PROSPECTUS
July 31, 1996
CALVERT NEW WORLD FUND, INC.
CALVERT NEW AFRICA FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
INVESTMENT OBJECTIVE
The investment objective of Calvert New World Fund, Inc., Calvert New
Africa Fund (the "Fund") is to achieve capital appreciation over time.
The Fund seeks capital appreciation aggressively by focusing the Fund's
investments mostly in the emerging market of equity and equity-linked
securities and fixed-income securities of African and African-related
companies.
WHETHER THIS FUND IS FOR YOU
The Fund is designed for aggressive investors who are willing to accept
above-average risk in order to seek a higher rate of return on
investment over time. Investments in African and African-related issuers
involve risk factors and special considerations not normally associated
with investments in United States ("U.S.") issuers. These include risks
associated with the political and economic uncertainty caused by
political transitions, the comparatively small and potentially illiquid
nature of the African securities markets and corresponding price
volatility, as well as interest rate movements, exchange controls,
and the possibility of significant currency fluctuation. In addition, the
identification of and realization of attractive investment opportunities
involves a high degree of uncertainty. Thus, share prices may experience
substantial fluctuations so that your shares may be worth less than when
you originally purchased them. There can be no assurance that the objectives
of the Fund will be achieved. See "Investment Objective and Policies" and
"Risk Factors." The Fund is designed for long-term investors and does not
attempt to maintain a balanced portfolio. Accordingly, the Fund should not
be used to meet short-term financial needs.
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.
PURCHASE INFORMATION
The Fund offers one class of shares, Class A shares, with a sales charge
imposed at the time you purchase the shares ("front-end sales charge").
See "How to Buy Shares" for further details.
ADVISORS
Calvert-Sloan Advisers, L.L.C. is the Fund's Advisor, responsible for
overall management and supervision of the Fund's investment and
day-to-day management. New Africa Advisers, Inc. ("NAA") and Calvert
Asset Management Company, Inc. ("CAMCO") are the Fund's Sub-Advisors,
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 July 31, 1996) for the Fund
has been filed with the Securities and Exchange Commission and is
incorporated by reference. This free Statement is available upon request
from the Fund: 800-368-2748.
FUND EXPENSES
A. Shareholder Transaction Costs Class A
Maximum Front-End Sales Charge on 2.50%
Purchases (as a percentage of offering
price)
Maximum Front-End Sales Charge on None
Reinvested Dividends (as a percentage
of offering price)
Contingent Deferred Sales Charge None
Redemption Fees (as a percentage of 2.00%
amount redeemed)<F1>
Exchange Fees<F2> None
B. Annual Fund Operating Expenses
(As a percentage of average net assets)
Management Fees 1.75%
Rule 12b-1 Service and Distribution Fees
0.75%
Other Expenses 1.27%
Total Fund Operating Expenses 3.77%
<F1> The redemption fee will be charged only for redemptions (including
exchanges) of assets held in the Fund for 2 years or less. See "How to
Sell Your Shares." If you request a wire redemption of less than $1,000,
you will be charged a $5 wire fee.
<F2> See footnote 1.
C. Example of Expenses. 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.
Example: You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period, and (3)
assumes payment of maximum initial sales charge at
time of purchase.
1 Year 3 Years 5 Years 10 Years
Class A $82 $137 $215 $416
You would pay the following expenses on the same
investment, assuming no redemption (assumes
payment of maximum initial sales charge at time of
purchase):
1 Year 3 Years 5 Years 10 Years
Class A $62 $137 $215 $416
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 and
"Calculation of Contingent Deferred Sales Charges" to see if you qualify
for possible reductions in the sales charge. A redemption fee of 2.00%
will be charged on any redemptions (including exchanges) made with
assets that have been held in the Fund for less than two (2) years. See
"How to Sell Your Shares."
B. Annual Fund Operating Expenses. Management Fees are paid by the
Fund to Calvert-Sloan Advisers, L.L.C. ("Investment Advisor") for
managing the Fund's investments and business affairs. Management fees
include the Sub-Advisory fees paid by the Investment Advisor to New
Africa Advisers, Inc. and Calvert Asset Management Company, Inc.
("Sub-Advisors") and the Administrative Service fee paid by the Fund 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. All expense ratios
have been restated to reflect expenses anticipated for fiscal year 1997.
The Advisor may voluntarily defer fees or assume expenses of
the Fund. If the Advisor had not done so for fiscal year 1996, Other
Expenses would have been 2.51%. Total Fund Operating Expenses would have
been 4.99%.
The Fund's Rule 12b-1 fees include an asset-based sales charge.
Thus, it is possible that long-term shareholders in the Fund may pay
more in total sales charges than the economic equivalent of the maximum
front-end sales charge permitted by rules of the National Association of
Securities Dealers, Inc.
FINANCIAL HIGHLIGHTS
The following table provides information about the financial history of
the Fund's shares. It expresses the information in terms of a single
share outstanding for the Fund. The table has been audited by Coopers &
Lybrand L.L.P., independent accountants, whose report 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.
April 12, 1995
(inception) to
March 31,1996
Net asset value, beginning of period $12.00
Income from investment operations
Net investment income (.04)
Net realized and unrealized gain
on investments .04
Total from investment operations --
Total increase (decrease) in
net asset value --
Net asset value, end of period $12.00
Total return<F3> 0.00%
Ratio to average net assets:
Net investment income (loss) (.54%)(a)
Total Expense<F4> 3.75%(a)
Net Expenses 3.24%(a)
Expenses reimbursed and/or waived 1.24%(a)
Portfolio turnover 6%
Net assets, end of period (in thousands) $7,974
Number of shares outstanding at
end of period (in thousands) 664
(a) Annualized
<F3> Total return is not annualized and does not reflect deduction of the
front-end sales charge.
<F4> 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 investment objective of the Fund is to achieve capital appreciation
over time. The Fund seeks capital appreciation aggressively by focusing
its investments mostly in the emerging market of equity and
equity-linked securities and fixed-income securities of African and
African-related companies. The Fund is nondiversified, which means that
the percentage of its assets that may be invested in a single issuer is
not limited. See "Investment Restrictions" and "Nondiversified Status"
in the Statement of Additional Information. The Fund's investment
objective is not fundamental and may be changed without shareholder
approval. The Fund will give written notice to shareholders 30 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.
Under normal circumstances, the Fund will invest at least 65% of its
assets in equity securities of African and African-related companies
The Fund will invest primarily in equity and equity-linked securities of
African and African-related companies, defined as entities that are
organized under the laws of an African country; companies which derive
at least 50% of their revenues from goods produced or sold, investments
made, or services performed in Africa or which have at least 50% of
their assets situated in Africa; or entities which issue equity or debt
securities which are traded principally on a stock exchange in Africa.
The Fund may also invest directly in African and African-related
companies, as described in "Direct Investment Philosophy," below.
Exclusive of the 65%, the Fund may invest in the equities of
multinational companies which do business in African countries.
The term "equity and equity-linked securities" includes common stock,
preferred stock, rights or warrants to purchase common or preferred
stock, debt securities convertible into common or preferred stock and
structured debt obligations (debt issued by issuers in connection with
identified projects which pay interest under what the Fund considers to
be an equity participation formula structured to reflect the status of
the project). 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.
The Fund may invest up to 20% of its assets in fixed-income securities,
including junk bonds
Fixed income securities include non-convertible debt obligations
excluding such structured debt obligations as noted above. The Fund may
invest in African sovereign debt and debt of African countries when such
investments offer opportunities for long-term capital appreciation. The
Fund focuses on its analysis of political, economic, exchange control
and other macro-economic factors, such as interest rates and inflation
in the Fund's fixed-income security selection process. See "Risk
Factors" on page 8.
The Fund may use various investment techniques, including financial
futures contracts and related options. See "Investment Techniques and
Related Risks" on page 16.
Social Philosophy - Calvert's Vision and Journey
The Calvert New Africa Fund is the first open-ended mutual fund to
invest primarily in Africa. The Fund's investment objective supports
basic economic development by investing in and assisting the growth of
African companies, by providing capital and creating jobs. As a member
of the Calvert family of mutual funds, Calvert New
Africa Fund's capital investments in Africa are directed to specific
economic development goals. The Fund views positively companies that are
making progress towards black economic empowerment and positive employee
relations in Africa. As investors, the Fund will also encourage
companies in which it invests to demonstrate positive leadership in
areas like the environment and treatment of employees. The Fund's
investments, both through direct investment opportunities (see below)
and through the ownership of publicly traded securities, seek to
catalyze economic empowerment and improve the quality of life for the
people of Africa.
Direct Investment Philosophy
Initially, the primary focus of the Direct Investments will be in South
Africa, and on six industries: consumer products, telecommunications,
health care, light manufacturing, services, and tourism. Direct
Investments may take the form of (1) management buyouts of established
businesses, (2) investments in closely-held listed companies that are
undervalued relative to their market value, (3) investments in certain
advanced-stage venture capital situations that are poised for sustained
growth, and (4) certain special investment situations, such as investing
in privatizations (a government-owned or state-controlled entity that is
sold to the private sector; e.g., in 1994, the Government of Ghana sold
25% of Ashanti Goldfields, one of the world's largest and richest gold
mines, to the private sector). Direct Investment acquisitions made by
the Fund are expected to result in a moderate degree of leverage to the
acquired company, given that the Fund wants to control risk and generate
equity gains through growth and operational improvements rather than
through restructured financial statements. In each investment, the Fund
will seek to ally itself with strong management (as determined by New
Africa Advisers ("NAA") either already in place or recruited for that
particular situation. In order to assure an identity of interest with
the Fund, the management of each portfolio company will be expected to
make a meaningful investment in its respective portfolio company, to the
extent possible. By sitting on the board of directors of each portfolio
company, under the supervision of the Board of Directors and to the
extent allowed by law, and by offering general business and management
advice to the management of the portfolio company, the Fund will aim to
enhance the financial performance and value of portfolio companies over
a five to seven year holding period. NAA expects to use a number of
strategies to obtain liquidity and potentially realize capital gains for
the Fund. These include: 1) the complete or partial sale of the business
to an outside third party or joint venture partners, 2) the complete or
partial sale of the business to the public securities market, either in
the form of an initial public offering or the sale of debt, 3) the
complete or partial sale of the business to management, and 4) the
refinancing of the investment's capital structure, using the proceeds to
pay a dividend to all investors. In all cases, NAA will work with the
appropriate financial advisors, underwriters, or merchant bankers in the
respective local markets to determine the most effective way to realize
capital gains. The Fund may invest up to 15% of its net assets in Direct
Investments, which are considered illiquid securities. See also "Risk
Factors, Marketability of Fund Investments," on page 11 and "Risk
Diversification and Controls for the Fund's Direct Investments" on page
16.
Sourcing Direct Investment Opportunities
NAA and its affiliates have an extensive network of contacts in the
U.S., Europe, and Africa. The portfolio of Direct Investments will be
constructed by tapping into three areas: (1) companies entering or
re-entering the African market in need of equity partners with capital
and local business experience, (2) South African conglomerates desiring
to divest, or "unbundle," specific operations or assets in response to
the changes in the political environment in South Africa and the
economic impact of greater worldwide competition in South Africa; and (3)
currently successful or emerging private African companies needing
growth capital.
The actual universe of potential Direct Investments is quite large,
including established companies, established entrepreneurs, emerging
entrepreneurs, new ventures, and companies in need of capital to make a
business turnaround. NAA anticipates the majority of the Direct
Investments will be invested with established companies, established
entrepreneurs, and new ventures.
Some of the characteristics of the Direct Investment opportunity
universe, using South Africa as an example, are: (1) no source of
private equity capital, which has caused a tremendous pent-up demand for
capital; (2) solid company performance with the potential for
significant growth; (3) with the lifting of sanctions, many small and
medium sized companies are poised for international growth; and (4)
rising black living standards due to job creation programs, home
building and electrification projects, and free education and medical
care.
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" on page 16.
African economies
See page 12 for more economic information about specific African
countries
The economies of individual African countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross
domestic product or gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, structural unemployment, and
balance of payments position. The economies of African countries may
also be affected to a greater extent than in other countries by price
fluctuations of a single commodity or by one type of commodity, such as
gold or other minerals. Severe cyclical climatic conditions,
particularly drought, may also affect the economies of African
countries. Business entities in some African countries do not have a
significant history of operating in market-oriented economies, and the
ultimate impact of some African countries' attempts to move toward more
market-oriented economies is currently unclear. Botswana, Egypt, Ghana,
Ivory Coast, Kenya, Mauritius, Morocco, Nigeria, Namibia, South Africa,
Swaziland, Tunisia, Zambia and Zimbabwe have market-oriented economies
in various stages of development, with the South African economy being
substantially more developed than the others. Therefore, the Fund may
have more than 25% of its assets invested in any one country in Africa,
and initially anticipates that approximately 85% of Fund assets will be
invested in South Africa. Thus, the Fund's performance may be
significantly affected by the economic, social, and political
developments in South Africa.
