at no charge to the investor. Amounts
of $1,000 or more will be transmitted by wire without charge by the Fund
to the investor's account at a domestic commercial bank that is a member
of the Federal Reserve System or to a correspondent bank. A charge of $5
is imposed on wire transfers of less than $1,000. If the investor's bank
is not a Federal Reserve System member, failure of immediate
notification to that bank by the correspondent bank could result in a
delay in crediting the funds to the investor's bank account.
Telephone redemption requests which would require the
redemption of shares purchased by check or electronic funds transfer
within the previous 10 business days may not be honored. The Fund
reserves the right to modify the telephone redemption privilege.
New shareholders wishing to use the Fund's telephone redemption
procedure must so indicate on their Investment Applications and, if
desired, designate a commercial bank or securities broker and account to
receive the redemption proceeds. Existing shareholders who at any time
desire to arrange for the telephone redemption procedure, or to change
instructions already given, must send a written notice to the Fund, with
a voided check for the bank wiring instructions to be added. If a voided
check does not accompany the request, then the request must be signature
guaranteed by a commercial bank, savings and loan association, trust
company, member firm of any national securities exchange, or certain
credit unions. Further documentation may be required from corporations,
fiduciaries, pension plans, and institutional investors.
The Fund's redemption check normally will be mailed to the
investor on the next business day following the date of receipt by the
Fund of the written or telephone redemption request. If the investor so
instructs in the redemption request, the check will be mailed or the
redemption proceeds wired to a predesignated account at the investor's
bank. Redemption proceeds are normally paid in cash. However, at the
sole discretion of the Fund, the Fund has the right to redeem shares in
assets other than cash for redemption amounts exceeding, in any 90-day
period, $250,000 or 1% of the net asset value of the Fund, whichever is
less, or as allowed by law.
The right of redemption of Fund shares may be suspended or the
date of payment postponed for any period during which the New York Stock
Exchange is closed (other than customary weekend and holiday closings),
when trading on the New York Stock Exchange is restricted, or an
emergency exists, as determined by the SEC, or if the Commission has
ordered such a suspension for the protection of shareholders. Redemption
proceeds are normally mailed or wired the next business day after a
proper redemption request has been received unless redemptions have been
suspended or postponed as described above.
==========================================================================
REDUCED SALES CHARGES (CLASS A)
==========================================================================
The Fund imposes reduced sales charges for Class A shares in
certain situations in which the Principal Underwriter and the dealers
selling Fund shares may expect to realize significant economies of scale
with respect to such sales. Generally, sales costs do not increase in
proportion to the dollar amount of the shares sold; the per-dollar
transaction cost for a sale to an investor of shares worth, say, $5,000
is generally much higher than the per-dollar cost for a sale of shares
worth $1,000,000. Thus, the applicable sales charge declines as a
percentage of the dollar amount of shares sold as the dollar amount
increases.
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter of
Intent, the Underwriter and selling dealers can expect to realize the
economies of scale applicable to that stated goal amount. Thus the Fund
imposes the sales charge applicable to the goal amount. Similarly, the
Underwriter and selling dealers also experience cost savings when
dealing with existing Fund shareholders, enabling the Fund to afford
existing shareholders the Right of Accumulation. The Underwriter and
selling dealers can also expect to realize economies of scale when
making sales to the members of certain qualified groups which agree to
facilitate distribution of Fund shares to their members. See "Exhibit A
- - Reduced Sales Charges" in the Prospectus.
==========================================================================
NET ASSET VALUE
==========================================================================
The net asset value per share of the Fund, the price at which
the Fund's shares are redeemed, is determined every business day as of
the close of the New York Stock Exchange (generally, 4:00 p.m., Eastern
time), and at such other times as may be necessary or appropriate. The
Fund does not determine net asset value on certain national holidays or
other days on which the New York Stock Exchange is closed: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
The public offering price of the Fund's shares is the net asset
value per share (plus, for Class A shares, the applicable sales charge).
The net asset value per share is computed separately for each class by
dividing the value of the Fund's total assets, less its liabilities, by
the total number of shares outstanding for that class. The Fund's
securities are valued as follows: (a) securities for which market
quotations are readily available are valued at the most recent closing
price, mean between bid and asked price, or yield equivalent as obtained
from one or more market makers for such securities; (b) securities
maturing within 60 days are valued at cost, plus or minus any amortized
discount or premium, unless the Board of Directors determines such
method not to be appropriate under the circumstances; and (c) all other
securities and assets for which market quotations are not readily
available are fairly valued by the Advisor in good faith under the
supervision of the Board of Directors.
