SEC Registration Nos.
811-3416 and 2-76510
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
The Calvert Fund
(Exact Name of Registrant as Specified in Charter)
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Address of Principal Executive Offices)
Registrant's Telephone Number: (301) 951-4800
William M. Tartikoff, Esq.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Name and Address of Agent for Service)
This filing will become effective on ______ __, 1996 pursuant to Rule 488.
The Registrant has registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Section 24(f) under the
Investment Company Act of 1940; accordingly, no fee is payable herewith
because of reliance on Rule 24f-2. A Rule 24f-2 Notice for the Income
Fund and U.S. Government Fund Series of Registrant's fiscal year ended
September 30, 1995 was filed with the Commission on November 29, 1995.
Pursuant to Rule 429, this Registration Statement relates to shares
previously registered on Form N-1A.
<PAGE>
The Calvert Fund
Cross Reference Sheet
Item number Part A
1. Cover Page
2. Table of Contents
3. Synopsis
4. Synopsis; Reasons for the
Reorganization; Proposed Transaction;
Tax Consequences; Information about
the Reorganization; Comparative
Information on Shareholder Rights;
Information about the Funds
5. Synopsis; Comparison of Investment
Policies; Information about the
Funds; Investment Objectives and
Policies; Advisory Fees, Distribution
Fees and Expense Ratios; Purchases;
Exchange Privileges; Distribution
Procedures; Redemption Procedures
6. Synopsis; Comparison of Investment
Policies; Information about the
Funds; Investment Objectives and
Policies; Advisory Fees, Distribution
Fees and Expense Ratios; Purchases;
Exchange Privileges; Distribution
Procedures; Redemption Procedures
7. Voting Information; Adjournment
8. Not Applicable
9. Not Applicable
Part B
10. Cover Page
11. Table of Contents
12. Statement of Additional Information
of Registrant
13. Not Applicable
14. Financial Statements included in
Statement of Additional Information
of Registrant; Pro Forma Financial
Information
<PAGE>
The Calvert Fund
U.S. Government Fund
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on __________ ___, 1996
NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders
of The Calvert Fund, U.S. Government Fund portfolio will be held in the
Tenth Floor Conference Room of Calvert Group, Ltd., Air Rights North
Tower, 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland at 10:00
a.m. on ________, __________ ___, 1996 for the following purposes:
I. To consider and act on an Agreement and Plan of
Reorganization, dated December 19, 1995, 1996, providing for the
transfer of substantially all of the assets of The Calvert Fund, U.S.
Government Fund portfolio and the assumption of certain identified
liabilities of the U.S. Government Fund portfolio in exchange for
Calvert Income Fund portfolio shares of The Calvert Fund.
II. To transact any other business that may properly come
before the meeting or any adjournment or adjournments thereof.
Shareholders of record at the close of business on _______ ___,
1996 are entitled to notice of and to vote at this meeting or any
adjournment thereof.
By Order of the Trustees,
William M. Tartikoff, Esq.
Secretary
________ ___, 1996
Please execute the enclosed proxy and return it promptly in the enclosed
envelope, thus enabling your Fund to avoid unnecessary expense and
delay. No postage is required if mailed in the United States. The proxy
is revocable and will not affect your right to vote in person if you
attend the meeting.
<PAGE>
INSTRUCTIONS FOR EXECUTING VOTING PROXY CARD
Voting instruction forms must be executed properly. When forms
are not signed as required by law, you and the Calvert U.S. Government
Fund must undertake the time and expense to take steps to validate your
vote. The following general guide may help you choose the proper format
for signing your form.
1. Individual Accounts: Your name should be signed exactly as it
appears in the registration on the voting instruction form.
2. Joint Accounts: Either party may sign, but the name of the
party signing should conform exactly to a name shown in the
registration.
3. All other accounts should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the voting
instruction form. For example:
REGISTRATION VALID
SIGNATURE
A.
1) Save the Earth Corp. Jane Q. Nature, Treasurer
2) Save the Earth Corp. Jane Q. Nature, Treasurer
c/o Jane Q. Nature, Treasurer
B.
1) Save the Earth Corp. Jon B. Goodhealth, Trustee
Profit Sharing Plan
2) Save the Earth Trust Jon B. Goodhealth, Trustee
3) Jon B. Goodhealth, Trustee Jon B. Goodhealth, Trustee
u/t/d 5/1/78
C.
1) David Smith, Cust. David Smith f/b/o Jason Smith UGMA
<PAGE>
TABLE OF CONTENTS
Synopsis __
Reasons for the Reorganization __
Comparison of Investment Policies __
Information about the Reorganization __
Comparative Information on Shareholder Rights __
Information about the Funds __
Voting Information __
Adjournment __
Exhibit A - Agreement and Plan of Reorganization
<PAGE>
PROSPECTUS AND PROXY STATEMENT - _______, 1996
Acquisition of the assets of Calvert U.S. Government Fund
By and in exchange for shares of Calvert Income Fund
4550 Montgomery Avenue, Bethesda, Maryland 20814 - (800) 368-2745
This Prospectus and Proxy Statement relates to the proposed
transfer of all the assets and the assumption of certain identified
liabilities of the Calvert U.S. Government Fund ("Government Fund") to
the Calvert Income Fund ("Income Fund") (collectively, "the Funds") in
exchange for like shares of Income Fund. Following the transfer, Income
Fund shares will be distributed to shareholders of Government Fund in
liquidation of Government Fund, and Government Fund will be dissolved.
As a result of the proposed transaction, each shareholder of Government
Fund will receive that number of like Income Fund shares equal in value
at the date of the exchange to the value of such shareholder's shares of
Government Fund. The transaction will occur if shareholders vote in
favor of the proposed transfer.
Income Fund is a series of The Calvert Fund ("Calvert"), which
is an open-end management investment company. The net assets of Income
Fund were $43,402,592 as of September 30, 1995. Its investment objective
is to maximize long-term income, to the extent consistent with prudent
investment management and preservation of capital, primarily through
investment in investment grade bonds and other income producing
securities. Income Fund is non-diversified. Debt securities may be
long-term, intermediate-term, short-term, or any combination thereof,
depending on the Advisor's evaluation of current and anticipated trends.
Government Fund is also a series of Calvert, with assets of
$9,472,160 as of September 30, 1995. Its investment objective is to seek
to provide high current income consistent with safety of principal by
investing in a professionally managed portfolio consisting primarily of
U.S. Government-backed obligations. There is no limitation on the
maturity of obligations in which Government Fund may invest.
Income Fund and Government Fund both have a 3.75% maximum sales
charge for Class A Shares. The sales charge is added to the purchase
price of shares, but will not be applied to shares issued in the
reorganization (see "Purchase Procedures"). Class C Shares have a level
load charged as higher expenses rather than a front-end sales charge.
Both funds have distribution plans that permit them to pay certain
expenses associated with the distribution of their shares. Calvert Asset
Management Company, Inc. ("Advisor") is the investment advisor for both
Income Fund and Government Fund.
This Prospectus and Proxy Statement, which should be retained
for future reference, sets forth concisely the information about Income
Fund that a prospective investor should know before investing. This
Prospectus and Proxy Statement is accompanied by the Prospectus of
Income Fund dated January 31, 1995 as revised September 30, 1995 and is
incorporated herein by reference. A Statement of Additional Information
dated January 31, 1995 and revised September 30, 1995 containing
additional information has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus and
Proxy Statement. A copy of the Statement may be obtained without charge
by writing Income Fund at 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814, or by calling (800) 368-2748.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
<PAGE>
SUMMARY
Reasons for the Reorganization. The Board of Trustees of The
Calvert Fund (the "Trustees") have been considering the problems
inherent in the small size of the Government Fund, and have concluded
that by combining the Government Fund into the larger Income Fund, the
assets could be more efficiently managed in an effort to reduce expenses
and enhance returns. The Income Fund has more than four times the net
assets of Government Fund. At fiscal year-end, on September 30, 1995,
Income Fund had net assets of $43,402,592, compared to $9,472,160 for
Government Fund.
In evaluating the benefits of the proposed transaction, the
Board of Trustees considered the effect of the loss of a portion of the
capital loss carryforwards that might be available to Government Fund.
It has been determined that the benefits of the proposed reorganization
outweigh the uncertain potential detriment resulting from possible
constraints in the use of capital loss carryforwards. See "Information
about the Reorganization."
Proposed Transaction. The Trustees have authorized Calvert, on
behalf of the funds, to enter into an Agreement and Plan of
Reorganization (the "Agreement" or "Plan") providing for the transfer of
all the assets and liabilities of Government Fund to Income Fund in
exchange for like shares of Income Fund. Following the transfer, Income
Fund shares will be distributed to shareholders of Government Fund in
liquidation of Government Fund, and Government Fund will be dissolved.
As a result of the proposed transaction, each shareholder of Government
Fund will receive that number of full and fractional Income Fund shares
equal in class and value at the date of the exchange to the class and
value of such shareholder's shares of Government Fund. For the reasons
stated above, the Trustees, including the independent Trustees, have
concluded that the reorganization would be in the best interests of the
shareholders of Government Fund and recommend shareholder approval.
Tax Consequences. The Plan is conditioned upon receipt by
Government Fund of an opinion of counsel that no gain or loss will be
recognized by Government Fund or Government Fund shareholders as a
result of the reorganization. The tax basis of Income Fund shares
received by a shareholder will be the same as the tax basis of the
shareholder's Government Fund shares. In addition, the tax basis of
Government Fund assets in the hands of Income Fund as a result of the
reorganization will be the same as the tax basis of such assets in the
hands of Government Fund prior to the reorganization. See "Information
about the Reorganization."
Investment Policies. Shareholders should consider the
differences in investment policies between Government Fund and Income
Fund. While both Funds seek income, the Government Fund pursues high
current income, and the Income Fund seeks to maximize long-term income.
Thus, the focus of each investment portfolio is different. Government
Fund invests primarily in U.S. Government obligations. Income Fund
purchases corporate bonds and other income-producing securities,
including U.S. Government obligations. See "Comparison of Investment
Policies."
Advisory Fees, Distribution Fees and Expense Ratios. Income
Fund pays the Advisor a fee computed on average daily net assets at an
annual rate of 0.70%. Government Fund pays the Advisor a fee computed on
average daily net assets at an annual rate of 0.60%. Total Fund Operation
Expenses, however, are less for Income Fund and are not expected to increase
significantly (see "ProForma" on the next page).
<PAGE>
FUND EXPENSES: CURRENT AND PRO FORMA
CURRENT:
A. Shareholder Transaction Costs Income Income
Class A Class C
Maximum Sales Charge on Purchases 3.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses - Fiscal Year 1995
(as a percentage of net assets, after expense reimbursements or waivers)
Management Fees 0.70% 0.70%
Rule 12b-1 Service
and Distribution Fees 0.15% .90%
All Other Expenses 0.38% 1.74%
Total Fund Operating Expenses 1.23% 3.34%
A. Shareholder Transaction Costs U.S. Government U.S. Government
Class A Class C
Maximum Sales Charge on Purchases 3.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses - Fiscal Year 1995
(as a percentage of net assets, after expense reimbursements or waivers)
Management Fees 0.60% 0.60%
Rule 12b-1 Service
and Distribution Fees 0.23% 1.00%
All Other Expenses 0.77% 1.90%
Total Fund Operating Expenses 1.60% 3.50%
PRO FORMA:
A. Shareholder Transaction Costs Income Income
Class A Class C
Maximum Sales Charge on Purchases 3.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge None None
B. Pro Forma Annual Fund Operating Expenses
(as a percentage of net assets, after expense reimbursements or waivers)
Management Fees 0.70% 0.70%
Rule 12b-1 Service
and Distribution Fees 0.16% .94%
All Other Expenses 0.45% 1.76%
Total Fund Operating Expenses 1.31% 3.40%
C. Example: You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return;(2) redemption at the end of
each period; and (3) for Class A, payment of maximum initial sales
charge at time of purchase:
Current 1 Year 3 Years 5 Years 10 Years
Income Fund
Class A $50 $75 $103 $181
Class C $34 $103 $174 $363
Government Fund
Class A $53 $86 $121 $220
Class C $35 $107 $182 $377
PRO FORMA 1 Year 3 Years 5 Years 10 Years
Income Fund
Class A $50 $77 $107 $189
Class C $34 $104 $177 $368
The example, which is hypothetical, should not be considered a
representation of past or future expenses. Actual expenses and return
may be higher or lower than those shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the
Funds may 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 a Fund.
B. Annual Fund Operating Expenses. Management Fees are paid by the
Funds to Calvert Asset Management Company, Inc. ("Investment Advisor")
for managing the Funds' investments and business affairs. The Funds
incur 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 Funds' share price
and are not charged directly to individual shareholder accounts. If
Management had not reimbursed or waived fees, the current Other Expenses
and Total Fund Operating Expenses for Class A Shares of Income Fund
would have been 0.31% and 1.26%, respectively. For Class C shares, the
current Other Expenses and Total Fund Operating Expenses for Class A
Shares of Income Fund would have been 1.77% and 3.37%, respectively. If
Management had not reimbursed or waived fees, the current Other Expenses
and Total Fund Operating Expenses for Class A shares of Government Fund
would have been 0.80% and 1.62%, respectively. For Class C shares, the
current Other Expenses and Total Fund Operating Expenses for Class A
Shares of Income Fund would have been 1.93% and 3.53%, respectively.
The Fund's Rule 12b-1 fees include an asset-based sales charge.
Thus, long-term shareholders in the Fund may pay more in total sales
charges than the economic equivalent of the maximum front-end sales
charge permitted by rules of the National Association of Securities
Dealers, Inc.
Under the terms of their Distribution Plans, the Funds are
permitted to pay annually a percentage of their average daily net assets
for certain expenses associated with the distribution of their shares.
The maximum percentage allowed by contract is 0.50% and .90% for Class
A and C Shares of the Income Fund, respectively, and 0.25% and 1.00% for
Class A and C Shares of the Government Fund, respectively. Although the
Income Fund's maximum annual Rule 12b-1 fee for Class A Shares is 0.50%,
the Income Fund currently charges 0.25%. Amounts paid by the funds to
the underwriter/distributor, Calvert Distributors, Inc. ("CDI"), under
the Class A Distribution Plan are used to pay to dealers and others,
including CDI salespersons who service accounts, service fees at an
annual rate of up to 0.25% of the average daily net asset value of Class
A shares, and to pay CDI for its marketing and distribution expenses,
including, but not limited to, preparation of advertising and sales
literature and the printing and mailing of prospectuses to prospective
investors. During the fiscal year ended September 30, 1995, Class A
Distribution Plan expenses for the Income and Government Funds were
0.15% and 0.23%, respectively. Amounts paid by the funds under the Class
C Distribution Plan are currently used by CDI to pay dealers and other
selling firms dealer-paid quarterly compensation at an annual rate of up
to 0.75%, plus a service fee of up to 0.25%, of the average daily net
asset value of each share sold by such others. For the fiscal year ended
September 30, 1995, Class C Distribution Plan expenses were .90% and
1.00% for the Income and Government Funds, respectively.
FINANCIAL HIGHLIGHTS
The following tables provide information about the financial history
of each Fund's Class A and C shares. They express the information in
terms of a single share outstanding for the respective Fund throughout
each period. The tables have been audited by those independent
accountants whose reports are included in the respective Annual Reports
to Shareholders of the Funds. The tables should be read in conjunction
with the financial statements and their related notes. The current
Annual Reports to Shareholders are incorporated by reference into the
Statement of Additional Information.