As with investment in countries outside the U.S. generally,
nationalization, expropriation or confiscatory taxation, currency
blockage, political changes, government regulation, political or social
instability and diplomatic developments could adversely affect the
economy of any African country or the Fund's investments in that
country. In the event of expropriation, nationalization, or other
confiscation, the Fund could lose its entire investment in the country
involved.
African Securities Markets
The securities markets of African countries are comparatively small,
with the majority of market capitalization and trading volume
concentrated in a small number of companies. In many African countries,
including South Africa and Zimbabwe, a small number of institutional
investors, directly or through related companies, hold positions in
publicly-held companies in that particular country representing a
substantial portion of the total market capitalization of listed
securities. This factor, together with significant exchange control
limitations on the ability of such investors to invest outside their
home countries and the increased investment in certain African issuers
by foreign investors, will limit the securities available for purchase
by the Fund. The foregoing factors and changes therein may cause the
Fund's investment portfolio to experience greater price volatility and
lower liquidity than a portfolio invested only in securities of a U.S.
company.
Trading volume in African securities is substantially less than that in
the United States. However, during periods of price volatility and lower
liquidity in the markets, securities settlements and clearance may be
subject to delays and related administrative uncertainties, such as
share registration and delivery delays. This could result in temporary
periods when Fund assets are not invested and no return is earned.
Commissions for trading on African stock exchanges are often higher than
commissions on U.S. exchanges, although the Fund will endeavor to
achieve the most favorable net results on its portfolio transactions.
Most of the African stock exchanges have fixed commissions, scaled
according to volume, ranging from 0.2% to 3% or more, depending on taxes
or additional exchange fees. The higher the purchase, the lower the
percentage of the commission, generally. The commission scale in South
Africa ranges from 1.2% for a purchase of up to 5,000 Rand to 7,127.50
Rand plus 0.20% on the excess over 1,500,000 Rand for a purchase of over
1,500,000 Rand.
African Sovereign Debt
The types of foreign government obligations in which the Fund will
primarily invest will be debt securities issued and backed by the
respective government bodies. In terms of their government backing,
these securities will structurally resemble U.S. Government and U.S.
Government agency issues. In many instances the debt issues of African
sovereignties represent low quality securities and may be comparable to
securities rated below investment grade by Standard & Poor ("S&P") or
Moody's (i.e., rated C and D by S&P and Moody's, respectively). Because
of their speculative characteristics, they trade at substantial
discounts from face value, but offer substantial long-term capital
appreciation.
Noninvestment-grade (High Yield/High Risk - or Junk Bond) Debt Securities
The Fund may invest up to 20% of its assets in lower quality debt
securities (generally those rated BB or lower by S&P or Ba or lower by
Moody's, including those rated C and D). These securities have moderate
to poor protection of principal and interest payments and have
speculative characteristics. Securities rated D are in default of
payment of interest and/or principal. 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 is determined immediately after the Fund's
acquisition of a security. 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, NAA 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.
Likewise, when purchasing convertible debt securities and structured
debt obligations, NAA will prepare a quality and credit analysis,
including a study of any existing debt, capital structure and current
financial condition, ability to service debts and to pay dividends,
sensitivity to changes in economic conditions, and the current trend of
earnings, revenues, expenses, cash flow, and other factors, under the
supervision of the Advisor and the Board of Directors.
Currency Risks
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.
General Foreign Security 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 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.
For many foreign securities, there are U.S. dollar-denominated American
Depository Receipts ("ADRs"), which are traded in the U.S. on exchanges
or over the counter. ADRs are receipts typically issued by a U.S. bank
or trust company which evidence ownership of underlying securities of a
foreign corporation. 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. By investing in ADRs rather than directly in
foreign issuers' stock, the Fund may avoid currency and some liquidity
risks, since the information available for ADRs is subject to the more
uniform and more exacting accounting, auditing and financial reporting
standards of the domestic market or exchange on which they are traded.
In general, there is a large, liquid market in the U.S. for many ADRs.
The Fund may also invest in European Depository Receipts ("EDRs'), which
are receipts evidencing an arrangement with a European bank similar to
that for ADRs and are designed for use in the European securities
markets. EDRs are not necessarily denominated in the currency of the
underlying security.
The dividends and interest payable on certain of the Fund's foreign
securities may be subject to foreign withholding taxes, thus reducing
the net amount available for distribution to the Fund's shareholders.
You should understand that the expense ratio of the Fund can be expected
to be higher than those of investment companies investing only in
domestic securities since the costs of operations are higher.
Risks of Nondiversification
There may be risks associated with the Fund being nondiversified.
Specifically, 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 would be.
Marketability of Fund Investments
The marketability and liquidity of the Fund's investments cannot be
assured. The Fund's ability to acquire and dispose of investments in
private debt and equity securities will be dependent on factors outside
its control, including the health of the market for private debt and
equity securities and the financial condition of a security's issuer, as
well as general economic conditions. The Fund may invest up to 15% of
its net assets in illiquid securities, which may include up to 5% in
unlisted securities. Generally, the Fund will need to obtain permission
from regulatory authorities in South Africa and other African countries
to invest in unlisted securities.
Temporary defensive positions
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.
BACKGROUND AND ECONOMIC INFORMATION
The background and economic information in this section is a partial
listing of some of the African countries in which the Fund is
considering investment opportunities. The following sections are not
intended to be a complete description of the countries involved, their
respective economies, or securities markets.
South Africa
After almost ten years of sanctions, South Africa is truly an emerging
society. The first fully democratic election in South Africa's history
took place in April, 1994, and resulted in a Government of National
Unity led by the African National Congress, which inherited both the
country's economic problems and its inherent strength. As the country
emerged from a lengthy period of international isolation, the economy
began to grow again as it did during the 1960s and 1970s. The turnaround
started in 1993, when the Gross Domestic Product ("GDP") increased by
1.2%, the first increase in four years. Growth continued in 1994 at the
rate of 2.5%, and, 3.1% in 1995. The GDP is projected to rise by 4.0% in
1996, according to Standard Bank Investment Corporation, Johannesburg,
estimates. Gross Domestic Expenditure rose to an annualized rate of 7.1%
in the fourth quarter of 1994, and gross domestic fixed investment by
17.1%. Inflation dropped to levels not experienced in South Africa since
the late 1970s. The Government of South Africa forecasts an inflation
rate of 6% for 1996.
The growth in the economy has allowed the government to make a start on
its Reconstruction and Development Program ("RDP"). The RDP is a
blueprint for economic change. Its major thrust is to provide the basic
amenities of housing, water, electricity and sewerage for the
disadvantaged population. The RDP envisages the construction of one
million houses, each with water and sanitation reticulation, and the
electrification of 2.5 million houses before the year 2000. This splurge
of house building will require schools, clinics, hospitals, libraries,
and civic and shopping centers, which will cause the demand for building
materials and furnishings of all kinds to increase significantly. Thus,
the opportunities for investment in consumer products will be limitless
as well. The RDP is also advocating more investment in health care.
South Africa has significant investment opportunities available in the
telecommunications and tourism industries, and considerable expertise
and comparative advantages in several other areas as well, such as the
production of stainless steel and aluminum. In addition, the financial
sector is well-developed and efficient, with the Johannesburg Stock
Exchange providing easy access to most of the major companies in the
country. Prior to mid-March, 1995, South Africa had a two-tier currency
structure utilizing the financial rand and the commercial rand.
Effective March 13, 1995, the South African Government began the
phaseout of the financial rand. For foreign investors, this represented
a step in the present government's attempts to create a desirable
investment climate, another step away from an underdeveloped economy
towards a recognized developing economy, and a sign of growing maturity
on the part of the Government of National Unity, according to NAA. In
1995 (est.), South Africa's population was 45 million, with an annual
growth rate of 2.6%, and an adult literacy rate of approximately 50%.
The Gross National Product ("GNP") in 1994 was $125 billion.
Morocco
Morocco has adopted a structural adjustment program suggested by the
International Monetary Fund ("IMF"), and is now one of the most
prosperous of the francophone African countries. Morocco enjoys a
reputation for political stability and sound economic policies, which,
along with geographic proximity to Europe and considerable natural
resources, have served as major attractions for investors. Morocco's
chief exports are phosphates, food and beverages, and semiprocessed and
consumer goods.
After more than a decade of growth, 1993 was a "watershed" for the
country, according to the IMF. With the support of the IMF and other
organizations, the Moroccan government has tried to restrain its
spending, reduce constraints on foreign trade and private activities,
and keep inflation under control. In coordination with the IMF, the
reform program has reduced trade restrictions and tariffs, liberalized
foreign exchange controls, privatized state companies, and improved the
climate for foreign investors. The Government must still deal with high
unemployment (16% estimated in 1994) and servicing its debt. In 1994,
GDP increased by about 8.0%, in part due to abundant rainfall, which
helped to boost agricultural production by 40%. 1994 inflation was 5.4%.
The Moroccan stock exchange is one of Africa's largest, second only in
size to the Johannesburg Stock Exchange. The market capitalization of
the companies is approximately $3.5 billion. There is no limitation on
foreign investment. In 1994, Morocco's population was 26.5 million, and
its GNP was $30,330 million.
Kenya
Kenya is the leading economy in East Africa. It was badly affected by
the oil price increases of the 1970s and has struggled with an almost
continual balance of payments crisis since then. There were several
attempts by the IMF and the World Bank to impose structural adjustment
programs, adopted in late 1992.
Since the mid-1993 reform package agreement between the Kenyan
Government and the World Bank, the economy has been on an upward track.
In 1993, the Kenyan government instituted some economic reform, taking
specific measures, such as the removal of price controls; the
liberalization of agricultural marketing; control of credit and money
supplies; a gradual reduction of government expenditures; a gradual
dismantling of exchange controls; and fiscal and monetary incentives
aimed at the promotion of exports. Attempts at privatization are also
being made, with 150 companies privatized in 1994. The Government's
current economic program seeks to reduce inflation, stabilize the
exchange rate, and lower the external current account deficit.
Agricultural products account for almost 90% of Kenyan exports, as the
majority of the population is engaged in agriculture. As the hub of East
Africa, Kenya is well placed to provide manufactured goods to the whole
area. In order to achieve a growth in manufacturing of 6% per annum,
three export processing zones have been created and led to emerging
manufacturers. Tourism is also a major industry, although fighting in
nearby Rwanda has affected the industry a certain amount.
The Kenyan stock exchange is located in Nairobi, with over 50 listed
companies and 20 member brokers. The market capitalization of the
companies is approximately $1.9 billion, the fourth largest in Africa.
Foreign investors were not previously allowed to invest in the Stock
Exchange, although this restriction was partially lifted as of January,
1995. There is no restriction on foreign direct investment in unlisted
companies. The 1994 GDP growth rate was an estimated 3%, and the
currency has stabilized after a long period of depreciation. Inflation
rose to about 30% in 1994 (est.). Kenya, which has a population of
nearly 29 million people (July 1995 est.), has also experienced an
important breakthrough in controlling population growth, reducing the
total fertility rate 20% between 1989 and 1993, the most precipitous
drop in birth rate ever recorded anywhere in the world. Population
growth has declined from 4.1% in 1984 to 2.7% in 1994, and 0.99% in 1995
(est.).
Zimbabwe
Zimbabwe achieved independence in 1980 and now represents a model of
political and economic stability. After independence, the government
focused on providing education and health care for the majority black
population, although this required an increase in government spending,
resulting in a budget deficit of approximately 10%. The government
turned to IMF in the late 1980s, and put in place a structural
adjustment program to bring growth to the private productive sector and
to reduce the resources used by the public sector. Severe drought caused
the GDP to drop 8% in 1992, with 2% growth in 1993, followed by 3.5% in
1994. The structural adjustment program remains in place despite the
lingering effects of the drought on economic and other social
conditions. Unemployment is high at 45%, as is inflation at 22% (1994
est.).
Interest rates are currently high and monetary policy is tight, due to
the IMF, but this is helping to create a more viable economy and provide
a suitable climate for attracting foreign investment. Exports include
textiles, tobacco, and products from the mining and energy complex.
Zimbabwe is in the process of upgrading its telecommunication systems,
using fiber optics and digitalization.
The stock exchange is in Harare, with a market capitalization of
approximately $2 billion and over 60 listed companies. There are
limitations on foreign investment, in that only 5% of the shares of any
company may be held by a single foreign investor, and no more than a
total of 25% of a company may be held by foreign investors. The opening
of the stock exchange to foreign investors in June 1993 was followed by
a high surge in trading. In 1994, Zimbabwe's population was 11 million,
and the GNP was $5,424 million.
Tunisia
Tunisia is a growing African economy, due to the diligence with which
its structural adjustment program was implemented. With a mixed economy
based on agriculture, tourism, manufacturing, and petroleum, Tunisia has
established a track record for steady growth, averaging 4.7% since 1987.
The country's structural adjustment program, launched in 1987,
prioritizes export-led growth, as well as price and import
liberalization, financial sector reform, and privatization. Some 50
firms owned by the government have been sold, and the government has
promised to speed up the process. Part of the structural adjustment
program has been directed towards attracting foreign investment. A
unified investment code has been adopted, which offers tax advantages to
investors in export-oriented projects, regional development projects, or
in projects which promote young entrepreneurs and small and medium-sized
businesses.
