PROSPECTUS
January 31, 1997
CALVERT 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 one or more
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, 1997) has been filed with the Securities and Exchange Commission
and is incorporated by reference. This free Statement is available upon
request from the Fund: 800-368-2748.
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 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)
Maximum Contingent Deferred Sales Charge None None
B Annual Fund Operating Expenses (fiscal
year 1996)
(as a percentage of average net assets)
Management Fees 0.90% 0.90%
Rule 12b-1 Service and Distribution Fees
0.35% 1.00%
Other Expenses 0.91% 1.52%
Total Fund Operating Expenses<F1> 2.16% 3.42%
<F1> Net Fund Operating Expenses after reduction for fees paid indirectly were:
Class A 1.98%, Class C 3.24%.
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 $68 $112 $158 $285
Class C $35 $105 $178 $370
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 Fund's investments and business affairs.
Management fees include the subadvisory fee paid by Calvert Asset Management
Company, Inc. (the "Advisor") to the various sub-advisors 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. 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. In addition
to the compensation itemized above (sales charge and Rule 12b-1 service and
distribution fees), certain broker/dealers and/or their salespersons may
receive certain compensation for the sale and distribution of the securities
or for services to the Fund. See the Statement of Additional Information,
"Method of Distribution".
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
September 30, 1996
Net asset value, beginning of period $21.48
Income from investment operations
Net investment income (loss) (.24)
Net realized and unrealized gain (loss) 1.88
Total from investment operations 1.64
Distributions from
Net investment income --
Net realized gains (.57)
Total Distributions (.57)
Total increase (decrease) in net asset value 1.07
Net asset value, ending $22.55
Total return<F4> 7.92%
Ratio to average net assets:
Net investment income (loss) (1.56%)
Total expenses<F5> 2.16%
Net expenses 1.98%
Expenses reimbursed --
Portfolio turnover 114%
Average commission (rate paid) $.06
Net assets, ending (in thousands) $39,834
Number of shares outstanding, ending (in thousands) 1,767
<F4>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges.
<F5>This ratio reflects total expenses before reduction for fees paid
indirectly; such reductions are included in the ratio of net expenses.
(a) Annualized
Class A Shares
From October 31,
1994 (Inception) To
September 30, 1995
Net asset value, beginning of period $15.00
Income from investment operations
Net investment income (loss) (.11)
Net realized and unrealized gain (loss) 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, ending $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 .05%(a)
Portfolio turnover 95%
Average commission (rate paid) --
Net assets, ending (in thousands) $16,111
Number of shares outstanding, ending (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; such reductions are included in the ratio of net expenses.
(a) Annualized
Class C Shares
September 30, 1996
Net asset value, beginning of period $21.55
Income from investment operations
Net investment income (loss) (.55)
Net realized and unrealized gain (loss) 1.91
Total from investment operations 1.36
Distributions from
Net investment income --
Net realized gains (.57)
Total Distributions (.57)
Total increase (decrease) in net asset value .79
Net asset value, ending $22.34
Total return<F4> 6.56%
Ratio to average net assets:
Net investment income (loss) (2.82%)
Total expenses<F5> 3.42%
Net expenses 3.24%
Expenses reimbursed --
Portfolio turnover 114%
Average commission (rate paid) $.06
Net assets, ending (in thousands) $3,164
Number of shares outstanding, ending (in thousands) 142
<F4>Total return is not annualized and does not reflect deduction of Class A
front-end sales charges.
<F5>This ratio reflects total expenses before reduction for fees paid
indirectly; such reductions are included in the ratio of net expenses.
(a) Annualized
Class C Shares
From October 31,
1994 (Inception) To
September 30, 1995
Net asset value, beginning of period $15.00
Income from investment operations
Net investment income (loss) (.15)
Net realized and unrealized gain (loss) 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, ending $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 2.79%(a)
Portfolio turnover 95%
Average commission (rate paid) --
Net assets, ending (in thousands) $1,992
Number of shares outstanding, ending (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; such reductions are included in the ratio of net expenses.
(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 one or more 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. 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
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 Subadvisors will make decisions whether to invest in these
instruments based on market conditions, regulatory limits and tax
considerations. If this strategy is used, the Fund may be required to cover
assets used for this purpose in a segregated account for the protection of
shareholders. 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
Subadvisors attempt to determine price movements and thereby prevent declines
in the value of portfolio holdings, there is a risk of imperfect or no
correlation between price movements of portfolio investments and instruments
used as part of a defensive strategy so that a loss is incurred. While
defensive strategies can reduce the risk of loss, they can also reduce the
opportunity for gain since they offset favorable price movements. The use of
defensive strategies may result in a disadvantage to the 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:
- -environment
- -human rights
- -weapons systems
- -nuclear energy
- -employee relations
- -product criteria
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 Subadvisors.
The following criteria may be changed by the Fund's Board of Directors without
shareholder approval:
(1) The Fund avoids investing in companies that, in the Advisor's opinion,
have significant or historical patterns of violating environmental
regulations, or otherwise have an egregious environmental record.
Additionally, the Fund will avoid investing in nuclear power plant operators
and owners, or manufacturers of key components in the nuclear power process.
(2) The Fund will not invest in companies 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. 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 returns usually will include the effect of paying the front-end sales
charge, in the case of Class A shares. Of course, total returns will be higher
if sales charges are not taken into account. Quotations of "return without
maximum sales load" do not reflect deduction of the sales charge. You should
consider these figures only if you qualify for a reduced sales charge, or for
purposes of comparison with comparable figures which also do not reflect sales
charges, such as mutual fund averages compiled by Lipper Analytical Services,
Inc. 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 Capital Accumulation Fund is a series of Calvert World Values Fund, Inc.
an open-end management investment company organized as a Maryland corporation
on February 14, 1992. The other series is the International Equity Fund, a
socially-screened portfolio of equity securities from around the world.
The 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, 1996, Calvert Group managed and administered assets in
excess of $5.0 billion and more than 218,882 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 Subadvisors.
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, 1996, pursuant to the Investment Advisory Agreement,
the Advisor received an investment advisory fee of 0.80% of the Fund's
respective average daily net assets. 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 recapture through December 31, 1996, any fees it deferred or
expenses it assumed.
The Fund uses a multi-manager approach
The Fund has a pool of six investment subadvisors ("Subadvisors") to manage
the Fund's assets. The asterisks indicate those subadvisors currently managing
the Fund's assets.
Subadvisor Ownership
*Brown Capital African American
*Fortaleza Asset Management Hispanic/Women
Apodaca Hispanic American
New Amsterdam Women
Seneca, Inc. Women
Sturdivant African American
The Advisor will select which Subadvisors will manage the Fund's 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. Each firm has selected a
performance index against which it will be measured with respect to payment of
a performance fee, as explained in the next section.
Brown Capital Management, Inc.: Brown Capital Management, Inc. of Baltimore,
Maryland believes that capital can be enhanced in times of opportunity and
preserved in times of adversity without timing the market. The firm uses a
bottom-up approach that incorporates growth-adjusted price earnings. Stocks
purchased are generally undervalued and have momentum, have EPS growth rates
greater than the market, are more profitable than the market, and have
relatively low price-earnings ratios. Its performance index is a blend: 60%
Russell 1000 Growth and 40% Russell 2000.
Eddie C. Brown is founder and President of Brown Capital Management.
He has over 22 years of investment experience, having served as a Vice
President and Portfolio Manager for 10 years at T. Rowe Price Associates
immediately prior to starting his own firm. Mr. Brown holds an M.S. in
Business Administration from the Indiana University School of Business.
Additionally, he is a professionally-designated Chartered Financial Analyst
("CFA") and Chartered Investment Counselor.
Fortaleza Asset Management, Inc.: Fortaleza Asset Management, Inc., of
Chicago, Illinois, is a small-cap growth manager that bases its investment
principles on three key elements: (1) a proprietary stock valuation system
that incorporates technical and market sentiment indicators to determine
optimal buy points; (2) an emphasis on the preservation of capital through the
implementation of a strict selling discipline to lock in capital gains and
reduce losses; and (3) a discipline that does not force equity commitment in
overvalued markets. The investment approach is based on a bottom-up stock
selection process. Its performance index is the Russell 2000.
Ms. Margarita Perez is the founder, President and Portfolio Manager
of Fortaleza, and has over 14 years of investment experience. Prior to forming
Fortaleza, Ms. Perez was Vice President and Portfolio Manager for Monetta
Financial Services, Inc., where she was directly involved in the management of
equity accounts totaling in excess of $100 million.
Ms. Perez is a native of Puerto Rico. She earned an MBA 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, and the
National Association of Securities Professionals. She is also a trustee of the
Chicago Historical Society.
The Fund's remaining pool of Sub-Advisors are described in the
Statement of Additional Information. See "Investment Advisor and Sub-Advisors".
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,
provides certain administrative services to the Fund, including the
preparation of regulatory filings and shareholder reports, the daily
determination of its net asset value per share and dividends, and the
maintenance of its portfolio and general accounting records. For providing
such services, CASC receives an annual fee, payable monthly, from 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 two classes of shares:
Class A Shares - Front End Load Option
Class A shares are sold with a front-end sales charge at the time of purchase.
Class A shares are not subject to a sales charge when they are redeemed.
Class C shares - Level Load Option
Class C shares are sold without a sales charge at the time of purchase or
redemption.
Class C shares have higher expenses than Class A shares
The Fund bears some of the costs of selling its shares under Distribution
Plans adopted with respect to its Class A and Class C shares pursuant to Rule
12b-1 under the 1940 Act. Payments under the Class A Distribution Plan are
limited to up to 0.35% annually of the average daily net asset value of Class
A shares, while payments under Class C Distribution Plan are 1.00% of the
average daily net asset value of Class C shares.
Considerations for deciding which class of shares to buy
Income distributions paid by the Fund with respect to 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
or if you plan to hold the shares for several years. Class C shares are not
available for investments of $1 million or more.
Class A Shares
Class A shares are offered at net asset value plus a front-end sales charge as
follows:
Concession to
Dealers asa %
As a % of As a % of Net of Amount
Amount of Investment Offering Price Amount 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%*
*Payments will be made less redemptions. For either choice, quarterly
trailing commissions will begin in the thirteenth month. CDI reserves the
right to recoup any portion of the amount paid to the dealer if the investor
redeems some or all of the shares from the Fund within twelve months of the
time of purchase.
Sales charges on Class A shares may be reduced or eliminated in certain cases.