==========================================================================
CALCULATION OF TOTAL RETURN
==========================================================================
The Fund may, from time to time, advertise "total return."
Total return is calculated separately for each class. Total return is
computed by taking the total number of shares purchased by a
hypothetical $1,000 investment, after deducting the applicable sales
charge for Class A shares, adding all additional shares purchased within
the period with reinvested dividends and distributions, calculating the
value of those shares at the end of the period, and dividing the result
by the initial $1,000 investment. Note: "Total Return" when quoted in
the Financial Highlights section of the Fund's Prospectus and the Annual
Report to Shareholders, however, per SEC instructions, does not reflect
deduction of the sales charge, and corresponds to "overall" return as
referred to herein. For periods of more than one year, the cumulative
total return is then adjusted for the number of years, taking
compounding into account, to calculate average annual total return
during that period.
Total return is computed according to the following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $l,000 (less the maximum
sales charge imposed during the period calculated); T = total return; n
= number of years; and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period.
Performance is historical in nature and is not intended to
indicate future performance. All total return quotations reflect the
deduction of the Fund's maximum sales charge, except quotations of
"overall return" which do not reflect deduction of the sales charge.
Overall return, which will be higher than total return, should be
considered only by investors, such as participants in certain pension
plans, to whom the sales charge does not apply, or for purposes of
comparison only with comparable figures which also do not reflect sales
charges, such as Lipper averages. Thus, in the above formula, for
overall return P = the entire $1,000 hypothetical initial investment and
does not reflect deduction of any sales charge. Overall return may be
advertised for other periods, such as by quarter, or cumulatively for
more than one year.
Return for the Funds' shares for the period from inception
(October 31, 1994) to September 30, 1995 are as follows:
Class A Shares Class A Shares Class C Shares
Overall Return Cumulative Total Cumulative Total
Return Return
==========================================================================
Since Inception 43.40% 36.58% 43.67%
Total return, like net asset value per share, fluctuates in
response to changes in market conditions. Performance for any particular
time period should not be considered an indication of future return.
==========================================================================
ADVERTISING
==========================================================================
The Fund or its affiliates may provide information such as, but
not limited to, the economy, investment climate, investment principles,
sociological conditions and political ambiance. Discussion may include
hypothetical scenarios or lists of relevant factors designed to aid the
investor in determining whether the Fund is compatible with the
investor's goals. The Fund may list portfolio holdings or give examples
or securities that may have been considered for inclusion in the
Portfolio, whether held or not.
The Fund or its affiliates may supply comparative performance
data and rankings from independent sources such as Donoghue's Money Fund
Report, Bank Rate Monitor, Money, Forbes, Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Wiesenberger Investment
Companies Service, Russell 2000/Small Stock Index, Mutual Fund Values
Morningstar Ratings, Mutual Fund Forecaster, Barron's, The Wall Street
Journal, and Schabacker Investment Management, Inc. Such averages
generally do not reflect any front- or back-end sales charges that may
be charged by Funds in that grouping. The Fund may also cite to any
source, whether in print or on-line, such as Bloomberg, in order to
acknowledge origin of information. The Fund may compare itself or its
portfolio holdings to other investments, whether or not issued or
regulated by the securities industry, including, but not limited to,
certificates of deposit and Treasury notes. The Fund, its Advisor, and
its affiliates reserve the right to update performance rankings as new
rankings become available.
==========================================================================
DIVIDENDS, DISTRIBUTIONS, AND TAXES
==========================================================================
The Fund declares and pays dividends from net investment income
on an annual basis. Distributions of realized net capital gains, if any,
are normally paid once a year; however, the Fund does not intend to make
any such distributions unless available capital loss carryovers, if any,
have been used or have expired. Dividends and distributions paid may
differ among the classes because of different expenses.
Certain options, futures contracts, and options on futures
contracts are "section 1256 contracts." Any gains or losses on section
1256 contracts are generally considered 60% long-term and 40% short-term
capital gains or losses ("60/40 gains or losses"). Also, section 1256
contracts held by the Fund at the end of each taxable year are treated
for federal income tax purposes as being sold on such date for their
fair market value. The resultant gains or losses are treated as 60/40
gains or losses. When the section 1256 contract is subsequently disposed
of, the actual gain or loss will be adjusted by the amount of the
year-end gain or loss. The use of section 1256 contracts may increase
the amount of short-term capital gain realized by the Fund and taxed as
ordinary income when distributed to shareholders.