Calvert Income Fund Class A Shares
Year Ended
September 30, 1995
Net asset value, beginning of period $15.68
Income from investment operations
Net investment income 1.11
Net realized and unrealized gain
(loss) on investments 1.14
Total from investment operations 2.25
Distributions to shareholders
Dividends from net investment income (1.11)
Distribution from capital gains --
Total Distributions (1.11)
Total increase (decrease) in
net asset value 1.14
Net asset value, end of period $16.82
Total return<F4> 14.90%
Ratio to average net assets:
Net investment income 6.89%
Total expenses<F5> 1.26%
Net expenses 1.23%
Expenses reimbursed and/or waived --
Portfolio turnover 135%
Net assets, end of period (in thousands) $42,637
Number of shares outstanding
at end of year (in thousands) 2,535
<F4>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
===============================================================================
Calvert Income Fund Class A Shares
Year Ended
September 30, 1994
Net asset value, beginning of period $18.41
Income from investment operations
Net investment income 1.16
Net realized and unrealized gain
(loss) on investments (2.42)
Total from investment operations (1.26)
Distributions to shareholders
Dividends from net investment income (1.16)
Distribution from capital gains (.31)
Total Distributions (1.47)
Total increase (decrease) in
net asset value (2.73)
Net asset value, end of period $15.68
Total return<F4> (6.94)%
Ratio of expenses to average
net assets 1.07%
Ratio of net income to average
net assets 6.86%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 34%
Net assets, end of period $45,935,905
Number of shares outstanding
at end of period (in thousands) 2,929
<F4>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
===============================================================================
Calvert Income Fund
Class A Shares
Year Ended September 30, 1993
Net asset value, beginning of period $17.50
Income from investment operations
Net investment income 1.23
Net realized and unrealized gain
(loss) on investments .91
Total from investment operations 2.14
Distributions to shareholders
Dividends from net investment income (1.23)
Distribution from capital gains --
Total Distributions (1.23)
Total increase (decrease) in
net asset value .91
Net asset value, end of period $18.41
Total return<F5> 12.47%
Ratio of expenses to average
net assets 1.00%
Ratio of net income to average
net assets 6.93%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 25%
Net assets, end of period $53,134,459
Number of shares outstanding
at end of period (in thousands) 2,886
<F5>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
================================================================================
Calvert Income Fund
Class A Shares
Year Ended September 30, 1992
Net asset value, beginning of period $16.61
Income from investment operations
Net investment income 1.28
Net realized and unrealized gain
(loss) on investments .89
Total from investment operations 2.17
Distributions to shareholders
Dividends from net investment income (1.28)
Distribution from capital gains --
Total Distributions (1.28)
Total increase (decrease) in
net asset value .89
Net asset value, end of period $17.50
Total return<F5> 13.66%
Ratio of expenses to average
net assets 1.04%
Ratio of net income to average
net assets 7.59%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 18%
Net assets, end of period $43,494,326
Number of shares outstanding
at end of period (in thousands) 2,486
<F5>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
================================================================================
Calvert Income Fund
Class A Shares
Year Ended September 30, 1991
Net asset value, beginning of period $15.58
Income from investment operations
Net investment income 1.31
Net realized and unrealized gain
(loss) on investments 1.03
Total from investment operations 2.34
Distributions to shareholders
Dividends from net investment income (1.31)
Distribution from capital gains --
Total Distributions (1.31)
Total increase (decrease) in
net asset value 1.03
Net asset value, end of period $16.61
Total return<F6> 15.72%
Ratio of expenses to average
net assets 1.08%
Ratio of net income to average
net assets 8.22%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 27%
Net assets, end of period $36,412,545
Number of shares outstanding
at end of period (in thousands) 2,193
<F6>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
================================================================================
Calvert Income Fund
Class A Shares
Year Ended September 30, 1990
Net asset value, beginning of period $16.36
Income from investment operations
Net investment income 1.36
Net realized and unrealized gain
(loss) on investments (.78)
Total from investment operations .58
Distributions to shareholders
Dividends from net investment income (1.36)
Distribution from capital gains --
Total Distributions (1.36)
Total increase (decrease) in
net asset value (.78)
Net asset value, end of period $15.58
Total return<F6> 3.63%
Ratio of expenses to average
net assets 1.05%
Ratio of net income to average
net assets 8.42%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 5%
Net assets, end of period $32,201,363
Number of shares outstanding
at end of period (in thousands) 2,066
<F6>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
================================================================================
Calvert Income Fund
Class A Shares
Year Ended September 30, 1989
Net asset value, beginning of period $15.70
Income from investment operations
Net investment income 1.36
Net realized and unrealized gain
(loss) on investments .71
Total from investment operations 2.07
Distributions to shareholders
Dividends from net investment income (1.41)
Distribution from capital gains --
Total Distributions (1.41)
Total increase (decrease) in
net asset value .66
Net asset value, end of period $16.36
Total return<F7> 13.48%
Ratio of expenses to average
net assets 1.07%
Ratio of net income to average
net assets 8.57%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 19%
Net assets, end of period $22,969,095
Number of shares outstanding
at end of period (in thousands) 1,404
<F7>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
================================================================================
Calvert Income Fund
Class A Shares
Year Ended September 30,
1988
Net asset value, beginning of period $15.29
Income from investment operations
Net investment income 1.42
Net realized and unrealized gain
(loss) on investments .71
Total from investment operations 2.13
Distributions to shareholders
Dividends from net investment income (1.42)
Distribution from capital gains (.30)
Total Distributions (1.72)
Total increase (decrease) in
net asset value .41
Net asset value, end of period $15.70
Total return<F7> 14.67%
Ratio of expenses to average
net assets .94%
Ratio of net income to average
net assets 9.07%
Increase reflected in above net
investment income ratios due to
expense reimbursement .25%
Portfolio turnover 37%
Net assets, end of period $20,374,751
Number of shares outstanding
at end of period (in thousands) 1,298
<F7>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
================================================================================
Calvert Income Fund
Class A Shares
Year Ended September 30, 1987
Net asset value, beginning of period $17.04
Income from investment operations
Net investment income 1.51
Net realized and unrealized gain
(loss) on investments (1.61)
Total from investment operations (.10)
Distributions to shareholders
Dividends from net investment income (1.47)
Distribution from capital gains (.18)
Total Distributions (1.65)
Total increase (decrease) in
net asset value (1.75)
Net asset value, end of period $15.29
Total return<F8> (.84)%
Ratio of expenses to average
net assets .85%
Ratio of net income to average
net assets 9.06%
Increase reflected in above net
investment income ratios due to
expense reimbursement .25%
Portfolio turnover 42%
Net assets, end of period $20,573,546
Number of shares outstanding
at end of period (in thousands) 1,345
<F8>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
================================================================================
Calvert Income Fund
Class A Shares
Year Ended September 30, 1986
Net asset value, beginning of period $15.78
Income from investment operations
Net investment income 1.57
Net realized and unrealized gain
(loss) on investments 1.26
Total from investment operations 2.83
Distributions to shareholders
Dividends from net investment income (1.57)
Distribution from capital gains --
Total Distributions (1.57)
Total increase (decrease) in
net asset value 1.26
Net asset value, end of period $17.04
Total return<F8> 18.38%
Ratio of expenses to average
net assets .85%
Ratio of net income to average
net assets 9.16%
Increase reflected in above net
investment income ratios due to
expense reimbursement .33%
Portfolio turnover 23%
Net assets, end of period $21,455,859
Number of shares outstanding
at end of period (in thousands) 1,259
<F8>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
===============================================================================
Calvert Income Fund Class C Shares
Year Ended
September 30, 1995
Net asset value, beginning of period $15.63
Income from investment operations
Net investment income .81
Net realized and unrealized gain
(loss) on investments 1.09
Total from investment operations 1.90
Distributions to shareholders
Dividends from net investment income (.97)
Distribution from capital gains --
Total Distributions (.97)
Total increase (decrease) in
net asset value .93
Net asset value, end of period $16.56
Total return<F4> 12.58%
Ratio to average net assets:
Net investment income 4.71%
Total expenses<F5> 3.37%
Net expenses 3.34%
Expenses reimbursed and/or waived .69%
Portfolio turnover 135%
Net assets, end of period (in thousands) $766
Number of shares outstanding
at end of period (in thousands) 46
<F4>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
================================================================================
Calvert Income Fund Class C Shares
From Inception
(March 1, 1994) To
September 30, 1994
Net asset value, beginning of period $17.35
Income from investment operations
Net investment income .57
Net realized and unrealized gain
(loss) on investments (1.67)
Total from investment operations (1.10)
Distributions to shareholders
Dividends from net investment income (.62)
Distribution from capital gains --
Total Distributions (.62)
Total increase (decrease) in
net asset value (1.72)
Net asset value, end of period $15.63
Total return<F4> (5.47)%
Ratio of expenses to average
net assets 2.65%(a)
Ratio of net income to average
net assets 5.62%(a)
Increase reflected in above net
investment income ratios due to
expense reimbursement 7.29%(a)
Portfolio turnover 34%
Net assets, end of period $413,187
Number of shares outstanding
at end of period (in thousands) 26
<F4>Total return does not reflect deduction of Class A front-end sales
charges. Total return prior to 1989 is not audited.
(a) Annualized
================================================================================
Comparative Performance Information. Total return for the
Funds' shares for the periods indicated are as follows:
Average Annual Total Returns
For Periods Ended September 30, 1995
Income Fund Class A Class C
One year 10.59% One Year 12.58%
Five years 8.78% From inception
Ten years 9.23% (March 1, 1994) 3.35%
Government Fund Class A Class C
One year 8.13% One Year 10.21%
Five years 6.54% From inception
From inception (March 1, 1994) 3.27%
(May 22, 1986) 7.15%
The total return figures shown above include the effect of the
maximum sales charge of 3.75% for Class A Shares, changes in share
price, and reinvestment of dividends and distributions. Total return is
based on historical earnings and asset value fluctuations and is not
intended to indicate future performance. No adjustments are made to
reflect any income taxes payable by shareholders.
Purchases. Class A Shares of both Government Fund and Income
Fund are sold on a continuous basis at net asset value plus the
appropriate sales charge which is subject to reduction by right of
accumulation, group purchase, and letter of intent. Employee purchases
and certain plans qualified under the Internal Revenue Code may purchase
shares with no sales charge, and all Fund shareholders may reinvest
dividends without paying a sales charge. Class A Shares issued in the
reorganization will not be assessed any sales charge. Class C Shares do
not have a front-end sales charge.
SALES CHARGE TABLE
CLASS A SHARES
Income and Government Funds
Amount of As a % of As a % of Allowed to Dealers
Investment offering net amount as a % of offering
price invested price
Less than $50,000 3.75% 3.90% 3.00%
$50,000 but less
than $100,000 3.00% 3.09% 2.25%
$100,000 but less
than $250,000 2.25% 2.30% 1.75%
$250,000 but less
than $500,000 1.75% 1.78% 1.25%
$500,000 but less
than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
*For new investments (new purchases but not exchanges) of $1 million or
more a broker-dealer will have the choice of being paid a finder's fee
by CDI in one of the following methods: (1) CDI may pay broker-dealers,
on a monthly basis for 12 months, an annual rate of 0.30%. Payments will
be made monthly at the rate of 0.025% of the amount of the investment,
less redemptions; or (2) CDI may pay broker-dealers 0.25% of the amount
of the purchase; however, CDI reserves the right to recoup any portion
of the amount paid to the dealer if the investor redeems some or all of
the shares from the fund(s) within thirteen months of the time of
purchase.
The minimum initial investment in each fund is $2,000 and the
minimum subsequent investment is $250 (except in the case of certain
retirement plans).
Exchange Privileges. Shareholders of both Government Fund and
Income Fund may exchange fund shares for shares of a variety of other
Calvert Group funds. Each such exchange represents a sale of fund
shares, which may produce a gain or loss for tax purposes. Shares are
exchanged into the same class. There is no additional charge for
exchanges. Calvert Group discourages frequent exchanges and may prohibit
additional purchases of shares by persons who have previously been
advised that their frequent use of the exchange privilege is
inconsistent with the orderly management of the investment portfolio.
Government Fund and Income Fund reserve the right to modify or eliminate
this exchange privilege with 60 days' written notice.
Distribution Procedures. Both Government Fund and Income Fund
distribute dividends monthly and pay out their net realized capital
gains (if any) once each year. Shareholders of both funds may reinvest
distributions. Your existing election in Government Fund with respect to
dividends and/or capital gains will be continued with respect to the
shares of Income Fund you acquire in connection with the reorganization
unless you notify the Fund of a new election.
Redemption Procedures. At any time and in any amount, shares of
Government Fund and Income Fund may be redeemed by submitting a written
request by mail. All written orders for redemption, and all accompanying
certificates, must be signed by the shareholder and may be required to
be signature guaranteed by a commercial bank, savings association, trust
company or member firm of any national securities exchange. Further
documentation may be required from corporations, fiduciaries, pension
plans and institutional investors.
Shares may also be redeemed by telephone or through brokers.
Both funds impose a charge of $5.00 for wire transfers of less than
$1,000. Government Fund and Income Fund may, after 30 days' notice,
close accounts if the value of shares in the account is reduced by
redemptions to less than $1,000, and the investor fails to purchase
sufficient additional shares.
COMPARISON OF INVESTMENT POLICIES
As noted in the "Summary" above, the investment policies of the
two funds are different. While both Funds seek income, the
Government Fund invests only in U.S. Government-backed obligations to
produce high current income. Examples of U.S. Government-backed
obligations include mortgage pass-through certificates, such as GNMAs;
direct obligations of the United States Treasury, such as U.S. Treasury
bills, notes, and bonds; obligations issued or guaranteed by the U.S.
Government, its agencies or its instrumentalities; collateralized
mortgage obligations; and U.S. Government-backed obligations subject to
repurchase agreements. Income Fund can purchase not only U.S.
Government-backed obligations, but also corporate obligations, foreign
securities, and other income-producing securities.
In seeking to maximize long-term income, Income Fund invests
80% of its assets in corporate obligations and other fixed-income
securities. At least 65% of its assets at the date of investment are
rated within the four highest grades established by Moody's Investor
Services, Inc. ("Moody's"), or by Standard & Poor's Corporation ("S&P")
(grades AAA/Aaa through Baa/BBB). The remaining 35% of assets may consist
of other debt securities, including bonds rated below Baa/BBB. With
lower rated bonds, there is a greater possibility that an adverse change
in the financial condition of the issuer may affect its ability to pay
principal and interest. In addition, to the extent Income Fund holds
such bonds, it may be negatively affected by adverse economic
developments, increased volatility or a lack of liquidity.
Income Fund may also purchase obligations issued or guaranteed
as to principal by the U.S. Government or its agencies or
instrumentalities; certificates of deposit, time deposits, and bankers'
acceptances of U.S. banks and their branches located outside of the U.S.
and of U.S. branches of foreign banks, provided that the bank has total
assets of at least one billion dollars or the equivalent in other
currencies; commercial paper which at the date of investment is rated
Prime-2 or better by Moody's, A-2 or better by S&P, or, if not rated, is
of comparable quality as determined by the Advisor; and any of the above
securities subject to repurchase agreements with recognized securities
dealers and banks. Up to 20% of Income Fund's total assets may consist
of other debt securities, including securities convertible into or
carrying warrants to purchase common stock or other equity securities
and income-producing preferred and common stocks.
Income Fund is a nondiversified fund. There may be risks
associated with nondiversification. Specifically, since a relatively
high percentage of the assets may be invested in the obligations of a
limited number of issuers, the value of the shares may be more
susceptible to any single economic, political, or regulatory event than
the shares of a diversified fund.
Income Fund may invest in options and futures to increase or
decrease its exposure to changing security prices, interest rates,
currency exchange rates, or other factors that affect security value.
These techniques may involve derivative transactions such as buying and
selling options and futures contracts and leveraged notes, entering into
currency exchange contracts, or swap agreements, and purchasing indexed
securities. Income Fund can use these practices either as substitution
or as protection against an adverse move in its portfolio to adjust the
risk and return characteristics. If the Advisor judges market conditions
incorrectly or employs a strategy that does not correlate well with
Income Fund's investments, or if the counterparty to the transaction
does not perform as promised, these techniques could result in a loss.
These techniques may increase the volatility of the portfolio and may
involve a small investment of cash relative to the magnitude of the risk
assumed.
INFORMATION ABOUT THE REORGANIZATION
Plan of Reorganization. The proposed Agreement and Plan of
Reorganization (the "Agreement" or "Plan") provides that Income Fund
will acquire all the assets and liabilities of Government Fund in
exchange for shares of Income Fund on the Closing Date (as defined in
Section 2(b) of the Plan). A copy of the Plan is attached as Exhibit A
to this Proxy Statement. The number of full and fractional Income Fund
shares to be issued to shareholders of Government Fund will equal the
value of the shares of Government Fund outstanding immediately prior to
the reorganization. Portfolio securities of Government Fund and Income
Fund will be valued in accordance with the valuation practices of Income
Fund which are described on page 15 of the Income Fund prospectus and on
page 13 of its Statement of Additional Information. At the time of the
reorganization, Income Fund will assume and pay all of Government Fund's
obligations and liabilities. The reorganization will be accounted for by
the method of accounting for tax-free reorganizations of investment
companies, sometimes referred to as the "pooling without restatement"
method. Any reimbursement due from the Advisor to Government Fund under
the expense limitation provision will be paid at, or prior to, the
closing.
As soon as practicable after the Closing Date, Government Fund
will liquidate and distribute pro rata to its shareholders of record as
of the close of business on the Closing Date the full and fractional
shares of Income Fund at an aggregate net asset value equal to the value
of the shareholder's investment in Government Fund next determined after
the effective time of the transaction. This method of valuation is also
consistent with interpretations of Rule 22c-1 under the Investment
Company Act of 1940 by the Securities and Exchange Commission's Division
of Investment Management. Such liquidation and distribution will be
accomplished by the establishment of accounts on the share records of
Income Fund in the name of such Government Fund shareholders, each
representing the respective pro rata number of full and fractional
shares of Income Fund due the shareholder. Certificates representing
shares of Government Fund at the Closing Date will represent the shares
of Income Fund distributed to the recordholder thereof as a result of
the liquidation of Government Fund. New certificates for Income Fund
shares will be issued only upon written request, and only upon tender of
Government Fund certificates.
The consummation of the Plan is subject to the conditions set
forth in the Agreement. The Plan may be terminated and the
reorganization abandoned at any time before or after approval by
Government Fund shareholders, prior to the Closing Date by mutual
consent of Government Fund and Income Fund, or by either if any
condition set forth in the Plan has not been fulfilled or is waived by
the party entitled to its benefits. In accordance with the Plan,
Government Fund and Income Fund will each be responsible for payment of
expenses incurred in connection with the reorganization.
Description of Income Fund Shares. Full and fractional shares
of Income Fund will be issued to Government Fund shareholders per class
in accordance with the procedures under the Plan as described above.
Each share will be fully paid and nonassessable when issued and
transferable without restrictions and will have no preemptive or
conversion rights.