See Exhibit A to this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a portion to
your broker-dealer. Upon written notice to dealers with whom it has dealer
agreements, CDI may reallow up to the full applicable sales charge. Dealers to
whom 90% or more of the entire sales charge is reallowed may be deemed to be
underwriters under the Securities Act of 1933.
In addition to any sales charge reallowance or finder's fee, your
broker-dealer, or other financial service firm through which your account is
held, currently will be paid periodic service fees at an annual rate of up to
0.25% of the average daily net asset value of Class A shares held in accounts
maintained by that firm.
Class A Distribution Plan
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, 1996,
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, 1996, 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
P.O. Box 419739 P.O. Box 419544
Kansas City, MO Kansas City, MO
64105-6739 64179-6542
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
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.
All of your purchases must be made in U.S. dollars and checks must be drawn on
U.S. banks. No cash will be accepted. The Fund reserves the right to suspend
the offering of shares for a period of time or to reject any specific purchase
order. If your check does not clear, your purchase will be canceled and you
will be charged a $10 fee plus costs incurred by the Fund. When you purchase
by check or with Calvert Money Controller, those funds will be on hold for up
to 10 business days from the date of receipt. During that period, the proceeds
of redemptions against those funds will be held until the transfer agent is
reasonably satisfied that the purchase payment has been collected. To avoid
this collection period, you can wire federal funds from your bank, which may
charge you a fee. Check purchases received at the branch location will be
credited the next business day. Any check purchase received without an
investment slip may cause delayed crediting.
Certain financial institutions or broker-dealers which have entered into a
sales agreement with 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
Each exchange represents the sale of shares of one Fund and the purchase of
shares of another. Therefore, you could realize a taxable gain or loss on the
transaction.
If your investment goals change, the Calvert Group Family of Funds has a
variety of investment alternatives that includes common stock funds,
tax-exempt and corporate bond funds, and money market funds. The exchange
privilege is a convenient way to buy shares in other Calvert Group Funds in
order to respond to changes in your goals or in market conditions. However, to
protect a Fund's performance and to minimize costs, Calvert Group discourages
frequent exchanges and may prohibit additional purchases of Fund shares by
persons engaged in too many short-term trades. Before you make an exchange
from a Fund or Portfolio, please note the following:
Call your broker or a Calvert representative for information and a
prospectus for any of Calvert's other Funds registered in your state. Read the
prospectus of the Fund or Portfolio into which you want to exchange for
relevant information, including class offerings.
Complete and sign an application for an account in that Fund or
Portfolio, taking care to register your new account in the same name and
taxpayer identification number as your existing Calvert account(s). Exchange
instructions may then be given by telephone if telephone redemptions have been
authorized and the shares are not in certificate form.
You may exchange shares on which you have already paid a sales charge
at Calvert Group and shares acquired by reinvestment of dividends or
distributions into another fund at no additional charge. You may exchange
Class C shares for shares of another fund, but you will have to pay the
front-end sales charge, if applicable.
Shareholders (and those managing multiple accounts) who make two
purchases and two exchange redemptions of shares of the same Portfolio during
any 6-month period will be given written notice that they may be prohibited
from making additional investments. This policy does not prohibit a
shareholder from redeeming shares of the Fund, and does not apply to trades
solely among money market funds.
For purposes of the exchange privilege, the Fund is related to Summit
Cash Reserves Fund by investment and investor services. The Fund reserves the
right to terminate or modify the exchange privilege in the future upon 60
days' written notice.
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 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 17. 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 20. 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.
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 underSection 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, 1997
Performance and Prices:
Calvert Information Network CALVERT CAPITAL ACCUMULATION FUND
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
Investment Techniques and Risks
Social Screens
Total Return
Management of the Fund
SHAREHOLDER GUIDE:
Alternative Sales Options
How to Buy Shares
Net Asset Value
When Your Account Will Be Credited
Exchanges
Other Calvert Group Services
How to Sell Your Shares
Dividends and Taxes
Exhibit A (Reduced Sales Charges)
<PAGE>
PROSPECTUS
January 31, 1997
CALVERT WORLD VALUES FUND, INC.
INTERNATIONAL EQUITY FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
INVESTMENT OBJECTIVE
The investment objective of Calvert World Values Fund,
Inc., International 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
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,
1997) 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 1996
Management Fees 1.10% 1.10%
Rule 12b-1 Service and Distribution Fees
0.25% 1.00%
Other Expenses 0.60% 0.98%
Total Fund Operating Expenses<F1> 1.95% 3.08%
<F1> Net Fund Operating Expenses after reduction for fees paid indirectly were:
Class A 1.81%, Class C 2.93%.
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 $66 $106 $148 $264
Class C $31 $95 $162 $339
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, 1996, no fees were waived and no expenses
were reimbursed. 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 1996.
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. In addition
to the compensation itemized above (sales charge and Rule 12b-1 service and
distribution fees), certain broker/dealers and/or their salespersons may
receive certain compensation for the sale and distribution of the securities
or for services to the Fund. See the Statement of Additional Information,
"Method of Distribution".
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., independent accountants, whose report on
the period from July 2, 1992, (commencement of operations) through September
30, 1996, 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, 1996
Net asset value, beginning $17.62
Income from investment operations
Net investment income .04
Net realized and unrealized gain (loss) 1.53
Total from investment operations 1.57
Distributions from
Net investment income (.13)
Excess of net investment income --
Net realized gains (.44)
Total Distributions (.57)
Total increase (decrease) in net asset value 1.00
Net asset value, ending $18.62
Total return<F4> 9.22%
Ratio to average net assets:
Net investment income (loss) .23%
Total expenses<F5> 1.95%
Net expenses 1.81%
Expenses reimbursed and/or waived --
Portfolio turnover 96%
Average commission rate paid $.03
Net assets, end of period (in thousands) $194,032
Number of shares outstanding,
ending (in thousands) 10,422
<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; such reductions are included in the ratio
of net expenses.
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) .38
Total from investment operations .49
Distributions from
Net investment income --
Excess of net investment income --
Net realized gains (.86)
Total Distributions (.86)
Total increase (decrease) in net asset value (.37)
Net asset value, ending $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%
Average commission rate paid --
Net assets, end of period (in thousands) $191,586
Number of shares outstanding,
ending (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; such reductions are included in the ratio
of net expenses.
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) 2.14
Total from investment operations 2.14
Distributions from
Net investment income (.03)
Excess of net investment income (.04)
Net realized gains (.43)
Total Distributions (.50)
Total increase (decrease) in net asset value 1.64
Net asset value, ending $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%
Average commission rate paid --
Net assets, end of period (in thousands) $175,543
Number of shares outstanding,
ending (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; such reductions are included in the ratio
of net expenses.
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) 2.04
Total from investment operations 2.12
Distributions from
Net investment income (.05)
Excess of net investment income --
Net realized gains (.03)
Total Distributions (.08)
Total increase (decrease) in net asset value 2.04
Net asset value, ending $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%
Average commission rate paid --
Net assets, end of period (in thousands) $54,280
Number of shares outstanding,
ending (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; such reductions are included in the ratio
of net expenses.
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) (.71)
Total from investment operations (.69)
Distributions from
Net investment income --
Excess of net investment income --
Net realized gains --
Total Distributions --
Total increase (decrease) in net asset value (.69)
Net asset value, ending $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 --
Average commission rate paid --
Net assets, end of period (in thousands) $8,440
Number of shares outstanding,
ending (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; such reductions are included in the ratio
of net expenses.
Class C Shares
Year Ended
September 30, 1996
Net asset value, beginning of period $17.28
Income from investment operations
Net investment income (.15)
Net realized and unrealized gain (loss) 1.51
Total from investment operations 1.36
Distributions from
Net investment income --
Excess of net investment income --
Net realized gains (.44)
Total Distributions (.44)
Total increase (decrease) in net asset value .92
Net asset value, ending $18.20
Total return<F4>
8.07%
Ratio to average net assets:
Net investment income (loss) (.88%)
Total expenses<F5> 3.08%
Net expenses 2.93%
Expenses reimbursed and/or waived --
Portfolio turnover 96%
Average commission rate paid $.03
Net assets, end of period (in thousands) $6,779
Number of shares outstanding,
ending (in thousands) 373
<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; such reductions are included in the ratio
of net expenses.
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) .32
Total from investment operations .27
Distributions from
Net investment income --
Excess of net investment income --
Net realized gains (.85)
Total Distributions (.85)
Total increase (decrease) in net asset value (.58)
Net asset value, ending $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%
Average commission rate paid --
Net assets, end of period (in thousands) $6,061
Number of shares outstanding,
ending (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; such reductions are included in the ratio
of net expenses.
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) (.32)
Total from investment operations (.38)
Distributions from
Net investment income --
Excess of net investment income --
Net realized gains --
Total Distributions --
Total increase (decrease) in net asset value (.38)
Net asset value, ending $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%
Average commission rate paid --
Net assets, end of period (in thousands) $3,620
Number of shares outstanding,
ending (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; such reductions are included in the ratio
of net expenses.
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
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 invest in American or European Depositary Receipts ("ADRs" or
"EDRs.") See "Statement of Additional Information." 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, other than 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. As an operating
policy, the Fund will limit its investment in securities of U.S. issuers,
excluding special equities and High Social Impact Investments, to 5% of the
Fund's net assets.
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.
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 warrants, stock rights and repurchase agreements. If
the Subadvisor judges market conditions incorrectly or employs a strategy that
does not correlate well with the Fund's investments, or if the counterparty to
the transaction does not perform as promised, these techniques could result in
a loss. These techniques may increase the volatility of the Fund and may
involve a small investment of cash relative to the magnitude of the risk
assumed. These investment techniques and the related risks are described in
more detail in the Statement of Additional Information.
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.
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.
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. 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. In order to minimize the risk of investing in
repurchase agreements, the Portfolio may engage in such transactions only with
recognized securities dealers and banks and in all instances holds underlying
securities with a value equal to the total repurchase price the dealer or bank
has agreed to pay. Repurchase agreements are always for periods of less than
one year, and are considered illiquid if not terminable within seven days.
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 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"). 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. The High Social Impact Investments Committee of the Board of Directors
identifies, evaluates and selects these investments, subject to ratification
by the Board.
