Calvert U.S. Government Fund
Annual Report
September 30, 1995
Investing with Vision (TM) (logo) Calvert Group(R)
A member of the Acacia Group(R)
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Branch Office:
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Bethesda, Maryland 20814
Registered, Certified
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Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105-1807
Principal
Underwriter:
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
This report is intended to provide fund information to shareholders.
It is not authorized for distribution to prospective investors unless
preceded or accompanied by a prospectus.
Annual Report_September 30, 1995
Calvert U.S. government fund
Dear Shareholder:
This report for the Calvert U.S. Government Fund covers the fiscal
year ending September 30, 1995, a period marked by steadily falling
interest rates. The climate proved favorable for bonds as declining rates,
which fell to 20-month lows by quarter's end, pushed the prices of
fixed-income securities higher. According to Lipper Analytical Services,
Inc., the Lehman Government Bond Index advanced 13.57% for the 12 months
ending September 30, 1995, well above its 15-year average annual total
return of 10.56%.
Chart 1: Treasury Yield Curve
A line graph showing the yield curve for 9/30/94 and 9/30/95.
The bond market rally during the period was fueled by expectations of a
reversal in Federal Reserve policy. After adhering to a restrictive policy
for more than a year, the Fed cut the Federal Funds rate one quarter of a
percentage point in July of 1995. The rate cut was in response to slowing
economic growth and good news on the inflation front. With inflation and
economic growth both running under 3%, it appears the Fed has been
successful in achieving its desired soft landing.
Performance and Strategy Review
Investment Performance
Periods Ended 9/30/95 6 Months 12 Months
U.S. Government Fund 7.25% 12.30%
Lipper General U.S. Govt.
Funds Average 7.54% 12.74%
Investment performance is for Class A shares and does not reflect the
deduction of any front-end sales charges.
As the chart shows, the Fund's 12-month total return of 12.30% closely
matched the Lipper General U.S. Government Funds Average total return of
12.74%. During the past six months, we kept the Fund's average maturity
slightly longer than its index as interest rates were in a declining phase.
We recently shortened the average maturity, however, from approximately 12
to 10 years because we expect rates to remain within their current trading
range for some time.
Outlook
Our approach to the markets is based on the expectation of continued
moderate inflation in the 2% to 3% range. That appears likely given current
expectations for reasonable GDP growth as well as improving productivity
and consumer spending. In addition, the Group of Seven nations have
recently reiterated their commitment to a stable dollar. Without the threat
of higher inflation, we do not expect the Federal Reserve to lower interest
rates in the near term.
We appreciate your investment in the Calvert U.S. Government Fund.
Sincerely,
(signature)
Clifton S. Sorrell
President
Portfolio Statistics
Maturity Schedule
% of Portfolio 9/30/95 3/31/95
Less Than 1 Year 15% _
1-2.9 Years _ 7%
3-4.9 Years 29% 21%
5-6.9 Years _ 11%
7-9.9 Years 23% 29%
10-19.9 Years 10% 21%
20 Years and Above 23% 11%
Weighted Average 12 years 10 years
SEC Yields
Thirty Days Ended 9/30/95 3/31/95
Class A Shares 4.52% 5.66%
Class C Shares 2.95% 4.39%
Average Annual Total Returns for periods ended September 30, 1995
Class A Shares Class C Shares
One Year 8.13% One Year 10.21%
Five Year 6.54% Since Inception (3/94) 3.27%
Since Inception (5/86) 7.15%
Calvert U.S. Government Fund
Comparison of change in value of $10,000 investment
Chart 2: Comparison of change in value of $10,000 investment
A Line chart showing a $10,000 investment in the U.S. Government Fund
growing to $21,134 compared to the same in the Lehman Govt. Bond growing to
$19,087.
Total returns assume reinvestment of dividends and, for Class A shares,
reflect the deduction of the Fund's maximum sales charge of 3.75%. No sales
charge has been applied to the index used for comparison. The value of an
investment in Class A shares is plotted in the line graph. The value of an
investment in Class C shares would be different.
Past performance is no guarantee of future results.