Tunisia exports crude oil, minerals, clothing, and agricultural
products, including its renowned olive oil. The 1994 GNP was $15,873
million, with a 4.7% inflation rate. The Tunisian Stock Exchange,
established in 1969, is small, with a market capitalization of
approximately $2.5 billion and over 20 listed companies. In August 1995,
Tunisia simplified the foreign purchase of shares in Tunisian companies.
Foreigners can buy up to 10% of a listed company, and up to 30% of an
unlisted company, without central bank approval. In 1994, Tunisia's
population was 8.8 million.
Egypt
Egypt has a large population, a cosmopolitan outlook, and a strategic
position between the East and West. Its major export is oil, although it
also exports cotton and earns large amounts of foreign exchange through
its ownership of the Suez canal, and from tourism.
In 1994, Egypt experienced a 2.0% increase in the GDP (up from 1.3% in
1993 and 0.4% in 1992) and a decline in the rate of inflation to about
6.0% from nearly 16.0% in 1992. The economy was boosted from a $550
million IMF standby credit which runs to mid-1996 and a $300 million
World Bank loan, as well as an annual U.S. aid package that totals about
$800 million. But per capita income for the country's large population
of about 57.5 million has remained fairly steady at $630, with
unemployment at about 10%. The government's economic reforms include
reductions in subsidies and import controls and the elimination of most
foreign exchange controls, budget deficit cuts, new banking laws, the
introduction of a sales tax, and an extensive privatization program.
The stock exchange was founded in 1910, and has a market capitalization
of approximately $7 billion, with over 20 listed companies. During 1994,
trading volume rose dramatically and two state companies were
oversubscribed when their stock was offered to investors.
Ghana
Ghana began an ambitious structural and economic reform program in the
early 1980s. The political situation is stable, and the economy is being
revitalized. In the last ten years, inflation and the public sector
budget deficit have been significantly reduced. Declining world
commodity prices for Ghana's agricultural exports may continue to put
the Government under economic pressure.
Cocoa is the main cash crop of Ghana's agricultural economy. Other crops
include rice, peanuts, cassava, coffee, corn, and shea nuts. As with any
agricultural economy, Ghana is vulnerable to the weather, particularly
drought. Even with production and marketing inefficiencies, the
agricultural sectors of cocoa production, forestry, and fishing account
for 45% of the country's GDP and about 55% of employment. Other
contributors to GDP include tourism and manufacturing.
Ghana ranks among the world's top gold producers and exporters and also
exports timber, tuna, bauxite, and aluminum. In 1994, the Ghanaian
government completed its sale of about 25% of the Ashanti Goldfields
company, listed on the Ghana Stock Exchange and the London International
Stock Exchange. Because of this dominant listing, the Ghanaian Stock
Exchange is ranked sixth largest in Africa.
The stock exchange is in Accra, with a market capitalization of
approximately $2 billion and 18 listed companies. Nonresidents of Ghana
may participate in the market, although aggregate holdings of all
nonresident investors cannot exceed 74% of the total outstanding shares
of a security, or 10% on an individual level. In 1994, Ghana's
population was 16.9 million, with an annual growth rate of 3.1%. Its GNP
was $7.311 million. The rate of inflation was about 10%.
RISK DIVERSIFICATION AND CONTROLS FOR THE FUND'S DIRECT INVESTMENTS
The Fund can invest up to 15% of its net assets in Direct Investments,
which will consist primarily of investments in companies that by U.S.
standards are small to medium sized. While Direct Investments in such
companies offer the opportunity for significant capital gains, such
investments involve a degree of business and financial risks that can
result in losses, and the liquidity cannot be assured. Among these are
the risks associated with investing in companies with new management,
companies operating with substantial variations in operating results
from period to period, and companies with the need for substantial
additional capital to support expansion or to achieve or maintain a
competitive position. Such businesses may face intense competition from
rivals with greater financial resources, more extensive research and
development, manufacturing, marketing, and services capabilities, and a
larger number of qualified managerial and technical personnel.
The Fund's Direct Investment philosophy is to help ensure that you have
a reasonable level of risk related to your Fund investment. The risks
involved in investment in private debt and equity situations are managed
in several ways. For example, the Sub-Advisor consistently receives
up-to-date information about the South African market and economy;
evaluates potential opportunities using a multi-step procedure which
includes a tour of facilities and discussions with management; explores
innovative financing techniques; capitalizes portfolio companies with
30%-50% equity to mitigate financial risk; and may directly monitor a
company by sitting on its board of directors.
The Fund will not invest in a situation which does not present
reasonable exit opportunities. A number of exit strategies to obtain
liquidity and realize capital gains will be used, including: (1) the
complete or partial sale of the business to an outside third party or
joint venture partners, (2) the complete or partial sale of the business
to the public securities market, either in the form of an initial public
offering or the sale of debt, (3) the complete or partial sale of the
business to management, and (4) the refinancing of the investment's
capital structure and using the proceeds to pay a dividend to investors.
The holding period for a Direct Investment is anticipated to range from
five to seven years.
INVESTMENT TECHNIQUES and RELATED RISKS
Financial Futures, Options, and Other Investment Techniques
The Fund can use various techniques to increase or decrease its exposure
to changing security prices, interest rates, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts
and leveraged notes, entering into swap agreements, and purchasing
indexed securities. The Fund can use these practices either as
substitution for an allowable security or as protection against an
adverse move in the Fund's portfolio to adjust the risk and return
characteristics of the Fund's portfolio. The Fund may engage in
transactions in financial futures contracts and related options as
explained below. It may also write covered call options and secured put
options, purchase call and put options on securities and security
indices, and may enter into option transactions on foreign currency. The
Fund may also invest in repurchase agreements. If the Advisor 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 a fund
and may involve a small investment of cash relative to the magnitude of
the risk assumed.
The Fund reserves the right to invest in the above investment
techniques, but, with the exception of financial futures contracts and
related options, currently anticipates such investment in each technique
to be less than 5% of the Fund's net assets in the coming year.
Therefore, those investment techniques and the related risks are
described in detail in the Statement of Additional Information.
Financial Futures and Related Options
The Fund may enter into financial futures contracts and related options
as a hedge against anticipated changes in the market value of their
portfolio securities or securities which they intend to purchase or in
the exchange rate of foreign currencies. Hedging is the initiation of an
offsetting position in the futures market which is intended to minimize
the risk associated with a position's underlying securities in the cash
market. Investment techniques related to financial futures and options
are summarized below and are described more fully in the Statement of
Additional Information.
Financial futures contracts consist of interest rate futures contracts,
foreign currency futures contracts and securities index futures
contracts. An interest rate futures contract obligates the seller of the
contract to deliver, and the purchaser to take delivery of, the interest
rate securities called for in the contract at a specified future time
and at a specified price. A foreign currency futures contract obligates
the seller of the contract to deliver, and the purchaser to take
delivery of, the foreign currency called for in the contract at a
specified future time and at a specified price. (See "Foreign Currency
Transactions" in the Statement of Additional Information.) A securities
index assigns relative values to the securities included in the index,
and the index fluctuates with changes in the market values of the
securities so included. A securities index futures contract is a
bilateral agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times
the difference between the index value at the close of the last trading
day of the contract and the price at which the futures contract is
originally struck. An option on a financial futures contract gives the
purchaser the right to assume a position in the contract (a long
position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the period of the
option.
The Fund may purchase and sell financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase
exchange or board-traded put and call options on financial futures
contracts. It will engage in transactions in financial futures contracts
and related options only for hedging purposes and not for speculation.
In addition, the Fund will not purchase or sell any financial futures
contract or related option if, immediately thereafter, the sum of the
cash or U.S. Treasury bills committed with respect to its existing
futures and related options positions and the premiums paid for related
options would exceed 5% of the market value of its total assets. At the
time of purchase of a futures contract or a call option on a futures
contract, an amount of cash, U.S. Government securities or other
appropriate high-grade debt obligations equal to the market value of the
futures contract minus the Fund's initial margin deposit with respect
thereto, will be deposited in a segregated account with the Fund's
custodian bank to collateralize fully the position and thereby ensure
that it is not leveraged. The extent to which the Fund may enter into
financial futures contracts and related options may also be limited by
requirements of the Internal Revenue Code of 1986 for qualification as a
regulated investment company.
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 NAA 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.
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. 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 policies set forth as fundamental investment restrictions may
not be changed without shareholder approval. The Fund's Statement of
Additional Information describes these and additional policies and
restrictions concerning the portfolio investments of the Fund.
TOTAL RETURN
The Fund may advertise total return. Total return is based on historical
results and is not intended to indicate future performance
Total return 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 shows overall change in value, including
changes in share price and assuming all of the dividends and capital
gain distributions are reinvested. A cumulative total return reflects
the performance over a stated period of time. An average annual total
return reflects the hypothetical annual compounded return that would
have produced the same cumulative total return if the performance had
been constant over the entire period. Because average annual returns
tend to smooth out variations in the returns, you should recognize that
they are not the same as actual year-by-year results. Both types of
total return usually will include the effect of paying the front-end
sales charge. Of course, total returns will be higher if sales charges
are not taken into account. Quotations of "overall return" do not
reflect deduction of the sales charge. You should consider overall
return figures only if you qualify for a reduced sales charge, or for
purposes of comparison with comparable figures which also do not reflect
sales charge, such as mutual fund averages compiled by Lipper Analytical
Services, Inc. ("Lipper"). Further information about the Fund's
performance is contained in its Annual Report to Shareholders, which may
be obtained without charge.
MANAGEMENT OF THE FUND
The Fund's Board of Directors supervises the Fund's activities and
reviews its contracts with companies that provide it with services
The Fund is a series of Calvert New World Fund, Inc., an open-end
management investment company organized as a Maryland corporation on
December 22, 1994.
The Fund is neither required nor intends 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.
Board of Directors
Elias Belayneh
President of US-Africa Chamber of Commerce
Robert Browne
President of Twenty-First Century Foundation
Reno Martini
Director and Senior Vice President of Calvert Group, Ltd.
Senior Vice President and Chief Investment Officer of Calvert Asset
Management Company, Inc.
Dorika Mambaleo
Harvard Business School student
Madala Mthembu
Senior Advisor of Premier of the Northern Cape Province of South Africa
Donald Norland
Senior Policy Advisor of WorldSpace, Inc.
Maceo K. Sloan
Chairman, President and CEO of Sloan Financial Group and NCM Capital
Management Group, Inc.
Tim Smith
Executive Director of Interfaith Center on Corporate Responsiblity
Chairman of the Advisory Council of the Calvert Social Investment Fund
Clifton S. Sorrell, Jr.
President, Chief Executive Officer and Vice Chairman of Calvert Group,
Ltd. and its subsidiaries
Pamela Van Arsdale
Community activist
Calvert-Sloan Advisers, L.L.C. serves as Advisor to the Fund
Calvert-Sloan Advisers, L.L.C. (the "Advisor") is the Fund's investment
advisor. It is located at 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814. It is jointly owned by Calvert Group, Ltd., and Sloan
Holdings, Inc., and was organized in the State of Maryland on March 3,
1995. Although the Advisor is a new venture, the individuals involved in
its management are experienced employees of Calvert Group, Ltd. and its
subsidiary, Calvert Asset Management Company, Inc. (a Sub-Advisor to the
Fund), and New Africa Advisers, Inc. (also a Sub-Advisor to the Fund), a
subsidiary of Sloan Financial Group (see below). The Advisor provides
the Fund with investment supervision and management, administrative
services and office space; furnishes executive and other personnel to
the Fund; and pays the salaries and fees of all Directors who are
affiliated persons of the Advisor. The Advisor may also assume and pay
certain advertising and promotional expenses of the Fund and reserves
the right to compensate broker-dealers in return for their promotional
or administrative services. The Fund pays all other operating expenses
as noted in the Statement of Additional Information.
The Fund's organizational expenses were advanced to the Fund by
Calvert-Sloan Advisers, L.L.C. These expenses will be amortized over a
sixty-month period which will commence with the inception of the Fund.
In the event that the Fund liquidates before the deferred organization
expenses are fully amortized, Calvert-Sloan Advisers, L.L.C. shall bear
such unamortized deferred organization expenses.
The Public School Retirement System of the City of St. Louis, located at
#1 Mercantile Center, St. Louis, Missouri 63101, currently controls 59%
of the Fund.
New Africa Advisers, Inc., is one of the Fund's Sub-Advisors
New Africa Advisers, Inc., is one of the Sub-Advisors to the Fund. NAA's
principal business office in the U.S. is 103 West Main Street, Fourth
Floor, Durham, North Carolina 27701. It also has offices in New York
City and Johannesburg, South Africa. NAA is a registered investment
advisor and is wholly owned by Sloan Financial Group, Inc. ("SFG"). NAA
was founded in 1992 to provide investors with access to African-related
investment opportunities. Combining African emerging markets and global
portfolio management expertise, New Africa Advisers is uniquely
qualified in this era of post-apartheid African investments. Along with
investment research and statistical information, NAA provides investment
advisory assistance and the day-to-day management of the Fund's
investments and re-investments.