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 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 seeks to invest in companies with positive labor
practices. The Fund avoids investing in companies that demonstrate a pattern
of engaging in forced, compulsory, or child labor. In addition, we seek to
invest in companies that hire and promote women and ethnic minorities; respect
the right to form unions; comply, at a minimum, with domestic hour and wage
laws; and provide good health and safety standards; (3) the Fund will not
invest in issuers which the Advisor or Sub-Advisor ascertains contribute to
human rights abuses in other countries; (4) 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 (5)
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. The Fund believes 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 returns usually will include the effect of paying the front-end sales
charge, in the case of Class A shares. Of course, total returns will be higher
if sales charges are not taken into account. Quotations of "return without
maximum sales load" do not reflect deduction of the sales charge. You should
consider these figures only if you qualify for a reduced sales charge, or for
purposes of comparison with comparable figures which also do not reflect sales
charges, such as mutual fund averages compiled by Lipper Analytical Services,
Inc. 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 service
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. Prior to June 1, 1996, the series operated under the
name of Calvert World Value Global Equity Fund. 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 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; 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 International 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, 1996, Calvert Group managed and administered assets in
excess of $5.0 billion and more than 219,882 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. For the year ended September 30, 1996,
the Advisor received fees of 1.00% of the Fund's average daily net assets. The
Advisor may in its discretion defer its fees or assume the Fund's operating
expenses. The Investment Advisory Agreement provides that the Advisor may
later, to the extent permitted by law, recapture any fees it deferred, or
expenses it assumed during the two prior years. During the 1996 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. 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,
provides certain administrative services to the Fund, including the
preparation of regulatory filings and shareholder reports, the daily
determination of its net asset value per share and dividends, and the
maintenance of its portfolio and general accounting records. For providing
such services, CASC receives an annual fee, payable monthly, from 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, while payments under the Class C Distribution Plan are 1.00% of the
average daily net asset value of Class C shares.
Considerations for deciding which class of shares to buy
Income distributions for Class A shares will probably be higher than those for
Class C shares, as a result of the distribution expenses described above. (See
also "Total Return.") You should consider Class A shares if you qualify for a
reduced sales charge under Class A or if you plan to hold the shares for
several years. Class C shares are not available for investments of 1 million
or more.
Class A Shares
Class A shares are offered at net asset value plus a front-end sales charge as
follows:
Concession to
Dealers as a %
As a % of As a % of Net of Amount
Offering Price Amount Invested Invested
Amount of Investment
Less than $50,000 4.75% 4.99% 4.00%
$50,000 but less than $100,000 3.75% 3.90% 3.00%
$100,000 but less than $250,000 2.75% 2.83% 2.25%
$250,000 but less than $500,000 1.75% 1.78% 1.25%
$500,000 but less than $1,000,000
1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
*Payments will be made less redemptions. For either choice, quarterly
trailing commissions will begin in the thirteenth month. CDI reserves the
right to recoup any portion of the amount paid to the dealer if the investor
redeems some or all of the shares from the Fund within twelve months of the
time of purchase.
Sales charges on Class A shares may be reduced or eliminated in certain cases.
See Exhibit A to this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a portion to
your broker-dealer. Upon written notice to dealers with whom it has dealer
agreements, CDI may reallow up to the full applicable sales charge. Dealers to
whom 90% or more of the entire sales charge is reallowed may be deemed to be
underwriters under the Securities Act of 1933.
In addition to any sales charge reallowance or finder's fee, your
broker-dealer, or other financial service firm through which your account is
held, currently will be paid periodic service fees at an annual rate of up to
0.25% of the average daily net asset value of Class A shares held in accounts
maintained by that firm.
Class A Distribution Plan
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, 1996, 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. Payments pursuant to a Distribution Plan are included
in the operating expenses of the class. Payments pursuant to a Distribution Plan
are included in the operating expenses of the 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 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, 1996,
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. All such payments will be in compliance with NASD rules. Dealers or
others may receive different levels of compensation depending on which class
of shares they sell.
HOW TO BUY SHARES
BE SURE TO SPECIFY WHICH CLASS YOU ARE BUYING
Method New Accounts AdditionalInvestments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the Fund payable to theFund
and mail it with your and mail it with your
application to: investment slipto:
Calvert Group Calvert Group
P.O. Box 419544 P.O.Box 419739
Kansas City, MO KansasCity, MO
64141-6544 64141-6739
By Registered, Certified, or Overnight Mail:
Calvert Group CalvertGroup
c/o NFDS, 6th Floor c/o NFDS, 6thFloor
1004 Baltimore 1004Baltimore
Kansas City, MO KansasCity, MO
64105-180764105-1807
Through Your Broker $2,000 minimum $250 minimum
At the Calvert
Branch Office Visit the Calvert Branch Office to make investments 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, 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
All of your purchases must be made in U.S. dollars and checks must be drawn
on U.S. banks. No cash will be accepted. The Fund reserves the right to suspend
the offering of shares for a period of time or to reject any specific purchase
order. If your check does not clear, your purchase will be canceled and you will
be charged a $10 fee plus costs incurred by the Fund. When you purchase by check
or with Calvert Money Controller, those funds will be on hold for up to 10
business days from the date of receipt. During that period, the proceeds of
redemptions against those funds will be held until the transfer agent is
reasonably satisfied that the purchase payment has been collected. To avoid this
collection period, you can wire federal funds from your bank, which may charge
you a fee. Check purchases received at the branch location will be credited the
next business day. Any check purchase received without an investment slip may
cause delayed crediting.
Certain financial institutions or broker-dealers which have entered into a
sales agreement with the Distributor may enter confirmed purchase orders on
behalf of customers by phone, with payment to follow within a number of days of
the order as specified by the program. If payment is not received in the time
specified, the financial institution could be held liable for resulting fees or
losses.
EXCHANGES
Each exchange represents the sale of shares of one Fund and the purchase of
shares of another. Therefore, you could realize a taxable gain or loss on the
transaction.
If your investment goals change, the Calvert Group of Funds has a variety
of investment alternatives that includes common stock funds, tax-exempt and
corporate bond funds, and money market funds. The exchange privilege is a
convenient way to buy shares in other Calvert Group Funds in order to respond to
changes in your goals or in market conditions. However, the Fund is intended as
a long-term investment and not for frequent short-term trades. Before you make
an exchange from a Fund, please note the following:
Call your broker or a Calvert representative for information and a
prospectus for any of Calvert's other Funds registered in your state. Read the
prospectus of the Fund into which you want to exchange for relevant information,
including class offerings. The exchange privilege is only available in states
where shares of the fund into which you want to exchange are registered for
sale.
Complete and sign an application for an account in 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."
You may exchange shares on which you have already paid a sales charge at
Calvert Group and shares acquired by reinvestment of dividends or distributions
into another fund at no additional charge. You may exchange Class C shares for
shares of another fund, but you will have to pay the front-end sales charge, if
applicable.
Shareholders (and those managing multiple accounts) who make two purchases
and two exchange redemptions of shares of the same fund during any 6-month
period will be given written notice that they may be prohibited from making
additional investments. This policy does not prohibit a shareholder from
redeeming shares of the Fund, and does not apply to trades solely among money
market funds.
For purposes of the exchange privilege, the Fund is related to Summit Cash
Reserves Fund by investment and investor services. The Fund reserves the right
to terminate or modify the exchange privilege in the future upon 60 days written
notice.
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour yield and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers 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 18. 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 "Telephone Transactions" on page 21. 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.
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, 1997
CALVERT WORLD
VALUES FUND, INC.
International
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, 1997
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT 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 8
Purchase and Redemption of Shares 10
Reduced Sales Charges (Class A) 11
Net Asset Value 11
Calculation of Total Return 11
Advertising 12
Dividends and Taxes 13
Directors and Officers 15
Investment Advisor and Subadvisors 17
Transfer and Shareholder Servicing
Agent 19
Portfolio Transactions 21
Independent Accountants and Custodians 21
Financial Statements 22
Appendix 22
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-January 31, 1997
CALVERT CAPITAL ACCUMULATION FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account (800) 368-2748 Shareholder (800) 368-2745
Information: (301) 951-4820 Services: (301) 951-4810
Broker Services: (800) 368-2746 TDD for the Hearing-
(301) 951-4850 Impaired: (800) 541-1524
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in conjunction
with the Fund's Prospectus, dated January 31, 1997, which may be obtained free
of charge by writing the Fund at the above address or calling the Fund.
INVESTMENT OBJECTIVE 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:
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
particular months in the future at a specified price. Buying or selling
futures contracts -- contracts that establish a price level at a given time
for items to be delivered later -- amounts to insurance against adverse price
changes, or "hedging."
The Fund may purchase put and call options, and write (sell) covered
put and call options, on equity and debt securities, foreign currencies and
stock or debt indices. The Fund may purchase or write both exchange-traded and
OTC options. These strategies may also be used with respect to futures.
Special Risks of Defensive Strategies
Successful use of defensive strategies depends on the ability to
predict movements of the overall securities, currency and interest rate
markets, which is a different skill than that required to select equity and
debt investments. There can be no assurance that a chosen strategy will
succeed.
There may not be an expected correlation between price movements of a
hedging instrument and price movements of the investment being hedged, so that
the Fund may lose money notwithstanding employment of the hedging strategy.
While defensive strategies can reduce risk of loss by offsetting the
negative effect of unfavorable price movements, they can also reduce the
opportunity for gain by offsetting the positive effect of a favorable price
movement. If the variance is great enough, a decline in the price of an
instrument used for defensive purposes may result in a loss to the Fund.
The Fund may be required to cover its assets in a segregated account.
If an investment is not able to be liquidated at the time the Subadvisor
believes it is best for the Fund to do so, the Fund might be required to keep
assets on reserve that it otherwise would not have had to maintain. Similarly,
it might have to sell a security at an inopportune time in order to maintain
the reserves.
Instruments used as part of a Defensive Strategy
The Fund may write covered call options and purchase call and put
options on securities and securities indices, and may write secured put
options and enter into option transactions on foreign currency. It may also
engage in transactions in financial futures contracts and related options for
hedging purposes, and invest in repurchase agreements. A call option on a
security, security index or a foreign currency gives the purchaser of the
option, in return for the premium paid to the writer (seller), the right to
buy the underlying security, index or foreign currency at the exercise price
at any time during the option period. Upon exercise by the purchaser, the
writer of a call option on an individual security or foreign currency has the
obligation to sell the underlying security or currency at the exercise price.
A call option on a securities index is similar to a call option on an
individual security, except that the value of the option depends on the weighted
value of the group of securities comprising the index and all settlements are to
be made in cash. A call option may be terminated by the writer (seller) by
entering into a closing purchase transaction in which it purchases an option of
the same series as the option previously written.