Report of Independent Accountants
To the Board of Trustees of the Calvert Fund, Inc.,
and Shareholders of Calvert U.S. Government Fund:
We have audited the accompanying statement of assets and liabilities
of Calvert U.S. Government Fund (one of the portfolios comprising The
Calvert Fund), including the portfolio of investments, as of September 30,
1995, and the related statement of operations for the year then ended, and
statements of changes in net assets, and financial highlights for each of
the two years then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for each
of the respective years in the period ended September 30, 1993 were audited
by other auditors whose report dated October 29, 1993, expressed an
unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
investments owned as of September 30, 1995, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Calvert U.S. Government Fund as of September 30, 1995, and the
results of its operations for the year then ended, and changes in net
assets, and financial highlights for each of the two years in the period
ended September 30, 1995 in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
November 9, 1995
Calvert U.S. Government Fund
Portfolio of Investments
September 30, 1995
U.S. Government Obligations, Agencies Principal
and Instrumentalities (83.7%) Amount Value
Federal National Mortgage Assn.,6.85%,9/12/05 $2,000,000 $1,996,300
Federal National Mortgage Assn.,8.00%,3/15/00 1,000,000 1,008,330
Federal National Mortgage Assn.,5.59%,7/01/96 1,300,000 1,299,025
Small Business Administration, 8.05%, 6/1/12 885,761 924,903
U.S. Treasury Bonds, 7.50%, 11/15/24 1,000,000 1,112,640
U.S. Treasury Notes, 7.50%, 10/31/99 1,500,000 1,579,260
Total U.S. Government Obligations, Agencies
and Instrumentalities (Cost $7,813,711) 7,920,458
Mortgage Securities (10.4%)
Federal National Mortgage Assn., 7.00%, 8/01/25 998,554 984,824
Government National Mortgage Assn.,11.00%,10/15/15 3,102 3,474
Total Mortgage Securities (Cost $981,596) 988,298
TOTAL INVESTMENTS (94.1%)<F2>
(Cost $8,795,307)<F1> $8,908,756
[FN]
Notes to Portfolio of Investments:
<F1> Cost of investments is substantially the same for federal income tax
purposes.
<F2> The percentages shown represent the percentage of the investments to net
assets.
[/FN]
Calvert U.S. Government Fund
Statement of Assets and Liabilities
September 30, 1995
Assets
Investments in securities,at value-see accompanying portfolio $8,908,756
Cash 438,181
Receivable for shares sold 1,044
Interest receivable 136,302
Other assets 4,405
Total assets 9,488,688
Liabilities
Payable to Calvert Asset Management Co., Inc. 6,863
Payable to Calvert Shareholder Services, Inc. 1,436
Payable to Calvert Distributors, Inc. 2,048
Accrued expenses and other liabilities 6,181
Total liabilities 16,528
Net assets $9,472,160
Net Assets
Net assets consist of:
Paid-in capital applicable to 618,647 outstanding Class A
Shares of beneficial interest, no par value (unlimited
number of shares authorized) $9,353,142
Paid-in capital applicable to 30,048 outstanding Class C
Shares of beneficial interest, no par value (unlimited
number of shares authorized) 425,416
Undistributed net investment income 4,316
Accumulated realized gains (losses) (424,163)
Net unrealized appreciation (depreciation) on investments 113,449
Net assets $9,472,160
Net Asset Value and Offering Price Per Share
Class A net asset value per share ($9,036,855 divided by
618,647 Class A Shares) $14.61
Maximum sales charge (3.75% of Class A Shares
offering price) .57
Offering price per Class A Share $15.18
Class C net asset value and offering price per share
($435,305 divided by 30,048 Class C Shares) $14.49
See notes to financial statements
Calvert U.S. Government Fund
Statement of Operations
Year Ended September 30, 1995
Net Investment Income
Investment Income
Interest income $680,654
Expenses
Investment advisory fee 57,362
Transfer agency fee and expenses 19,313
Distribution Plan expenses:
Class A 21,114
Class C 3,805
Custodian fees 3,086
Registration fees 43,716
Reports to shareholders 17,173
Miscellaneous 3,624
Reimbursement from Advisor (6,653)
Total expenses 162,540
Fees paid indirectly (2,617)
Net expenses 159,923
Net Investment Income 520,731
Realized And Unrealized Gain (Loss) On
Investments
Net realized gains (losses) on:
Securities (93,564)
Options written (27,700)
Futures 4,086
(117,178)
Change in unrealized appreciation or depreciation 693,772
Net Realized and Unrealized
Gain (Loss) On Investments 576,594
Increase (Decrease) In Net Assets
Resulting From Operations $1,097,325
See notes to financial statements
Calvert U.S. Government Fund
Statement of Changes in Net Assets
Year Ended Year Ended
Sept. 30, 1995 Sept. 30, 1994
Increase (Decrease)
in Net Assets
Operations
Net investment income $520,731 $595,054
Net realized gain (loss) on investments (117,178) (306,981)
Change in unrealized appreciation
or depreciation of investments 693,772 (915,767)
Increase (Decrease)
In Net Assets Resulting
From Operations 1,097,325 (627,694)
Distributions to shareholders from
Net investment income:
Class A Shares (500,219) (594,086)
Class C Shares (16,196) (4,568)
Net realized gain on investments _ 756,017)
Total distributions (516,415) (1,354,671)
Capital share transactions
Class A Shares (1,243,907) (1,960,406)
Class C Shares 112,477 313,176
Total capital share transactions (1,131,430) (1,647,230)
Total Increase (Decrease)
In Net Assets (550,520) (3,629,595)
Net Assets
Beginning of year 10,022,680 13,652,275
End of year ( including undistributed net
investment income (loss) of $ 4,316 and
($6,048) for 1995 and 1994, respectively.) $9,472,160 $10,022,680
See notes to financial statements.