Federal Income Tax Consequences. The Plan is a tax-free
reorganization pursuant to Section 368(a)(1)(C) of the Internal Revenue Code.
The Plan is conditioned upon the issuance of an opinion by outside
counsel to the Fund, to the effect that, on the basis of the existing
provisions of the Internal Revenue Code of 1986, current administrative
rules and court decisions, for federal income tax purposes: (1) No gain
or loss will be recognized by Government Fund or Income Fund upon the
transfer of Government Fund assets to, and the assumption of its
liabilities by, Income Fund in exchange for Income Fund shares (Section
1032(a)); (2) no gain or loss will be recognized by shareholders of
Government Fund upon the exchange of Government Fund shares for Income
Fund shares (Section 361(a)); (3) the basis and holding period immediately
after the reorganization for Income Fund shares received by each
Government Fund shareholder pursuant to the reorganization will be the
same as the basis and holding period of Government Fund shares held
immediately prior to the exchange (Section 354, 356); and (4) the basis and
holding period immediately after the reorganization of Government Fund
assets acquired by Income Fund will be the same as the basis and holding
period of such assets of Government Fund immediately prior to the
reorganization (Section 362(b), 1223(2)).
Opinions of counsel are not binding on the Internal Revenue
Service or the courts. If the reorganization is consummated but does not
qualify as a tax-free reorganization under the Internal Revenue Code,
the consequences described above would not be applicable. Shareholders
of Government Fund should consult their tax advisors regarding the
effect, if any, of the proposed reorganization in light of their
individual circumstances. Since the foregoing discussion relates only to
the federal income tax consequences of the reorganization, shareholders
of the Government Fund should also consult their tax advisors as to the
state and local tax consequences, if any, of the reorganization.
Other Tax Consequences. Many states do not tax income received
from U.S. Government obligations. Because of the diversity of Income Fund
investments, however, the percentage of income a shareholder receives from
U.S. Government obligations may be less than that of Government Fund.
Effect of the Reorganization on Capital Loss Carryforwards. The
following tables provide comparative information regarding realized
capital gains and losses and net unrealized appreciation or depreciation
of portfolio securities of Income Fund and Government Fund as of
September 30, 1995, and the capital loss carryforwards of each at the
end of its last fiscal year.
Income Fund
Capital Loss Carryforward at 9/30/95 $174,409
Realized gains (losses) 10/1/94 - 9/30/95 ($197,657)
Net unrealized appreciation at 9/30/95 $703,207
Government Fund
Capital Loss Carryforward at 9/30/95 $424,163
Realized gains (losses) 10/1/94 - 9/30/95 ($117,178)
Net unrealized appreciation at 9/30/95 $113,449
If the reorganization does not occur, Government Fund's capital
loss carryforwards should be available to offset any net realized
capital gains of Government Fund through 2002 and 2003. It is
anticipated that no distributions of net realized capital gains would be
made by Government Fund until the capital loss carryforwards expire or
are offset by net realized capital gains.
If the reorganization is consummated, Income Fund will be
constrained in the extent to which it can use the capital loss
carryforwards of Government Fund because of limitations imposed by the
Internal Revenue Code on the occurrence of an ownership change. Income
Fund should be able to use in each year a capital loss carryforward in
an amount equal to the value of Government Fund on the date of the
reorganization multiplied by a long-term tax-exempt rate calculated by
the Internal Revenue Service. If the amount of such a loss is not used
in one year, it may be added to the amount available for use in the next
year. For 1995, the amount of capital loss carryforward that may be used
under the formula will be further reduced to reflect the number of days
remaining in the year following the date of the reorganization.
It appears that the anticipated benefits outweigh the uncertain
potential detriment resulting from the partial loss of capital loss
carryforwards, and the differing consequences of federal and various
other income taxation on a distribution received by each shareholder
whose tax liabilities (if any) are determined by the net effect of a
multitude of considerations that are individual to the shareholder.
Government Fund shareholders who need information as to state and local
tax consequences, if any, should consult their tax advisors.
Capitalization. The following table shows the capitalization of
Government Fund and Income Fund as of September 30, 1995, and on a pro
forma basis as of that date of the proposed acquisition of assets at net
asset value:
Government Income Pro Forma
Combined*
Net Assets $9,472,160 $43,402,592 $52,874,752
Net Asset Value
Per Share, Class A $14.61 $16.82 $16.82
Net Asset Value
Per Share, Class C $14.49 $16.56 $16.56
Shares Outstanding
Class A 618,647 2,534,815 3,072,177
Shares Outstanding
Class C 30,048 46,243 72,535
*The Pro Forma combined net assets does not reflect
adjustments with respect to distributions prior to the
reorganization. Total Income Fund Class A shares issued pro
forma to Government Fund shareholders would be 537,362 and
26,292 for Class C. For each Class A share of Government Fund
shares owned, shareholders of Government Fund would receive pro
forma approximately 0.875 Class A shares of Income Fund. For
each Class C share of Government Fund shares owned,
shareholders of Government Fund would receive pro forma
approximately 0.868 Class C shares of Income Fund. The actual
exchange ratio will be determined based on the relative net
asset value per share on the acquisition date.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
Both funds are series of the same open-end management
investment company that is organized as a Massachusetts trust, and as
such share a common Declaration of Trust and Bylaws. After the merger,
the operations of the surviving fund will continue to be governed by
the Declaration of Trust and Bylaws of Calvert as it now exists.
INFORMATION ABOUT THE FUNDS
Information about Income Fund is included in its separate
prospectus, dated January 31, 1995 as revised September 30, 1995.
Information about Government Fund is included in a combined prospectus
dated January 31, 1995, as revised May 15, 1995, June 28, 1995, and
September 30, 1995. Copies of the Prospectuses are included with this
proxy statement and incorporated by reference into it. Additional
information about Income Fund and Government Fund is included in the
Statement of Additional Information, also dated January 31, 1995, as
revised September 30, 1995, which has been filed with the Securities
and Exchange Commission and is incorporated by reference in this proxy
statement. The audited Annual Reports to Shareholders of each fund are
also incorporated by reference into this proxy statement. Copies of the
Statement of Additional Information and Annual Reports may be obtained
without charge by writing to Income Fund or Government Fund at 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814 or by calling
(800) 368-2748. Income Fund and Government Fund file proxy material,
reports and other information with the Securities and Exchange
Commission. These reports may be inspected and copied at the Public
Reference facilities maintained by the Securities and Exchange
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of
the material may also be obtained from the Office of Consumer Affairs
and Information Services of the Securities and Exchange Commission at
prescribed rates.
OTHER BUSINESS
The Trustees of the Government Fund do not intend to present
any other business at the meeting. If, however, any other matters are
properly brought before the meeting, the persons named in the
accompanying form of proxy will vote thereon in accordance with their
judgment.
VOTING INFORMATION
Proxies from the shareholders of Government Fund are being
solicited by the Trustees of Calvert for the Special Meeting of
Shareholders to be held in the Tenth Floor Conference Room of Calvert
Group Ltd., Air Rights North Tower, 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland at 10:00 a.m. on ___________, __________ __, 1996, or
at such later time or date made necessary by adjournment. A proxy may be
revoked at any time before the meeting or during the meeting by oral or
written notice to William M. Tartikoff, Esq., Secretary, 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Unless
revoked, all valid proxies will be voted in accordance with the
specification thereon or, in the absence of specification, for approval
of the Plan. Approval of the Plan will require the affirmative vote of
the holders of at least a majority of the outstanding shares of
Government Fund entitled to vote at the meeting.
Proxies are solicited by mail. Additional solicitations may be
made by telephone, computer communications, facsimile or other such
means, or by personal contact by officers or employees of Calvert Group
and its affiliates or by proxy soliciting firms retained for this
purpose. Government Fund and Income Fund will each bear their
appropriate share of solicitation costs.
Shareholders of Government Fund of record at the close of
business on __________ __, 1996 ("record date") are entitled to notice
of and to vote at the Special Meeting or any adjournment thereof. The
holders of a majority of the shares of Government Fund outstanding at
the close of business on the record date present in person or
represented by proxy will constitute a quorum for the meeting; however,
as noted above, the affirmative vote of the holders of at least a
majority of the shares outstanding at the close of business on the
record date is required to approve the reorganization. Shareholders are
entitled to one vote for each share held. As of September 30, 1995, as
shown on the books of Government Fund, there were issued and
outstanding 618,647 shares of Government Fund. The votes of the
shareholders of Income Fund are not being solicited since their
approval or consent is not necessary for this transaction.
As of __________ __, 1996, the officers and Trustees of
Government Fund as a group beneficially owned less than 1% of the
outstanding shares of Government Fund. To the best of the knowledge of
Government Fund, no shareholder beneficially owned 5% or more of the
outstanding shares as of __________ __, 1996.
ADJOURNMENT
In the event that sufficient votes in favor of the proposals
set forth in the Notice of Meeting and Proxy Statement are not received
by the time scheduled for the meeting, the persons named as proxies may
move one or more adjournments of the meeting to permit further
solicitation of proxies with respect to any such proposals. Any such
adjournment will require the affirmative vote of a majority of the
shares present at the meeting. The persons named as proxies will vote
in favor of such adjournment those shares that they are entitled to
vote which have voted in favor of such proposals. They will vote
against any such adjournment those proxies that have voted against any
such proposals.
By Order of the
Board of Trustees
William M.
Tartikoff, Esq.
Secretary
The Trustees of The Calvert Fund, Including the Independent
Trustees, Recommend a Vote FOR Approval of the Plan.
<PAGE>
THE CALVERT FUND:
CALVERT GOVERNMENT FUND
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s)
William M. Tartikoff, Esq. and Clifton S. Sorrell, Jr. attorneys, with
full power of substitution, to vote all shares of Calvert Government
Fund that the undersigned is entitled to vote at the Special Meeting of
Shareholders to be held in the Tenth Floor Conference Room of Calvert
Group, 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814 on
__________, __________ __, 1996 at 10:00 a.m. and at any adjournment
thereof. All powers may be exercised by a majority of the proxy holders
or substitutes voting or acting or, if only one votes and acts, then by
that one. This Proxy shall be voted on the proposal described in the
Proxy Statement. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly
as your name appears on
this Proxy. When signing
in a fiduciary capacity,
such as executor,
administrator, trustee,
guardian, etc., please so
indicate. Corporate and
partnership proxies
should be signed by an
authorized person
indicating the person's
title.
Date
_________________________,
1996
__________________________________
__________________________________
Signature(s) (Title(s),
if applicable)
PLEASE SIGN, DATE, AND
RETURN
PROMPTLY IN ENCLOSED
ENVELOPE
- --------------------------------------------------------------------------
Please refer to the Proxy Statement discussion on this matter.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSAL.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
1. To act upon a proposal to approve an Agreement and Plan of
Reorganization authorizing the exchange of shares of the Calvert U.S.
Government Fund for shares of the Calvert Income Fund.
[] For [] Against [] Abstain
<PAGE>
Exhibit A, Part A
Exhibit 4, Part C
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION, dated as of December 19,
1995 is between Calvert U.S. Government Fund (Government Fund) and
Calvert Income Fund (Income Fund). Government Fund and Income Fund are
both series of The Calvert Fund (Calvert).
In consideration of the mutual promises contained in this
Agreement, the parties agree as follows:
1. SHAREHOLDER APPROVAL
Approval by Shareholders. A meeting of the shareholders of
Government Fund shall be called and held for the purpose of acting on
and authorizing the transactions contemplated in this Agreement and Plan
of Reorganization (the Agreement or Plan). Income Fund shall furnish to
Government Fund such data and information as shall be reasonably
requested by Government Fund for inclusion in the information to be
furnished to its shareholders in connection with the meeting.
2. REORGANIZATION
(a) Plan of Reorganization. Government Fund will convey,
transfer, and deliver to Income Fund all of the then-existing assets of
Government Fund at the closing provided for in Section 2(b) of this
Agreement (the Closing). In consideration thereof, Income Fund agrees at
the Closing:
(i) to assume and pay, to the extent that they exist on
or after the Effective Time of the Reorganization (as defined in Section
2(b)), all of Government Fund's obligations and liabilities, whether
absolute, accrued, contingent, or otherwise; and
(ii) to deliver to Government Fund in exchange for the
assets the number of full and fractional shares of common stock of
Income Fund (Income Fund Shares) to be determined as follows: In
accordance with Section 3 of this Agreement, the number of shares shall
be determined by dividing the per share net asset value of Government
Fund Shares (rounded to the nearest mill) by the net asset value per
share of Income Fund (rounded to the nearest mill) and multiplying the
quotient by the number of outstanding shares of Government Fund as of
the close of business on the closing date. It is expressly agreed that
there will be no sales charge to Government Fund, or to any of the
shareholders of Government Fund upon distribution of Income Fund Shares
to them.
(b) Closing and Effective Time of the Reorganization. The
Closing shall occur at the Effective Time of the Reorganization, which
shall be either
(i) the later of receipt of all necessary regulatory
approvals and the final adjournment of the meeting of shareholders of
Government Fund at which the Plan will be considered, or
(ii) such later date as the parties may mutually agree.
3. VALUATION OF NET ASSETS
(a) The value of Government Fund's net assets to be transferred
to Income Fund under this Agreement shall be computed as of the close of
business on the business day immediately preceding the Closing Date
(hereinafter the Valuation Date) using the valuation procedures as set
forth in Income Fund's prospectus.
(b) The net asset value per share of Income Fund Shares for
purposes of Section 2 of this Agreement shall be determined as of the
close of business on the Valuation Date by Income Fund's Controller
using the same valuation procedures as set forth in Income Fund's
prospectus.
(c) A copy of the computation showing in reasonable detail the
valuation of Government Fund's net assets to be transferred to Income
Fund pursuant to paragraph 2 of this Agreement, certified by the
Controller of Government Fund, shall be furnished by Government Fund to
Income Fund at the Closing. A copy of the computation showing in
reasonable detail the determination of the net asset value per share of
Income Fund Shares pursuant to paragraph 2 of this Agreement, certified
by the Controller of Income Fund, shall be furnished by Income Fund to
Government Fund at the Closing.
4. LIQUIDATION AND DISSOLUTION
(a) As soon as practicable after the Closing Date, Government
Fund will distribute pro rata to the Government Fund shareholders of
record as of the close of business on the Closing Date the shares of
Income Fund received by Government Fund pursuant to this Section. Such
liquidation and distribution will be accompanied by the establishment of
Shareholder accounts on the share records of Income Fund in the names of
each such shareholder of Government Fund, representing the respective
pro rata number of full shares and fractional interests in shares of
Income Fund due to each. No such shareholder accounts shall be
established by Income Fund or its transfer agent for Income Fund except
pursuant to written instructions from Government Fund, and Government
Fund agrees to provide on the Closing Date instructions to transfer to a
shareholder account for each former Government Fund shareholder a pro
rata share of the number of shares of Income Fund received pursuant to
Section 2(a) of this Agreement.
(b) Promptly after the distribution described in Section 4(a)
above, appropriate notification will be mailed by Income Fund or its
transfer agent to each shareholder of Government Fund receiving such
distribution of shares of Income Fund informing such shareholder of the
number of such shares distributed to such shareholder and confirming the
registration thereof in such shareholder's name.
(c) Following the Closing Date and until surrendered, each
outstanding share certificate representing shares of Government Fund
shall be deemed for all purposes to evidence ownership of shares of
Income Fund that the holder is entitled to receive in exchange for the
certificate. The shares of Income Fund that the holder is entitled to
receive with respect to Government Fund's share certificates not yet
surrendered will be held by Income Fund's transfer agent on behalf of
the shareholder, but may not be transferred or redeemed until surrender
of Government Fund's share certificates in proper form for transfer to
Income Fund's transfer agent or, in lieu thereof, the posting of a lost
certificate bond or other surety instrument deemed acceptable to Income
Fund's transfer agent. All of Income Fund's distributions attributable
to the shares represented by the share certificates of Government Fund
retained by shareholders will be paid to the shareholder in cash or
invested in additional shares of Income Fund at the net asset value in
effect on the respective payment dates in accordance with instructions
previously given by the shareholder to Government Fund's transfer agent.
Share certificates representing holdings of shares of Income Fund shall
not be issued unless requested by the shareholder and, if such a request
is made, share certificates of Income Fund will be issued only for full
shares of Income Fund and any fractional interests in shares shall be
credited in the shareholder's account with Income Fund.
(d) As promptly as is practicable after the liquidation of
Government Fund, and in no event later than 12 months from the date of
this Agreement, Government Fund shall be terminated pursuant to the
provisions of the Plan and The Calvert Fund's Declaration of Trust.
(e) Immediately after the Closing Date, the share transfer
books of Government Fund shall be closed and no transfer of shares shall
thereafter be made on those books.
5. TRUST and BY-LAWS
(a) Declaration of Trust. The Declaration of Trust of Calvert,
which governs its series Income Fund, as in effect immediately prior to
the Effective Time of the Reorganization shall continue to be the
Declaration of Trust until amended as provided by law.
(b) By-laws. The By-laws of Calvert, which govern its series
Income Fund, in effect at the Effective Time of the Reorganization shall
continue to be the By-laws until the same shall thereafter be altered,
amended, or repealed in accordance with the Trust Indenture or said
By-laws.