A put option on a security, security index, or foreign currency gives
the purchaser of the option, in return for the premium paid to the writer
(seller), the right to sell the underlying security, index, or foreign
currency at the exercise price at any time during the option period. Upon
exercise by the purchaser, the writer of a put option has the obligation to
purchase the underlying security or foreign currency at the exercise price. A
put option on a securities index is similar to a put option on an individual
security, except that the value of the option depends on the weighted value of
the group of securities comprising the index and all settlements are made in
cash. The Fund may write exchange-traded call options on its securities.
Call options may be written on portfolio securities, securities indices, or
foreign currencies. With respect to securities and foreign currencies, the
Fund may write call and put options on an exchange or over-the-counter. Call
options on portfolio securities will be covered since the Fund will own the
underlying securities. Call options on securities indices will be written only
to hedge in an economically appropriate way against anticipated changes in the
market value of portfolio securities which are not otherwise hedged with
options or financial futures contracts and will be "covered" by identifying
the specific portfolio securities being hedged.
Options on foreign currencies will be covered by securities
denominated in that currency. Options on securities indices will be covered by
securities that substantially replicate the movement of the index. The Fund
may not write options on more than 50% of its total assets. Management
presently intends to cease writing options if and as long as 25% of such total
assets are subject to outstanding options contracts or if required under
regulations of state securities administrators.
The Fund may write call and put options in order to obtain a return
on its investments from the premiums received and will retain the premiums
whether or not the options are exercised. Any decline in the market value of
portfolio securities or foreign currencies will be offset to the extent of the
premiums received (net of transaction costs). If an option is exercised, the
premium received on the option will effectively increase the exercise price or
reduce the difference between the exercise price and market value. During the
option period, the writer of a call option gives up the opportunity for
appreciation in the market value of the underlying security or currency above
the exercise price. It retains the risk of loss should the price of the
underlying security or foreign currency decline. Writing call options also
involves risks relating to the Fund's ability to close out options it has
written. During the option period, the writer of a put option has assumed the
risk that the price of the underlying security or foreign currency will
decline below the exercise price. However, the writer of the put option has
retained the opportunity for an appreciation above the exercise price should
the market price of the underlying security or foreign currency increase.
Writing put options also involves risks relating to the Fund's ability to
close out options it has written.
The Fund may sell a call option or a put option which it has
previously purchased prior to the purchase (in the case of a call) or the sale
(in the case of a put) of the underlying security or foreign currency. Any
such sale would result in a net gain or loss depending on whether the amount
received on the sale is more or less than the premium and other transaction
costs paid on the call or put which is sold. Purchasing a call or put option
involves the risk that the Fund may lose the premium it paid plus transaction
costs.
Warrants and stock rights are almost identical to call options in
their nature, use and effect except that they are issued by the issuer of the
underlying security rather than an option writer, and they generally have
longer expiration dates than call options. The Fund may invest up to 5% of its
net assets in warrants and stock rights, but no more than 2% of its net assets
in warrants and stock rights not listed on the New York Stock Exchange or the
American Stock Exchange.
The Fund may enter into financial futures contracts and related
options as a hedge against anticipated changes in the market value of
portfolio securities or securities which it or the Fund intends to purchase or
in the exchange rate of foreign currencies. Hedging is the initiation of an
offsetting position in the futures market which is intended to minimize the
risk associated with a position's underlying securities in the cash market.
Investment techniques related to financial futures and options are summarized
below.
Financial futures contracts in which the Fund may invest include
interest rate futures contracts, foreign currency futures contracts and
securities index futures contracts. An interest rate futures contract
obligates the seller of the contract to deliver, and the purchaser to take
delivery of, the interest rate securities called for in the contract at a
specified future time and at a specified price. A foreign currency futures
contract obligates the seller of the contract to deliver, and the purchaser to
take delivery of, the foreign currency called for in the contract at a
specified future time and at a specified price. (See "Foreign Currency
Transactions.") A securities index assigns relative values to the securities
included in the index, and the index fluctuates with changes in the market
values of the securities so included. A securities index futures contract is a
bilateral agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of the last trading day of the
contract and the price at which the futures contract is originally struck. An
option on a financial futures contract gives the purchaser the right to assume
a position in the contract (a long position if the option is a call and a
short position if the option is a put) at a specified exercise price at any
time during the period of the option.
Engaging in transactions in financial futures contracts involves
certain risks, such as the possibility of an imperfect correlation between
futures market prices and cash market prices and the possibility that the
Advisor or Subadvisor could be incorrect in its expectations as to the
direction or extent of various interest rate movements or foreign currency
exchange rates, in which case the Fund's return might have been greater had
hedging not taken place. There is also the risk that a liquid secondary market
may not exist. The risk in purchasing an option on a financial futures
contract is that the Fund will lose the premium it paid. Also, there may be
circumstances when the purchase of an option on a financial futures contract
would result in a loss to the Fund while the purchase or sale of the contract
would not have resulted in a loss.
The Fund may purchase and sell financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase exchange or
board-traded put and call options on financial futures contracts. It will
engage in transactions in financial futures contracts and related options only
for hedging purposes and not for speculation. In addition, the Fund will not
purchase or sell any financial futures contract or related option if,
immediately thereafter, the sum of the cash or U.S. Treasury bills committed
with respect to its existing futures and related options positions and the
premiums paid for related options would exceed 5% of the market value of its
total assets. At the time of purchase of a futures contract or a call option
on a futures contract, an amount of cash, U.S. Government securities or other
appropriate high-grade debt obligations equal to the market value of the
futures contract minus the Fund's initial margin deposit with respect thereto,
will be deposited in a segregated account with the Fund's custodian bank to
collateralize fully the position and thereby ensure that it is not leveraged.
The extent to which the Fund may enter into financial futures contracts and
related options may also be limited by requirements of the Internal Revenue
Code of 1986 for qualification as a regulated investment company.
Noninvestment-grade (High Yield/High Risk - or Junk Bond) Debt Securities
The Fund may invest in lower quality debt securities (generally those
rated BB or lower by S&P or Ba or lower by Moody's), subject to the Funds'
investment policy which provides that they may not invest more than 35% of
their assets in securities rated below BBB, or in unrated securities
determined by the Advisor to be comparable to securities rated below BBB.
These securities involve greater risk of default or price declines due to
changes in the issuer's creditworthiness than investment-grade debt
securities. Because the market for lower-rated securities may be thinner and
less active than for higher-rated securities, there may be market price
volatility for these securities and limited liquidity in the resale market.
Market prices for these securities may decline significantly in periods of
general economic difficulty or rising interest rates. Unrated debt securities
may fall into the lower quality category. Unrated securities usually are not
attractive to as many buyers as are rated securities, which may make them less
marketable.
The quality limitation set forth in the investment policy is
determined immediately after the Fund's acquisition of a security.
Accordingly, any later change in ratings will not be considered when
determining whether an investment complies with the Fund's investment policy.
If an obligation held by the Fund is later downgraded, the Fund's Advisor,
under the supervision of the Fund's Board of Directors, will consider whether
it is in the best interest of the Fund's shareholders to hold or to dispose of
the obligation. Among the criteria that may be considered by the Advisor and
the Board are the probability that the obligations will be able to make
scheduled interest and principal payments in the future, the extent to which
any devaluation of the obligation has already been reflected in the Fund's net
asset value, and the total percentage, if any, of obligations currently rated
below investment grade held by the Fund.
When purchasing high-yielding securities, rated or unrated, the
Subadvisor prepares its own careful credit analysis to attempt to identify
those issuers whose financial condition is adequate to meet future obligations
or is expected to be adequate in the future. Through portfolio diversification
and credit analysis, investment risk can be reduced, although there can be no
assurance that losses will not occur.
Foreign Securities
The Fund may purchase foreign securities. Foreign brokerage
commissions and the custodial costs associated with maintaining foreign
portfolio securities are generally higher than in the United States. Fee
expense may also be incurred on currency exchanges when the Fund changes
investments from one country to another or converts foreign securities
holdings into U.S. dollars. Foreign companies and foreign investment practices
are not subject to uniform accounting, auditing and financial reporting
standards and practices or regulatory requirements comparable to those
applicable to United States companies. There may be less public information
available about foreign companies.
United States Government policies have at times, in the past, through
imposition of interest equalization taxes and other restrictions, discouraged
United States investors from making certain investments abroad and may be
reinstituted from time to time as a means of fostering a favorable United
States balance of payments. In addition, foreign countries may impose
withholding and taxes on dividends and interest.
Foreign Currency Transactions
Forward Foreign Currency Exchange Contracts. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days
("Term") from the date of the contract agreed upon by the parties, at a price
set at the time of the contract. These contracts are traded directly between
currency traders (usually large commercial banks) and their customers.
The Fund will not enter into such forward contracts or maintain a net
exposure in such contracts where it would be obligated to deliver an amount of
foreign currency in excess of the value of its portfolio securities and other
assets denominated in that currency. The Subadvisor believes that it is
important to have the flexibility to enter into such forward contracts when it
determines that to do so is in the Fund's best interests.
Foreign Currency Options. A foreign currency option provides the
option buyer with the right to buy or sell a stated amount of foreign currency
at the exercise price at a specified date or during the option period. A call
option gives its owner the right, but not the obligation, to buy the currency,
while a put option gives its owner the right, but not the obligation, to sell
the currency. The option seller (writer) is obligated to fulfill the terms of
the option sold if it is exercised. However, either seller or buyer may close
its position during the option period for such options any time prior to
expiration.
A call rises in value if the underlying currency appreciates.
Conversely, a put rises in value if the underlying currency depreciates. While
purchasing a foreign currency option can protect the Fund against an adverse
movement in the value of a foreign currency, it does not limit the gain which
might result from a favorable movement in the value of such currency. For
example, if the Fund was holding securities denominated in an appreciating
foreign currency and had purchased a foreign currency put to hedge against a
decline in the value of the currency, it would not have to exercise its put.
Similarly, if the Fund had entered into a contract to purchase a security
denominated in a foreign currency and had purchased a foreign currency call to
hedge against a rise in the value of the currency but instead the currency had
depreciated in value between the date of purchase and the settlement date, it
would not have to exercise its call but could acquire in the spot market the
amount of foreign currency needed for settlement.
Foreign Currency Futures Transactions. The Fund may use foreign
currency futures contracts and options on such futures contracts. Through the
purchase or sale of such contracts, it may be able to achieve many of the same
objectives attainable through the use of foreign currency forward contracts,
but more effectively and possibly at a lower cost.