Hedging transactions in options, futures contracts and
straddles or other similar transactions will subject the Fund to special
tax rules (including mark-to-market, straddle, wash sale and short sales
rules). The effect of these rules may be to accelerate income to the
Fund, defer losses to the Fund, cause adjustments in the holding periods
of the Fund's securities or convert short-term capital losses into
long-term capital losses. Hedging transactions may increase the amount
of short-term capital gain realized by the Fund which is taxed as
ordinary income when distributed to shareholders. The Fund may make one
or more of the various selections available under the Code with respect
to hedging transactions. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from
the affected positions will be determined under rules that vary
according to the elections made. The Fund will use its best efforts to
make any available elections pertaining to the foregoing transactions in
a manner believed to be in the best interests of the Fund. The 30%
limit on gains from the sale of securities held for less than three
months and the diversification requirements applicable to the Fund's
assets may limit the extent to which the Fund will be able to engage in
transactions in options, futures contracts, or options on futures
contracts.
The Fund's transactions in foreign currency-denominated debt
and equity securities, certain foreign currency options, futures
contracts, and forward contracts may give rise to ordinary income or
loss to the extent such income or loss results from fluctuations in the
value of the foreign currency concerned.
If more than 50% of the Fund's assets at year end consist of
the debt and equity securities of foreign corporations, the Fund may
elect to permit shareholders to claim a credit or deduction on their
income tax returns for their pro rata portion of qualified taxes paid by
the Fund to foreign countries. In such a case, shareholders will include
in gross income from foreign sources their pro rata shares of such
taxes. A shareholder's ability to claim a foreign tax credit or
deduction in respect of foreign taxes paid by the Fund may be subject to
certain limitations imposed by the Code, as a result of which a
shareholder may not get a full credit or deduction for the amount of
such taxes. Shareholders who do not itemize on their federal income tax
returns may claim a credit (but no deduction) for such foreign taxes.
Dividends and distributions may be subject to state and local
taxes. Dividends paid by the Fund from income attributable to interest
on obligations of the U.S. Government and certain of its agencies and
instrumentalities may be exempt from state and local taxes in certain
states. The Fund will advise shareholders of the proportion of its
dividends consisting of such governmental interest. Shareholders should
consult their tax advisors regarding the possible exclusion of this
portion of their dividends for state and local tax purposes.
Investors should note that the Internal Revenue Code may
require investors to exclude the initial sales charge, if any, paid on
the purchase of Fund shares from the tax basis of those shares if the
shares are exchanged for shares of another Calvert Group Fund within 90
days of purchase. This requirement applies only to the extent that the
payment of the original sales charge on the shares of the Fund causes a
reduction in the sales charge otherwise payable on the shares of the
Calvert Group Fund acquired in the exchange, and investors may treat
sales charges excluded from the basis of the original shares as incurred
to acquire the new shares.
The Fund is required to withhold 31% of any dividends or
redemption payments occurring in the Fund if: (a) the shareholder's
social security number or other taxpayer identification number ("TIN")
is not provided, or an obviously incorrect TIN is provided; (b) the
shareholder does not certify under penalties of perjury that the TIN
provided is the shareholder's correct TIN and that the shareholder is
not subject to backup withholding under section 3406(a)(1)(C) of the
Code because of underreporting (however, failure to provide
certification as to the application of section 3406(a)(1)(C) will result
only in backup withholding on dividends, not on redemptions); or (c) the
Fund is notified by the Internal Revenue Service that the TIN provided
by the shareholder is incorrect or that there has been underreporting of
interest or dividends by the shareholder. Affected shareholders will
receive statements at least annually specifying the amount withheld.
The Fund is required to report to the Internal Revenue Service
the following information with respect to each redemption transaction:
(a) the shareholder's name, address, account number and taxpayer
identification number; (b) the total dollar value of the redemptions;
and (c) the Fund's identifying CUSIP number.
Certain shareholders are exempt from the backup withholding and
broker reporting requirements. Exempt shareholders include:
corporations; financial institutions; tax-exempt organizations;
individual retirement plans; the U.S., a State, the District of
Columbia, a U.S. possession, a foreign government, an international
organization, or any political subdivision, agency or instrumentality of
any of the foregoing; U.S. registered commodities or securities dealers;
real estate investment trusts; registered investment companies; bank
common trust funds; certain charitable trusts; foreign central banks of
issue. Non-resident aliens, certain foreign partnerships and foreign
corporations are generally not subject to either requirement but may
instead be subject to withholding under sections 1441 or 1442 of the
Internal Revenue Code. Shareholders claiming exemption from backup
withholding and broker reporting should call or write the Fund for
further information.
