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December 20, 1999

Calvert Brings Vanguard into Socially Responsible Arena
    by Phillip Johansson

A new socially screened index will be the benchmark for the Vanguard Calvert Social Index Fund, not to mention 14 million potential new clients. -- Calvert Group, a leading provider of socially responsible investment products managing $2.2 billion ($US), announced that it is creating a new socially screened index. The Calvert Social Index will be an innovative new benchmark, and will provide the basis for the first socially screened mutual fund offered by Vanguard Group, the second largest mutual fund company in the U.S.

"This will be the broadest-based, most rigorously constructed benchmark in the marketplace for measuring the performance of large, U.S.-based socially responsible companies," says Barbara Krumsiek, President & CEO of Calvert Group. The index will screen stocks for inclusion from approximately 1,000 of the largest companies in the U.S., resulting in an anticipated portfolio of about 600 of them.

The Calvert group asserts that their index will be distinctly different from other socially screened benchmarks, such as the Domini Social Index and the Citizens Index. The Calvert Social Index will use a consistent passive screening process to select from a discrete universe of 1,000 stocks, while the Domini and Citizens indexes start by screening companies in the S&P 500, then include additional companies to reach a desired distribution of industries.

"There will be no substitution of companies," said Elizabeth Laurienzo, Director of Corporate Communications at Calvert. "We're not modeling the Calvert Social Index after any other established index. What we get after applying the screens is what we get."

The Calvert Social Index will include only companies with excellent records and policies addressing environmental issues, hiring and promoting minorities and women, providing a safe and healthy workplace, responding to product safety problems, and supporting human rights in overseas operations. These positive screening criteria will be in addition to avoidance screening of companies involved with weapons contracting, tobacco, alcohol, gambling, or nuclear power.

But what makes the Calvert Social Index really distinctive is that it will provide the basis for a new socially responsible equity fund by the Vanguard Group, the nation's second largest mutual fund company. Vanguard offers a bevy of 103 funds already, and is a leading provider of company-sponsored retirement plan services, managing more than $525 billion in assets.

Vanguard's announcement that it is planning to launch the Vanguard Calvert Social Index Fund, a no-load fund that will track the Calvert Social index, will send a clear message to other companies about the untapped market of socially responsible investors. Their 14 million clients stand to substantially broaden the horizons for social investing, a giant step toward making socially screened funds available to more investors.

"Many clients have asked us to offer a fund with a social orientation for more than a decade," said Vanguard Chairman and Chief Executive Officer John J. Brennan. "With this index, we will be able to accommodate both our clients and other investors who consider social criteria in their investment selection."

Calvert Group, having been active in socially responsible investing since 1982 and offering more than 26 mutual funds of its own, proved to be an ideal partner for Vanguard's social investing debut. "Calvert Group is a premier organization in the world of social investing," added Brennan, "and we are pleased that they will develop an index that coincides with our philosophical preference for broad diversification."

In addition to Vanguard, Calvert Group will offer its own new fund tracking the new Calvert Social Index, distributed through its traditional third party distribution system. Calvert plans to release the list of component companies in the index in February 2000, available through its Web site.

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