The Sloan Financial Group, NAA's parent company, headquartered in
Durham, North Carolina, is the nation's largest minority-owned financial
services firm. Founded in 1986 by Maceo K. Sloan, (Chairman, President,
and Chief Executive Officer), the company's roots date back to 1898 when
Sloan's ancestors founded North Carolina Mutual Life Insurance Company,
the nation's largest minority-owned insurance firm. Presently, Sloan
Financial Group contains two investment management subsidiaries, NCM
Capital Management Group, Inc., and New Africa Advisers. Within its
family of companies, SFG currently manages assets of approximately $3
billion, and the firm's client base includes many of the nation's
largest employee benefit, foundation, and endowment plans.
CAMCO is one of the Fund's Sub-Advisors
CAMCO is one of the Sub-Advisors to the Fund. CAMCO's principal business
office is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
CAMCO manages the U.S. dollar portion of the Fund's cash reserves. CAMCO
is a subsidiary of Calvert Group, Ltd., and currently serves as
investment advisor to First Variable Rate Fund for Government Income,
Calvert Tax-Free Reserves, Calvert Social Investment Fund, Calvert Cash
Reserves (d/b/a Money Management Plus), The Calvert Fund, Calvert
Municipal Fund, Inc., Calvert World Values Fund, Inc., and Acacia
Capital Corporation.
Portfolio Managers - Investment selections for the Fund are made by a
team
Investment selections for the Fund are made by a team, led by Maceo K.
Sloan, Chairman of New Africa Advisers, Inc. Mr. Sloan's 25-year career
in the investment management industry began at North Carolina Mutual
Life Insurance Company where he held positions including Investment
Analyst, Treasurer, Vice President, and Chief Investment Officer.
Presently, he serves as Chairman, President, and Chief Executive Officer
of Sloan Financial Group and NCM Capital Management Group, Inc. Mr.
Sloan is a Director of the National Association of Securities
Professionals, a Chartered Financial Analyst and a Fellow of the Life
Management Institute. He is a regular panelist on the PBS program Wall
Street Week in Review and has been a panelist and chaired several
conferences concerning investment opportunities in South Africa, such as
the RCB International Seminar and the Pensions 2000 on South Africa.
Justin F. Beckett is President and CEO of New Africa Advisers, Inc. He
has ten years' experience in the investment field. Mr. Beckett began
researching Africa's capital markets in 1990 and the experiences and
information that Mr. Beckett has amassed since then represent the
foundation of NAA's investment philosophy. Mr. Beckett was one of the
first U.S. professionals to establish a dialogue with South Africa's
post-apartheid investment community, and now resides in Johannesburg. As
a recognized expert on investments in South Africa, Mr. Beckett has been
quoted in numerous periodicals (Pensions & Investments, The Wall Street
Journal, The New York Times, The Washington Post), and has chaired and
spoken on several conference panels relative to investments in South
Africa. Mr. Beckett has also appeared on The Color of Money,
Reflections, PBS Morning News, and Prime Time Sunday.
Clifford D. Mpare, Chief Investment Officer of NAA, is a native of
Ghana, in West Africa. He has over ten years of investment experience,
hands-on knowledge of African capital markets, and experience in the
U.S. and Canadian markets. Prior to joining NAA's parent company, SFG,
Mr. Mpare, who is a Chartered Financial Analyst and a Certified
Management Accountant, was a Senior Analyst with First Union Corp's
private equity department, where he specialized in the valuation of
unlisted securities. He serves on the review board of the Association of
Investment Management and Research, and is a member of the North
Carolina Society of Financial Analysts, the Institute of Chartered
Financial Analysts, the Institute of Management Accountants, and the
Society of Management Accountants of Canada.
CAMCO manages the U.S. dollar portion of the Fund's cash reserves
The U.S. dollar portion of the Fund's cash reserves is invested by
Calvert Asset Management Company, Inc., headed by Reno Martini, Senior
Vice President and Chief Investment Officer. Mr. Martini, a Director of
Calvert Group, Ltd., and Senior Vice President and Chief Investment
Officer of Calvert Asset Management Company, Inc., oversees management
of all Calvert Group portfolios. He has extensive experience in
evaluating and purchasing municipal securities.
Calvert Group is one of the largest investment management firms in the
Washington, D.C. area
Calvert Group, Ltd., parent of the Fund's transfer agent, distributor,
and CAMCO, is a subsidiary of Acacia Mutual Life Insurance Company of
Washington, D.C. Calvert Group is one of the largest investment
management firms in the Washington, D.C. area. Calvert Group, Ltd. and
its subsidiaries are located at 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814. As of December 31, 1995, Calvert Group managed
and administered assets in excess of $4.8 billion and more than 200,000
shareholder and depositor accounts.
The Advisor receives a fee based on a percentage of the Fund's assets
and the performance of the Fund. From this, it pays the Sub-Advisors a
fee
The Investment Advisory Agreement between the Fund and the Advisor
provides that the Advisor is entitled to a base annual fee, payable
monthly, of 1.50% of the Portfolio's average daily net assets. From
this, the Advisor pays a base annual fee of 0.755% to NAA, 0.495% to
CAMCO, and a fee of 0.10% to Sloan Holdings, Inc., for consulting
services. Commencing on July 1, 1998, the Advisor will receive a
"Performance Fee," applied prospectively, based on the investment
performance of the Fund over a "Performance Period" in relation to the
investment record of the Morgan Stanley South Africa Index. The
Performance Fee will be adjusted up or downward to the extent to which
performance of the Fund exceeds or trails the Morgan Stanley South
Africa Index:
Performance versus the Performance Fee
Morgan Stanley Adjustment
South Africa Index
30% to less than 60% 0.05%
60% to less than 90% 0.07%
90% or more 0.10%
The Advisor will pay NAA a performance fee equal to the Performance Fee
the Advisor receives from the Fund.
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.
Calvert Administrative Services Company provides administrative services
for the Fund
Calvert Administrative Services Company ("CASC"), an affiliate of the
Advisor, has been retained by the Fund to provide certain administrative
services necessary to the conduct of its affairs, including the
preparation of regulatory filings and shareholder reports, the daily
determination of its net asset value per share and dividends, and the
maintenance of its portfolio and general accounting records. For
providing such services, CASC receives an annual fee, payable monthly,
from the Fund of 0.25% of the Fund's average daily net assets.
Calvert Distributors, Inc. serves as underwriter to market the Fund's
shares
Calvert Distributors, Inc. ("CDI") is the Fund's principal underwriter
and distributor. Under the terms of its underwriting agreement with the
Fund, CDI markets and distributes the Fund's shares and is responsible
for payment of commissions and service fees to broker-dealers, banks,
and financial services firms, preparation of advertising and sales
literature, and printing and mailing of prospectuses to prospective
investors.
The transfer agent keeps your account records
Calvert Shareholder Services, Inc. is the Fund's transfer, dividend
disbursing and shareholder servicing agent.
SHAREHOLDER GUIDE
Opening An Account
You can buy shares of the Fund in several ways
An account application should accompany this prospectus. A completed and
signed application is required for each new account you open, regardless
of the method you choose for making your initial investment. Additional
forms may be required from corporations, associations, and certain
fiduciaries. If you have any questions or need extra applications, call
your broker, or Calvert Group at 800-368-2748.
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.
Class A Shares - Front End Load
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.
The Fund bears some of the costs of selling its shares under a
Distribution Plan adopted with respect to its shares pursuant to Rule
12b-1 under the 1940 Act. Payments under the Class A Distribution Plan
are limited to 0.75% annually of the average daily net asset value of
Class A shares.
Class A Shares
Class A shares are offered at net asset value plus a front-end sales
charge as follows:
Concession to
As a % of As a % of Dealers as a %
Offering Net Amount of Amount
Price Invested Invested
Amount of Investment
Less than $50,000 2.50% 2.56% 2.00%
$50,000 but less than $100,000 2.00% 2.04% 1.50%
$100,000 but less than $250,000 1.50% 1.52% 1.10%
$250,000 but less than $500,000 1.25% 1.27% 0.95%
$500,000 but less than $1,000,000 1.00% 1.01% 0.85%
$1,000,000 and over 0.00% 0.00% 0.75%*
*For new investments (new purchases but not exchanges) of $1 million or
more, CDI may pay a broker-dealer, on a quarterly basis for 12 months,
an annual rate of 0.75%. Payments will be made quarterly at the rate of
0.0625% of the amount of the investment, less redemptions.
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 0.75% of the average daily net asset value of
Class A shares, to pay expenses associated with the distribution and
servicing of Class A shares. Fees 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, quarterly compensation
at an annual rate of up to 0.50%, plus service fees at an annual rate of
up to 0.25% of the average daily net asset value of Class A shares,
beginning the thirteenth month after the shares are purchased. The
distribution fees also are used 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.
Arrangements with Broker-Dealers and Others
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing
registered representatives who have sold or are expected to sell a
minimum dollar amount of shares of the Fund and/or shares of other Funds
underwritten by CDI. CDI may make expense reimbursements for special
training of a dealer's registered representatives, advertising or
equipment, or to defray the expenses of sales contests. Eligible
marketing and distribution expenses may be paid pursuant to the Fund's
Rule 12b-1 Distribution Plan.
Dealers or others may receive different levels of compensation depending
on which class of shares they sell. Payments pursuant to a Distribution
Plan are included in the operating expenses of the class.
HOW TO BUY SHARES
Method Initial investment Additional Investments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check payable
payable to the Fund and to the Fund and mail it with
mail it with your your investment slip to:
application
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas City, MO 64141-6544 Kansas City, MO 64141-6739
By Registered, Certified, or Overnight Mail:
Calvert Group Calvert Group
c/o NFDS, 6th Floor c/o NFDS, 6th Floor
1004 Baltimore 1004 Baltimore
Kansas City, MO 64105-1807 Kansas City, MO 64105-1807
Through Your Broker $2,000 minimum $250 minimum
At the Calvert Visit the Calvert Branch Office to
Branch Office make investments by check.
See the back cover page for the address.
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR BROKER OR
CALVERT GROUP AT 800-368-2745
By Bank Wire $2,000 minimum $250 minimum
By Calvert Money Not Available $50 minimum
Controller*
*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. This value is calculated at the close of the
Fund's business day, which coincides with the closing of the regular
session of the New York Stock Exchange (normally 4:00 p.m. Eastern
time). The Fund is open for business each day the New York Stock
Exchange is open. All purchases of Fund shares will be confirmed and
credited to your account in full and fractional shares (rounded to the
nearest 1/1000th of a share).
Fund securities and other assets are valued based on market quotations,
except that securities maturing within 60 days are valued at amortized
cost. If quotations are not available, securities are valued by a method
that the Board of Directors believes accurately reflects fair value.
Securities which are primarily traded on foreign securities exchanges
are generally valued at the preceding closing values of such securities
on their respective exchanges (See the Statement of Additional
Information -- "Determination of Net Asset Value") relating to the
valuation of foreign securities. Financial futures are valued at the
settlement price established each day by the board of trade or exchange
on which they are traded. All assets and liabilities initially expressed
in foreign currency values will be converted into United States dollars
as last quoted by any recognized dealer.
WHEN YOUR ACCOUNT WILL BE CREDITED
Before you buy shares, please read the following information to make
sure your investment is accepted and credited properly
Your purchase will be processed at the next offering price based on the
next net asset value calculated after your order is received and
accepted. If your purchase is made by federal funds wire, check, or
exchange, and is received by 4:00 p.m. (Eastern time), your account will
be credited on the day of receipt. If your purchase is received after
4:00 p.m. Eastern time, it will be credited the next business day. All
your purchases must be made in U.S. dollars and checks must be drawn on
U.S. banks. No cash will be accepted. The Fund reserves the right to
suspend the offering of shares for a period of time or to reject any
specific purchase order. If your check does not clear, your purchase
will be canceled and you will be charged a $10 fee plus costs incurred
by the Fund. When you purchase by check or with Calvert Money
Controller, the Fund can hold payment on redemptions until it is
reasonably satisfied that the investment is collected (normally 10
business days from purchase date). To avoid this collection period, you
can wire federal funds from your bank, which may charge you a fee. 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.
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour performance and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers use a push button phone with tone capabilities to obtain
prices, performance information, account balances, and authorize certain
transactions.