6. REPRESENTATIONS AND WARRANTIES OF INCOME FUND
(a) Organization, Existence, etc. Income Fund is a duly
organized series of Calvert, validly existing and in good standing under
the laws of the State of Massachusetts, and has the power to carry on
its business as it is now being conducted. Currently, Income Fund is not
qualified to do business as a foreign corporation under the laws of any
jurisdiction. Income Fund has all necessary federal, state and local
authorization to own all of its properties and assets and to carry on
its business as now being conducted.
(b) Registration as Investment Company. Calvert, of which
Income Fund is a series, is registered under the Investment Company Act
of 1940 (the Act) as an open-end diversified management investment
company. Its registration has not been revoked or rescinded and is in
full force and effect.
(c) Capitalization. Income Fund has an unlimited number of
shares of beneficial interest, no par value, of which as of ___________
___, 1996, ____________ Class A shares and ___________ Class C shares
were outstanding, and no shares were held in the treasury of Income
Fund. All of the outstanding shares of Income Fund have been duly
authorized and are validly issued, fully paid, and non-assessable. Since
Income Fund is a series of an open-end investment company engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may change prior to the Effective Time of the
Reorganization.
(d) Financial Statements. The financial statements of Income
Fund for the year ended September 30, 1995 (Income Fund Financial
Statements), previously delivered to Government Fund, fairly present the
financial position of Income Fund as of September 30, 1995 and the
results of its operations and changes in its net assets for the year
then ended.
(e) Shares to be Issued Upon Reorganization. Income Fund Shares
to be issued in connection with the Reorganization have been duly
authorized and upon consummation of the Reorganization will be validly
issued, fully paid and non-assessable.
(f) Authority Relative to this Agreement. Calvert has the power
to enter into the Plan on behalf of its series Income Fund and to carry
out its obligations under this Agreement. The execution and delivery of
the Plan and the consummation of the transactions contemplated have been
duly authorized by the Board of Trustees of Calvert and no other
proceedings by Calvert are necessary to authorize its officers to
effectuate the Plan and the transactions contemplated. Income Fund is
not a party to or obligated under any charter, by-law, indenture, or
contract provision or any other commitment or obligation, or subject to
any order or decree which would be violated by its executing and
carrying out the Plan.
(g) Liabilities. There are no liabilities of Calvert on behalf
of its series Income Fund, whether or not determined or determinable,
other than liabilities disclosed or provided for in Income Fund
Financial Statements and liabilities incurred in the ordinary course of
business subsequent to September 30, 1995 or otherwise previously
disclosed to Government Fund, none of which has been materially adverse
to the business, assets or results of operations of Income Fund.
(h) Litigation. To the knowledge of Income Fund there are no
claims, actions, suits, or proceedings, pending or threatened, which
would adversely affect Income Fund or its assets or business, or which
would prevent or hinder consummation of the transactions contemplated by
this Agreement.
(i) Contracts. Except for contracts and agreements previously
disclosed to Government Fund under which no default exists, Income Fund
is not a party to or subject to any material contract, debt instrument,
plan, lease, franchise, license, or permit of any kind or nature
whatsoever.
(j) Taxes. The federal income tax returns of Income Fund have
been filed for all taxable years to and including September 30, 1994,
and all taxes payable pursuant to such returns have been paid. Income
Fund has qualified as a regulated investment company under the Internal
Revenue Code in respect to each taxable year of Income Fund since
commencement of its operations.
(k) Registration Statement. Income Fund shall have filed with
the Securities and Exchange Commission (the Commission ) a Registration
Statement under the Securities Act of 1933 (Securities Act) relating to
the shares of capital stock of Income Fund issuable under this
Agreement. At the time the Registration Statement becomes effective, the
Registration Statement
(i) will comply in all material respects with the
provisions of the Securities Act and the rules and regulations of the
Commission thereunder (the Regulations), and
(ii) will not contain an untrue statement of material
fact or omit to state a material act required to be stated therein or
necessary to make the statements therein not misleading.
Further, at the time the Registration Statement becomes
effective, at the time of the shareholders' meeting referred to in
Section 1, and at the Effective Time of the Reorganization, the
Prospectus and Statement of Additional Information included therein, as
amended or supplemented by any amendments or supplements filed by Income
Fund, will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties in
this subsection shall apply to statements in or omissions from the
Registration Statement or Prospectus and Statement of Additional
Information made in reliance upon and in conformity with information
furnished by Government Fund for use in the Registration Statement or
Prospectus and Statement of Additional Information as provided in
Section 7(k).
7. REPRESENTATIONS AND WARRANTIES OF GOVERNMENT FUND
(a) Organization, Existence, etc. Government Fund is a duly
organized series of Calvert, validly existing and in good standing under
the laws of the State of Massachusetts, and has power to carry on its
business as it is now being conducted. Currently, Government Fund is not
qualified to do business as a foreign corporation under the laws of any
jurisdiction. Government Fund has all necessary federal, state and local
authorization to own all of its properties and assets and to carry on
its business as now being conducted.
(b) Registration as Investment Company. Calvert, of which
Government Fund is a series, is registered under the Act as an open-end
diversified management investment company. Its registration has not been
revoked or rescinded and is in full force and effect.
(c) Capitalization. Government Fund has an unlimited number of
shares of beneficial interest, no par value, of which as of ______ ___,
1996, ______ shares were outstanding, and no shares were held in the
treasury of Government Fund. All of the outstanding shares of Government
Fund have been duly authorized and are validly issued, fully paid, and
non-assessable. Since Government Fund is a series of an open-end
investment company engaged in the continuous offering and redemption of
its shares, the number of outstanding shares of Government Fund may
change prior to the Effective Date of the Reorganization.
(d) Financial Statements. The financial statements of
Government Fund for the year ended September 30, 1995 (Government Fund
Financial Statements), previously delivered to Income Fund, fairly
present the financial position of Government Fund as of September 30,
1995 and the results of its operations and changes in its net assets for
the year then ended.
(e) Authority Relative to the Plan. Calvert has the power to
enter into the Plan on behalf of Government Fund and to carry out its
obligations under this Agreement. The execution and delivery of the Plan
and the consummation of the transactions contemplated have been duly
authorized by the Trustees of Calvert and, except for approval by the
holders of its capital stock, no other proceedings by Calvert are
necessary to authorize its officers to effectuate the Plan and the
transactions contemplated. Government Fund is not a party to or
obligated under any charter, by-law, indenture, or contract provision or
any other commitment or obligation, or subject to any order or decree,
which would be violated by its executing and carrying out the Plan.
(f) Liabilities. There are no liabilities of Government Fund
whether or not determined or determinable, other than liabilities
disclosed or provided for in Government Fund Financial Statements and
liabilities incurred in the ordinary course of business subsequent to
September 30, 1995 or otherwise previously disclosed to Income Fund none
of which has been materially adverse to the business, assets, or results
of operations of Government Fund.
(g) Litigation. To the knowledge of Government Fund there are
no claims, actions, suits, or proceedings, pending or threatened, which
would adversely affect Government Fund or its assets or business, or
which would prevent or hinder consummation of the transactions
contemplated by this Agreement.
(h) Contracts. Except for contracts and agreements previously
disclosed to Income Fund under which no default exists, Calvert on
behalf of Government Fund is not a party to or subject to any material
contract, debt instrument, plan, lease, franchise, license, or permit of
any kind or nature whatsoever.
(i) Taxes. The federal income tax returns of Government Fund
have been filed for all taxable years to and including the taxable year
ended September 30, 1994 and all taxes payable pursuant to such returns
have been paid. Government Fund has qualified as a regulated investment
company under the Internal Revenue Code with respect to each past
taxable year of Government Fund since commencement of its operations.
(j) Portfolio Securities. All securities to be listed in the
schedule of investments of Government Fund as of the Effective Time of
the Reorganization will be owned by Calvert on behalf of Government Fund
free and clear of any liens, claims, charges, options, and encumbrances,
except as indicated in the schedule. Except as so indicated, none of the
securities is, or after the Reorganization as contemplated by this
Agreement will be, subject to any legal or contractual restrictions on
disposition (including restrictions as to the public offering or sale of
the securities under the Securities Act), and all the securities are or
will be readily marketable.
(k) Registration Statement. Government Fund will cooperate with
Income Fund in connection with the Registration Statement referred to in
Section 6(k) of this Agreement, and will furnish to Income Fund the
information relating to Government Fund required by the Securities Act
and its Regulations to be set forth in the Registration Statement
(including the Prospectus and Statement of Additional Information). At
the time the Registration Statement becomes effective, the Registration
Statement, insofar as it relates to Government Fund,
(i) will comply in all material respects with the
provisions of the Securities Act and its Regulations, and
(ii) will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
Further, at the time the Registration Statement becomes
effective, at the time of the shareholders' meeting referred to in
Section I and at the Effective Time of the Reorganization, the
Prospectus and Statement of Additional Information, as amended or
supplemented by any amendments or supplements filed by Income Fund,
insofar as it relates to Government Fund, will not contain an untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall apply only to
statements in or omissions from the Registration Statement or Prospectus
and Statement of Additional Information made in reliance upon and in
conformity with information furnished by Government Fund for use in the
Registration Statement or Prospectus and Statement of Additional
Information as provided in this Section 7(k).
8. CONDITIONS TO OBLIGATIONS OF GOVERNMENT FUND
The obligations of Government Fund under this Agreement with
respect to the consummation of the Reorganization are subject to the
satisfaction of the following conditions:
(a) Shareholder Approval. The Plan shall have been approved by
the affirmative vote of the holders of a majority of the outstanding
shares of capital stock of Government Fund.
(b) Representations, Warranties and, Agreements. As of the
Effective Time of the Reorganization, Income Fund shall have complied
with each of its responsibilities under this Agreement, each of the
representations and warranties contained in this Agreement shall be true
in all material respects, and there shall have been no material adverse
change in the financial condition, results of operations, business,
properties, or assets of Income Fund since September 30, 1995. As of the
Effective Time of the Reorganization, Government Fund shall have
received a certificate from Income Fund satisfactory in form and
substance to Government Fund indicating that it has met the terms stated
in this Section.
(c) Regulatory Approval. The Registration Statement referred to
in Section 6(k) shall have been declared effective by the Commission and
no stop orders under the Securities Act pertaining thereto shall have
been issued; all necessary orders of exemption under the Act with
respect to the transactions contemplated by this Agreement shall have
been granted by the Commission; and all approvals, registrations, and
exemptions under federal and state laws considered to be necessary shall
have been obtained.
(d) Tax Opinion. Government Fund shall have received the
opinion of counsel, dated the Effective Time of the Reorganization,
addressed to and in form and substance satisfactory to Government Fund,
as to certain of the federal income tax consequences of the
Reorganization under the Internal Revenue Code to Government Fund and
its shareholders. For purposes of rendering its opinion, counsel may
rely exclusively and without independent verification, as to factual
matters, on the statements made in the Plan, the proxy statement which
will be distributed to the shareholders of Government Fund in connection
with the Reorganization, and on such other written representations as
Government Fund and Income Fund, respectively, will have verified as of
the Effective Time of the Reorganization. The opinion of counsel will be
to the effect that, based on the facts and assumptions stated therein,
for federal income tax purposes:
(i) neither Government Fund nor Income Fund will
recognize any gain or loss upon the transfer of the assets of Government
Fund to and the assumption of its liabilities by Income Fund in exchange
for Income Fund Shares and upon the distribution (whether actual or
constructive) of Income Fund Shares to its shareholders in exchange for
their shares of capital stock of Government Fund;
(ii) the shareholders of Government Fund who receive
Income Fund Shares pursuant to the Reorganization will not recognize any
gain or loss upon the exchange (whether actual or constructive) of their
shares of capital stock of Government Fund for Income Fund Shares
(including any fractional share interests they are deemed to have
received) pursuant to the Reorganization;
(iii) the basis of Income Fund Shares received by
Government Fund's shareholders will be the same as the basis of the
shares of capital stock of Government Fund surrendered in the exchange;
and
(iv) the basis of Government Fund assets acquired by
Income Fund will be the same as the basis of such assets to Government
Fund immediately prior to the Reorganization.
(e) Opinion of Counsel. Government Fund shall have received the
opinion of counsel for Income Fund, dated the Effective Time of the
Reorganization, addressed to and in form and substance satisfactory to
Government Fund, to the effect that:
(i) Calvert is an open-end management company
registered under the Act, and is duly organized and validly existing
under the laws of the State of Massachusetts;
(ii) Income Fund is a series of Calvert;
(iii) the Plan and the Reorganization provided for in
this Agreement and the execution and filing of the Plan have been duly
authorized and approved by all requisite action of Income Fund and the
Plan has been duly executed and delivered by Income Fund and is a valid
and binding obligation of Income Fund; and
(iv) Income Fund Shares to be issued in the
Reorganization have been duly authorized and upon issuance thereof in
accordance with the Plan will be validly issued, fully paid and
non-assessable shares of capital stock of Income Fund.
9. CONDITIONS TO OBLIGATIONS OF INCOME FUND
The obligations of Income Fund under this Agreement with
respect to the consummation of the Reorganization are subject to the
satisfaction of the following conditions:
(a) Representations, Warranties, and Agreements. As of the
Effective Time of the Reorganization, Government Fund shall have
complied with each of its obligations under this Agreement, each of the
representations and warranties contained in this Agreement shall be true
in all material respects, and there shall have been no material adverse
change in the financial condition, results of operations, business,
properties or assets of Government Fund since September 30, 1995. Income
Fund shall have received a certificate from Government Fund satisfactory
in form and substance to Income Fund indicating that it has met the
terms stated in this Section.
(b) Regulatory Approval. All necessary orders of exemption
under the Act with respect to the transactions contemplated by this
Agreement shall have been granted by the Commission, and all approvals,
registrations, and exemptions under state securities laws considered to
be necessary shall have been obtained.
(c) Opinion of Counsel. Income Fund shall have received the
opinion of counsel for Government Fund, dated the Effective Time of the
Reorganization, addressed to and in form and substance satisfactory to
Income Fund, to the effect that:
(i) Calvert is an investment company registered under
the Act, and is duly organized and existing in good standing under the
laws of the State of Massachusetts;
(ii) Government Fund is a series of Calvert; and
(iii) the Plan and the Reorganization provided for in
this Agreement and the execution and filing of the Plan have been duly
authorized and approved by all requisite action by the Board of Calvert
and the Plan will be duly executed and delivered by Government Fund and
is a valid and binding obligation of Calvert and Government Fund.
(d) Tax Opinion. Income Fund shall have received the opinion of
counsel, dated the Effective Time of the Reorganization, addressed to
and in form and substance satisfactory to Income Fund, as to certain of
the federal income tax consequences of the Reorganization under the
Internal Revenue Code to Government Fund and the shareholders of
Government Fund. For purposes of rendering its opinion, counsel may rely
exclusively and without independent verification, as to factual matters,
on the statements made in the Plan, the proxy statement which will be
distributed to the shareholders of Government Fund in connection with
the Reorganization, and on such other written representations as
Government Fund and Income Fund, respectively, will have verified as of
the Effective Time of the Reorganization. The opinion of counsel will be
to the effect that, based on the facts and assumptions stated therein,
for federal income tax purposes:
(i) neither Government Fund nor Income Fund will
recognize any gain or loss upon the transfer of the assets of Government
Fund to, and the assumption of its liabilities by, Income Fund in
exchange for Income Fund Shares and upon the distribution (whether
actual or constructive) of Income Fund Shares to its shareholders in
exchange for their shares of beneficial interest of Government Fund;
(ii) the shareholders of Government Fund who receive
Income Fund Shares pursuant to the Reorganization will not recognize any
gain or loss upon the exchange (whether actual or constructive) of their
shares of capital stock of Government Fund for Income Fund Shares
(including any fractional share interests they are deemed to have
received) pursuant to the Reorganization;
(iii) the basis of Income Fund Shares received by
Government Fund's shareholders will be the same as the basis of the
shares of capital stock of Government Fund surrendered in the exchange;
and
(iv) the basis of Government Fund assets acquired by
Income Fund will be the same as the basis of such assets to Government
Fund immediately prior to the Reorganization.
10. AMENDMENTS, TERMINATIONS, NON-SURVIVAL OF COVENANTS, WARRANTIES
AND REPRESENTATIONS
(a) The parties hereto may, by agreement in writing authorized
by the Board of Trustees, amend the Plan at any time before or after
approval of the Plan by shareholders of Government Fund, but after such
approval, no amendment shall be made that substantially changes the
terms of this Agreement.
(b) At any time prior to the Effective Time of the
Reorganization, any of the parties may by written instrument signed by
it (i) waive any inaccuracies in the representations and warranties made
pursuant to this Agreement, and (ii) waive compliance with any of the
covenants or conditions made for its benefit pursuant to this Agreement.
(c) Government Fund may terminate the Plan at any time prior to
the Effective Time of the Reorganization by notice to Income Fund if (i)
a material condition to its performance under this Agreement or a
material covenant of Income Fund contained in this Agreement is not
fulfilled on or before the date specified for the fulfillment thereof,
or (ii) a material default or material breach of the Plan is made by
Income Fund.