Nondiversified Status
The Fund is a "nondiversified" investment company under the
Investment Act of 1940 (the "Act"), which means the Fund is not limited
by the Act in the proportion of its assets that may be invested in the
securities of a single issuer. A nondiversified fund may invest in a
smaller number of issuers than a diversified fund. Thus, an investment
in the Fund may, under certain circumstances, present greater risk of
loss to an investor than an investment in a diversified fund. However,
the Fund intends to conduct its operations so as to qualify to be taxed
as a "regulated investment company" for purposes of the Code, which will
relieve the Fund of any liability for federal income tax to the extent
its earnings are distributed to shareholders. To qualify for this
Subchapter M tax treatment, the Fund will limit its investments to
satisfy the Code diversification requirements so that, at the close of
each quarter of the taxable year, (i) not more than 25% of the fund's
assets will be invested in the securities of a single issuer or of two
or more issuers which the Fund controls and which are determined to be
engaged in the same or similar trades or businesses or related trades or
businesses, and (ii) with respect to 50% of its assets, not more than 5%
of its assets will be invested in the securities of a single issuer and
the Fund will not own more than 10% of the outstanding voting securities
of a single issuer. Investments in United States Government securities
are not subject to these limitations; while securities issued or
guaranteed by foreign governments are subject to the above tests in the
same manner as the securities of non-governmental issuers. The Fund
intends to comply with the SEC staff position that securities issued or
guaranteed as to principal and interest by any single foreign government
are considered to be securities of issuers in the same industry.
==========================================================================
DIRECTORS AND OFFICERS
==========================================================================
1CLIFTON 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.
1 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.
1 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.
<F1> 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.
<F1> DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc. and is an officer of each of
the other investment companies in the Calvert Group of Funds.
<F1> 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.
<F1> SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds.
<F2> BETH-ANN ROTH, Esq., Assistant Secretary. Ms. Roth 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.
<F1>"Interested persons" of the Fund under the Investment Company Act of
1940. Messrs. Sorrell, Tartikoff and Wolfsheimer and Mes. Bender and
Roth are affiliated persons of the Fund and its Principal Underwriter.
<F2>"Interested persons" of the Fund under the Investment Company Act of
1940. Messrs. Sorrell, Tartikoff and Wolfsheimer and Mes. Bender and
Roth are affiliated persons of the Fund and its Principal Underwriter.
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 $404.
Directors of the Fund not affiliated with the Fund's Advisor
may elect to defer receipt of all or a percentage of their fees and
invest them in any fund in the Calvert Family of Funds through the
Trustees Deferred Compensation Plan (shown as "Pension or Retirement
Benefits Accrued as part of Fund Expenses," below). Deferral of the fees
is designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees.
Director Compensation Table
Fiscal Year 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-ADVISORS
==========================================================================
The Fund's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, 1000N, Bethesda, Maryland 20814,
a subsidiary of Calvert Group Ltd., which is a subsidiary of Acacia
Mutual Life Insurance Company of Washington, D.C. ("Acacia Mutual").
The Advisory Contract between the Fund and the Advisor was
entered into on May 21, 1992, and will remain in effect indefinitely,
provided continuance is approved at least annually by the vote of the
holders of a majority of the outstanding shares of the Fund or by the
Board of Directors of the Fund; and further provided that such
continuance is also approved annually by the vote of a majority of the
trustees of the Fund who are not parties to the Contract or interested
persons of parties to the Contract or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on
such approval. The Contract may be terminated without penalty by either
party upon 60 days' prior written notice; it automatically terminates in
the event of its assignment.
<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.
Under the Contract, the Advisor provides investment advice to
the Fund and oversees its day-to-day operations, subject to direction
and control by the Fund's Board of Directors. For its services, the
Advisor receives an annual base fee, payable monthly, of 0.80% of the
Fund's average daily net assets For the 1995 fiscal period, the Advisor
received a fee of $50,418, reimbursed $12,183, and voluntarily waived or
assumed $3,256 of expenses. The Advisor may recapture from (charge to)
the Fund any fees deferred or expenses reimbursed through December 31,
1996, to the extent permitted by law. 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.