Calvert Money Controller
Calvert Money Controller eliminates the delay of mailing a check or the
expense of wiring funds. You can request this free service on your
application
This service allows you to authorize electronic transfers of money to
purchase or sell shares. You use Calvert Money Controller like an
"electronic check" to move money ($50 to $300,000) between your bank
account and your account in the Fund with one phone call. Allow two
business days after the call for the transfer to take place from your
bank to Calvert; for redemptions, allow five to seven days after the
call for the redemption proceeds to be 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
You may purchase, redeem, or exchange shares, wire funds and use Calvert
Money Controller by telephone if you have pre-authorized service
instructions. You automatically have telephone privileges unless you
elect otherwise. The Fund, the transfer agent and their affiliates are
not liable for acting in good faith on telephone instructions relating
to your account, so long as they follow reasonable procedures to
determine that the telephone instructions are genuine, and if they
do not, they may be liable for any losses due to unauthorized or
fraudulent telephone transactions. 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 "Option" sections of the application for the easiest way to
establish services
The easiest way to establish optional services on your Calvert Group
account is to select the options you desire when you complete your
account application. If you wish to add other options later, you may
have to provide us with additional information and a signature
guarantee. Please call your broker or Calvert Investor Relations at
800-368-2745 for further assistance. For our mutual protection, we may
require a signature guarantee on certain written transaction requests. A
signature guarantee verifies the authenticity of your signature, and may
be obtained from any bank, savings and loan association, credit union,
trust company, broker-dealer firm or member of a domestic stock
exchange. A signature guarantee cannot be provided by a notary public.
Householding of General Mailings
Housholding 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 25. 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.
Because the securities held by the Fund may be far less liquid than
securities that are issued in mature markets, and to allow for the
orderly redemption of shares, your shares will be redeemed at the net
asset value next calculated after your redemption request is received
and accepted, but the redemption proceeds may be mailed, wired, or sent
by electronic transfer up to five business days later. At the Fund's
sole discretion, you may receive securities in lieu of cash. See
"Purchase and Redemption of Shares" in the Statement of Additional
Information. If you redeem shares of the Fund (including exchanges)
after holding them less than two years, the Fund will deduct a
redemption fee equal to 2.0% of the net asset value of the shares
redeemed. The fee will be retained by the Fund and used to offset
transaction costs that short-term trading imposes on the Fund and its
shareholders. If shares you are redeeming were not all held for the same
length of time, those shares you held longest will be redeemed first for
purposes of determining whether this fee applies. Below are 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
by mail, electronic transfer, or wire between the fifth and seventh day.
Calvert Money Controller redemptions generally will be credited to your
bank account between the fifth and seventh 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
Please maintain a balance in your account of at least $1,000 per Fund.
If, due to redemptions, it falls below $1,000, your account may be
closed and the proceeds mailed to you at the address of record. You will
be given notice that your account will be closed after 30 days unless
you make an additional investment to increase your account balance to
the $1,000 minimum.
By Mail To:
Calvert Group
P.O. Box 419544
Kansas City, MO
64141-6544
You may redeem available funds from your account at any time by sending
a letter of instruction, including your name, account and Fund number,
the number of shares or dollar amount, and where you want the money to
be sent. Additional requirements, below, may apply to your account. The
letter of instruction must be signed by all required authorized signers.
If you want the money to be wired to a bank not previously authorized,
then a voided bank check must be enclosed with your letter. If you do
not have a voided check or if you would like funds sent to a different
address or another person, your letter must be signature guaranteed.
Type of Registration Requirements
Corporations,
Associations Letter of instruction
and corporate
resolution, signed by
person(s)
authorized to act on the
account,
accompanied by signature
guarantee(s).
Trusts Letter of instruction
signed by the Trustee(s)
(as Trustees), with a
signature guarantee.
(If the Trustee's name
is not registered on
your account, provide a
copy of the trust
document, certified
within the last 60 days.)
By Telephone
Please call 800-368-2745. You may redeem shares from your account by
telephone and have your money mailed to your address of record or wired
to an address or bank you have previously authorized. A charge of $5 is
imposed on wire transfers of less than $1,000. See "Telephone
Transactions." 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 a balance of $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 Payment Options
Dividends and distributions are automatically reinvested in additional
shares, unless on the account application you request to have them paid
to you in cash (by check or by Calvert Money Controller). You may also
request to have your dividends and distributions from the Fund invested
at net asset value ("NAV") in shares of any other Calvert Group Fund. If
you choose to have them reinvested in the same Fund, the new shares will
be purchased at the NAV (no sales charge) on the reinvest date, which is
generally 1 to 3 days prior to the payment date. You must be a
shareholder on the record date to receive dividends. You must notify the
Fund in writing prior to the record date if you want to change your
payment options. If you elect to have dividends and/or distributions
paid in cash, and the U.S. Postal Service cannot deliver the check, or
if it remains uncashed for six months, it, as well as future dividends
and distributions, will be reinvested in additional shares.
"Buying a Dividend"
At the time of purchase, the share price of the Fund may reflect
undistributed income, capital gains or unrealized appreciation of
securities. Any income or capital gains from these amounts which are
later distributed to you are fully taxable as dividends or capital gains
distributions. On the record date for a distribution, the Fund's per
share value is reduced by the amount of the distribution. If you buy
shares just before the record date ("buying a dividend") you will pay
the full price for the shares and then receive a portion of the price
back as a taxable distribution.
Federal Taxes
The Fund normally distributes all net income and capital gain to
shareholders. These distributions are taxable to you regardless of
whether they are taken in cash or reinvested. Distributions of 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 Taxpayer
Identification Number ("TIN") and a signed certified application or Form
W-9, federal law requires the Fund to withhold 31% of your dividends,
capital gain distributions, and redemptions. In addition, you may be
subject to a fine. You will also be prohibited from opening another
account by exchange. If this TIN information is not received within 60
days after your account is established, your account may be redeemed at
the current NAV on the date of redemption. The Fund reserves the right
to reject any new account or any purchase order for failure to supply a
certified TIN.
EXHIBIT A
REDUCED SALES CHARGES (CLASS A ONLY)
You may qualify for a reduced sales charge through several purchase
plans available. You must notify the Fund at the time of purchase to
take advantage of the reduced sales charge
Right of Accumulation. The sales charge is calculated by taking into
account not only the dollar amount of a new purchase of shares, but also
the higher of cost or current value of shares previously purchased in
Calvert Group Funds that impose sales charges. This automatically
applies to your account for each new purchase.
Letter of Intent. If you plan to purchase $50,000 or more of Fund shares
over the next 13 months, your sales charge may be reduced through a
"Letter of Intent." You pay the lower sales charge applicable to the
total amount you plan to invest over the 13-month period, excluding any
money market fund purchases. Part of your shares will be held in escrow,
so that if you do not invest the amount indicated, you will have to pay
the sales charge applicable to the smaller investment actually made. For
more information, see the Statement of Additional Information.
Group Purchases. If you are a member of a qualified group, you may
purchase shares of the Fund at the reduced sales charge applicable to
the group taken as a whole. The sales charge is calculated by taking
into account not only the dollar amount of the shares you purchase, but
also the higher of cost or current value of shares previously purchased
and currently held by other members of your group.
A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Fund shares at a
discount, and (iii) satisfies uniform criteria which enable CDI and
dealers offering Fund shares to realize economies of scale in
distributing such shares. A qualified group must have more than 10
members, must be available to arrange for group meetings between
representatives of CDI or dealers distributing the Fund's shares, must
agree to include sales and other materials related to the Fund in its
publications and mailings to members at reduced or no cost to CDI or
dealers, and must seek to arrange for payroll deduction or other bulk
transmission of investments to the Fund.
Pension plans may not qualify participants for group purchases; however,
such plans may qualify for reduced sales charges under a separate
provision (see below). Members of a group are not eligible for a Letter
of Intent.
Retirement Plans Under Section 457, Section 403(b)(7), or Section
401(k). There is no sales charge on shares purchased for the benefit of a
retirement plan under Section 457 of the Internal Revenue Code of 1986, as
amended ("Code"), or for a plan qualifying under Section 403(b)(7) of the Code
if, at the time of purchase, Calvert Group has been notified in writing
that the 403(b)(7) plan has at least 200 eligible employees.
Furthermore, there is no sales charge on shares purchased for the
benefit of a retirement plan qualifying under Section 401(k) of the Code if,
at the time of such purchase, the 401(k) plan administrator has notified
Calvert Group in writing that a) its 401(k) plan has at least 200
eligible employees; or b) the cost or current value of shares the plan
has in Calvert Group of Funds (except money market funds) is at least $1
million.
Neither the Fund, nor CDI, nor any affiliate thereof will reimburse a
plan or participant for any sales charges paid prior to receipt of such
written communication and confirmation by Calvert Group. Plan
administrators should send requests for the waiver of sales charges
based on the above conditions to: Calvert Group Retirement Plans, 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
Other Circumstances. There is no sales charge on shares of any fund
(portfolio or series) of the Calvert Group of Funds sold to:
(1) current and retired members of the Board of Trustees/Directors of
the Calvert Group of Funds, (and the Advisory Council of the Calvert
Social Investment Fund);
(2) directors, officers and employees of the Advisor, Distributor, and
their affiliated companies;
(3) directors, officers and registered representatives of brokers
distributing the Fund's shares; and immediate family members of persons
listed in (1), (2), or (3) above;
(4) dealers, brokers, or registered investment advisors that have
entered into an agreement with CDI providing specifically for the use of
shares of the Fund (Portfolio or Series) in particular investment
programs or products (where such program or product already has a fee
charged therein) made available to the clients of such dealer, broker,
or registered investment advisor;
(5) trust departments of banks or savings institutions for trust clients
of such bank or savings institution; and
(6) purchases placed through a broker maintaining an omnibus account
with the Fund (Portfolio or Series) and the purchases are made by (a)
investment advisors or financial planners placing trades for their own
accounts (or the accounts of their clients) and who charge a management,
consulting, or other fee for their services; or (b) clients of such
investment advisors or financial planners who place trades for their own
accounts if such accounts are linked to the master account of such
investment advisor or financial planner on the books and records of the
broker or agent; or (c) retirement and deferred compensation plans and
trusts, including, but not limited to, those defined in Section 401(a) or
Section 403(b) of the I.R.C., and "rabbi trusts."
Dividends and Capital Gain Distributions from other Calvert Group Funds.
You may prearrange to have your dividends and capital gain distributions
from another Calvert Group Fund with a sales charge automatically
invested in another 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
July 31, 1996
CALVERT NEW WORLD FUND, INC.
Calvert New Africa 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
Investment Objective and Policies
Risk Factors
Risk Diversification and Controls
Economic Information
Investment Techniques and Related Risks
Total Return
Management of the Fund
SHAREHOLDER GUIDE:
How to Buy Shares
Net Asset Value
When Your Account Will Be Credited
Other Calvert Group Services
How to Sell Your Shares
Dividends and Taxes
Exhibit A - Reduced Sales Charges
<PAGE>
Calvert New World Fund, Inc.
Calvert New Africa Fund
Statement of Additional Information
July 31, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert-Sloan Advisers, L.L.C. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT AUDITORS PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 Redwood Street 4550 Montgomery Avenue Suite 1000N
Baltimore, Maryland 21202-3316 Bethesda, Marylamd 20814
TABLE OF CONTENTS
Investment Objective and Policies 1
Investment Restrictions 6
Investment Selection Process 7
Dividends, Distributions and Taxes 7
Net Asset Value 8
Calculation of Total Return 9
Advertising 9
Purchase and Redemption of Shares 10
Reduced Sales Charges (Class A) 10
Directors and Officers 10
Investment Advisor and Sub-Advisors 12
Method of Distribution 13
Transfer and Shareholder Servicing Agent 13
Fund Transactions 13
Independent Accountants and Custodians 14
General Information 14
Financial Statements 14
Appendix 14
STATEMENT OF ADDITIONAL INFORMATION-July 31, 1996
CALVERT NEW WORLD FUND, INC.
CALVERT NEW AFRICA FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account (800) 368-2748
Shareholder (800) 368-2745
Information: (301) 951-4820
Services: (301) 951-4810
Broker (800) 368-2746
TDD for the
Hearing-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 July 31, 1996, which may be
obtained free of charge by writing the Fund at the above address or
calling the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of Calvert New World
Fund, Inc., Calvert New Africa Fund (the "Fund") is to achieve capital
appreciation over time. The Fund seeks capital appreciation aggressively
by focusing the Fund's investments mostly in the emerging market of
equity and equity-linked securities and fixed-income securities of
African and African-related companies. The following discussion
supplements the discussion in the Prospectus. Unless otherwise
specified, the investment objective, programs and restrictions of the
Fund are not fundamental policies. The operating policies of the Fund
are subject to change by its Board of Directors without shareholder
approval. Shareholders will be notified of a material change in the
investment objective, a non-fundamental or operating policy.
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.
United States Government policies have at times, in the past,
through imposition of interest equalization taxes and other
restrictions, discouraged United States investors from making certain
investments abroad. While such taxes or restrictions are not presently
in effect, they may be reinstituted from time to time as a means of
fostering a favorable United States balance of payments. In addition,
foreign countries may impose withholding and taxes on dividends and
interest. See "Risk Factors" in the Prospectus.
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
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 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.
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.
To preserve the Fund's status as a regulated investment company
under Subchapter M of the Internal Revenue Code, it is the Fund's
operating policy to limit any gains on put or call options and other
securities held less than three months to less than 30% of the Fund's
annual gross income.