(d) Income Fund may terminate the Plan at any time prior to the
Effective Time of the Reorganization by notice to Government Fund if (i)
a material condition to its performance under this Agreement or a
material covenant of Government Fund contained in this Agreement is not
fulfilled on or before the date specified for the fulfillment thereof,
or (ii) a material default or material breach of the Plan is made by
Government Fund.
(e) The Plan may be terminated by either party at any time
prior to the Effective Time of the Reorganization upon notice to the
other party, whether before or after approval by the shareholders of
Government Fund, without liability on the part of either party hereto or
its respective trustees, officers, or shareholders, and shall be
terminated without liability as of the close of business on September
30, 1995 if the Effective Time of the Reorganization is not on or prior
to such date.
(f) No representations, warranties, or covenants in or pursuant
to the Plan (including certificates of officers) shall survive the
Reorganization.
11. EXPENSES
Government Fund and Income Fund will bear their own expenses
incurred in connection with this Reorganization.
12. GENERAL
This Plan supersedes all prior agreements between the parties
(written or oral), is intended as a complete and exclusive statement of
the terms of the Plan between the parties and may not be changed or
terminated orally. The Plan may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall
become effective when one or more counterparts have been executed by
each party and delivered to each of the parties hereto. The headings
contained in the Plan are for reference purposes only and shall not
affect in any way the meaning or interpretation of the Plan. Nothing in
the Plan, expressed or implied, is intended to confer upon any other
person any rights or remedies by reason of the Plan.
IN WITNESS WHEREOF, Government Fund and Income Fund have caused
the Plan to be executed on their behalf by their respective Chairman,
President, or a Vice President, and their seals to be affixed hereto and
attested by their respective Secretary or Assistant Secretary, all as of
the day and year first above written, and to be delivered as required.
(SEAL)
Attest: CALVERT U.S. GOVERNMENT FUND
By: Susan Walker Bender By: William M. Tartikoff
(SEAL) CALVERT INCOME FUND
By: Susan Walker Bender By: William M. Tartikoff
<PAGE>
The Calvert Fund
STATEMENT OF ADDITIONAL INFORMATION
January 31, 1995
Acquisition of the Assets of
Calvert U.S. Government Fund
(a series of The Calvert Fund)
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
By and In Exchange for Shares of
Calvert Income Fund
(a series of The Calvert Fund)
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
This Statement of Additional Information, relating
specifically to the proposed transfer of all or substantially all of
the assets of Calvert U.S. Government Fund ("Government Fund") in
exchange for shares of Calvert Income Fund ("Income Fund"), consists
of this cover page, the Pro Forma Financial Information, and the
Statement of Additional Information of The Calvert Fund, dated
January 31, 1995, attached hereto and incorporated herein by
reference.
This Statement of Additional Information is not a
prospectus. A Prospectus/Proxy Statement dated ______, 1996, relating
to the above-referenced matter may be obtained from Calvert Group,
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. This
Statement of Additional Information relates to, and should be read in
conjunction with, such Prospectus/Proxy Statement.
The date of this Statement of Additional Information is
January 31, 1995,as revised ______, 1996.
<PAGE>
CALVERT U.S. GOVERNMENT FUND
STATEMENT OF OPERATIONS
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
CALVERT
U.S. GOVERNMENT
INVESTMENT INCOME FUND
<S> <C>
Interest Income $ 680,654
Total investment income 680,654
Expenses - Note B
Investment advisory fee 57,362
Transfer agency fees 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 (LOSS) 520,731
___________
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments 188,613
Net realized gain (loss) on foreign currency
-
Change in unrealized appreciation or
depreciation of investments 1,176,503
Change in unrealized appreciation or
depreciation of foreign currency -
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY 1,365,116
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,349,660
__________
__________
</TABLE>
<PAGE>
CALVERT U.S. GOVERNMENT FUND
CALVERT INCOME FUND
PROFORMA STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
CALVERT
U.S. GOVERNMENT
FUND
<S> <C>
ASSETS
Investments in securities, at value -
see accompanying portfolio $8,908,756
Cash 438,181
Receivable for securities sold 1,044
Interest receivable 136,302
Other assets 4,405
Total assets 9,488,688
CALVERT INCOME
FUND
<S> <C>
ASSETS
Investments in securities, at value -
see accompanying portfolio $42,639,993
Cash 243,385
Receivable for securities sold 1,021,072
Receivable for shares sold 20,685
Interest receivable 668,573
Other assets 6,147
Total assets 44,599,855
PROFORMA COMBINED
<S> <C>
ASSETS
Investments in securities, at value -
see accompanying portfolio $51,548,749
Cash 681,566
Receivable for securities sold 1,021,072
Receivable for shares sold 21,729
Interest receivable 804,875
Other assets 10,522
Total assets 54,088,543
CALVERT
U.S. GOVERNMENT
FUND
LIABILITIES
Payable for securities purchased -
Payable for shares redeemed -
Payable to Calvert Asset Management Company,
Inc. 6,863
Payable to Calvert Shareholder Services, Inc. 1,436
Payable Calvert Distributors, Inc. 2,048
Accrued expenses and other liabilities 6,181
_________
Total liabilities 16,528
_________
Net assets $9,472,160
_________
_________
CALVERT INCOME
FUND
LIABILITIES
Payable for securities purchased 1,101,076
Payable for shares redeemed 30,308
Payable to Calvert Asset Management Company,
Inc. 37,940
Payable to Calvert Shareholder Services, Inc. 4,494
Payable Calvert Distributors, Inc. 5,907
Accrued expenses and other liabilities 17,538
_________
Total liabilities 1,197,263
_________
Net assets $43,402,592
_________
_________
PROFORMA COMBINED
LIABILITIES
Payable for securities purchased 1,101,076
Payable for shares redeemed 30,308
Payable to Calvert Asset Management Company,
Inc. 44,803
Payable to Calvert Shareholder Services, Inc. 5,930
Payable Calvert Distributors, Inc. 7,955
Accrued expenses and other liabilities 23,719
_________
Total liabilities 1,213,791
_________
Net assets $52,874,752
_________
_________
CALVERT
U.S. GOVERNMENT
FUND
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 ASSETS - CLASS A $9,036,855
__________
__________
SHARES OUTSTANDING - CLASS A 618,647
__________
__________
NET ASSET VALUE - CLASS A $ 14.61
__________
__________
Maximum sales charge (3.75% of Class A
Shares offering price). .57
__________
__________
Offering Price per Calss A share $ 15.18
__________
__________
NET ASSETS - CLASS C $ 435,305
__________
__________
SHARES OUTSTANDING - CLASS C 30,048
__________
__________
NET ASSET VALUE - CLASS C $ 14.49
__________
__________
CALVERT INCOME
FUND
NET ASSETS
Net assets consist of:
Paid-in capital applicable to 2,534,815
outstanding Class A shares of beneficial interest,
no par value (unlimited number of shares authorized)42,147,520
Paid-in capital applicable to 46,243
outstanding Class C shares of beneficial interest,
no par value (unlimited number of shares authorized) 737,103
Undistributed net investment income 12,419
Accumulated realized gains (losses) (197,657)
Net unrealized appreciation (depreciation)
on investments 703,207
_________
Net assets $43,402,592
__________
__________
NET ASSETS - CLASS A $42,637,008
__________
__________
SHARES OUTSTANDING - CLASS A 2,534,815
__________
__________
NET ASSET VALUE - CLASS A $ 16.82
__________
__________
Maximum sales charge (3.75% of Class A
Shares offering price). .66
__________
__________
Offering Price per Calss A share $ 17.48
__________
__________
NET ASSETS - CLASS C $ 765,584
__________
__________
SHARES OUTSTANDING - CLASS C 46,243
__________
__________
NET ASSET VALUE - CLASS C $ 16.56
__________
__________
PROFORMA COMBINED
NET ASSETS
Net assets consist of:
Paid-in capital, Class A $51,500,662
Paid-in capital, Class C 1,162,519
Undistributed net investment income 16,735
Accumulated realized gains (losses) (621,820)
Net unrealized appreciation (depreciation)
on investments 816,656
__________
Net assets $52,874,752
__________
__________
NET ASSETS - CLASS A $51,673,863
__________
__________
SHARES OUTSTANDING - CLASS A 3,072,177 <F1>
__________
__________
NET ASSET VALUE - CLASS A $ 16.82
__________
__________
Maximum sales charge (3.75% of Class A
Shares offering price). .66 <F2>
__________
__________
Offering Price per Calss A share $ 17.48
__________
__________
NET ASSETS - CLASS C $1,200,889
__________
__________
SHARES OUTSTANDING - CLASS C 72,535 <F3>
__________
__________
NET ASSET VALUE - CLASS C $ 16.56
__________
__________
<FN>
<F1>The proforma combined shares outstanding consists of 2,534,815 A shares
of Calvert Income Fund and 537,362 A shares of Calvert U.S. Government Fund.
<F2>The maximum sales charge for the Calvert Income Fund and the Calvert
U.S. Government Fund is 3.75%.
<F3>The proforma combined shares outstanding consists of 46,243 C shares of
Calvert Income Fund and 26,292 C shares of Calvert U.S. Government Fund.
</FN>
</TABLE>
- --------------------------------------------------------------------------
PART C. OTHER INFORMATION
- --------------------------------------------------------------------------
Item 15. Indemnification
Registrant's Declaration of Trust, which Declaration is Exhibit
1 of the Initial Registration Statement dated August 1, 1986, provides,
in summary, that officers, trustees, employees, and agents shall be
indemnified by Registrant against liabilities and expenses incurred by
such persons in connection with actions, suits, or proceedings arising
out of their offices or duties of employment, except that no
indemnification can be made to such a person if he has been adjudged
liable of willful misfeasance, bad faith, gross negligence, or reckless
disregard of his duties. In the absence of such an adjudication, the
determination of eligibility for indemnification shall be made by
independent counsel in a written opinion or by the vote of a majority of
a quorum of trustees who are neither "interested persons" of Registrant,
as that term is defined in Section 2(a)(19) of the Investment Company
Act of 1940, nor parties to the proceeding.
Registrant's Declaration of Trust also provides that Registrant
may purchase and maintain liability insurance on behalf of any officer,
trustee, employee or agent against any liabilities arising from such
status. In this regard, Registrant maintains a Directors & Officers
(Partners) Liability Insurance Policy with Chubb Group of Insurance
Companies, 15 Mountain View Road, Warren, New Jersey 07061, providing
Registrant with $5 million in directors and officers liability coverage,
plus $3 million in excess directors and officers liability coverage for
the independent trustees/directors only. Registrant also maintains an $8
million Investment Company Blanket Bond issued by ICI Mutual Insurance
Company, P.O. Box 730, Burlington, Vermont, 05402.
Item 16. Exhibits
1. Declaration of Trust, incorporated by reference to
Registrant's initial registration statement, March 15,
1982.
2. By-Laws, incorporated by reference to Registrant's
Pre-Effective Amendment No. 2, September 3, 1982.
4. Agreement and Plan of Reorganization, filed herewith.
5. Specimen Stock Certificate, with respect to the Calvert
Income Fund and Calvert U.S. Government Fund series,
incorporated by reference to Registrant's
Post-Effective Amendment No. 21, January 29, 1993.
6. Advisory Contract, incorporated by reference to
Registrant's Post-Effective Amendment No. 3, November
1, 1984.
7. Underwriting and Dealer Agreements, incorporated by
reference to Registrant's Post-Effective Amendment No.
27, January 31, 1995.
8. Trustees' Deferred Compensation Agreement, incorporated
by reference to Registrant's Post-Effective Amendment
No. 20, January 28, 1992.
9. Custodian Agreement, incorporated by reference to
Registrant's Post-Effective Amendment No. 21, January
29, 1993.
10. Rule 12b-1 Distribution Plan with respect to
Registrant's Class C shares, incorporated by reference
to Registrant's Post-Effective Amendment No. 27,
January 31, 1995; with respect to Class A shares and
the following series: Calvert Income Fund series,
incorporated by reference to Registrant's Pre-Effective
Amendment No. 2, September 3, 1982; with respect to
Calvert U.S. Government Fund series, incorporated by
reference to Registrant's Post-Effective Amendment No.
8, May 7, 1986.
11. Opinion and Consent of Counsel as to Legality of Shares
Being Registered, filed herewith.
12. Opinion and Consent of Counsel on Tax Matters, filed
herewith.
14. Consent of Independent Accountants to Use of Report, filed
herewith.
16. Copies of Power of Attorney Forms, filed herewith.
17. (a) Current Calvert U.S. Government Fund
Prospectus, filed herewith.
(b) Current Calvert Income Fund Prospectus, filed
herewith.
(c) The Calvert Fund U.S. Government Fund and
Calvert Income Fund Statement of Additional
Information, filed herewith.
(d) The Calvert Fund U.S. Government Fund and
Calvert Income Fund Financial Data Schedules,
filed herewith.
Exhibits 3, 13, and 15 are omitted because they are
inapplicable.
Item 17. Undertakings
(1) Not Applicable
(2) Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed on behalf of the registrant,
in the City of Bethesda, and State of Maryland, on the _____ day of
___________, 1996.
THE CALVERT FUND
By:
Clifton S. Sorrell, Jr.
President and Trustee
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons in the capacities indicated.
Signature Title
Date
Trustee and Principal
__/__/96
Clifton S. Sorrell, Jr. Executive Officer
Principal Accounting
__/__/96
Ronald M. Wolfsheimer Officer
* Trustee
__/__/96
Richard L. Baird, Jr.
* Trustee
__/__/96
Frank H. Blatz, Jr., Esq.
* Trustee
__/__/96
Frederick T. Borts, M.D.
* Trustee
__/__/96
Charles E. Diehl
* Trustee
__/__/96
Douglas E. Feldman
* Trustee
__/__/96
Peter W. Gavian
* Trustee
__/__/96
John G. Guffey, Jr.
* Trustee
__/__/96
Arthur J. Pugh
* Trustee
__/__/96
David R. Rochat
* Trustee
__/__/96
D. Wayne Silby
* By Susan Walker Bender, pursuant to Exhibit 16:
___________________________
<PAGE>
Exhibit 11
___________ __, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Exhibit 11, Form N-14
The Calvert Fund
Ladies and Gentlemen:
As counsel to The Calvert Fund (the "Trust"), it is my opinion,
based upon an examination of the Trust's Declaration of Trust and
By-Laws and such other original or photostatic copies of Trust records,
certificates of public officials, documents, papers, statutes, and
authorities as I deemed necessary to form the basis of this opinion,
that the securities being registered by this Registration Statement
will, when sold, be legally issued, fully paid and non-assessable.
Consent is hereby given to file this opinion of counsel with
the Securities and Exchange Commission as an Exhibit to this
Registration Statement.
Sincerely,
Susan Walker Bender
Associate General Counsel
<PAGE>
Exhibit 12
December 19, 1995
Calvert U.S. Government Fund
Calvert Income Fund
4550 Montgomery Avenue
Bethesda, Maryland 20814
Re: Acquisition of Assets of Calvert U.S. Government Fund
Ladies and Gentlemen:
You have asked for our opinion as to certain tax
consequences of the proposed acquisition of assets of Calvert
U.S. Government Fund ("Selling Fund"), a series of
The Calvert Fund, a Massachusetts business trust (the
"Company"), by Calvert Calvert Income Fund ("Acquiring Fund"),
also a series of the Company, in exchange for
voting shares of Acquiring Fund (the "Reorganization").
In rendering our opinion, we have reviewed and relied upon
the draft Prospectus/Proxy Statement dated December 13, 1995 and
the Agreement and Plan of Reorganization (the "Agreement")
dated as of December 19, 1995. We have relied, without
independent verification, upon the factual statements made
therein, and assume that there will be no change in material
facts disclosed therein between the date of this letter and the
date of closing of the Reorganization. We further assume that
the Reorganization will be carried out in accordance with the
Agreement. We have also relied upon the following
representations, each of which has been made to us by officers of
the Company on behalf of Acquiring Fund or of Selling Fund:
The Reorganization will be consummated substantially
as described in the Agreement.
Acquiring Fund will acquire from Selling Fund at least
90% of the fair market value of the net assets and at least 70%
of the fair market value of the gross assets held by Selling Fund
immediately prior to the Reorganization. For purposes of this
representation, assets of Selling Fund used to pay reorganization
<PAGE>
Calvert U.S. Government Fund
Calvert Income Fund
December 19, 1995
Page 2
expenses, cash retained to pay liabilities, and redemptions and
distributions (except for regular and normal distributions) made
by Selling Fund immediately preceding the transfer which are part
of the plan of reorganization, will be considered as assets held
by Selling Fund immediately prior to the transfer.
To the best of the knowledge of management of Selling
Fund, there is no plan or intention on the part of the
shareholders of Selling Fund to sell, exchange, or otherwise
dispose of a number of Acquiring Fund shares received in the
Reorganization that would reduce the former Selling Fund
shareholders' ownership of Acquiring Fund shares to a number of
shares having a value, as of the date of the Reorganization
(the "Closing Date"), of less than 50 percent of the value of all
of the formerly outstanding shares of Selling Fund as of the same
date. For purposes of this representation, Selling Fund shares
exchanged for cash or other property will be treated as
outstanding Selling Fund shares on the Closing Date. There are
no dissenters' rights in the Reorganization, and no cash will
be exchanged for Selling Fund shares in lieu of fractional shares
of Acquiring Fund. Moreover, shares of Selling Fund and shares
of Acquiring Fund held by Selling Fund shareholders and otherwise
sold, redeemed, or disposed of prior or subsequent to the
Reorganization will be considered in making this
representation, except for shares of Selling Fund or Acquiring
Fund redeemed in the ordinary course of business of Selling Fund
or Acquiring Fund in accordance with the requirements of section
22(e) of the Investment Company Act of 1940.