Unlike forward foreign currency exchange contracts, foreign currency
futures contracts and options on foreign currency futures contracts are
standardized as to amount and delivery period and are traded on boards of
trade and commodities exchanges. It is anticipated that such contracts may
provide greater liquidity and lower cost than forward foreign currency
exchange contracts.
Lending Portfolio Securities
The Fund may lend its portfolio securities to member firms of the New
York Stock Exchange and commercial banks with assets of one billion dollars or
more, provided the value of the securities loaned from the Fund will not
exceed one-third of the Fund's assets. Loans must be secured continuously in
the form of cash or cash equivalents such as U.S. Treasury bills; the amount
of the collateral must on a current basis equal or exceed the market value of
the loaned securities, and the Fund must be able to terminate such loans upon
notice at any time. The Fund will exercise its right to terminate a securities
loan in order to preserve its right to vote upon matters of importance
affecting holders of the securities.
The advantage of such loans is that the Fund continues to receive the
equivalent of the interest earned or dividends paid by the issuers on the
loaned securities while at the same time earning interest on the cash or
equivalent collateral which may be invested in accordance with the Fund's
investment objective, policies and restrictions.
Securities loans are usually made to broker-dealers and other
financial institutions to facilitate their delivery of such securities. As
with any extension of credit, there may be risks of delay in recovery and
possibly loss of rights in the loaned securities should the borrower of the
loaned securities fail financially. However, the Fund will make loans of its
portfolio securities only to those firms the Advisor or Subadvisor deems
creditworthy and only on such terms the Advisor believes should compensate for
such risk. On termination of the loan the borrower is obligated to return the
securities to the Fund. The Fund will realize any gain or loss in the market
value of the securities during the loan period. The Fund may pay reasonable
custodial fees in connection with the loan.
Nondiversified Status
The Fund is a "nondiversified" investment company under the
Investment Act of 1940 (the "Act"), which means the Fund is not limited by the
Act in the proportion of its assets that may be invested in the securities of
a single issuer. A nondiversified fund may invest in a smaller number of
issuers than a diversified fund. Thus, an investment in the Fund may, under
certain circumstances, present greater risk of loss to an investor than an
investment in a diversified fund. However, the Fund intends to conduct its
operations so as to qualify to be taxed as a "regulated investment company"
for purposes of the Code, which will relieve the Fund of any liability for
federal income tax to the extent its earnings are distributed to shareholders.
To qualify for this Subchapter M tax treatment, the Fund will limit its
investments to satisfy the Code diversification requirements so that, at the
close of each quarter of the taxable year, (i) not more than 25% of the fund's
assets will be invested in the securities of a single issuer or of two or more
issuers which the Fund controls and which are determined to be engaged in the
same or similar trades or businesses or related trades or businesses, and (ii)
with respect to 50% of its assets, not more than 5% of its assets will be
invested in the securities of a single issuer and the Fund will not own more
than 10% of the outstanding voting securities of a single issuer. Investments
in United States Government securities are not subject to these limitations;
while securities issued or guaranteed by foreign governments are subject to
the above tests in the same manner as the securities of non-governmental
issuers. The Fund intends to comply with the SEC staff position that
securities issued or guaranteed as to principal and interest by any single
foreign government are considered to be securities of issuers in the same
industry.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The Fund has adopted the following investment restrictions which
cannot be changed without the approval of the holders of a majority of the
outstanding shares of the Fund. As defined in the Investment Company Act of
1940, this means the lesser of the vote of (a) 67% of the shares of the Fund
at a meeting where more than 50% of the outstanding shares are present in
person or by proxy or (b) more than 50% of the outstanding shares of the Fund.
The Fund may not:
1. With respect to 50% of its assets, purchase
securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the
value of its total assets would be invested in securities of
that issuer. (The remaining 50% of its total assets may be
invested without restriction except to the extent other
investment restrictions may be applicable).
2. Concentrate 25% or more of the value of its assets
in any one industry; provided, however, that there is no
limitation with respect to investments in obligations issued
or guaranteed by the United States Government or its
agencies and instrumentalities, and repurchase agreements
secured thereby.
3. Make loans of more than one-third of the assets of
the Fund, or as permitted by law. The purchase by the Fund
of all or a portion of an issue of publicly or privately
distributed debt obligations in accordance with its
investment objective, policies and restrictions, shall not
constitute the making of a loan.
4. Underwrite the securities of other issuers, except
as permitted by the Board of Directors within applicable
law, and except to the extent that in connection with the
disposition of its portfolio securities, the Fund may be
deemed to be an underwriter.
5. Purchase from or sell to any of the Fund's officers
or directors, or companies of which any of them are
directors, officers or employees, any securities (other than
shares of beneficial interest of the Fund), but such persons
or firms may act as brokers for the Fund for customary
commissions.
6. Except as required in connection with permissible
options, futures and commodity activities of the Fund,
invest in commodities, commodity futures contracts, or real
estate, although it may invest in securities which are
secured by real estate or real estate mortgages and
securities of issuers which invest or deal in commodities,
commodity futures, real estate or real estate mortgages and
provided that it may purchase or sell stock index futures,
foreign currency futures, interest rate futures and options
thereon.
7. Invest in the shares of other investment companies,
except as permitted by the 1940 Act or other applicable law,
or pursuant to Calvert's nonqualified deferred compensation
plan adopted by the Board of Directors in an amount not to
exceed 10% or as permitted by law.
8. Purchase more than 10% of the outstanding voting
securities of any issuer.
Nonfundamental Investment Restrictions
The Fund has adopted the following operating (i.e., non-fundamental)
investment policies and restrictions which may be changed by the Board of
Directors without shareholder approval. The Fund may not:
9. Purchase the securities of any issuer with less
than three years' continuous operation if, as a result, more
than 5% of the value of its total assets would be invested
in securities of such issuers.
10. Invest, in the aggregate, more than 15% of its net
assets in illiquid securities. Purchases of securities
outside the U.S. that are not registered with the SEC or
marketable in the U.S. are not per se illiquid.
11. Invest, in the aggregate, more than 5% of its net
assets in the securities of issuers restricted from selling
to the public without registration under the Securities Act
of 1933, excluding restricted securities eligible for resale
pursuant to Rule 144A under that statute. Purchases of
securities outside the U.S. that are not registered with the
SEC or marketable in the U.S. are not per se restricted.
12. Make short sales of securities or purchase any
securities on margin except that the Fund may obtain such
short-term credits as may be necessary for the clearance of
purchases and sales of securities. The depositor payment by
the Fund of initial or maintenance margin in connection with
financial futures contracts or related options transactions
is not considered the purchase of a security on margin.
13. Purchase or retain securities of any issuer if the
officers, Directors of the Fund or its Advisors, owning
beneficially more than 1/2 of 1% of the securities of such
issuer, together own beneficially more than 5% of such
issuer's securities.
14. Invest in warrants if more than 5% of the value of
the Fund's net assets would be invested in such securities.
15. Invest in interests in oil, gas, or other mineral
exploration or development programs or leases although it
may invest in securities of issuers which invest in or
sponsor such programs.
16. Borrow money, except from banks for temporary or
emergency purposes, and then only in an amount not to exceed
one-third of the Fund's total assets, or as permitted by
law. In order to secure any permitted borrowings under this
section, the Fund may pledge, mortgage or hypothecate its
assets.
17. Invest for the purpose of exercising control or
management of another issuer.
For purposes of the Fund's concentration policy contained in
restriction (2), above, the Fund intends to comply with the SEC staff position
that securities issued or guaranteed as to principal and interest by any
single foreign government are considered to be securities of issuers in the
same industry.
Any investment restriction which involves a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the applicable percentage occurs immediately after an acquisition of
securities or utilization of assets and results therefrom.
PURCHASE AND REDEMPTION OF SHARES
Share certificates will not be issued unless requested in writing by
the investor. No charge will be made for share certificate requests. No
certificates will be issued for fractional shares.
Amounts redeemed by check redemption may be mailed to the investor
without charge. Amounts of more than $50 and less than $300,000 may be
transferred electronically at no charge to the investor. Amounts of $1,000 or
more will be transmitted by wire without charge by the Fund to the investor's
account at a domestic commercial bank that is a member of the Federal Reserve
System or to a correspondent bank. A charge of $5 is imposed on wire transfers
of less than $1,000. If the investor's bank is not a Federal Reserve System
member, failure of immediate notification to that bank by the correspondent
bank could result in a delay in crediting the funds to the investor's bank
account.
Telephone redemption requests which would require the redemption of
shares purchased by check or electronic funds transfer within the previous 10
business days may not be honored. The Fund reserves the right to modify the
telephone redemption privilege.
New shareholders wishing to use the Fund's telephone redemption
procedure must so indicate on their Investment Applications and, if desired,
designate a commercial bank or securities broker and account to receive the
redemption proceeds. Existing shareholders who at any time desire to arrange
for the telephone redemption procedure, or to change instructions already
given, must send a written notice to the Fund, with a voided check for the
bank wiring instructions to be added. If a voided check does not accompany the
request, then the request must be signature guaranteed by a commercial bank,
savings and loan association, trust company, member firm of any national
securities exchange, or certain credit unions. Further documentation may be
required from corporations, fiduciaries, pension plans, and institutional
investors.
The Fund's redemption check normally will be mailed to the investor
on the next business day following the date of receipt by the Fund of the
written or telephone redemption request. If the investor so instructs in the
redemption request, the check will be mailed or the redemption proceeds wired
to a predesignated account at the investor's bank. Redemption proceeds are
normally paid in cash. However, at the sole discretion of the Fund, the Fund
has the right to redeem shares in assets other than cash for redemption
amounts exceeding, in any 90-day period, $250,000 or 1% of the net asset value
of the Fund, whichever is less, or as allowed by law.
The right of redemption of Fund shares may be suspended or the date
of payment postponed for any period during which the New York Stock Exchange
is closed (other than customary weekend and holiday closings), when trading on
the New York Stock Exchange is restricted, or an emergency exists, as
determined by the SEC, or if the Commission has ordered such a suspension for
the protection of shareholders. Redemption proceeds are normally mailed or
wired the next business day after a proper redemption request has been
received unless redemptions have been suspended or postponed as described
above.