Notes to Financial Statements
Note A_Significant Accounting Policies
General: The Calvert U. S. Government Fund (the "Series"), a series of The
Calvert Fund (the "Fund"), is registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company. The Fund
accounts separately for the operations of each series. The Series offers
Class A and Class C shares of beneficial interest. Class A shares are sold
with a maximum front-end sales charge of 3.75%. Class C shares, which have
no transaction-based sales charge, have a higher annual expense rate than
Class A. Each class has different: (a) Distribution Plan expenses, (b)
class specific expenses, including transfer agency fees, registration fees,
reports to shareholders, (c) dividend rates due to (a) and (b) above, (d)
exchange privileges and (e) class specific voting rights.
Security Valuation: Securities for which market quotations are readily
available are valued at the most recent closing price of their primary
exchange, or, if closing prices are unavailable, at the bid prices or based
on a yield equivalent obtained from the securities' market maker.
Short-term securities maturing within 60 days are valued at amortized cost
which approximates market. Other securities and assets for which market
quotations are not available or deemed inappropriate are valued in good
faith under the direction of the Board of Trustees.
Repurchase Agreements: The Series may enter into repurchase agreements
with recognized financial institutions or registered broker/dealers and, in
all instances, holds underlying securities with a value exceeding the total
repurchase price, including accrued interest.
Options: The Series may write or purchase option securities. The option
premium is the basis for recognition of unrealized or realized gain or loss
on the option. The cost of securities acquired or the proceeds from
securities sold through the exercise of the option is adjusted by the
amount of the premium. The Series maintains, in a segregated account with
brokers, liquid assets sufficient to cover, on a daily basis, the current
values of written options.
Futures Contracts: The Series may enter into futures contracts agreeing to
buy or sell a financial instrument for a set price at a future date. The
Series segregates securities with a value equal to its obligation under
each contract. Initial margin deposits of either cash or securities are
made upon entering in futures contracts; thereafter, variation margin
payments are made or received daily reflecting the change in market value.
Unrealized or realized gains and losses are recognized based on the change
in market value. Risks of futures contracts arise from the possible
illiquidity of the futures markets and the movement in the value of the
investment or in interest rates.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Interest income, accretion of discount and
amortization of premium are recorded on an accrual basis.
Distributions to Shareholders: Distributions to shareholders are recorded
by the Series on ex-dividend date. Dividends from net investment income are
paid monthly. Distributions from net realized capital gains, if any, are
paid at least annually. Distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles, accordingly, periodic reclassifications are made within the
Series' capital accounts to reflect income and gains available for -
distribution under income tax regulations.
Expense Offset Arrangement: The Series has an arrangement with its
custodian bank whereby the custodian's fees are paid indirectly by credits
earned on the Series' cash on deposit with the bank. Such deposit
arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Series intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note B_Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory
services and pays the salaries and fees of officers and affiliated
Trustees of the Series. For its services, the Advisor receives a monthly
fee based on an annual rate of .60% of the Series' average daily net
assets.
The Advisor reimburses the Series for its operating expenses (excluding
brokerage fees, taxes, interest, Distribution Plan expenses and
extraordinary items) exceeding the following annual rates of average daily
net assets: 2.5% on the first $30 million, 2.0% on the next $70 million and
1.5% on the excess of $100 million.
Calvert Distributors, Inc. (the successor of Calvert Securities Corp.
effective April, 1995), both affiliates of the Advisor, is the distributor
and principal underwriter for the Series. Distribution Plans, adopted by
each class of shares, allow the Series to pay the distributor for expenses
and services associated with distribution of shares. The expenses paid may
not exceed .25% and 1.0% annually of average daily net assets of each Class
A and Class C, respectively.
The Distributor received $2,379 as its portion of the commissions charged
on sales of the Series' shares.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the
Series.
Each Trustee who is not affiliated with the Advisor receives an annual fee
of $20,250 plus $1,200 for each Board and Committee meeting attended.