Selling Fund has not redeemed and will not redeem the
shares of any of its shareholders in connection with the
Reorganization except to the extent necessary to comply with
its legal obligation to redeem its shares.
The management of Acquiring Fund has no plan or
intention to redeem or reacquire any of the Acquiring Fund shares
to be received by Selling Fund shareholders in connection with
the Reorganization, except to the extent necessary to comply
with its legal obligation to redeem its shares.
The management of Acquiring Fund has no plan or
intention to sell or dispose of any of the assets of Selling Fund
which will be acquired by Acquiring Fund in the Reorganization,
except for dispositions made in the ordinary course of business,
<PAGE>
Calvert Responsibly Invested
Bond Portfolio
Calvert Responsibly Invested
Balanced Portfolio
December 19, 1995
Page 3
and to the extent necessary to enable Acquiring Fund to comply
with its legal obligation to redeem its shares.
Following the Reorganization, Acquiring Fund will
continue the historic business of Selling Fund in a substantially
unchanged manner as part of the regulated investment company
business of Acquiring Fund, or will use a significant portion of
Selling Fund's historic business assets in a business.
There is no intercorporate indebtedness between
Acquiring Fund and Selling Fund.
Acquiring Fund does not own, directly or indirectly,
and has not owned in the last five years, directly or indirectly,
any shares of Selling Fund. Acquiring Fund will not acquire any
shares of Selling Fund prior to the Closing Date.
Acquiring Fund will not make any payment of cash or of
property other than shares to Selling Fund or to any shareholder
of Selling Fund in connection with the Reorganization.
Pursuant to the Agreement, the shareholders of Selling
Fund will receive solely Acquiring Fund voting shares in exchange
for their voting shares of Selling Fund.
The fair market value of the Acquiring Fund shares to
be received by the Selling Fund shareholders will be
approximately equal to the fair market value of the Selling Fund
shares surrendered in exchange therefor.
Subsequent to the transfer of Selling Fund's assets to
Acquiring Fund pursuant to the Agreement, Selling Fund will
distribute the shares of Acquiring Fund, together with other
assets it may have, in final liquidation as expeditiously as
possible.
Selling Fund is not under the jurisdiction of a court
in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Internal Revenue Code of 1986, as amended
(the "Code").
Selling Fund is treated as a corporation for federal
income tax purposes and at all times in its existence has
qualified as a regulated investment company, as defined in Section 851
of the Code.
<PAGE>
Calvert Responsibly Invested
Bond Portfolio
Calvert Responsibly Invested
Balanced Portfolio
December 19, 1995
Page 4
Acquiring Fund is treated as a corporation for federal
income tax purposes and at all times in its existence has
qualified as a regulated investment company, as defined in Section 851
of the Code.
The sum of the liabilities of Selling Fund to be
assumed by Acquiring Fund and the expenses of the
Reorganization does not exceed twenty percent of the fair
market value of the assets of Selling Fund.
The foregoing representations are true on the date of
this letter and will be true on the date of closing of the
Reorganization.
Based on and subject to the foregoing, and our examination
of the legal authority we have deemed to be relevant, it is our
opinion that for federal income tax purposes:
The acquisition by Acquiring Fund of substantially all
of the assets of Selling Fund solely in exchange for voting
shares of Acquiring Fund followed by the distribution by Selling
Fund of said Acquiring Fund shares to the shareholders of Selling
Fund in exchange for their Selling Fund shares will constitute a
reorganization within the meaning of Section 368(a)(1)(C) of the Code,
and Acquiring Fund and Selling Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code.
No gain or loss will be recognized to Selling Fund upon
the transfer of substantially all of its assets to Acquiring Fund
solely in exchange for Acquiring Fund voting shares and
assumption by Acquiring Fund of certain identified liabilities of
Selling Fund, or upon the distribution of such Acquiring Fund
voting shares to the shareholders of Selling Fund in exchange for
all of their Selling Fund shares.
No gain or loss will be recognized by Acquiring Fund
upon the receipt of the assets of Selling Fund (including any
cash retained initially by Selling Fund to pay liabilities but
later transferred) solely in exchange for Acquiring Fund voting
shares and assumption by Acquiring Fund of certain identified
liabilities of Selling Fund.
The basis of the assets of Selling Fund acquired by
Acquiring Fund will be the same as the basis of those assets in
the hands of Selling Fund immediately prior to the transfer, and
<PAGE>
Calvert Responsibly Invested
Bond Portfolio
Calvert Responsibly Invested
Balanced Portfolio
December 19, 1995
Page 5
the holding period of the assets of Selling Fund in the hands of
Acquiring Fund will include the period during which those assets
were held by Selling Fund.
The shareholders of Selling Fund will recognize no gain
or loss upon the exchange of all of their Selling Fund shares
solely for Acquiring Fund voting shares. Gain, if any, will be
realized by Selling Fund shareholders who in exchange for their
Selling Fund shares receive other property or money in addition
to Acquiring Fund shares, and will be recognized, but not in
excess of the amount of cash and the value of such other property
received. If the exchange has the effect of the distribution of
a dividend, then the amount of gain recognized that is not in
excess of the ratable share of undistributed earnings and profits
of Selling Fund will be treated as a dividend.
The basis of the Acquiring Fund voting shares to be
received by the Selling Fund shareholders will be the same as the
basis of the Selling Fund shares surrendered in exchange
therefor.
The holding period of the Acquiring Fund voting shares
to be received by the Selling Fund shareholders will include the
period during which the Selling Fund shares surrendered in
exchange therefor were held, provided the Selling Fund shares
were held as a capital asset on the date of the exchange.
This opinion letter is delivered to you in satisfaction of
the requirements of sections 8.D. and 9.D. of the Agreement. We hereby
consent to the filing of this opinion as an exhibit to the
Registration Statement on Form N-14 and to use of our name and
any reference to our firm in the Registration Statement or in the
Prospectus/Proxy Statement constituting a part thereof. In
giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
SULLIVAN & WORCESTER
A Registered Limited Liability Partnership
<PAGE>
Exhibit 14
CONSENT OF INDEPENDENT AUDITORS
We consent to the following with respect to the reigstration of securities
on Form N-14 under the Securities Act of 1933, relative to the transfer of all
the assets and liabilities of The Calvert Fund, Calvert U.S. Government Fund
Portfolio to The Calvert Fund, Calvert Income Fund Portfolio in exchange for
shares of The Calvert Fund, Income Fund Portfolio.
1. The inclusion of our report dated November 9, 1995 on our audit of the
financial statements and financial highlights of The Calvert Income Fund,
which report is included in the Annual Report to Shareholders for the year
ended September 30, 1995.
2. The incorporation by reference of our report dated November 29, 1994
on our audit of the financial statements and financial highlights of The
Calvert Income Fund, which report is included in the Annual Report to
Shareholders for the year ended September 30, 1994, in the Statement of
Additional Information of The Calvert Fund, dated January 31, 1995.
3. The reference to our Firm under the heading "Independent Accountants and
Custodians" in the Statment of Additional Information of The Calvert Fund,
dated January 31, 1995.
COOPERS & LYBRAND, L.L.P.
Baltimore, Maryland
December 22, 1995
<PAGE>
Exhibit 16
Ex-99.16
POWER OF ATTORNEY
I, the undersigned Director of The Calvert Fund (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1995 Clifton S. Sorrell
Date Signature
Donald K. Sorrell Clifton S. Sorrell
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of The Calvert Fund (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
March 1, 1995 Ronald M. Wolfsheimer
Date Signature
Katherine Stoner Ronald M. Wolfsheimer
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of The Calvert Fund (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1995 Richard L. Baird, Jr.
Date Signature
C.S. Sorrell, Jr. Richard L. Baird, Jr.
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of Calvert Tax-Free Reserves (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1995 Frank H. Blatz, Jr.
Date Signature
Charles E. Diehl Frank H. Blatz, Jr.
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of The Calvert Fund (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1995 Frederick T. Borts
Date Signature
John G. Guffey, Jr. Frederick T. Borts
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of The Calvert Fund (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1995 Douglas E. Feldman
Date Signature
Richard L. Baird, Jr. Douglas E. Feldman
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of The Calvert Fund (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1995 John G. Guffey, Jr.
Date Signature
Frederick T. Borts, M.D. John G. Guffey, Jr.
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of The Calvert Fund (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1995 Arthur J. Pugh
Date Signature
Sharon H. Pugh Arthur J. Pugh
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of The Calvert Fund (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1995 David R. Rochat
Date Signature
Ronald M. Wolfsheimer David R. Rochat
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of The Calvert Fund (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1995 D. Wayne Sibley
Date Signature
Frederick T. Borts, M.D. D. Wayne Sibley
Witness Name of Director
<PAGE>
PROSPECTUS Exhibit 17 (a)
January 31, 1995
THE CALVERT FUND
Calvert U. S. Government Fund
Calvert Income Fund
4550 Montgomery Avenue, Bethesda, Maryland 20814
INVESTMENT OBJECTIVES
Calvert U.S. Government Fund seeks to provide high current income consistent
with safety of principal by investing in a professionally managed portfolio
consisting primarily of U.S. Government-backed obligations. There is no
limitation on the maturity of obligations in which Calvert U.S. Government Fund
may invest.
Calvert Income Fund seeks to maximize long-term income, to the extent consistent
with prudent investment management and preservation of capital, through
investment in bonds and other income producing securities of investment grade
quality.
Each Fund offers two classes of shares, each with different expense levels and
sales charges. You may choose to purchase (i) Class A shares, with a sales
charge imposed at the time you purchase the shares ("front-end sales charge");
or (ii) Class C shares which impose neither a front-end sales charge nor a
contingent deferred sales charge. Class C shares are not available through all
dealers. Class C shares have a higher level of expenses than Class A shares,
including higher Rule 12b-1 fees. These alternatives permit you to choose the
method of purchasing shares that is most beneficial to you, depending on the
amount of the purchase, the length of time you expect to hold the shares, and
other circumstances. See "Alternative Sales Options" for further details.
TO OPEN AN ACCOUNT
Call your broker, or complete and return the enclosed Account Application.
Minimum investment is $2,000 per Fund.
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
Funds' goals match your own. Keep this document for future reference.
A Statement of Additional Information for the Funds (dated January 31, 1995) has
been filed with the Securities and Exchange Commission and is incorporated by
reference. This free Statement is available upon request from the Fund:
800-368-2748.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE FEDERAL OR
ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY. WHEN INVESTORS SELL SHARES OF THE FUND, THE VALUE
MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY PAID FUND EXPENSES
<TABLE>
<CAPTION>
CALVERT INCOME FUND
Class A Class C
<S> <C> <C>
A. Shareholder Transaction Costs
Maximum Sales Charge on 3.75% None
Purchases (as a percentage
of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses<F1>
Fiscal Year 1994 (as a percentage
of net assets, net of any applicable
expense reimbursement/fee waiver)
Management Fees 0.70% 0.70%
Rule 12b-1 Service and
Distribution Fees 0.25% 1.00%
Other Expenses 0.31% 1.13%
Total Fund Operating Expenses 1.26% 2.83%
<FN>
<F1>Expense ratios for Class A shares have been restated to reflect expenses
anticipated for fiscal year 1995.
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
CALVERT U.S. GOVERNMENT FUND
Class A Class C
<S> <C> <C>
A. Shareholder Transaction Costs
Maximum Sales Charge on 3.75% None
Purchases (as a percentage
of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses<F2>
Fiscal Year 1994 (as a percentage
of net assets, net of any applicable
expense reimbursement/fee waiver)
Management Fees 0.60% 0.60%
Rule 12b-1 Service and
Distribution Fees 0.25% 1.00%
Other Expenses 0.50% 0.93%
Total Fund Operating Expenses 1.35% 2.53%
<FN>
<F2>Expense ratios for Class A shares have been restated to reflect expenses
anticipated for fiscal year 1995.
</FN>
</TABLE>
C. 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 period:
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Calvert Income Fund
Class A<F3> $50 $76 $104 $184
Class C $29 $88 $149 $316
Calvert U.S. Government Fund
Class A<F2> $51 $79 $109 $194
Class C $26 $79 $135 $287
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 may bear directly
(shareholder transaction costs) or indirectly (annual fund operating expenses).
<FN>
<F2>Expense ratios for Class A shares have been restated to reflect expenses
anticipated for fiscal year 1995.
<F3>Assumes payment of maximum initial sales charge at time of purchase.
</FN>
</TABLE>
A. Shareholder Transaction Costs are charges you pay when you buy or sell shares
of the Fund. See "Reduced Sales Charges" at Exhibit A to see if you qualify for
possible reductions in the sales charge. If you request a wire redemption of
less than $1,000, you will be charged a $5 wire fee.
B. Annual Fund Operating Expenses. Management Fees are paid by the Fund to
Calvert Asset Management Company, Inc. ("Investment Advisor") for managing the
Funds' investments and business affairs. The Funds incur 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 Funds' share price and are not charged directly to individual
shareholder accounts. Please refer to "Management of the Fund" for further
information.
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.
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.
================================================================================
FINANCIAL HIGHLIGHTS
The following tables provide information about the financial history of each
Fund's Class A and C shares. They express the information in terms of a single
share outstanding for the respective Fund throughout each period. The tables
have been audited by those independent accountants whose reports are included in
the respective Annual Reports to Shareholders of the Funds. The tables should be
read in conjunction with the financial statements and their related notes. The
current Annual Reports to Shareholders are incorporated by reference into the
Statement of Additional Information.