REDUCED SALES CHARGES (CLASS A)
The Fund imposes reduced sales charges for Class A shares in certain
situations in which the Principal Underwriter and the dealers selling Fund
shares may expect to realize significant economies of scale with respect to
such sales. Generally, sales costs do not increase in proportion to the dollar
amount of the shares sold; the per-dollar transaction cost for a sale to an
investor of shares worth, say, $5,000 is generally much higher than the
per-dollar cost for a sale of shares worth $1,000,000. Thus, the applicable
sales charge declines as a percentage of the dollar amount of shares sold as
the dollar amount increases.
When a shareholder agrees to make purchases of shares over a period
of time totaling a certain dollar amount pursuant to a Letter of Intent, the
Underwriter and selling dealers can expect to realize the economies of scale
applicable to that stated goal amount. Thus the Fund imposes the sales charge
applicable to the goal amount. Similarly, the Underwriter and selling dealers
also experience cost savings when dealing with existing Fund shareholders,
enabling the Fund to afford existing shareholders the Right of Accumulation.
The Underwriter and selling dealers can also expect to realize economies of
scale when making sales to the members of certain qualified groups which agree
to facilitate distribution of Fund shares to their members. See "Exhibit A -
Reduced Sales Charges" in the Prospectus.
NET ASSET VALUE
The net asset value per share of the Fund, the price at which the
Fund's shares are redeemed, is determined every business day as of the close of
the New York Stock Exchange (generally, 4:00 p.m., Eastern time), and at such
other times as may be necessary or appropriate. The Fund does not determine
net asset value on certain national holidays or other days on which the New
York Stock Exchange is closed: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
The public offering price of the Fund's shares is the net asset value
per share (plus, for Class A shares, the applicable sales charge). The net
asset value per share is computed separately for each class by dividing the
value of the Fund's total assets, less its liabilities, by the total number of
shares outstanding for that class. The Fund's securities are valued as
follows: (a) securities for which market quotations are readily available are
valued at the most recent closing price, mean between bid and asked price, or
yield equivalent as obtained from one or more market makers for such
securities; (b) securities maturing within 60 days are valued at cost, plus or
minus any amortized discount or premium, unless the Board of Directors
determines such method not to be appropriate under the circumstances; and (c)
all other securities and assets for which market quotations are not readily
available are fairly valued by the Advisor in good faith under the supervision
of the Board of Directors.
CALCULATION OF TOTAL RETURN
The Fund may, from time to time, advertise "total return." Total
return is calculated separately for each class. Total return is computed by
taking the total number of shares purchased by a hypothetical $1,000
investment, after deducting the applicable sales charge for Class A shares,
adding all additional shares purchased within the period with reinvested
dividends and distributions, calculating the value of those shares at the end
of the period, and dividing the result by the initial $1,000 investment. Note:
"Total Return" when quoted in the Financial Highlights section of the Fund's
Prospectus and the Annual Report to Shareholders, however, per SEC
instructions, does not reflect deduction of the sales charge, and corresponds
to "return without maximum sales load" return as referred to herein. For
periods of more than one year, the cumulative total return is then adjusted
for the number of years, taking compounding into account, to calculate average
annual total return during that period.
Total return is computed according to the following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $l,000 (less the maximum sales
charge imposed during the period calculated); T = total return; n = number of
years; and ERV = the ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period.
Performance is historical in nature and is not intended to indicate
future performance. All total return quotations reflect the deduction of the
Fund's maximum sales charge, except quotations of "return without maximum
sales load" which do not reflect deduction of the sales charge. Return without
maximum sales load, which will be higher than total return, should be
considered only by investors, such as participants in certain pension plans,
to whom the sales charge does not apply, or for purposes of comparison only
with comparable figures which also do not reflect sales charges, such as
Lipper averages. Thus, in the above formula, for return without maximum sales
load, P = the entire $1,000 hypothetical initial investment and does not
reflect deduction of any sales charge. Return may be advertised for other
periods, such as by quarter, or cumulatively for more than one year.
Return for the Funds' shares for the period from inception (October
31, 1994) to September 30, 1996, are as follows:
Class A Shares Class A Shares Class C Shares
Without Maximum Total Return Total Return
Sales Load Return With Maximum
Sales Load
One Year 7.92% 2.80% 6.56%
Since Inception 25.61% 22.45% 24.90%
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; or foreign
central banks of issue. Non-resident aliens, certain foreign partnerships and
foreign corporations are generally not subject to either requirement but may
instead be subject to withholding under sections 1441 or 1442 of the Internal
Revenue Code. Shareholders claiming exemption from backup withholding and
broker reporting should call or write the Fund for further information.
DIRECTORS AND OFFICERS
<F1> 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. Age: 54.
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. Age: 47.
TERRENCE J. MOLLNER, Ed.D, Director. Dr. Mollner is Founder and
Chairperson of Trusteeship Institute, Inc., a diverse foundation known
principally for its consultation to corporations converting to cooperative
employee-ownership. He served as a Trustee of the Cooperative Fund of New
England, Inc., and is now a member of its Board of Advisors. Mr. Mollner also
serves as Trustee for the Calvert Social Investment Fund. He is also a founder
and member of the Board of Trustees of the Foundation for Soviet-American
Economic Cooperation. Address: 15 Edwards Square, Northampton, Massachusetts
01060. DOB: 12/13/44.
RUSTUM ROY, Director. Mr. Roy is the Evan Pugh Professor of the Solid
State Geochemistry at Pennsylvania State University, and Corporation Chair,
National Association of Science, Technology, and Society. Address: Material
Research Laboratory, Room 102A, Pennsylvania State University, University
Park, Pennsylvania, 16802. DOB: 7/3/24.
<F1> 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. Age: 47.
TESSA TENNANT, Director. Ms. Tennant is the head of green and ethical
investing for National Provident Investment Managers Ltd. Previously, she was
in charge of the Environmental Research Unit of Jupiter Tyndall Merlin Ltd.,
and was the Director of the Jupiter Tyndall Merlin investment managers.
Address: 55 Calverley Road, Tunbridge Wells, Kent, TN1 2UE, United Kingdom.
DOB: 5/29/59.
MOHAMMAD YUNUS, Director. Mr. Yunus is a Managing Director of Grameen
Bank in Bangladesh. Address: Grameen Bank, Mirpur Two, Dhaka 1216, Bangladesh.
DOB: 6/28/40.
<F1> 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. Age: 46.
<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. Age: 48.
<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. Age: 45.
<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. Age: 43.
<F1> SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of each
of the other investment companies in the Calvert Group of Funds. DOB: 01/29/59.
<F1> KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is Assistant
Counsel of Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the other
investment companies in the Calvert Group of Funds. DOB: 10/21/56.
<F1> LISA CROSSLEY, Esq., Assistant Secretary and Compliance Officer. Ms.
Crossley is Assistant Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of each
of the other investment companies in the Calvert Group of Funds. DOB: 12/31/61.
<F1> IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Assistant
Counsel of Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the other
investment companies in the Calvert Group of Funds. DOB: 09/07/68.
<F1> Officers and Trustees deemed to be "interested persons" of the Fund under
the Investment Company Act of 1940, by virtue of their affiliation with the
Fund's Advisor.
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 1996, Directors of the Fund not affiliated with the
Fund's Advisor were paid aggregate fees and expenses of $2,366.
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 1996 Aggregate Pension or Total Compensation
(unaudited numbers) Compensation Retirement from Registrant
from Registrant Benefits Accrued and Fund Complex
for service as part of paid to
as Director Registrant Directors<F3>
Expenses<F2>
Name of Director
John G. Guffey, Jr. $319 $0 $49,433
Terrence J. Mollner $0 $0 $44,109
Rustum Roy $0 $0 $ 8,750
D. Wayne Silby $297 $0 $56,398
Tessa Tennant $0 $0 $ 5,750
Mohammad Yunus $0 $0 $ 9,750
<F2> No Directors has chosen to defer a portion of their compensation as of
September 30, 1996.
<F3> As of December 31, 1996, the Fund Complex consists of nine (9) registered
investment companies.
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio, as the
case may be, here indicated.
INVESTMENT ADVISOR AND SUB-ADVISORS
The Fund's Investment Advisor is Calvert Asset Management Company,
Inc., 4550 Montgomery Avenue, 1000N, Bethesda, Maryland 20814, a subsidiary of
Calvert Group Ltd., which is a subsidiary of Acacia Mutual Life Insurance
Company of Washington, D.C. ("Acacia Mutual").
The Advisory Contract between the Fund and the Advisor was entered
into on May 21, 1992, and will remain in effect indefinitely, provided
continuance is approved at least annually by the vote of the holders of a
majority of the outstanding shares of the Fund or by the Board of Directors of
the Fund; and further provided that such continuance is also approved annually
by the vote of a majority of the trustees of the Fund who are not parties to
the Contract or interested persons of parties to the Contract or interested
persons of such parties, cast in person at a meeting called for the purpose of
voting on such approval. The Contract may be terminated without penalty by
either party upon 60 days' prior written notice; it automatically terminates
in the event of its assignment.
Under the Contract, the Advisor provides investment advice to the
Fund and oversees its day-to-day operations, subject to direction and control
by the Fund's Board of Directors. For its services, the Advisor receives an
annual base fee, payable monthly, of 0.80% of the Fund's average daily net
assets. For the 1995 fiscal period, the Advisor received a fee of $50,418,
reimbursed $12,183, and voluntarily waived or assumed $3,256 of expenses. For
the 1996 fiscal period, the Advisor received a fee of $243,241. There were no
expenses reimbursed or fees voluntarily waived. The Advisor may recapture
through December 31, 1996, from (charge to) the Fund any fees deferred or
expenses reimbursed. 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 Fund's current Subadvisors are described in the Prospectus. See
"Management of the Fund." The remaining pool of Sub-Advisors are described
below.
Apodaca Investment Group, Capital Management, Inc.: Apodaca Investment
Group, 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. Its
performance index is the Russell 2000.
Jerry 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.
New Amsterdam Partners, L.P.: New Amsterdam Partners, L.P. is a mid-cap value
investment manager in New York, New York. New Amsterdam Partners is a
quantitative investment firm, evaluating investment opportunities by comparing
expected investment returns. The firm believes that the disciplined use of
their valuation techniques, in conjunction with fundamental analysis of
companies, is the key to understanding and maximizing investment returns.
Michelle Clayman, General Partner of New Amsterdam, was a founding
partner of the company, which was started in 1986. Prior to co-founding New
Amsterdam, Ms. Clayman was a Vice President of Salomon Brothers in charge of
STOCKFACTS, an on-line computer system that combines analytical tools for
equity analysis and databases and was designed and developed by Ms. Clayman.