Risks Related to Options Transactions. The Fund can close out
its respective positions in exchange-traded options only on an exchange
which provides a secondary market in such options. Although it intends
to acquire and write only such exchange-traded options for which an
active secondary market appears to exist, there can be no assurance that
such a market will exist for any particular option contract at any
particular time. This might prevent the Fund from closing an options
position, which could impair its ability to hedge effectively. The
inability to close out a call position may have an adverse effect on
liquidity because the Fund may be required to hold the securities
underlying the option until the option expires or is exercised.
Writing (Selling) Call and Put 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. 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.
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.
The Fund may write exchange-traded call options on its
securities. Call options may be written on portfolio securities,
securities indices, or foreign currencies. With respect to securities
and foreign currencies, the Fund may write call and put options on an
exchange or over-the-counter. Call options on portfolio securities will
be covered since the Fund will own the underlying securities. Call
options on securities indices will be written only to hedge in an
economically appropriate way portfolio securities which are not
otherwise hedged with options or financial futures contracts and will be
"covered" by identifying the specific portfolio securities being hedged.
Options on foreign currencies will be covered by securities denominated
in that currency. Options on securities indices will be covered by
securities that substantially replicate the movement of the index. The
Fund may not write options on more than 50% of its total assets. The
Fund 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 state regulations.
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.
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. When the Fund writes a secured put option, it will gain a profit
in the amount of the premium, less a commission, so long as the price of
the underlying security remains above the exercise price. However, the
Fund remains obligated to purchase the underlying security from the
buyer of the put option (usually in the event the price of the security
funds below the exercise price) at any time during the option period. If
the price of the underlying security falls below the exercise price, the
Fund may realize a loss in the amount of the difference between the
exercise price and the sale price of the security, less the premium
received. 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.
During the option period, the writer of a put option has
assumed the risk that the price of the underlying security or foreign
currency will decline below the exercise price. However, the writer of
the put option has retained the opportunity for an appreciation above
the exercise price should the market price of the underlying security or
foreign currency increase. Writing put options also involves risks
relating to the Fund's ability to close out options it has written.
Purchasing Call and Put Options, Warrants and Stock Rights
The Fund may invest up to an aggregate of 5% of its total
assets in exchange-traded or over-the-counter call and put options on
securities and securities indices and foreign currencies. Purchases of
such options may be made for the purpose of hedging against changes in
the market value of the underlying securities or foreign currencies. The
Fund may invest in call and put options whenever, in the opinion of the
Sub-Advisor, a hedging transaction is consistent with its investment
objectives. 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. 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.
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
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 will adopt 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 Advisor or
Sub-Advisor, such a position acts as a hedge against market changes
which would adversely affect the securities held by the Fund. These
futures contracts may include, but are not limited to, market index
futures contracts and futures contracts based on U.S. Government
obligations.
A futures contract is an agreement between two parties to buy
and sell a security on a future date which has the effect of
establishing the current price for the security. Although futures
contracts by their terms require actual delivery and acceptance of
securities, in most cases the contracts are closed out before the
settlement date without the making or taking of delivery of securities.
Upon buying or selling a futures contract, the Fund deposits initial
margin with its custodian, and thereafter daily payments of maintenance
margin are made to and from the executing broker. Payments of
maintenance margin reflect changes in the value of the futures contract,
with the Fund being obligated to make such payments if its futures
position becomes less valuable and entitled to receive such payments if
its positions become more valuable.
The Fund may only invest in futures contracts to hedge its
existing investment positions and not for income enhancement,
speculation or leverage purposes. Although some of the securities
underlying the futures contract may not necessarily meet the Fund's
social criteria, any such hedge position taken by the Fund will not
constitute a direct ownership interest in the underlying securities.
Futures contracts have been designed by boards of trade which
have been designated "contracts markets" by the Commodity Futures
Trading Commission ("CFTC"). As a registered investment company, the
Fund is eligible for exclusion from the CFTC's definition of "commodity
pool operator," meaning that it may invest in futures contracts under
specified conditions without registering with the CFTC. Among these
conditions are requirements that to the extent that the Fund enters into
future contracts and options on futures positions that are not for
bonafide hedging purposes (as defined by the CFTC), the aggregate
initial margin and premiums on these positions (excluding the amount by
which options are "in-the-money") may not exceed 5% of the Fund's net
assets.
Options on Futures Contracts. The Fund may purchase and write put or
call options and sell call options on futures contracts in which it
could otherwise invest and which are traded on a U.S. exchange or board
of trade. It may also enter into closing transactions with respect to
such options to terminate an existing position; that is, to sell a put
option already owned and to buy a call option to close a position where
the Fund has already sold a corresponding call option.
The Fund may only invest in options on futures contracts to
hedge its existing investment positions and not for income enhancement,
speculation or leverage purposes. Although some of the securities
underlying the futures contract underlying the option may not
necessarily meet the Fund's social criteria, any such hedge position
taken by the Fund will not constitute a direct ownership interest in the
underlying securities.
An option on a futures contract gives the purchaser the right,
in return for the premium paid, to assume a position in a futures
contract-a long position if the option is a call and a short position if
the option is a put-at a specified exercise price at any time during the
period of the option. The Fund will pay a premium for such options
purchased or sold. In connection with such options bought or sold, the
Fund will make initial margin deposits and make or receive maintenance
margin payments which reflect changes in the market value of such
options. This arrangement is similar to the margin arrangements
applicable to futures contracts described above.
Put Options on Futures Contracts. The purchase of put options on futures
contracts is analogous to the sale of futures contracts and is used to
protect the portfolio against the risk of declining prices. The Fund may
purchase put options and sell put options on futures contracts it
already owns. The Fund will only engage in the purchase of put options
and the sale of covered put options on market index futures for hedging
purposes.
Call Options on Futures Contracts. The sale of call options on futures
contracts is analogous to the sale of futures contracts and is used to
protect the portfolio against the risk of declining prices. The purchase
of call options on futures contracts is analogous to the purchase of a
futures contract. The Fund may only buy call options to close an
existing position where the Fund has already sold a corresponding call
option, or for a cash hedge. The Fund will only engage in the sale of
call options and the purchase of call options to cover for hedging
purposes.
Writing Call Options on Futures Contracts. The writing of call options
on futures contracts constitutes a partial hedge against declining
prices of the securities deliverable upon exercise of the futures
contract. If the futures contract price at expiration is below the
exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any decline that may have
occurred in the Fund's securities holdings.
Risks of Options and Futures Contracts. If the Fund has sold futures or
takes options positions to hedge its portfolio against decline in the
market and the market later advances, it may suffer a loss on the
futures contracts or options which it would not have experienced if it
had not hedged. Correlation is also imperfect between movements in the
prices of futures contracts and movements in prices of the securities
which are the subject of the hedge. Thus the price of the futures
contract or option may move more than or less than the price of the
securities being hedged. Where the Fund has sold futures or taken
options positions to hedge against decline in the market, the market may
advance and the value of the securities held in the Fund may decline. If
this were to occur, the Fund might lose money on the futures contracts
or options and also experience a decline in the value of its portfolio
securities. However, although this might occur for a brief period or to
a slight degree, the value of a diversified portfolio will tend to move
in the direction of the market generally.
The Fund can close out futures positions only on an exchange or
board of trade which provides a secondary market in such futures.
Although the Fund intends to purchase or sell only such futures for
which an active secondary market appears to exist, there can be no
assurance that such a market will exist for any particular futures
contract at any particular time. This might prevent the Fund from
closing a futures position, which could require the Fund to make daily
cash payments with respect to its position in the event of adverse price
movements.
Options on futures transactions bear several risks apart from
those inherent in options transactions generally. The Fund's ability to
close out its options positions in futures contracts will depend upon
whether an active secondary market for such options develops and is in
existence at the time the Fund seeks to close its positions. There can
be no assurance that such a market will develop or exist. Therefore, the
Fund might be required to exercise the options to realize any profit.
Foreign Currency Transactions
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.
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 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.
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 Sub-Advisor believes that the currency of a particular
foreign country may suffer a substantial decline against the United
States dollar, it may enter into a forward contract to sell an amount of
foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. The
forecasting of short-term currency market movement is extremely
difficult and whether such a short-term hedging strategy will be
successful is highly uncertain.
It is impossible to forecast with precision the market values
of portfolio securities at the expiration of a contract. Accordingly, it
may be necessary for the Fund to purchase additional currency on the
spot market (and bear the expense of such purchase) if the market value
of the security is less than the amount of foreign currency the Fund is
obligated to deliver when a decision is made to sell the security and
make delivery of the foreign currency in settlement of a forward
contract. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the
Fund is obligated to deliver.
If the Fund retains the portfolio security and engages in an
offsetting transaction, it will incur a gain or a loss (as described
below) to the extent that there has been movement in forward contract
prices. If the Fund engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the foreign
currency. Should forward prices decline during the period between the
Fund's entering into a forward contract for the sale of a foreign
currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, it would realize gains to the extent
the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the
Fund would suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to
sell. Although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, they also tend to limit any
potential gain which might result should the value of such currency
increase. The Fund may have to convert its holdings of foreign
currencies into United States dollars from time to time. Although
foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the
prices at which they are buying and selling various currencies.
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
entered into a contract to purchase a security denominated in a foreign
currency and purchased a foreign currency call to hedge against a rise
in the value of the currency but instead the currency 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.
Repurchase agreements
Repurchase agreements are arrangements under which the Fund
buys securities and the seller simultaneously agrees to repurchase the
securities at a specified time and price. The Fund may engage in
repurchase agreements to earn a higher rate of return than it could earn
simply by investing in the obligation which is the subject of the
repurchase agreement. Repurchase agreements are not, however, without
risk. In the event of the bankruptcy of a seller during the term of a
repurchase agreement, a legal question exists as to whether the Fund
would be deemed the owner of the underlying security or would be deemed
only to have a security interest in and lien upon such security. The
Fund will only engage in repurchase agreements with recognized
securities dealers and banks determined to present minimal credit risk
by the Sub-Advisor under the direction and supervision of the Fund's
Board of Directors. In addition, the Fund will only engage in repurchase
agreements reasonably designed to secure fully during the term of the
agreement the seller's obligation to repurchase the underlying security
and will monitor the market value of the underlying security during the
term of the agreement. If the value of the underlying security declines
and is not at least equal to the repurchase price due the Fund pursuant
to the agreement, the Fund will require the seller to pledge additional
securities or cash to secure the seller's obligations pursuant to the
agreement. If the seller defaults on its obligation to repurchase and
the value of the underlying security declines, the Fund may incur a loss
and may incur expenses in selling the underlying security. Repurchase
agreements are always for periods of less than one year, and are
considered illiquid if not terminable within seven days.
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, although, with respect
to 50% of the Fund's assets, the Fund does not
currently anticipate investing more than 25% in the
securities of a single issuer in the coming year).
2. Concentrate 25% or more of the value of its
total assets in any one industry; provided, however,
that there is no limitation with respect to investments
in obligations issued or guaranteed by the United
States Government or its agencies and
instrumentalities, and repurchase agreements secured
thereby.
3. Make loans of more than one-third of the
assets of the Fund, other than through the purchase of
money market instruments and repurchase agreements or
by the purchase of bonds, debentures or other debt
securities, or the lending of portfolio securities as
detailed in the Prospectus, or as permitted by law. The
purchase by the Fund of all or a portion of an issue of
publicly or privately distributed debt obligations in
accordance with its investment objective, policies and
restrictions, shall not constitute the making of a loan.
4. Issue senior securities or 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. 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.
6. 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. The Fund will not make purchases
while its borrowings exceed 5% of total assets. In
order to secure any permitted borrowings under this
section, the Fund may pledge, mortgage or hypothecate
its assets.
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:
7. 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.
8. 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.
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. 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.
11. 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 and will ensure that there is no
duplication of advisory fees.
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. 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.
17. With respect to 75% of the Fund's assets,
purchase more than 10% of the outstanding voting
securities of any issuer.
Any investment restriction which involves a maximum percentage
of securities or assets (except for fundamental investment restriction
six) 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 by the Fund are selected on the basis of their
ability help achieve the objective of the Fund. The Sub-Advisor uses its
best efforts to select investments for the Fund that satisfy the Fund's
investment criteria to the greatest practical extent. New Africa
Advisers, Inc., one of the Fund's Sub-Advisors, has developed a number
of techniques for evaluating the performance of issuers in each of these
areas, as explained in the Prospectus.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
The Fund declares and pays dividends from net investment income
on an annual basis. Distributions of realized net capital gains, if any,
are normally paid once a year; however, the Fund does not intend to make
any such distributions unless available capital loss carryovers, if any,
have been used or have expired. Dividends and distributions paid may
differ among the classes.
Generally, dividends (including short-term capital gains) and
distributions are taxable to the shareholder in the year they are paid.
However, any dividends and distributions paid in January but declared
during the prior three months are taxable in the year declared.