<TABLE>
<CAPTION>
Calvert Income Fund Class C Shares
From Inception
(March 1, 1994) To
September 30, 1994
<S> <C>
Net asset value, beginning of period $17.35
Income from investment operations
Net investment income .57
Net realized and unrealized gain
(loss) on investments (1.67)
Total from investment operations (1.10)
Distributions to shareholders
Dividends from net investment income (.62)
Distribution from capital gains --
Total Distributions (.62)
Total increase (decrease) in
net asset value (1.72)
Net asset value, end of period $15.63
Total return<F4> (5.47)%
Ratio of expenses to average
net assets 2.65%(a)
Ratio of net income to average
net assets 5.62%(a)
Increase reflected in above net
investment income ratios due to
expense reimbursement 7.29%(a)
Portfolio turnover 34%
Net assets, end of period $413,187
Number of shares outstanding
at end of period (in thousands) 26
<FN>
<F4>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund Class A Shares
Year Ended
September 30, 1994
<S> <C>
Net asset value, beginning of period $18.41
Income from investment operations
Net investment income 1.16
Net realized and unrealized gain
(loss) on investments (2.42)
Total from investment operations (1.26)
Distributions to shareholders
Dividends from net investment income (1.16)
Distribution from capital gains (.31)
Total Distributions (1.47)
Total increase (decrease) in
net asset value (2.73)
Net asset value, end of period $15.68
Total return<F4> (6.94)%
Ratio of expenses to average
net assets 1.07%
Ratio of net income to average
net assets 6.86%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 34%
Net assets, end of period $45,935,905
Number of shares outstanding
at end of period (in thousands) 2,929
<FN>
<F4>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
Calvert Income Fund
Class A Shares
Year Ended September 30, 1993
<S> <C>
Net asset value, beginning of period $17.50
Income from investment operations
Net investment income 1.23
Net realized and unrealized gain
(loss) on investments .91
Total from investment operations 2.14
Distributions to shareholders
Dividends from net investment income (1.23)
Distribution from capital gains --
Total Distributions (1.23)
Total increase (decrease) in
net asset value .91
Net asset value, end of period $18.41
Total return<F5> 12.47%
Ratio of expenses to average
net assets 1.00%
Ratio of net income to average
net assets 6.93%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 25%
Net assets, end of period $53,134,459
Number of shares outstanding
at end of period (in thousands) 2,886
<FN>
<F5>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund
Class A Shares
Year Ended September 30, 1992
<S> <C>
Net asset value, beginning of period $16.61
Income from investment operations
Net investment income 1.28
Net realized and unrealized gain
(loss) on investments .89
Total from investment operations 2.17
Distributions to shareholders
Dividends from net investment income (1.28)
Distribution from capital gains --
Total Distributions (1.28)
Total increase (decrease) in
net asset value .89
Net asset value, end of period $17.50
Total return<F5> 13.66%
Ratio of expenses to average
net assets 1.04%
Ratio of net income to average
net assets 7.59%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 18%
Net assets, end of period $43,494,326
Number of shares outstanding
at end of period (in thousands) 2,486
<FN>
<F5>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund
Class A Shares
Year Ended September 30, 1991
<S> <C>
Net asset value, beginning of period $15.58
Income from investment operations
Net investment income 1.31
Net realized and unrealized gain
(loss) on investments 1.03
Total from investment operations 2.34
Distributions to shareholders
Dividends from net investment income (1.31)
Distribution from capital gains --
Total Distributions (1.31)
Total increase (decrease) in
net asset value 1.03
Net asset value, end of period $16.61
Total return<F6> 15.72%
Ratio of expenses to average
net assets 1.08%
Ratio of net income to average
net assets 8.22%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 27%
Net assets, end of period $36,412,545
Number of shares outstanding
at end of period (in thousands) 2,193
<FN>
<F6>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund
Class A Shares
Year Ended September 30, 1990
<S> <C>
Net asset value, beginning of period $16.36
Income from investment operations
Net investment income 1.36
Net realized and unrealized gain
(loss) on investments (.78)
Total from investment operations .58
Distributions to shareholders
Dividends from net investment income (1.36)
Distribution from capital gains --
Total Distributions (1.36)
Total increase (decrease) in
net asset value (.78)
Net asset value, end of period $15.58
Total return<F6> 3.63%
Ratio of expenses to average
net assets 1.05%
Ratio of net income to average
net assets 8.42%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 5%
Net assets, end of period $32,201,363
Number of shares outstanding
at end of period (in thousands) 2,066
<FN>
<F6>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund
Class A Shares
Year Ended September 30, 1989
<S> <C>
Net asset value, beginning of period $15.70
Income from investment operations
Net investment income 1.36
Net realized and unrealized gain
(loss) on investments .71
Total from investment operations 2.07
Distributions to shareholders
Dividends from net investment income (1.41)
Distribution from capital gains --
Total Distributions (1.41)
Total increase (decrease) in
net asset value .66
Net asset value, end of period $16.36
Total return<F7> 13.48%
Ratio of expenses to average
net assets 1.07%
Ratio of net income to average
net assets 8.57%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 19%
Net assets, end of period $22,969,095
Number of shares outstanding
at end of period (in thousands) 1,404
<FN>
<F7>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund
Class A Shares
Year Ended September 30, 1988
<S> <C>
Net asset value, beginning of period $15.29
Income from investment operations
Net investment income 1.42
Net realized and unrealized gain
(loss) on investments .71
Total from investment operations 2.13
Distributions to shareholders
Dividends from net investment income (1.42)
Distribution from capital gains (.30)
Total Distributions (1.72)
Total increase (decrease) in
net asset value .41
Net asset value, end of period $15.70
Total return<F7> 14.67%
Ratio of expenses to average
net assets .94%
Ratio of net income to average
net assets 9.07%
Increase reflected in above net
investment income ratios due to
expense reimbursement .25%
Portfolio turnover 37%
Net assets, end of period $20,374,751
Number of shares outstanding
at end of period (in thousands) 1,298
<FN>
<F7>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund
Class A Shares
Year Ended September 30, 1987
<S> <C>
Net asset value, beginning of period $17.04
Income from investment operations
Net investment income 1.51
Net realized and unrealized gain
(loss) on investments (1.61)
Total from investment operations (.10)
Distributions to shareholders
Dividends from net investment income (1.47)
Distribution from capital gains (.18)
Total Distributions (1.65)
Total increase (decrease) in
net asset value (1.75)
Net asset value, end of period $15.29
Total return<F8> (.84)%
Ratio of expenses to average
net assets .85%
Ratio of net income to average
net assets 9.06%
Increase reflected in above net
investment income ratios due to
expense reimbursement .25%
Portfolio turnover 42%
Net assets, end of period $20,573,546
Number of shares outstanding
at end of period (in thousands) 1,345
<FN>
<F8>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund
Class A Shares
Year Ended September 30, 1986
<S> <C>
Net asset value, beginning of period $15.78
Income from investment operations
Net investment income 1.57
Net realized and unrealized gain
(loss) on investments 1.26
Total from investment operations 2.83
Distributions to shareholders
Dividends from net investment income (1.57)
Distribution from capital gains --
Total Distributions (1.57)
Total increase (decrease) in
net asset value 1.26
Net asset value, end of period $17.04
Total return<F8> 18.38%
Ratio of expenses to average
net assets .85%
Ratio of net income to average
net assets 9.16%
Increase reflected in above net
investment income ratios due to
expense reimbursement .33%
Portfolio turnover 23%
Net assets, end of period $21,455,859
Number of shares outstanding
at end of period (in thousands) 1,259
<FN>
<F8>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund
Class A Shares
Year Ended September 30, 1985
<S> <C>
Net asset value, beginning of period $14.30
Income from investment operations
Net investment income 1.72
Net realized and unrealized gain
(loss) on investments 1.53
Total from investment operations 3.25
Distributions to shareholders
Dividends from net investment income (1.77)
Distribution from capital gains --
Total Distributions (1.77)
Total increase (decrease) in
net asset value 1.48
Net asset value, end of period $15.78
Total return<F9> 23.31%
Ratio of expenses to average
net assets .82%
Ratio of net income to average
net assets 10.74%
Increase reflected in above net
investment income ratios due to
expense reimbursement .61%
Portfolio turnover 11%
Net assets, end of period $13,428,901
Number of shares outstanding
at end of period (in thousands) 851
<FN>
<F9>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert U.S. Government Fund Class C Shares
From Inception
(March 1, 1994) To
September 30, 1994
<S> <C>
New asset value, beginning of period $14.77
Income from investment operations
Net investment income .34
Net realized and unrealized gain
(loss) on investments (1.01)
Total from investment operations (.67)
Distributions to shareholders
Dividends from net investment income (.39)
Distribution from capital gains --
Total Distributions (.39)
Total increase (decrease) in
net asset value (1.06)
Net asset value, end of period $13.71
Total return<F10> (3.58)%
Ratio of expenses to average
net assets 2.41%(a)
Ratio of net income to average
net assets 4.39%(a)
Increase reflected in above net
investment income ratio due to
expense reimbursement 7.96%(a)
Portfolio turnover 99%
Net assets, end of period $301,837
Number of shares outstanding
at end of period (in thousands) 22
<FN>
<F10>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert U.S. Government Fund Class A Shares
Year Ended
September 30, 1994
<S> <C>
New asset value, beginning of period $16.17
Income from investment operations
Net investment income .75
Net realized and unrealized gain
(loss) on investments (1.53)
Total from investment operations (.78)
Distributions to shareholders
Dividends from net investment income (.75)
Distribution from capital gains (.90)
Total Distributions (1.65)
Total increase (decrease) in
net asset value (2.43)
Net asset value, end of period $13.74
Total return<F10> (5.19)%
Ratio of expenses to average
net assets 1.02%
Ratio of net income to average
net assets 4.99%
Increase reflected in above net
investment income ratio due to
expense reimbursement --
Portfolio turnover 99%
Net assets, end of period $9,720,843
Number of shares outstanding
at end of period (in thousands) 708
<FN>
<F10>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert U.S. Government Fund
Class A Shares
Year Ended September 30, 1993
<S> <C>
Net asset value, beginning of period $15.72
Income from investment operations
Net investment income .87
Net realized and unrealized gain
(loss) on investments .45
Total from investment operations 1.32
Distributions to shareholders
Dividends from net investment income (.87)
Distribution from capital gains --
Total Distributions (.87)
Total increase (decrease) in
net asset value .45
Net asset value, end of period $16.17
Total return<F11> 8.70%
Ratio of expenses to average
net assets .95%
Ratio of net income to average
net assets 5.49%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover 191%
Net assets, end of period $13,652,275
Number of shares outstanding
at end of period (in thousands) 844
<FN>
<F11>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert U.S. Government Fund
Class A Shares
Year Ended September 30, 1992
<S> <C>
Net asset value, beginning of period $15.19
Income from investment operations
Net investment income .95
Net realized and unrealized gain
(loss) on investments .53
Total from investment operations 1.48
Distributions to shareholders
Dividends from net investment income (.95)
Distribution from capital gains --
Total Distributions (.95)
Total increase (decrease) in
net asset value .53
Net asset value, end of period $15.72
Total return<F11> 10.07%
Ratio of expenses to average
net assets 1.11%
Ratio of net income to average
net assets 6.15%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover --
Net assets, end of period $13,222,748
Number of shares outstanding
at end of period (in thousands) 841
<FN>
<F11>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert U.S. Government Fund
Class A Shares
Year Ended September 30, 1991
<S> <C>
Net asset value, beginning of period $14.50
Income from investment operations
Net investment income 1.00
Net realized and unrealized gain
(loss) on investments .69
Total from investment operations 1.69
Distributions to shareholders
Dividends from net investment income (1.00)
Distribution from capital gains --
Total Distributions (1.00)
Total increase (decrease) in
net asset value .69
Net asset value, end of period $15.19
Total return<F12> 12.07%
Ratio of expenses to average
net assets 1.26%
Ratio of net income to average
net assets 6.69%
Increase reflected in above net
investment income ratios due to
expense reimbursement --
Portfolio turnover --
Net assets, end of period $11,935,308
Number of shares outstanding
at end of period (in thousands) 785
<FN>
<F12>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert U.S. Government Fund
Class A Shares
Year Ended September 30, 1990
<S> <C>
Net asset value, beginning of period $14.52
Income from investment operations
Net investment income 1.13
Net realized and unrealized gain
(loss) on investments (.02)
Total from investment operations 1.11
Distributions to shareholders
Dividends from net investment income (1.13)
Distribution from capital gains --
Total Distributions (1.13)
Total increase (decrease) in
net asset value (.02)
Net asset value, end of period $14.50
Total return<F12> 7.91%
Ratio of expenses to average
net assets .75%
Ratio of net income to average
net assets 7.77%
Increase reflected in above net
investment income ratios due to
expense reimbursement .51%
Portfolio turnover --
Net assets, end of period $5,624,122
Number of shares outstanding
at end of period (in thousands) 388
<FN>
<F12>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert U.S. Government Fund
Class A Shares
Year Ended September 30, 1989
<S> <C>
Net asset value, beginning of period $14.34
Income from investment operations
Net investment income 1.19
Net realized and unrealized gain
(loss) on investments .21
Total from investment operations 1.40
Distributions to shareholders
Dividends from net investment income (1.22)
Distribution from capital gains --
Total Distributions (1.22)
Total increase (decrease) in
net asset value .18
Net asset value, end of period $14.52
Total return<F13> 10.20%
Ratio of expenses to average
net assets .75%
Ratio of net income to average
net assets 8.32%
Increase reflected in above net
investment income ratios due to
expense reimbursement .54%
Portfolio turnover --
Net assets, end of period $3,379,592
Number of shares outstanding
at end of period (in thousands) 233
<FN>
<F13>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert U.S. Government Fund
Class A Shares
Year Ended September 30, 1988
<S> <C>
Net asset value, beginning of period $13.54
Income from investment operations
Net investment income 1.23
Net realized and unrealized gain
(loss) on investments .80
Total from investment operations 2.03
Distributions to shareholders
Dividends from net investment income (1.23)
Distribution from capital gains --
Total Distributions (1.23)
Total increase (decrease) in
net asset value .80
Net asset value, end of period $14.34
Total return<F13> 15.36%
Ratio of expenses to average
net assets .53%
Ratio of net income to average
net assets 8.60%
Increase reflected in above net
investment income ratios due to
expense reimbursement 1.10%
Portfolio turnover 8%
Net assets, end of period $2,988,364
Number of shares outstanding
at end of period (in thousands) 208
<FN>
<F13>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert U.S. Government Fund
Class A Shares
Year Ended September 30, 1987
<S> <C>
Net asset value, beginning of period $14.77
Income from investment operations
Net investment income 1.23
Net realized and unrealized gain
(loss) on investments (1.26)
Total from investment operations (.03)
Distributions to shareholders
Dividends from net investment income (1.20)
Distribution from capital gains --
Total Distributions (1.20)
Total increase (decrease) in
net asset value (1.23)
Net asset value, end of period $13.54
Total return<F14> (.54)%
Ratio of expenses to average
net assets .50%
Ratio of net income to average
net assets 8.58%
Increase reflected in above net
investment income ratios due to
expense reimbursement 1.31%
Portfolio turnover 115%
Net assets, end of period $2,416,948
Number of shares outstanding
at end of period (in thousands) 179
<FN>
<F14>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert U.S. Government Fund
Class A Shares
From Inception
(May 22, 1986
To September 30,
1986
<S> <C>
Net asset value, beginning of period $15.00
Income from investment operations
Net investment income .35
Net realized and unrealized gain
(loss) on investments (.24)
Total from investment operations .11
Distributions to shareholders
Dividends from net investment income (.34)
Distribution from capital gains --
Total Distributions (.34)
Total increase (decrease) in
net asset value (.23)
Net asset value, end of period $14.77
Total return<F14> .72%
Ratio of expenses to average
net assets .50%(a)
Ratio of net income to average
net assets 7.01%(a)
Increase reflected in above net
investment income ratios due to
expense reimbursement 4.53%(a)
Portfolio turnover --
Net assets, end of period $902,868
Number of shares outstanding
at end of period (in thousands) 61
<FN>
<F14>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
INVESTMENT OBJECTIVES AND POLICIES
Calvert U.S. Government Fund invests primarily in U.S. Government-backed
obligations.
Calvert U.S. Government Fund seeks to provide high current income consistent
with safety of principal by investing in a professionally managed portfolio
consisting primarily of U.S. Government-backed obligations. There is no limit on
the maturity of securities in which Calvert U.S. Government Fund may invest.
Under normal circumstances, this Fund attempts to invest 100% of its assets in
U.S. Government-backed obligations which include:
(1) Mortgage pass-through certificates issued by the Government National
Mortgage Association (known as "GNMAs" or "Ginnie Maes");
(2) Direct obligations of the United States Treasury which consist of U.S.
Treasury bills (having maturities of one year or less), U.S. Treasury notes
(having maturities of one to ten years) and U.S. Treasury bonds (generally
having maturities greater than ten years);
(3) Obligations issued or guaranteed by the United States Government, its
agencies, or its instrumentalities which are supported by: (a) the full faith
and credit of the U.S. Government (for example, GNMAs); (b) the right of the
issuer to borrow an amount limited to a specific line of credit for the U.S.
Government (for example, obligations of the Federal National Mortgage
Association, known as "Fannie Maes"); and (c) the credit of the agency or
instrumentality (for example, obligations of the Federal Home Loan Mortgage
Corporation, known as "Freddie Macs");
(4) Securities collateralized by the mortgage-related obligations described
above ("collateralized mortgage obligations" or "CMOs"); and
(5) U.S. Government-backed obligations subject to repurchase agreements with
recognized securities dealers and banks.
The Advisor anticipates that a substantial portion of the Government-backed
obligations in Calvert U.S. Government Fund's portfolio will consist of GNMAs
although there is no set percentage that must be invested in GNMAs.
Calvert Income Fund invests in corporate bonds. 80% of its assets must be
invested in bonds of investment grade quality.
Calvert Income Fund seeks to maximize long-term income, to the extent consistent
with prudent investment management and preservation of capital, primarily
through investment in investment grade bonds and other income-producing
securities. Debt securities may be long-term, intermediate-term, short-term, or
any combination thereof, depending on the Advisor's evaluation of current and
anticipated market patterns and trends. The Advisor expects that the Fund's
average weighted maturity will range between 5 and 20 years.
Calvert Income Fund invests 80% of its assets in corporate obligations which at
the date of investment are rated within the four highest grades established by
Moody's Investors Services, Inc. (Aaa, Aa, A, or Baa), or by Standard and Poor's
Corporation (AAA, AA, A, or BBB), or if not rated, are of comparable quality as
determined by the Advisor. Though still investment grade, securities rated
BBB/Baa possess certain speculative elements and are generally more susceptible
to changing market conditions. All fixed income instruments are subject to
interest-rate risk; that is, when market interest rates rise, the current
principal value of a bond will decline.
The remaining 20% of the Fund's total assets may consist of other debt
securities (see below) including bonds rated below BBB or Baa ("non-investment
grade securities," commonly known as "junk bonds"). With lower rated bonds,
there is a greater possibility that an adverse change in the financial condition
of the issuer may affect its ability to pay principal and interest. In addition,
to the extent the Fund holds any such bonds, it may be negatively affected by
adverse economic developments, increased volatility or a lack of liquidity. See
the Statement of Additional Information, "Non-Investment Grade Debt Securities,"
and bond ratings.
Calvert Income Fund may also purchase obligations issued or guaranteed as to
principal by the U.S. Government or its agencies or instrumentalities;
certificates of deposit, time deposits, and bankers' acceptances of U.S. banks
and their branches located outside of the U.S. and of U.S. branches of foreign
banks, provided that the bank has total assets of at least one billion dollars
or the equivalent in other currencies; commercial paper which at the date of
investment is rated Prime-2 or better by Moody's, A-2 or better by Standard &
Poor's, or, if not rated, is of comparable quality as determined by the Advisor;
and any of the above securities subject to repurchase agreements with recognized
securities dealers and banks. Up to 20% of the value of the Fund's total assets
may consist of other debt securities (including securities convertible into or
carrying warrants to purchase common stock or other equity securities) and
income-producing preferred and common stocks.
GNMA Certificates
GNMA Certificates, or GNMAs, are mortgage-backed securities representing
ownership of mortgage or construction loans that are issued by lenders such as
mortgage bankers, commercial banks and savings and loan associations and are
either insured by the Federal Housing Administration or guaranteed by the
Veterans Housing Administration. The GNMA may be secured by a single mortgage,
such as a large multi-family housing development, or, more typically, by a
"pool" or group of single-family housing mortgages.