Ms. Clayman received her Bachelor of Arts from Oxford University and an MBA
from Stanford University. She is a CFA and is past President of the Society of
Quantitative Analysts.
Keith Graham is Vice President and Special Limited Partner of New
Amsterdam. Before joining the company in 1987, Mr. Graham was an Assistant
Treasurer at the Bankers Trust Company, first in the Trust Administration
Group and later in the Investment Management Consulting Group.
Seneca, Inc.: 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 over 15 years' investment experience. Ms. Sweeney
is a Portfolio Manager and has over 10 years' investment experience.
Sturdivant & Co., Inc.: Sturdivant & Co., Inc., of Clementon, New Jersey,
seeks to identify undervalued companies or companies undergoing significant
changes that will enhance shareholder value. The company utilizes a
conservative, disciplined and consistently-applied decision making process
designed to achieve lower risk than the market.
Ralph Sturdivant is Chairman and CEO who, prior to founding the firm,
was a Vice President at Prudential-Bache Securities and an Account Executive
with Merrill Lynch. Mr. Sturdivant holds a Bachelor of Arts from Morgan State
University and is a member of the Financial Analysts of Philadelphia.
Albert Sturdivant is President and CIO, and was a principal and
manager of the capital markets division of Grigsby, Brandford & Company prior
to co-founding Sturdivant & Co. Mr. Sturdivant earned an MBA from the Wharton
Business School of the University of Pennsylvania.
Administrative Services
Calvert Administrative Services Company ("CASC", an affiliate of the
Advisor, has been retained by the Fund to provide certain administrative
services necessary to the conduct of its affairs, including the preparation of
regulatory filings and shareholder reports, the daily determination of its net
asset value per share and dividends, and the maintenance of its portfolio and
general accounting records. For providing such services, CASC receives an
annual fee from the Fund of 0.10% of the Fund's average daily net assets. For
the 1995 fiscal period, CASC received $6,251 in administrative fees. For the
1996 fiscal period, CASC received $30,405 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. During fiscal period 1996, CSSI
received $134,497 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). For fiscal period 1996, CDI received distribution fees of
$96,724 under the Class A Distribution Plan. Of the Class A distribution
expenses paid in fiscal 1996, $59,568 was used to compensate dealers for their
share distribution promotional services, and 45,103 was used for Advertising.
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.
For the 1996 period, it received net sales charges of $151,785.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Fund has adopted Distribution Plans (the "Plans") which permits the Fund to
pay certain expenses associated with the distribution of its shares. Such
expenses may not exceed, on an annual basis, 0.35% of the Fund's Class A
average daily net assets. Expenses under the Fund's Class C Plan may not
exceed, on an annual basis, 1.00% of the average daily net assets of Class C.
For the period from inception (October 31, 1994) to September 30, 1995, Class
C Distribution Plan expenses totaled $4,448. That amount was used entirely to
compensate dealers distributing shares, and to compensate the underwriter. For
the fiscal year 1996, Class C Distribution Plan expenses totaled $27,695. That
amount was used entirely to compensate dealers distributing shares, and to
compensate the underwriter.
The Fund's Distribution Plans were approved by the Board of
Directors, including the Directors who are not "interested persons" of the
Fund (as that term is defined in the Investment Company Act of 1940) and who
have no direct or indirect financial interest in the operation of the Plans or
in any agreements related to the Plans. The selection and nomination of the
Directors who are not interested persons of the Fund is committed to the
discretion of such disinterested Directors. In establishing the Plans, the
Directors considered various factors including the amount of the distribution
expenses. The Directors determined that there is a reasonable likelihood that
the Plans will benefit the Fund and its shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Directors who have no direct or indirect financial interest in
the Plans, or by vote of a majority of the outstanding shares of the Fund. Any
change in the Plans that would materially increase the distribution cost to
the Fund requires approval of the shareholders of the affected class;
otherwise, the Plans may be amended by the Directors, including a majority of
the non-interested Directors as described above. The Plans will continue in
effect for successive one-year terms provided that such continuance is
specifically approved by (i) the vote of a majority of the Directors who are
not parties to the Plans or interested persons of any such party and who have
no direct or indirect financial interest in the Plans, and (ii) the vote of a
majority of the entire Board of Directors.
Apart from the Plans, the Advisor and CDI, at their own expense, may
incur costs and pay expenses associated with the distribution of shares of the
Fund.
Certain broker-dealers, and/or other persons may receive compensation
from the investment advisor, underwriter, or their affiliates for the sale and
distribution of the securities or for services to the Fund. Such compensation
may include additional compensation based on assets held through that firm
beyond the regularly scheduled rates, and finder's fee payments to firms whose
representatives are responsible for soliciting a new account where the
accountholder does not choose to purchase through that firm.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and choice of
brokers and dealers are made by the Fund's Advisor under the direction and
supervision of the Fund's Board of Directors.
The Fund's policy is to limit portfolio turnover to transactions
necessary to carry out its investment policies and to obtain cash for
redemption of its shares. Depending upon market conditions, the Fund's
turnover expressed as a percentage may in some years exceed 100%, but is not
expected to exceed 200%. For the 1995 and 1996, fiscal periods, the portfolio
turnover rates of the Fund were 95% and 114%. In all transactions, the Fund
seeks to obtain the best price and most favorable execution and selects
broker-dealers on the basis of their professional capability and the value and
quality of their services. Broker-dealers may be selected who provide the Fund
with statistical, research, or other information and services. Such
broker-dealers may receive compensation for executing portfolio transactions
that is in excess of the compensation another broker-dealer would have
received for executing such transactions, if the Advisor determines in good
faith that such compensation is reasonable in relation to the value of the
information and services provided. Although any statistical, research, or
other information or services provided by broker-dealers may be useful to the
Advisor, its dollar value is generally indeterminable and its availability or
receipt does not materially reduce the Advisor's normal research activities or
expenses. During fiscal 1995, no commissions were paid to any officer or
director of the Fund, or to any of their affiliates. During fiscal year 1996,
$177,000 in aggregate brokerage commissions were paid to broker-dealers.
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
1997. State Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, MA
02110 acts as custodian of the Fund's investments. First National Bank of
Maryland, 25 South Charles Street, Baltimore, Maryland 21203 also serves as
custodian of certain of the Fund's cash assets. Neither custodian has a part
in deciding the Fund's investment policies or the choice of securities that
are to be purchased or sold for the Fund.
GENERAL INFORMATION
The Fund was organized as a Maryland Corporation on February 14,
1992. The other series of the Fund is the Calvert International Equity Fund.
Each share represents an equal proportionate interest with each other
share and is entitled to such dividends and distributions out of the income
belonging to such class as declared by the Board. The Fund offers two separate
classes of shares: Class A and Class C. Each class represents interests in the
same portfolio of investments but, as further described in the prospectus,
each class is subject to differing sales charges and expenses, which
differences will result in differing net asset values and distributions. Upon
any liquidation of the Fund, shareholders of each class are entitled to share
pro rata in the net assets belonging to that series available for distribution.
The Fund will send its shareholders confirmations of purchase and
redemption transactions, as well as periodic transaction statements and
unaudited semi-annual and audited annual financial statements of the Fund's
investment securities, assets and liabilities, income and expenses, and
changes in net assets.
The Prospectus and this Statement of Additional Information do not
contain all the information in the Fund's registration statement. The
registration statement is on file with the Securities and Exchange Commission
and is available to the public.
FINANCIAL STATEMENTS
The Fund's audited financial statements included in its Annual Report
to Shareholders dated September 30, 1996, 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.
<PAGE>
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the Letter
of Intent option on my Fund Account Application Form, I agree to be bound by
the terms and conditions applicable to Letters of Intent appearing in the
Prospectus and the Statement of Additional Information for the Fund and the
provisions described below as they may be amended from time to time by the
Fund. Such amendments will apply automatically to existing Letters of Intent.
I intend to invest in the shares of:(Fund or Portfolio name*)during the
thirteen (13) month period from the date of my first purchase pursuant to this
Letter (which cannot be more than ninety (90) days prior to the date of this
Letter or my Fund Account Application Form, whichever is applicable), an
aggregate amount (excluding any reinvestments of distributions) of at least
fifty thousand dollars ($50,000) which, together with my current holdings of the
Fund (at public offering price on date of this Letter or my Fund Account
Application Form, whichever is applicable), will equal or exceed the amount
checked below:
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio, as the
case may be, here indicated.
__ $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)
<PAGE>
Calvert World Values Fund, Inc.
International Equity Fund
Statement of Additional Information
January 31, 1997
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT 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 9
Investment Selection Process 12
Dividends, Distributions and Taxes 13
Net Asset Value 14
Calculation of Total Return 15
Purchase and Redemption of Shares 15
Reduced Sales Charges (Class A) 17
Advertising 17
Directors and Officers 18
Investment Advisor and Sub-Advisor 20
Method of Distribution 22
Transfer and Shareholder Servicing Agent 23
Portfolio Transactions 23
Independent Accountants and Custodians 24
General Information 24
Financial Statements 24
Appendix 25
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-January 31, 1997
CALVERT WORLD VALUES FUND, INC.
INTERNATIONAL EQUITY FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account (800) 368-2748 Shareholder (800) 368-2745
Information: (301) 951-4820 Services: (301) 951-4810
TDD for the Hearing-
Broker (800) 368-2746 Impaired: (800) 541-1524
Services: (301) 951-4850
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in conjunction
with the Fund's Prospectus dated January 31, 1997, which may be obtained free
of charge by writing the Fund at the above address or calling the Fund.
INVESTMENT OBJECTIVE
Calvert World Values Fund, Inc., International Equity Fund (the
"Fund") seeks to achieve a high total return consistent with reasonable risk,
by investing primarily in a globally diversified portfolio of equity
securities. To the extent possible, investments are made in enterprises that
make a significant contribution to our global society through their products
and services and through the way they do business.
Foreign Securities
Additional costs may be incurred which are related to any
international investment, since foreign brokerage commissions and the
custodial costs associated with maintaining foreign portfolio securities are
generally higher than in the United States. Fee expense may also be incurred
on currency exchanges when the Fund changes investments from one country to
another or converts foreign securities holdings into U.S. dollars. Foreign
companies and foreign investment practices are not subject to uniform
accounting, auditing and financial reporting standards and practices or
regulatory requirements comparable to those applicable to United States
companies. There may be less public information available about foreign
companies.
United States Government policies have at times, in the past, through
imposition of interest equalization taxes and other restrictions, discouraged
United States investors from making certain investments abroad. 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.