The Advisor provides the Fund with investment supervision and
management, administrative services, office space, furnishes executive
and other personnel to the Fund, and may pay Fund advertising and
promotional expenses. The Advisor reserves the right to compensate
broker-dealers in consideration of their promotional or administrative
services. The Fund pays all other administrative and operating expenses,
including: custodial, registrar, dividend disbursing and transfer agency
fees; federal and state securities registration fees; salaries, fees and
expenses of directors, executive officers and employees of the Fund, who
are not ''affiliated persons" of the Advisor or the Subadvisors within
the meaning of the Investment Company Act of 1940; insurance premiums;
trade association dues; legal and audit fees; interest, taxes and other
business fees; expenses of printing and mailing reports, notices,
prospectuses, and proxy material to shareholders; annual shareholders'
meeting expenses; and brokerage commissions and other costs associated
with the purchase and sale of portfolio securities. The 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).
The Fund's current Subadvisors are described in the
Prospectus. See "Management of the Fund." The remaining pool of
Sub-Advisors are described below.
New Amsterdam Partners, L.P. is a mid-cap value investment
manager in New York, New York. New Amsterdam Partners is a quantitative
investment firm, evaluating investment opportunities by comparing
expected investment returns. The firm believes that the disciplined use
of their valuation techniques, in conjuunction with fundamental analysis
of companies, is the key to understanding and maximizing investment
returns. Michelle Clayman, General Partner of New Amersterdam, was a
founding partner of the company, which was started in 1986. Prior to
co-founding New Amsterdam, Ms. Clayman was a Vice President of Salomon
Brothers in charge of STOCKFACTS, an on-line computer system that
combines analytical tools for equity analysis and databases and was
designed and developed by Ms. Clayman. Ms. Clayman received her Bachelor
of Arts from Oxford University and an MBA from Stanford University. She
is a Chartered Financial Analyst (CFA) and is past President of the
Society of Quantitative Analysts. Keith Graham is Vice President and
Special Limited Partner of New Amsterdam. Before joining the company in
1987, Mr. Graham was an Assistant Treasurer at the Bankers Trust
Company, first in the Trust Administration Group and later in the
Investment Management Consulting Group. Mr. Graham holds an Associate of
Arts degree from Baruch College.
Seneca, Inc., of Basking Ridge, New Jersey, is a
value-oriented, medium-to-large capitalization equity manager with a
twelve-year performance record. The firm is majority-owned by six women
employees and a female director. The company employs a traditional low
P/E value approach enhanced by portfolio risk controls and selection of
only those securities experiencing upward revisions in analysts'
earnings estimates. Susan Saltus and Sandi Sweeney direct the investment
effort, drawing on more than 28 years of investment experience. Ms.
Saltus, CFA, is Chief Investment Officer and has 16 years investment
experience. Ms. Sweeney is a Portfolio Manager and has 12 years
investment experience.
Sturdivant & Co., Inc., of Clementon, New Jersey, seeks to
identify undervalued companies or companies that are undergoing
significant changes that will enhance shareholder value. The company
utilizes a conservative, disciplined and consistently-applied decision
making process designed to achieve lower risk than the market. Ralph
Sturdivant is Chairman and CEO who, prior to founding the firm was a
Vice President at Prudential-Bache Securities and an Account Executive
with Merrill Lynch. Mr. Sturdivant holds a Bachelor of Arts from Morgan
State University and is a member of the Financial Analysts of
Philadelphia. Albert Sturdivant is President and CIO, and was a
principal and manager of the capital markets division of Grigsby,
Brandford & Company prior to co-founding Sturdivant & Co. Mr. Sturdivant
holds a Bachelor of Science from Morgan State University, and earned an
MBA from the Wharton Business School of the University of Pennsylvania.
Administrative Services
Calvert Administrative Services Company ("CASC", an affiliate
of the Advisor, has been retained by the Fund to provide certain
administrative services necessary to the conduct of its affairs,
including the preparation of regulatory filings and shareholder reports,
the daily determination of its net asset value per share and dividends,
and the maintenance of its portfolio and general accounting records. For
providing such services, CASC receives an annual fee from the Fund of
0.10% of the Fund's average daily net assets. For the 1995 fiscal
period, CASC received $6,251 in administrative fees.
==========================================================================
TRANSFER AND SHAREHOLDER SERVICING AGENT
==========================================================================
Calvert Shareholder Services, Inc. ("CSSI"), a subsidiary of
Calvert Group, Ltd., and Acacia Mutual, has been retained by the Fund to
act as transfer agent, dividend disbursing agent and shareholder
servicing agent. These responsibilities include: responding to
shareholder inquiries and instructions concerning their accounts;
crediting and debiting shareholder accounts for purchases and
redemptions of Fund shares and confirming such transactions; updating of
shareholder accounts to reflect declaration and payment of dividends;
and preparing and distributing quarterly statements to shareholders
regarding their accounts. For such services, Calvert Shareholder
Services, Inc. receives compensation based on the number of shareholder
accounts and the number of shareholder transactions. During fiscal
period 1995, CSSI received $13,179 from the Fund.