Trustee's fees are allocated to each of the funds served.
Note C_Investment Activity
During the year, purchases and sales of investments, other than short-term
securities, were $12,258,869 and $13,481,995, respectively.
The cost of investments owned at September 30, 1995 was substantially the
same for federal income tax and financial reporting purposes. Net
unrealized appreciation aggregated $113,449, of which $116,612 related to
appreciated securities and $3,163 related to depreciated securities.
Net realized capital loss carryforwards, for federal income tax purposes,
of approximately $424,000 at year end may be utilized to offset future
capital gains until expiration in 2002 and 2003.
The Series' only transaction in written options was to close the 10
contracts, having a premium of $17,556, which were open at the beginning of
the year.
Note D_Capital Share Transactions
The change in net assets resulting from capital share transactions for 1995
and 1994 is indicated below:
Class C
Shares
From
Class A Class A Class C Inception
Shares Shares Shares March 1, 1994
Year Ended Year Ended Year Ended through
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994
In dollars:
Shares sold $856,683 $2,664,634 $204,255 $395,314
Reinvestment of
dividends 479,506 1,350,142 15,952 4,569
Shares redeemed (2,580,096) (5,975,182) (107,730) (86,707)
$(1,243,907) $(1,960,406) $112,477 $ 313,176
In shares:
Shares sold 60,800 200,427 14,612 27,693
Reinvestment of
dividends 34,307 94,340 1,133 320
Shares redeemed (184,137) (431,335) (7,705) (6,005)
(89,030) (136,568) 8,040 22,008
Financial Highlights
Class A Shares Class A Shares
Year Ended Year Ended Year Ended
September 30, September 30, September 30,
1995 1994 1993
Net asset value, beginning of year $13.74 $16.17 $15.72
Income from investment operations
Net investment income .78 .75 .87
Net realized and unrealized gain
(loss) on investments .86 (1.53) .45
Total from investment operations 1.64 (.78) 1.32
Distributions from
Net investment income (.77) (.75) (.87)
Net realized gains _ (.90) _
Total distributions (.77) (1.65) (.87)
Total increase (decrease) in
net asset value .87 (2.43) .45
Net asset value, end of year $14.61 $13.74 $16.17
Total return<F1> 12.30% (5.19%) 8.70%
Ratios to average net assets:
Net investment income 5.52% 4.99% 5.49%
Total expenses <F2> 1.62% _ _
Net expenses 1.60% 1.02% .95%
Expenses reimbursed
and/or waived _ _ _
Portfolio turnover 133% 99% 191%
Net assets, end of year (in thousands) $9,037 $9,721 $13,652
Number of shares outstanding
at end of year (in thousands) 619 708 844
[FN]
<F1> Total return does not reflect deduction of Class A front-end sales charge.
<F2> Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; previously, such reduction was included in
the ratio.
[/FN]
<TABLE>
<CAPTION>
Financial Highlights (continued)
Class C Shares
From
Inception
March 1,1994
Class C Shares Through
Year Ended Year Ended Year Ended Year Ended
September 30, September 30, September 30, September 30,
1992 1991 1995 1994
<S> <C> <C> <C> <C>
Net asset value, beginning of period $15.19 $14.50 $13.71 $14.77
Income from investment operations
Net investment income .95 1.00 .42 .34
Net realized and unrealized gain
(loss) on investments .53 .69 .94 (1.01)
Total from investment operations 1.48 1.69 1.36 (.67)
Distributions from
Net investment income (.95) (1.00) (.58) (.39)
Net realized gains _ _ _ _
Total distributions (.95) (1.00) (.58) (.39)
Total increase (decrease) in
net asset value .53 .69 .78 (1.06)
Net asset value, end of period $15.72 $15.19 $14.49 $13.71
Total return<F1> 10.07% 12.07% 10.21% (3.58%)
Ratios to average net assets:
Net investment income 6.15% 6.69% 3.60% 4.39%<F3>
Total expenses <F2> _ _ 3.53 _
Net expenses 1.11% 1.26% 3.50% 2.41%<F3>
Expenses reimbursed
and/or waived _ _ 1.75% 7.96%<F3>
Portfolio turnover _ _ 133% 99%
Net assets, end of period (in thousands) $13,223 $11,935 $435 $302
Number of shares outstanding
at end of period (in thousands) 841 785 30 22
<FN>
<F1> Total return is not annualized for periods of less than one year and
does not reflect deduction of Class A front-end sales charge.
<F2> Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously, such reduction was
included in the ratio.
<F3> Annualized
</FN>
</TABLE>
Investing with Vision (TM) (logo) Calvert Group(R)
A member of the Acacia Group(R)
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