Investors should note that the Internal Revenue Code ("Code")
may require investors to exclude the initial sales charge, if any, paid
on the purchase of Fund shares from the tax basis of those shares if the
shares are exchanged for shares of another Calvert Group Fund within 90
days of purchase. This requirement applies only to the extent that the
payment of the original sales charge on the shares of the Fund causes a
reduction in the sales charge otherwise payable on the shares of the
Calvert Group Fund acquired in the exchange, and investors may treat
sales charges excluded from the basis of the original shares as incurred
to acquire the new shares.
The Fund is required to withhold 31% of any long-term capital
gain dividends and 31% of each redemption transaction occurring in the
Fund if: (a) the shareholder's social security number or other taxpayer
identification number ("TIN") is not provided, or an obviously incorrect
TIN is provided; (b) the shareholder does not certify under penalties of
perjury that the TIN provided is the shareholder's correct TIN and that
the shareholder is not subject to backup withholding under section
3406(a)(1)(C) of the Code because of underreporting (however, failure to
provide certification as to the application of section 3406(a)(1)(C)
will result only in backup withholding on capital gain dividends, not on
redemptions); or (c) the Fund is notified by the Internal Revenue
Service that the TIN provided by the shareholder is incorrect or that
there has been underreporting of interest or dividends by the
shareholder. Affected shareholders will receive statements at least
annually specifying the amount withheld.
The Fund is required to report to the Internal Revenue Service
the following information with respect to each redemption transaction:
(a) the shareholder's name, address, account number and taxpayer
identification number; (b) the total dollar value of the redemptions;
and (c) the Fund's identifying CUSIP number.
Certain shareholders are exempt from the backup withholding and
broker reporting requirements. Exempt shareholders include:
corporations; financial institutions; tax-exempt organizations;
individual retirement plans; the U.S., a State, the District of
Columbia, a U.S. possession, a foreign government, an international
organization, or any political subdivision, agency or instrumentality of
any of the foregoing; U.S. registered commodities or securities dealers;
real estate investment trusts; registered investment companies; bank
common trust funds; certain charitable trusts; foreign central banks of
issue. Non-resident aliens, certain foreign partnerships and foreign
corporations are generally not subject to either requirement but may
instead be subject to withholding under Sections 1441 or 1442 of the
Internal Revenue Code. Shareholders claiming exemption from backup
withholding and broker reporting should call or write the Fund for
further information.
Nondiversified Status
The Fund is a "nondiversified" investment company under the
Investment Act of 1940 (the "Act"), which means the Fund is not limited
by the Act in the proportion of its assets that may be invested in the
securities of a single issuer. A nondiversified fund may invest in a
smaller number of issuers than a diversified fund. Thus, an investment
in Calvert New Africa Fund may, under certain circumstances, present
greater risk of loss to an investor than an investment in a diversified
fund. However, Calvert New Africa 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.
NET ASSET VALUE
The public offering price of the shares of the Fund is the
respective net asset value per share plus 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 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.
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; (b) for debt or equity securities traded
over-the-counter where closing prices are not readily available, at the
mean of the bid and asked price, or yield equivalent as obtained from
one or more market makers for such securities; (c) 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 represent fair value; and (d) 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 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 as 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.
Net Asset Value and Offering Price Per Share
Net asset value per share
($7,960,143/664,474 shares) $12.00
Maximum sales charge
(2.50% of offering price) 0.30
Offering price per share $12.30
CALCULATION OF TOTAL RETURN
The Fund may advertise "total return." Total return is computed
by taking the total number of shares purchased by a hypothetical $1,000
investment after deducting any applicable front-end 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. 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 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 $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.
All total return quotations ("return with maximum load")
reflect the deduction of the maximum sales charge, except quotations of
"return without maximum load" which do not reflect deduction of the sales
charge. Return without maximum 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 load, P = the entire $1,000
hypothetical initial investment and does not reflect deduction of any
sales charge. Return without maximum load may be advertised for other
periods, such as by quarter, or cumulatively for more than one year.
Total return, like net asset value per share, fluctuates in
response to changes in market conditions. Performance for any particular
time period is historical in nature and should not be considered an
indication of future return. For the period since inception, April 12,
1995, to March 31, 1996, returns for the Fund's shares are as follows:
Period Ended March 31, 1996 Shares W/O Max Load Shares W/Max Load
0.00% -2.52%
ADVERTISING
The Fund or its affiliates may provide information such as, but
not limited to, the economy, investment climate, investment principles
and rationale, sociological conditions and political ambiance.
Discussion may include hypothetical scenarios or lists of relevant
factors designed to aid the investor in determining whether the Fund is
compatible with the investor's goals. The Fund may list portfolio
holdings or give examples or securities that may have been considered
for inclusion in the Portfolio, whether held or not.
The Fund or its affiliates may supply comparative performance
data and rankings from independent sources such as Donoghue's Money Fund
Report, Bank Rate Monitor, Money, Forbes, Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Wiesenberger Investment
Companies Service, Russell 2000/Small Stock Index, Mutual Fund Values
Morningstar Ratings, Mutual Fund Forecaster, Barron's, The Wall Street
Journal, and Schabacker Investment Management, Inc. Such averages
generally do not reflect any front- or back-end sales charges that may
be charged by Funds in that grouping. The Fund may also cite to any
source, whether in print or on-line, such as Bloomberg, in order to
acknowledge origin of information. The Fund may compare itself or its
portfolio holdings to other investments, whether or not issued or
regulated by the securities industry, including, but not limited to,
certificates of deposit and Treasury notes. The Fund, its Advisor, and
its affiliates reserve the right to update performance rankings as new
rankings become available.
Calvert Group is the nation's leading family of socially
responsible mutual funds, both in terms of socially responsible mutual
fund assets under management, and number of socially responsible mutual
fund portfolios offered (source: Social Investment Forum, December 31,
1994). Calvert Group was also the first to offer a family of socially
responsible mutual fund portfolios.
PURCHASE AND REDEMPTION OF SHARES
Investments in the Fund made by mail, bank wire or electronic
funds transfer, through the Fund's branch office, 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 lock box
facility, plus the applicable sales charge as set forth in the Fund's
Prospectus.
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.
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.
If you redeem shares of the Fund after holding them less than
two years, the Fund will deduct a redemption fee equal to 2.0% of the
net asset value of the shares redeemed. 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 1.0% of the net
asset value of the Fund, whichever is less, or as allowed by law.
Shareholder objections to redemptions in kind will be handled on a
case-by-case basis, under the guidance of the Board of Directors.
To change redemption instructions already given, shareholders
must send a notice to Calvert Group, 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814, 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
reserves the right to modify the telephone redemption privilege.
REDUCED SALES CHARGES
The Fund imposes reduced sales charges for its shares in
certain situations in which the Principal Underwriter and the dealers
selling Fund shares may expect to realize significant economies of scale
with respect to such sales. Generally, sales costs do not increase in
proportion to the dollar amount of the shares sold; the per-dollar
transaction cost for a sale to an investor of shares worth, say, $5,000
is generally much higher than the per-dollar cost for a sale of shares
worth $1,000,000. Thus, the applicable sales charge declines as a
percentage of the dollar amount of shares sold as the dollar amount
increases.
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter of
Intent, the Underwriter and selling dealers can expect to realize the
economies of scale applicable to that stated goal amount. Thus the
Portfolio imposes the sales charge applicable to the goal amount.
Similarly, the Underwriter and selling dealers also experience cost
savings when dealing with existing Fund shareholders, enabling the Fund
to afford existing shareholders the Right of Accumulation. The
Underwriter and selling dealers can also expect to realize economies of
scale when making sales to the members of certain qualified groups which
agree to facilitate distribution of Portfolio shares to their members.
For shareholders who intend to invest at least $50,000, a Letter of
Intent is included in the Appendix to this Statement of Additional
Information. See "Exhibit A - Reduced Sales Charges" in the Prospectus.
DIRECTORS AND OFFICERS
ELIAS BELAYNEH, Director. Mr. Belayneh is the President of U.S.
- - Africa Chamber of Commerce, Washington, D.C., which serves as a
collective organization focusing on the promotion of trade and
investment between Africa and the United States. Date of birth: May 18,
1955. Address: 1899 L Street, N.W., 5th Floor, Washington, D.C. 20036.
ROBERT S. BROWNE, Director. Mr. Browne is the President of the
Twenty-First Century Foundation, which makes grants in the areas of
education and community service and was formerly a research fellow at
Howard University. Mr. Browne also serves on the Advisory Council to
Calvert Social Investment Fund. In 1992 and 1993, Mr. Browne was a Ford
Foundation Research Fellow. He served as Staff Director to the
Sub-Committee on International Development, Finance, Trade, and Monetary
Policy from 1986-1991. Date of birth: August 17, 1924. Address: 907 6th
Street, S.W., Apt. 510, Washington, D.C. 20036.
DORIKA MAMBOLEO, Director. Ms. Mamboleo is currently a Harvard
Business School student. Prior to attending Harvard Business School, Ms.
Mamboleo worked in South Africa for the Cambridge, Massachusetts Monitor
Consultant Group, and attended Harvard University as an undergraduate
student. Date of birth: May 14, 1968. Address: 15 Harbor Point Blvd.,
#303, Boston, Massachusetts 02125.
<F1> RENO J. MARTINI, Director and Vice President. Mr. Martini is
a Director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset Management
Company, Inc. He is an officer of each of the investment companies in
the Calvert Group of Funds. Date of birth: January 13, 1950.
MADALA MTHEMBU, Director. Presently, Mr. Mthembu is the Senior
Advisor to the Premier of the Northern Cape Province of South Africa. He
was previously a consultant with the Uniworld Group, Inc., and a
graduate student at Georgetown Law School. He is the former Assistant
Chief U.S. Representative for the African National Congress. Mr. Mthembu
received his degree in law from National University of Lesotho. Date of
birth: April 22, 1964. Address: Office of the Premier, Private
Bag X5016, Kimberley, 8300, Republic of South Africa.
DONALD R. NORLAND, Director. Mr. Norland is a foreign affairs
specialist, a 29-year career diplomat, and Ambassador, retired. He is a
Senior Policy Advisor at WORLDSPACE, Inc. Mr. Norland was a member of
the American Foreign Service Association ("AFSA"), Governing Board from
1991 to 1993, and subsequently was the Vice President (elected). He was
the U.S. Ambassador to Chad from 1979 - 1981, and the Ambassador to
Botswana from 1976 - 1979. Date of birth: June 14, 1924. Address: 11
Dupont Circle, N.W., Washington, D.C. 20036.
<F1> MACEO K. SLOAN, Director. Mr. Sloan is Chairman, President,
and Chief Executive Officer of Sloan Financial Group and NCM Capital
Management Group, Inc., Chairman of New Africa Advisers, Inc., Sloan
Communications, Inc., and PCS Development Corporation. In addition, Mr.
Sloan is a Director of the National Association of Securities
Professionals, a Chartered Financial Analyst and a Fellow of the Life
Management Institute. Date of birth: October 18, 1949. Address: New
Africa Advisers, Inc., 103 West Main Street, Durham, North Carolina
27701.
<F1> CLIFTON S. SORRELL, JR., 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 trustee/director of each of the other investment companies in
the Calvert Group of Funds. Date of birth: June 26, 1941.
TIM SMITH, Director. Mr. Smith is the Executive Director of the
Interfaith Center on Corporate Responsibility based in New York City. He
is also the Chair of the Advisory Council of the Calvert Social
Investment Fund. Date of birth: September 15, 1943. Address: Interfaith
Center on Corporate Responsibility, 475 Riverside, Room 566, New York,
N.Y. 10115.
PAMELA D. VAN ARSDALE, Director. Ms. Van Arsdale is currently a
community activist. Prior to her retirement in 1983, she was employed by
Calvert Group. Date of birth: May 6, 1954. Address: 23 Church Road,
Bedford, New Hampshire 03110.
<F1> JUSTIN F. BECKETT, President. Mr. Beckett is President and
CEO of New Africa Advisers, Inc. He is a Director and Executive Vice
President of Sloan Financial Group, Inc. and NCM Capital Management
Group, Inc., Executive Vice President of Sloan Holdings, Inc., and a
Director of Sloan Communications, Inc. and PCS Development Corporation.
Date of birth: April 5, 1963. Address: New Africa Advisers, Inc., 103
West Main Street, Durham, North Carolina 27701.
1 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 and General Counsel
of Calvert Group, Ltd., and each of its subsidiaries, except for Calvert
Distributors, Inc., of which he is a Director, President, and Secretary.
Date of birth: August 12, 1947.
<F1> RONALD M. WOLFSHEIMER, CPA, Vice President, Treasurer, and
Controller. Mr. Wolfsheimer is an officer of each of the other
investment companies in the Calvert Group of Funds. He is Senior Vice
President and Controller of Calvert Group, Ltd. and its subsidiaries,
except for Calvert Distributors, Inc., of which he is a Director and
Treasurer. Date of birth: July 24, 1952.
<F1> CLIFFORD MPARE, Vice President. Mr. Mpare is the Chief
Investment Officer of NAA. Prior to joining NAA's parent company, Sloan
Financial Group, Mr. Mpare was a Senior Analyst with First Union Corp's
private equity department. He is a Chartered Financial Analyst and a
Certified Management Accountant. Date of birth: November 21, 1957.