==========================================================================
METHOD OF DISTRIBUTION
==========================================================================
The Fund has entered into an agreement with Calvert
Distributors, Inc. ("CDI") whereby CDI, acting as principal underwriter
for the Fund, makes a continuous offering of the Fund's securities on a
"best efforts" basis. Under the terms of the agreement, CDI is entitled
to receive reimbursement of distribution expenses pursuant to the
Distribution Plan (see below). For fiscal period 1995, CDI received
distribution fees of $21,748 under the Class A Distribution Plan. Of the
Class A distribution expenses paid in fiscal 1995, $11,730 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 the 1995 period, it received net sales charges of
$23,647.
Pursuant to Rule 12b-1 under the Investment Company Act of
1940, the Fund has adopted Distribution Plans (the "Plans") which
permits the Fund to pay certain expenses associated with the
distribution of its shares. Such expenses may not exceed, on an annual
basis, 0.35% of the Fund's Class A average daily net assets. Expenses
under the Fund's Class C Plan may not exceed, on an annual basis, 1.00%
of the average daily net assets of Class C. For the period from
inception (October 31, 1994) to September 30, 1995, Class C Distribution
Plan expenses totaled $4,448. That amount was used entirely to
compensate dealers distributing shares, and to compensate the
underwriter.
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.
==========================================================================
PORTFOLIO TRANSACTIONS
==========================================================================
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and
choice of brokers and dealers are made by the Fund's Advisor under the
direction and supervision of the Fund's Board of Directors.
The Fund's policy is to limit portfolio turnover to
transactions necessary to carry out its investment policies and to
obtain cash for redemption of its shares. Depending upon market
conditions, the Fund's turnover expressed as a percentage may in some
years exceed 100%, but is not expected to exceed 200%. For the 1995
fiscal period, the portfolio turnover rates of the Fund was 95%. In all
transactions, the Fund seeks to obtain the best price and most favorable
execution and selects broker-dealers on the basis of their professional
capability and the value and quality of their services. Broker-dealers
may be selected who provide the Fund with statistical, research, or
other information and services. Such broker-dealers may receive
compensation for executing portfolio transactions that is in excess of
the compensation another broker-dealer would have received for executing
such transactions, if the Advisor determines in good faith that such
compensation is reasonable in relation to the value of the information
and services provided. Although any statistical, research, or other
information or services provided by broker-dealers may be useful to the
Advisor, its dollar value is generally indeterminable and its
availability or receipt does not materially reduce the Advisor's normal
research activities or expenses. During fiscal 1995, no commissions were
paid to any officer or director of the Fund, or to any of their
affiliates.
The Advisor may also execute Fund transactions with or through
broker-dealers who have sold shares of the Fund. However, such sales
will not be a qualifying or disqualifying factor in a broker-dealer's
selection nor will the selection of any broker-dealer be based on the
volume of Fund shares sold.
==========================================================================
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
==========================================================================
Coopers and Lybrand, L.L.P., has been selected by the Board of
Directors to serve as independent accountants of the Fund for fiscal
year 1996. State Street Bank & Trust Company, N.A., 225 Franklin Street,
Boston, MA 02110 acts as custodian of the Fund's investments. First
National Bank of Maryland, 25 South Charles Street, Baltimore, Maryland
21203 also serves as custodian of certain of the Fund's cash assets.
Neither custodian has a part in deciding the Fund's investment policies
or the choice of securities that are to be purchased or sold for the
Fund.
==========================================================================
GENERAL INFORMATION
==========================================================================
The Fund was organized as a Maryland Corporation on February
14, 1992. The other series of the Fund is the Calvert Global Equity Fund.
Each share represents an equal proportionate interest with each
other share and is entitled to such dividends and distributions out of
the income belonging to such class as declared by the Board. The Fund
offers two separate classes of shares: Class A and Class C. Each class
represents interests in the same portfolio of investments but, as
further described in the prospectus, each class is subject to differing
sales charges and expenses, which differences will result in differing
net asset values and distributions. Upon any liquidation of the Fund,
shareholders of each class are entitled to share pro rata in the net
assets belonging to that series available for distribution.