American and European Depositary Receipts
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.
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
Purchasing Call and Put Options, Warrants and Stock Rights
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.
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.
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.
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 falls 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 option 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.
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. 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.
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 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.
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 duplication of advisory
fees.
<PAGE>
Non-Fundamental Investment Restrictions
The Fund has adopted the following operating (i.e., non-fundamental)
investment policies and restrictions which may be changed by the Board of
Directors without shareholder approval. The Fund may not:
13. Purchase the securities of any issuer with less
than three years' continuous operation if, as a result, more
than 5% of the value of its total assets would be invested
in securities of such issuers.
14. Purchase illiquid securities if more than 15% of
the value of that Fund's net assets would be invested in
such securities. The Fund may buy and sell securities
outside the U.S. that are not registered with the SEC or
marketable in the U.S.
15. Purchase or retain securities of any issuer if the
officers, directors of the Fund or its Advisors, owning
beneficially more than 1/2 of 1% of the securities of such
issuer, together own beneficially more than 5% of such
issuer's securities.
16. Invest in warrants if more than 5% of the value of
the Fund's net assets would be invested in such securities.
17. Invest in interests in oil, gas, or other mineral
exploration or development programs or leases although it
may invest in securities of issuers which invest in or
sponsor such programs.
18. As an operating policy, excluding special equities and High
Social Impact Investments, the Fund will limit its investment in
securities of U.S. issuers to 5% of the Fund's net assets.
For purposes of the Fund's concentration policy contained in
restriction (2), above, the Fund intends to comply with the SEC staff position
that securities issued or guaranteed as to principal and interest by any
single foreign government are considered to be securities of issuers in the
same industry.
Any investment restriction which involves a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the applicable percentage occurs immediately after an acquisition of
securities or utilization of assets and results therefrom.
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 "return without maximum load,"
which do not deduct sales charge. Total returns for the Fund's shares for the
periods indicated are as follows:
Periods Ended Class A Class A Class C
September 30, 1996 Return Average Annual Average Annual
without Maximum Total Return Total Return
Load with Maximum Load
One year 9.22% 4.02% 8.07%
From date of inception<F1> 8.00% 7.07% 2.96%
<F1> June 29, 1992, for Class A and March 1, 1994, for Class C.
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.
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 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. 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., 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, September 30, 1996). Calvert Group was also
the first to offer a family of socially responsible mutual fund portfolios.
DIRECTORS AND OFFICERS
<F1> 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. Age: 54.
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. Age: 47.
TERRENCE J. MOLLNER, Ed.D, Director. Dr. Mollner is Founder and
Chairperson of Trusteeship Institute, Inc., a diverse foundation known
principally for its consultation to corporations converting to cooperative
employee-ownership. He served as a Trustee of the Cooperative Fund of New
England, Inc., and is now a member of its Board of Advisors. Mr. Mollner also
serves as Trustee for the Calvert Social Investment Fund. He is also a founder
and member of the Board of Trustees of the Foundation for Soviet-American
Economic Cooperation. Address: 15 Edwards Square, Northampton, Massachusetts
01060. DOB: 12/13/44.
RUSTUM ROY, Director. Mr. Roy is the Evan Pugh Professor of the Solid
State Geochemistry at Pennsylvania State University, and Corporation Chair,
National Association of Science, Technology, and Society. Address: Material
Research Laboratory, Room 102A, Pennsylvania State University, University
Park, Pennsylvania, 16802. DOB: 7/3/24.
<F1> 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. Age: 47.
TESSA TENNANT, Director. Ms. Tennant is the head of green and ethical
investing for National Provident Investment Managers Ltd. Previously, she was
in charge of the Environmental Research Unit of Jupiter Tyndall Merlin Ltd.,
and was the Director of the Jupiter Tyndall Merlin investment managers.
Address: 55 Calverley Road, Tunbridge Wells, Kent, TN1 2UE, United Kingdom.
DOB: 5/29/59.
MOHAMMAD YUNUS, Director. Mr. Yunus is a Managing Director of Grameen
Bank in Bangladesh. Address: Grameen Bank, Mirpur Two, Dhaka 1216, Bangladesh.
DOB: 6/28/40.
<F1> 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. Age: 46.
<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. Age: 48.
<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. Age: 45.
<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. Age: 43.
<F1> SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of each
of the other investment companies in the Calvert Group of Funds. DOB: 01/29/59.
<F1> KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is Assistant
Counsel of Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the other
investment companies in the Calvert Group of Funds. DOB: 10/21/56.
<F1> LISA CROSSLEY, Esq., Assistant Secretary and Compliance Officer. Ms.
Crossley is Assistant Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of each
of the other investment companies in the Calvert Group of Funds. DOB: 12/31/61.
<F1> IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Assistant
Counsel of Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the other
investment companies in the Calvert Group of Funds. DOB: 09/07/68.
<F1> Officers and Trustees deemed to be "interested persons" of the Fund under
the Investment Company Act of 1940, by virtue of their affiliation with the
Fund's Advisor.
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.
Messrs. Guffey and Silby serve on the Fund's High Social Impact
Investments Committee which assists the Fund in identifying, evaluating, and
selecting investments in securities that offer a rate of return below the
then-prevailing market rate and that present attractive opportunities for
furthering the Fund's social criteria. Messrs. Guffey, Silby, Sorrell, and Roy
serve on the Fund's Special Equities Committee which assists the Fund in
identifying, evaluating, and selecting appropriate private placement
investment opportunities for the Fund that are not high social impact
investments.
During fiscal 1996, Directors of the Fund not affiliated with the
Fund's Advisor were paid aggregate fees and expenses of $54,432.
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 1996 Aggregate Pension or Retirement Total
(unaudited numbers) Compensation Benefits Accrued Compensation
from Registrant as part of from Registrant
for service of Registrant and Fund Complex
as Director Expenses<F2> paid to Directors<F3>
Name of Director
John G. Guffey, Jr. $8,750 $0 $49,433
Terrence J. Mollner $9,714 $0 $44,109
Rustum Roy $8,750 $0 $ 8,750
D. Wayne Silby $7,750 $0 $56,398
Tessa Tennant $0 $5,750 $ 5,750
Mohammad Yunus $0 $9,750 $ 9,750
<F2> Ms. Tennant has chosen to defer a portion of her compensation. Her
total deferred compensation, including dividends and capital appreciation, was
$6,173.48 as of September 30, 1996. Mr. Yunus has also chosen to defer a portion
of his compensation. His total deferred compensation, including dividends and
capital appreciation, was $21,004.63 as of September 30, 1996.
<F3>As of December 31, 1996, the Fund Complex consists of nine (9) 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. During fiscal year 1994, no fees were waived and $4,980 of expenses
were reimbursed for Class C Shares. During fiscal year 1995, no fees were
waived and the Advisor received fees of $1,871,430. During fiscal year 1996,
no fees were waived and the Advisor received fees of $1,971,329. The Advisor
may recapture from (charge to) the Fund for such expenses incurred through
December 31, 1993, 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, 1994, through December 31, 1995. The Advisor may voluntarily agree
to further defer its fees or assume Fund expenses from January 1, 1994,
through December 31, 1995, ("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. 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 or 1996.
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 1994, 1995, and 1996, CASC
received $110,078, $187,143, and $197,133, 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.
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
1994, 1995, and 1996, CDI received distribution fees of $251,452, $454,763,
and $476,884, respectively, under the Class A Distribution Plan. Of the Class
A distribution expenses paid in fiscal 1996, $402,705, was used to compensate
dealers for their share distribution promotional services, $55,589 was used
for advertising, 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 1994, 1995, and 1996, CDI received net sales
charges of $526,194, $163,702, and $157,897, 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. In 1996, Class C Distribution expenses were $63,792.
Fiscal year 1996, 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.
Certain broker-dealers, and/or other persons may receive compensation
from the investment advisor, underwriter, or their affiliates for the sale and
distribution of the securities or for services to the Fund. Such compensation
may include additional compensation based on assets held through that firm
beyond the regularly scheduled rates, and finder's fee payments to firms whose
representatives are responsible for soliciting a new account where the
accountholder does not choose to purchase through that firm.
TRANSFER AND SHAREHOLDER SERVICING AGENT
Calvert Shareholder Services, Inc., a subsidiary of Calvert Group,
Ltd., and Acacia Mutual, has been retained by the Fund to act as transfer
agent, dividend disbursing agent and shareholder servicing agent. These
responsibilities include: responding to shareholder inquiries and instructions
concerning their accounts; crediting and debiting shareholder accounts for
purchases and redemptions of Fund shares and confirming such transactions;
daily updating of shareholder accounts to reflect declaration and payment of
dividends; and preparing and distributing quarterly statements to shareholders
regarding their accounts. For its fiscal years ended September 30, 1994, 1995,
and 1996, the Fund paid Calvert Shareholder Services, Inc. fees of $284,177,
$432,466, and $535,888, 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 1994, and 1995, no commissions were paid to any
officer or director of the Fund, or to any of their affiliates. During fiscal
year 1996, $177,000 in aggregate brokerage commissions were paid to
broker-dealers.
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 1994, 1995, and 1996, fiscal periods, the portfolio
turnover rates of the Fund were 78%, 73%, and 96%, 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 1997. State Street Bank &
Trust Company, N.A., 225 Franklin Street, Boston, MA 02110, serves as
custodian of the Fund's investments. First National Bank of Maryland, 25 South
Charles Street, Baltimore, Maryland 21203 also serves as custodian of certain
of the Fund's cash assets. The 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.
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 1996 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.
<PAGE>
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the Letter
of Intent option on my Fund Account Application Form, I agree to be bound by
the terms and conditions applicable to Letters of Intent appearing in the
Prospectus and the Statement of Additional Information for the Fund and the
provisions described below as they may be amended from time to time by the
Fund. Such amendments will apply automatically to existing Letters of Intent.
I intend to invest in the shares of: (Fund or Portfolio name*)during the
thirteen (13) month period from the date of my first purchase pursuant to this
Letter (which cannot be more than ninety (90) days prior to the date of this
Letter or my Fund Account Application Form, whichever is applicable), an
aggregate amount (excluding any reinvestments of distributions) of at least
fifty thousand dollars ($50,000) which, together with my current holdings of the
Fund (at public offering price on date of this Letter or my Fund Account
Application Form, whichever is applicable), will equal or exceed the amount
checked below:
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio, as the
case may be, here indicated.
__ $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)