Address: New Africa Advisers, Inc., 103 West Main Street, Durham, North
Carolina 27701.
<F1> SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Assistant Secretary of Calvert Group, Ltd. and each of its subsidiaries
and each of the other investment companies in the Calvert Group of
Funds. Date of birth: January 29, 1959.
1 KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is
Assistant Secretary of Calvert-Sloan Advisers, L.L.C., and Calvert
Group, Ltd. and each of its subsidiaries. Date of birth: October 21,
1956.
<F1> JAMILAH SABIR-CALLOWAY, Assistant Secretary. Ms.
Sabir-Calloway is the Corporate Secretary of NAA. Prior to that, Ms.
Sabir-Calloway was the Assistant to the Corporate Secretary of the Sloan
Financial Group. Date of birth: April 19, 1949. Address: New Africa
Advisers, Inc., 103 West Main Street, Durham, North Carolina 27701.
<F1> "Interested persons" of the Fund under the Investment Company Act of
1940.
The address of directors and officers, unless otherwise noted,
is 4550 Montgomery Avenue, Bethesda, Maryland 20814. Directors and
officers as a group own less than one percent of the total outstanding
shares of the Fund.
Directors of the Fund not affiliated with the Advisor currently
receive an annual fee of $1,000 for service as a member of the Board of
Directors plus a fee of $500 to $1000 for each Board and Committee
meeting attended. For the period from inception (April 12, 1995) to
March 31, 1996, Directors of the Fund not affiliated with the Fund's
advisor received fees and expenses of $36,086.
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/Directors Deferred Compensation Plan. Deferral of the fees is
designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees.
Director Compensation Table
Fiscal Year 1996 Aggregate Compensation from Pension or Retirement
(unaudited numbers) Registrant for service as Benefits Accrued as part
Director of Registrant Expenses
Name of Director
Elias Belayneh $5,000 $0
Robert Browne $5,000 $0
Dorika Mamboleo $5,000 $0
Madala Mthembu $4,000 $0
Donald Norland $5,000 $0
Tim Smith $5,000 $0
Pamela Van Arsdale $5,000 $0
Director Compensation Table
Fiscal Year 1996 Total Compensation from
(unaudited numbers) Registrant and Fund
Complex
paid to Directors<F2>
Name of Director
Elias Belayneh $5,000
Robert Browne $5,000
Dorika Mamboleo $5,000
Madala Mthembu $4,000
Donald Norland $5,000
Tim Smith $5,000
Pamela Van Arsdale $5,000
<F2> As of March 31, 1996. The Fund Complex consists of nine (9) registered
investment companies.
INVESTMENT ADVISOR AND SUB-ADVISORS
The Fund's Investment Advisor is Calvert-Sloan Advisers,
L.L.C., 4550 Montgomery Avenue, 1000N, Bethesda, Maryland 20814, a
jointly-owned subsidiary of Calvert Group, Ltd. and Sloan Holdings, Inc.
Calvert Group Ltd. 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 April 11, 1995, 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
directors of the Fund who are not parties to the Contract or interested
persons of parties to the Contract or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on
such approval. The Contract may be terminated without penalty by either
party upon 60 days' prior written notice; it automatically terminates in
the event of its assignment.
The 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 Advisor within the
meaning of the Investment Company Act of 1940; insurance premiums; trade
association dues; legal and audit fees; interest, taxes and other
business fees; expenses of printing and mailing reports, notices,
prospectuses, and proxy material to shareholders; annual shareholders'
meeting expenses; and brokerage commissions and other costs associated
with the purchase and sale of portfolio securities. The Advisor has
agreed to reimburse the Fund for all expenses (excluding brokerage,
taxes, interest, and all or a portion of distribution and certain other
expenses, to the extent allowed or required by state or federal law or
regulation, such as California Rule 260.140.84) exceeding the most
restrictive expense limitation in those states where the Fund's shares
are qualified for sale (currently 2.5% of the Fund's first $30 million
of average net assets, 2% of the next $70 million, and 1.5% of the
excess over $100 million).
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 a base annual fee of 1.50% of the Fund's average daily
net assets. For the fiscal 1996 period (since inception, April 12, 1995,
through March 31, 1996), the Fund paid advisory fees of $68,590. The
Advisor may voluntarily defer its fees or assume expenses of the Fund,
and did so during fiscal 1996. The Advisor may recapture from (charge
to) the Fund for such expenses incurred from April 1, 1996 through March
31, 1998, provided that such recapture would not cause the Fund's
aggregate expenses to exceed the most restrictive state limitation. The
Advisor may recapture from (charge to) the Fund for any such expenses
incurred during the fiscal 1996 period, provided that such recapture
would not cause the Fund's aggregate expenses to exceed the most
restrictive state limitation, and that such recapture shall be made to
the Advisor only from the two-year period from April 1, 1996 through
March 31, 1998. 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 Fund's Sub-Advisors are New Africa Advisers, Inc. ("NAA"),
and Calvert Asset Management Company, Inc. Pursuant to Investment
Advisory Agreements with the Advisor, the Sub-Advisors determine
investment selections for the Fund. For its services, NAA receives a
base annual fee from the Advisor of 0.755% of the Fund's average daily
net assets under management. CAMCO receives a base annual fee of 0.495%.
In addition, a consulting fee of 0.10% is paid to Sloan Holdings, Inc.
See the Prospectus for an explanation of the Performance Fee.
Calvert Administrative Services Company ("CASC", an affiliate of
the Advisor, has been retained by the Fund to provide certain
administrative services necessary to the conduct of its affairs,
including the preparation of regulatory filings and shareholder reports,
the daily determination of its net asset value per share and dividends,
and the maintenance of its portfolio and general accounting records. For
providing such services, CASC receives an annual fee from the Fund of
0.25% of the Fund's average daily net assets. For the fiscal 1996 period
(since inception, April 12, 1995, through March 31, 1996), the Fund paid
administrative services fees for of $11,432. CASC waived a portion of
its fee during that period.
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). CDI also receives the portion of the
sales charge in excess of the dealer reallowance. For the period since
inception, April 12, 1995, through March 31, 1996, CDI received net
sales charges of $17,193.
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, 0.75% of the Fund's average daily net assets. For the fiscal 1996
period since inception, April 12, 1995, through March 31, 1996, the Fund
paid Distribution Plan expenses of $33,955. Of the distribution expenses
paid in fiscal 1996, $26,963 was used for the printing and mailing of
prospectuses and sales materials to investors (other than current
shareholders), and the remainder was used for advertising.
The Fund's Distribution Plan was 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 Plan or in any agreements related to the Plan. 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 Plan, the Directors considered various factors
including the amount of the distribution expenses. The Directors
determined that there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders.
The Plan 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 Plan that would materially
increase the distribution cost to the Fund requires approval of the
shareholders of the affected class; otherwise, the Plan may be amended
by the Directors, including a majority of the non-interested Directors
as described above. The Plan 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 Plan or interested persons of any such party and who have no direct
or indirect financial interest in the Plan, and (ii) the vote of a
majority of the entire Board of Directors.
Apart from the Plan, the Advisor and CDI, at their own expense, may
incur costs and pay expenses associated with the distribution of shares
of the Fund.
TRANSFER AND SHAREHOLDER SERVICING AGENT
Calvert Shareholder Services, Inc., a subsidiary of Calvert
Group, Ltd., and Acacia Mutual, has been retained by the Fund to act as
transfer agent, dividend disbursing agent and shareholder servicing
agent. These responsibilities include: responding to shareholder
inquiries and instructions concerning their accounts; crediting and
debiting shareholder accounts for purchases and redemptions of Fund
shares and confirming such transactions; daily updating of shareholder
accounts to reflect declaration and payment of dividends; and preparing
and distributing semi-annual statements to shareholders regarding their
accounts. The Fund will pay Calvert Shareholder Services, Inc. an annual
fee of 0.25% of the Fund's average daily net assets. For the period
since inception, April 12, 1995, through March 31, 1996, the Fund paid
Calvert Shareholder Services, Inc. fees of $12,594.
FUND TRANSACTIONS
Fund transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and the
choice of brokers and dealers are made by the Fund's Advisor and 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 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 Advisor's normal research activities or expenses.
For the period since inception, April 12, 1995, through March
31, 1996, no brokerage commissions were paid by the Fund to
broker-dealers that provided the Fund's Advisor or Sub-Advisor with
research or other services. No commissions were paid to any officers or
directors of the Fund or any of its affiliates.
The Advisor and 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 not to exceed 100%. For the period since
inception, April 12, 1995, through March 31, 1996, the portfolio
turnover rate of the Fund was 6%.
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
Coopers & Lybrand, L.L.P. has been selected by the Board of
Directors to serve as independent accountants 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's
Fund.
GENERAL INFORMATION
The Fund was organized as a Maryland Corporation, Calvert New
World Fund, Inc., on December 22, 1994.
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 one class of shares, Class A. Upon any liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets belonging
to that series available for distribution.
The Fund will send its shareholders confirmations of purchase
and redemption transactions, as well as periodic transaction statements
and unaudited semi-annual and audited annual financial statements of the
Fund's investment securities, assets and liabilities, income and
expenses, and changes in net assets.
The Prospectus and this Statement of Additional Information do
not contain all the information in the Fund's registration statement.
The registration statement is on file with the Securities and Exchange
Commission and is available to the public.
FINANCIAL STATEMENTS
The Fund's audited financial statements included in its Annual
Report to Shareholders dated March 31, 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 Fund.
APPENDIX
CORPORATE BOND AND COMMERCIAL PAPER RATINGS
Corporate Bonds:
Description of Moody's Investors Service Inc.'s/Standard & Poor's bond
ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat larger than
in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which make the bond somewhat more susceptible to the adverse
effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
higher rated categories.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. The higher the degree of speculation, the
lower the rating. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposure to adverse conditions.
C/C: This rating is only for income bonds on which no interest
is being paid.
D: Debt in default; payment of interest and/or principal is in
arrears.
Commercial Paper:
MOODY'S INVESTORS SERVICE, INC.:
The Prime rating is the highest commercial paper rating
assigned by Moody's. Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of
the issuer; (2) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be
inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5)
amount and quality of long-term debt; (6) trend of earnings over a
period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by
management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
Issuers within this Prime category may be given ratings 1, 2, or 3,
depending on the relative strengths of these factors.
STANDARD & POOR'S CORPORATION:
Commercial paper rated A by Standard & Poor's has the following
characteristics: (i) liquidity ratios are adequate to meet cash
requirements; (ii) long-term senior debt rating should be A or better,
although in some cases BBB credits may be allowed if other factors
outweigh the BBB; (iii) the issuer should have access to at least two
additional channels of borrowing; (iv) basic earnings and cash flow
should have an upward trend with allowances made for unusual
circumstances; and (v) typically the issuer's industry should be well
established and the issuer should have a strong position within its
industry and the reliability and quality of management should be
unquestioned. Issuers rated A are further referred to by use of numbers
1, 2 and 3 to denote the relative strength within this highest
classification.
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the
Letter of Intent option on my Fund Account Application Form, I agree to
be bound by the terms and conditions applicable to Letters of Intent
appearing in the Prospectus and the Statement of Additional Information
for the Fund and the provisions described below as they may be amended
from time to time by the Fund. Such amendments will apply automatically
to existing Letters of Intent.
I intend to invest in the shares of: (Fund or Portfolio name*)during
the thirteen (13) month period from the date of my first purchase pursuant to
this Letter (which cannot be more than ninety (90) days prior to the date of
this Letter or my Fund Account Application Form, whichever is applicable), an
aggregate amount (excluding any reinvestments of distributions) of at least
fifty thousand dollars ($50,000) which, together with my current holdings of
the Fund (at public offering price on date of this Letter or my Fund
Account Application Form, whichever is applicable), will equal or exceed
the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
Subject to the conditions specified below, including the terms
of escrow, to which I hereby agree, each purchase occurring after the
date of this Letter will be made at the public offering price applicable
to a single transaction of the dollar amount specified above, as
described in the Fund's prospectus. No portion of the sales charge
imposed on purchases made prior to the date of this Letter will be
refunded.
I am making no commitment to purchase shares, but if my
purchases within thirteen months from the date of my first purchase do
not aggregate the minimum amount specified above, I will pay the
increased amount of sales charges prescribed in the terms of escrow
described below. I understand that 4.75% of the minimum dollar amount
specified above will be held in escrow in the form of shares (computed
to the nearest full share). These shares will be held subject to the
terms of escrow described below.
From the initial purchase (or subsequent purchases if
necessary), 4.75% of the dollar amount specified in this Letter shall be
held in escrow in shares of the Fund by the Fund's transfer agent. For
example, if the minimum amount specified under the Letter is $50,000,
the escrow shall be shares valued in the amount of $2,375 (computed at
the public offering price adjusted for a $50,000 purchase). All
dividends and any capital gains distribution on the 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)