The Fund will send its shareholders confirmations of purchase
and redemption transactions, as well as periodic transaction statements
and unaudited semi-annual and audited annual financial statements of the
Fund's investment securities, assets and liabilities, income and
expenses, and changes in net assets.
The Prospectus and this Statement of Additional Information do
not contain all the information in the Fund's registration statement.
The registration statement is on file with the Securities and Exchange
Commission and is available to the public.
==========================================================================
FINANCIAL STATEMENTS
==========================================================================
The Fund's audited financial statements included in its Annual
Report to Shareholders dated September 30, 1995, are expressly
incorporated by reference and made a part of this Statement of
Additional Information. A copy of the Annual Report may be obtained free
of charge by writing or calling The Calvert Fund.
==========================================================================
APPENDIX
==========================================================================
Corporate Bond Ratings:
Description of Moody's Investors Service Inc.'s/Standard & Poor's bond
ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat larger than
in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which make the bond somewhat more susceptible to the adverse
effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
higher rated categories.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. The higher the degree of speculation, the
lower the rating. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposure to adverse conditions.
C/C: This rating is only for income bonds on which no interest
is being paid.
D: Debt in default; payment of interest and/or principal is in
arrears.
Commercial Paper Ratings:
MOODY'S INVESTORS SERVICE, INC.:
The Prime rating is the highest commercial paper rating
assigned by Moody's. Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of
the issuer; (2) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be
inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5)
amount and quality of long-term debt; (6) trend of earnings over a
period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by
management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
Issuers within this Prime category may be given ratings 1, 2, or 3,
depending on the relative strengths of these factors.
STANDARD & POOR'S CORPORATION:
Commercial paper rated A by Standard & Poor's has the following
characteristics: (i) liquidity ratios are adequate to meet cash
requirements; (ii) long-term senior debt rating should be A or better,
although in some cases BBB credits may be allowed if other factors
outweigh the BBB; (iii) the issuer should have access to at least two
additional channels of borrowing; (iv) basic earnings and cash flow
should have an upward trend with allowances made for unusual
circumstances; and (v) typically the issuer's industry should be well
established and the issuer should have a strong position within its
industry and the reliability and quality of management should be
unquestioned. Issuers rated A are further referred to by use of numbers
1, 2 and 3 to denote the relative strength within this highest
classification.
LETTER OF INTENT
Date______________
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the
Letter of Intent option on my Fund Account Application Form, I agree to
be bound by the terms and conditions applicable to Letters of Intent
appearing in the Prospectus and the Statement of Additional Information
for the Fund and the provisions described below as they may be amended
from time to time by the Fund. Such amendments will apply automatically
to existing Letters of Intent.
I intend to invest in the shares of: (Fund or Portfolio name*)
during the thirteen (13) month period from the date
of my first purchase pursuant to this Letter (which cannot be more than
ninety (90) days prior to the date of this Letter or my Fund Account
Application Form, whichever is applicable), an aggregate amount
(excluding any reinvestments of distributions) of at least fifty
thousand dollars ($50,000) which, together with my current holdings of
the Fund (at public offering price on date of this Letter or my Fund
Account Application Form, whichever is applicable), will equal or exceed
the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the terms
of escrow, to which I hereby agree, each purchase occurring after the
date of this Letter will be made at the public offering price applicable
to a single transaction of the dollar amount specified above, as
described in the Fund's prospectus. No portion of the sales charge
imposed on purchases made prior to the date of this Letter will be
refunded.
I am making no commitment to purchase shares, but if my
purchases within thirteen months from the date of my first purchase do
not aggregate the minimum amount specified above, I will pay the
increased amount of sales charges prescribed in the terms of escrow
described below. I understand that 4.75% of the minimum dollar amount
specified above will be held in escrow in the form of shares (computed
to the nearest full share). These shares will be held subject to the
terms of escrow described below.
From the initial purchase (or subsequent purchases if
necessary), 4.75% of the dollar amount specified in this Letter shall be
held in escrow in shares of the Fund by the Fund's transfer agent. For
example, if the minimum amount specified under the Letter is $50,000,
the escrow shall be shares valued in the amount of $2,375 (computed at
the public offering price adjusted for a $50,000 purchase). All
dividends and any capital gains distribution on the escrowed shares will
be credited to my account.
If the total minimum investment specified under the Letter is
completed within a thirteen month period, escrowed shares will be
promptly released to me. However, shares disposed of prior to completion
of the purchase requirement under the Letter will be deducted from the
amount required to complete the investment commitment.
Upon expiration of this Letter, the total purchases pursuant to
the Letter are less than the amount specified in the Letter as the
intended aggregate purchases, Calvert Securities Corporation ("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 Securities Corporation to the
broker-dealer named herein shall be at the rate applicable to the
minimum amount of my specified intended purchases.
The Letter may be revised upward by me at any time during the
thirteen-month period, and such a revision will be treated as a new
Letter, except that the thirteen-month period during which the purchase
must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
In determining the total amount of purchases made hereunder,
shares disposed of prior to termination of this Letter will be deducted.
My broker-dealer shall refer to this Letter of Intent in placing any
future purchase orders for me while this Letter is in effect.
Dealer Name of Investor(s)
By _________________
Authorized Signer Address
Date________________ Signature of Investor(s)
Date________________ Signature of Investor(s)
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
<PAGE>
<PAGE>
Calvert World Values Fund, Inc.
Global Equity Fund
Statement of Additional Information
January 31, 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
- ---------------------------------------------------------
- ---------------------------------------------------------
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
CALVERT WORLD VALUES FUND, INC.
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, 1996, which may
be obtained free of charge by writing the Fund at the above address or
calling the Fund.
==========================================================================
INVESTMENT OBJECTIVE
==========================================================================
Calvert World Values Fund, Inc., Global 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.
==========================================================================
INVESTMENT RESTRICTIONS
==========================================================================
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.
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.
==========================================================================
INVESTMENT SELECTION PROCESS
==========================================================================
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.
==========================================================================
DIVIDENDS, DISTRIBUTIONS, AND TAXES
==========================================================================
The Fund declares and pays dividends from net investment income
on an annual basis. Distributions of realized net capital gains, if any,
are normally paid once a year; however, the Fund does not intend to make
any such distributions unless available capital loss carryovers, if any,
have been used or have expired. Dividends and distributions paid may
differ among the classes.
Generally, dividends (including short-term capital gains) and
distributions are taxable to the shareholder in the year they are paid.
However, any dividends and distributions paid in January but declared
during the prior three months are taxable in the year declared.
Investors should note that the Internal Revenue Code ("Code ")
may require investors to exclude the initial sales charge, if any, paid
on the purchase of Fund shares from the tax basis of those shares if the
shares are exchanged for shares of another Calvert Group Fund within 90
days of purchase. This requirement applies only to the extent that the
payment of the original sales charge on the shares of the Fund causes a
reduction in the sales charge otherwise payable on the shares of the
Calvert Group Fund acquired in the exchange, and investors may treat
sales charges excluded from the basis of the original shares as incurred
to acquire the new shares.
The Fund is required to withhold 31% of any long-term capital
gain dividends and 31% of each redemption transaction occurring in the
Fund if: (a) the shareholder's social security number or other taxpayer
identification number ("TIN") is not provided, or an obviously incorrect
TIN is provided; (b) the shareholder does not certify under penalties of
perjury that the TIN provided is the shareholder's correct TIN and that
the shareholder is not subject to backup withholding under section
3406(a)(1)(C) of the Code because of underreporting (however, failure to
provide certification as to the application of section 3406(a)(1)(C)
will result only in backup withholding on capital gain dividends, not on
redemptions); or (c) the Fund is notified by the Internal Revenue
Service that the TIN provided by the shareholder is incorrect or that
there has been underreporting of interest or dividends by the
shareholder. Affected shareholders will receive statements at least
annually specifying the amount withheld.
The Fund is required to report to the Internal Revenue Service
the following information with respect to each redemption transaction:
(a) the shareholder's name, address, account number and taxpayer
identification number; (b) the total dollar value of the redemptions;
and (c) the Fund's identifying CUSIP number.
Certain shareholders are exempt from the backup withholding and
broker reporting requirements. Exempt shareholders include:
corporations; financial institutions; tax-exempt organizations;
individual retirement plans; the U.S., a State, the District of
Columbia, a U.S. possession, a foreign government, an international
organization, or any political subdivision, agency or instrumentality of
any of the foregoing; U.S. registered commodities or securities dealers;
real estate investment trusts; registered investment companies; bank
common trust funds; certain charitable trusts; foreign central banks of
issue. Non-resident aliens, certain foreign partnerships and foreign
corporations are generally not subject to either requirement but may
instead be subject to withholding under sections 1441 or 1442 of the
Internal Revenue Code. Shareholders claiming exemption from backup
withholding and broker reporting should call or write the Fund for
further information.
==========================================================================
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.
<F2> BETH-ANN ROTH, Esq., Assistant Secretary. Ms. Roth 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. 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.