Once approved by GNMA, the timely payment of interest and principal on each
mortgage is guaranteed by GNMA and backed by the full faith and credit of the
U.S. Government. GNMAs differ from bonds in that principal is paid back monthly
by the borrower over the term of the loan rather than returned in a lump sum at
maturity. GNMAs are called "pass-through" securities because both interest and
principal payments (including prepayments) are passed through to the holder of
the GNMA. Upon receipt, principal payments will be reinvested by the Fund in
additional securities at the then prevailing interest rate. The amount of any
premium that may be paid upon purchase of a GNMA is not guaranteed. The Advisor
will attempt, through careful evaluation of available GNMA issues and prevailing
market conditions, to invest in GNMAs which provide a high income return but are
not subject to substantial risk of loss of principal. Accordingly, the Advisor
may forgo the opportunity to invest in certain issues of GNMAs which would
provide a high current income yield if the Advisor believes that such issues
would be subject to a risk of prepayment or loss of principal over the long-term
that would outweigh the short-term increment in yield.
Collateralized Mortgage Obligations
Collateralized mortgage obligations ("CMOs") are bonds which are the general
obligations of the bond issuer. CMOs may be issued by governmental entities,
such as the Federal Home Loan Mortgage Corporation (FHLMC), and by
non-governmental entities, such as banks and other mortgage lenders. CMOs
generally are secured by collateral consisting of individual mortgages or a pool
of mortgages. CMOs are not direct obligations of the Government. However,
Calvert U.S. Government Fund will purchase only those CMOs which are U.S.
Government-backed obligations (those that are secured by mortgages or
mortgage-related obligations which are issued or guaranteed by the U.S.
Government, its agencies or its instrumentalities).
FNMA and FHLMC Certificates
Each Fund may invest in pass-through certificates issued by the Federal National
Mortgage Association ("FNMA") and Federal Home Loan Mortgage Corporation
("FHLMC"). Unlike GNMAs, which are typically interests in pools of mortgages
insured or guaranteed by government agencies, FNMA and FHLMC certificates
represent undivided interests in pools of conventional mortgage loans.
Financial Futures, Options, and Other Investment Techniques
Each 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 (U.S. Government Fund
only), entering into swap agreements, and purchasing indexed securities. The
Fund can use these practices either as substitution or as protection against an
adverse move in the Fund's portfolio to adjust the risk and return
characteristics of the Fund's portfolio. 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. Any instruments determined to be illiquid are
subject to the Fund's 10% restriction on illiquid securities. See the Statement
of Additional Information for more detail about these strategies.
Each Fund may enter into repurchase agreements and may purchase securities on a
forward or when-issued basis.
In a repurchase agreement, the Fund buys a security subject to the right and
obligation to sell it back at a higher price. These transactions must be fully
secured at all times, but they involve some credit risk to the Fund if the other
party defaults on its obligation and the Fund is delayed or prevented from
liquidating the collateral.
Purchasing obligations for future delivery or on a "when-issued" basis may
increase the Fund's overall investment exposure and involves a risk of loss if
the value of the securities declines prior to the settlement date. The
transactions are fully secured at all times.
Foreign Investments
Calvert Income Fund may invest up to 20% of its assets in securities of foreign
issuers, provided such securities are denominated in U.S. dollars and trade on
domestic securities exchanges or over-the-counter securities markets. Securities
of foreign issuers may offer greater potential for capital appreciation or
income than the securities of domestic issuers and may involve investment risks
that are greater than those inherent in the securities of domestic issuers. Such
differences might possibly result from future political and economic
developments, disparities in economic systems, and imposition of foreign
governmental restrictions. There may also be less publicly available information
about a foreign issuer than about a domestic issuer; foreign issuers are not
generally subject to uniform auditing, accounting and reporting requirements
comparable to those applicable to domestic issuers.
Other Policies
Calvert Income Fund has the authority to invest in restricted securities and
covered call options, and international money market instruments, and may borrow
money from banks as a temporary measure for extraordinary or emergency purposes.
However, it does not hold, and in the coming year it does not plan to acquire,
more than 5% of the value of its assets in these types of securities or
practices. An explanation of such investment policies is set forth in the
Statement of Additional Information.
Each Fund may lend its portfolio securities to member firms of the New York
Stock Exchange and commercial banks with assets of $1 billion or more, but only
if the value of the securities loaned from a Fund will not exceed one-third of
the Fund's assets.
The Funds have adopted certain fundamental investment restrictions which are
discussed in detail in the Statement of Additional Information. Unless
specifically noted otherwise, the investment objective, policies and
restrictions of the Funds are fundamental and may not be changed without
shareholder approval.
Although U.S. Government-backed obligations in each Fund's portfolio may be
guaranteed by the Government, a Fund's net asset value per share and yield are
not guaranteed and will change in response to market conditions. There can be no
assurance that any Fund will be successful in meeting its investment objective.
YIELD AND TOTAL RETURN
The Funds may advertise yield and total return for each class.
Yield measures the current investment performance for each class of the Fund,
that is, the rate of income on its portfolio investments divided by the share
price. Yield is computed by annualizing the result of dividing the net
investment income per share over a 30-day period by the maximum offering price
per share on the last day of that period. Yields are calculated according to
accounting methods that are standardized for all stock and bond funds.
Both yield and total return are based on historical results and are not intended
to indicate future performance.
Total return is calculated separately for each class. It includes not only the
effect of income dividends but also any change in net asset value, or principal
amount, during the stated period. The total return of a class shows its overall
change in value, including changes in share price and assuming all of the class'
dividends and capital gain distributions are reinvested. A cumulative total
return reflects the class' performance over a stated period of time. An average
annual total return reflects the hypothetical annual compounded return that
would have produced the same cumulative total return if the performance had been
constant over the entire period. Because average annual returns tend to smooth
out variations in the returns, you should recognize that they are not the same
as actual year-by-year results. Both types of total return usually will include
the effect of paying the front-end sales charge, in the case of Class A shares.
Of course, total returns will be higher if sales charges are not taken into
account. Quotations of "overall return" do not reflect deduction of the sales
charge. You should consider overall return figures only if you qualify for a
reduced sales charge, or for purposes of comparison with comparable figures
which also do not reflect sales charges, such as mutual fund averages compiled
by Lipper Analytical Services, Inc. Further information about the Fund's
performance is contained in its Annual Report to Shareholders, which may be
obtained without charge.
MANAGEMENT OF THE FUND
The Trust's Board of Trustees supervises the Trust's activities and reviews its
contracts with companies that provide it with services
.
Calvert U.S. Government Fund and Calvert Income Fund are series of The Calvert
Fund (the "Trust"), an open-end diversified management investment company
organized as a Massachusetts business trust on March 15, 1982. The other series
of the Fund are Calvert Strategic Growth Fund and Calvert Short-Term U.S.
Government Fund.
The Trust is not required to hold annual shareholder meetings, but special
meetings may be called for certain purposes such as electing Trustees, changing
fundamental policies, or approving a management contract. As a shareholder, you
receive one vote for each share of a Fund you own. For matters affecting only
one Fund, only shares of that Fund are entitled to vote. Matters affecting
classes differently, such as Distribution Plans, will be voted on separately by
the affected class(es).
Portfolio Managers
Investment selections for the Funds are made by Colleen M. Denzler and Stephen
N. Van Order. Ms. Denzler has been with the Calvert Group since 1986, and has
been a member of the Portfolio Investment Department since January 1987. She is
a member of the Institute of Chartered Financial Analysts and the Washington
Society of Investment Analysts. Mr. Van Order joined Calvert Group in October
1992 as the head of the trading desk. He oversees the day-to-day investments and
operations of the department and participates in setting market and portfolio
strategy. Previously, Mr. Van Order was Director of Long Term Funding at Federal
National Mortgage Association (Fannie Mae). In his former capacity, Mr. Van
Order was responsible for Fannie Mae's long term borrowing programs, hedging
programs and debt marketing program.
Calvert Group is one of the largest investment management firms in the
Washington, D.C. area.
Calvert Group, Ltd., parent of the Funds' investment advisor, transfer agent,
and distributor, is a subsidiary of Acacia Mutual Life Insurance Company of
Washington, D.C. Calvert Group is one of the largest investment management firms
in the Washington, D.C. area. Calvert Group, Ltd. and its subsidiaries are
located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. As of
December 31, 1994, Calvert Group managed and administered assets in excess of
$4.2 billion and more than 200,000 shareholder and depositor accounts.
Calvert Asset Management serves as Advisor to the Funds.
Calvert Asset Management Company, Inc. (the "Advisor") is the Funds' investment
advisor. The Advisor provides the Funds with investment supervision and
management; administrative services and office space; furnishes executive and
other personnel to the Funds; and pays the salaries and fees of all Trustees who
are affiliated persons of the Advisor. The Advisor may also assume and pay
certain advertising and promotional expenses of the Funds and reserves the right
to compensate broker-dealers in return for their promotional or administrative
services. The Advisor has agreed to limit the Funds' expenses to the most
restrictive state limitation in effect.
The Advisor receives a fee based on a percentage of each Fund's assets.
For its services during the fiscal year ended September 30, 1994, the Advisor
was entitled pursuant to the Investment Advisory Agreement, to receive the
following investment advisory fees as a percentage of the Funds' respective
average daily net assets: Calvert U.S. Government Fund, 0.60%; and Calvert
Income Fund, 0.70%.
Calvert Distributors, Inc. serves as underwriter to market the Fund's shares.
Effective March 1, 1995, 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.
Prior to March 1, 1995, Calvert Securities Corporation was the principal
underwriter.
The transfer agent keeps your account records.
Calvert Shareholder Services, Inc. is the Funds' transfer, dividend disbursing
and shareholder servicing agent.
SHAREHOLDER GUIDE
Opening An Account
You can buy shares of the Funds in several ways which are described here and in
the chart below.
An account application accompanies this prospectus. A completed and signed
application is required for each new account you open, regardless of the method
you choose for making your initial investment. Additional forms may be required
from corporations, associations, and certain fiduciaries. If you have any
questions or need extra applications, call your broker, or Calvert Group at
800-368-2748. Be sure to specify which class you wish to purchase.
To invest in any of Calvert's tax-deferred retirement plans, please call Calvert
Group at 800-368-2748 to receive information and the required separate
application.
Alternative Sales Options
Each Fund offers two classes of shares:
Class A Shares - Front End Load Option
Class A shares are sold with a front-end sales charge at the time of purchase.
Class A shares are not subject to a sales charge when they are redeemed.
Class C shares - Level Load Option
Class C shares are sold without a sales charge at the time of purchase or
redemption.
Class C shares have higher expenses
Each Fund bears some of the costs of selling its shares under Distribution Plans
adopted with respect to its Class A and Class C shares pursuant to Rule 12b-1
under the 1940 Act. Payments under the Class A Distribution Plan are limited to
a maximum of 0.50% annually of the average daily net asset value of Class A
shares for Calvert Income Fund (0.25% for U.S. Government). The Class C
Distribution Plan provides for the payment of an annual distribution fee to CDI
of up to 0.75%, plus a service fee of up to 0.25%, for a total of 1.00% of the
average daily net assets attributable to their respective classes.
Considerations for deciding which class of shares to buy
Income distributions for Class A shares will probably be higher than those for
Class C shares, as a result of the distribution expenses described above. (See
also "Total Return.") You should consider Class A shares if you qualify for a
reduced sales charge under Class A or if you plan to hold the shares for several
years.
Class A Shares
Class A shares are offered at net asset value plus a front-end sales charge as
follows:
<TABLE>
<CAPTION>
Amount of Investment As a % of As a % of Concession to
Offering Net Amount Dealers
Price Invested as a % of
Amount Invested
<S> <C> <C> <C>
Less than $50,000 3.75% 3.90% 3.00%
$50,000 but less
than $100,000 3.00% 3.09% 2.25%
$100,000 but less
than $250,000 2.25% 2.30% 1.75%
$250,000 but less
than $500,000 1.75% 1.78% 1.25%
$500,000 but less
than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
*For new investments (new purchases but not exchanges) of $1 million or more a
broker-dealer will have the choice of being paid a finder's fee by CDI in one of
the following methods: (1) CDI may pay broker-dealer, on a monthly basis for 12
months, an annual rate of 0.30%. Payments will be made monthly at the rate of
0.025% of the amount of the investment, less redemptions; or (2) CDI may pay
broker-dealers 0.25% of the amount of the purchase; however, CDI reserves the
right to recoup any portion of the amount paid to the dealer if the investor
redeems some or all of the shares from the Fund within thirteen months of the
time of purchase.
</TABLE>
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 substantially 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
Each 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 0.25% of the average daily net asset value of Class A shares of
U.S. Government Fund (0.50% of Calvert Income Fund), to pay expenses associated
with the distribution and servicing of Class A shares. Amounts paid by the Fund
to CDI under the Class A Distribution Plan are used to pay to dealers and
others, including CDI salespersons who service accounts, service fees at an
annual rate of up to 0.25% of the average daily net asset value of Class A
shares, and to pay CDI for its marketing and distribution expenses, including,
but not limited to, preparation of advertising and sales literature and the
printing and mailing of prospectuses to prospective investors. During the fiscal
year ended September 30, 1994, Class A Distribution Plan expenses for the Income
and U.S. Government Funds were 0.06% and 0.09%, respectively.
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the respective class.
Class C Shares
Class C shares are not available through all dealers. Class C shares are offered
at net asset value, without a front-end sales charge or a contingent deferred
sales charge. Class C expenses are higher than those of Class A.
Class C Distribution Plan
Each Fund has adopted a Distribution Plan with respect to its Class C shares
(the "Class C Distribution Plan"), which provides for payments at an annual rate
of up to 1.00% of the average daily net asset value of Class C shares, to pay
expenses of the distribution and servicing of Class C shares. Amounts paid by
the Fund under the Class C Distribution Plan are currently used by CDI to pay
dealers and other selling firms dealer-paid quarterly compensation at an annual
rate of up to 0.75%, plus a service fee, as described above under "Class A
Distribution Plan," of up to 0.25%, of the average daily net asset value of each
share sold by such others. For the fiscal year ended September 30, 1994, Class C
Distribution Plan expenses were 1.00% and 1.00% for the Income and U.S.
Government Funds, respectively.
Arrangements with Broker-Dealers and Others
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing registered
representatives who have sold or are expected to sell a minimum dollar amount of
shares of the Fund and/or shares of other Funds underwritten by CDI. CDI may
make expense reimbursements for special training of a dealer's registered
representatives, advertising or equipment, or to defray the expenses of sales
contests. Eligible marketing and distribution expenses may be paid pursuant to
the Fund's Rule 12b-1 Distribution Plan.
Dealers or others may receive different levels of compensation depending on
which class of shares they sell. Payments pursuant to a Distribution Plan are
included in the operating expenses of the class.
HOW TO BUY SHARES
(BE SURE TO SPECIFY WHICH CLASS YOU ARE BUYING)
Method New Accounts Additional Investments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the Fund of payable to the Fund of
your choice and mail it your choice and mail it
with your application to: with your investment slip to:
These addresses Calvert Group Calvert Group
effective P.O. Box 419544 P.O. Box 419739
April 1, 1995 Kansas City, MO 64179-6542 Kansas City, MO 64105-6739
By Registered, Certified, or Overnight Mail: Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105-1807
Through Your
Broker $2,000 minimun $250 minimum
At the Calvert Visit the Calvert Branch Office to make investments by
Branch Office check. See back cover page for location.
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR BROKER, OR CALVERT GROUP AT
800-368-2745
By Exchange $2,000 minimum $250 minimum
(From your account in another Calvert Group Fund)
When opening an account by exchange, your new account must be established with
the same name(s), address and taxpayer identification number as your existing
Calvert account.
By Bank Wire $2,000 minimun $250 minimum
By Calvert Money Not Available for $50 minimum
Controller* initial Investment
*Please allow sufficient time for Calvert Group to process your initial request
for this service, normally 10 business days. The maximum transaction amount is
$300,000, and your purchase request must be received by 4:00 p.m. Eastern time.
NET ASSET VALUE
Net asset value per share ("NAV)" refers to the worth of one share. NAV is
computed by adding the value of all portfolio holdings, plus other assets,
deducting liabilities and then dividing the result by the number of shares
outstanding. The NAVs of each class will vary daily based on the market values
of the Funds' respective investments.
Portfolio securities and other assets are valued based on market quotations,
except that securities maturing within 60 days are valued at amortized cost. If
quotations are not available, securities are valued by a method that the Board
of Trustees believes accurately reflects fair value.
The NAV for each Fund is calculated at the close of the Fund's business day,
which coincides with the closing of the regular session of the New York Stock
Exchange (normally 4:00 p.m. Eastern time). The Fund is open for business each
day the New York Stock Exchange is open. All purchases of Fund shares will be
confirmed and credited to your account in full and fractional shares (rounded to
the nearest 1/1000 of a share).
WHEN YOUR ACCOUNT WILL BE CREDITED
Before you buy shares, please read the following information to make sure your
investment is accepted and credited properly.
Your purchase will be processed at the next offering price based on the next net
asset value calculated after your order is received and accepted. If your
purchase is received by 4:00 p.m. Eastern time, your account will be credited on
the day of receipt. If your purchase is received after 4:00 p.m. Eastern time,
it will be credited the next business day. All purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks. No cash will be accepted. The
Fund reserves the right to suspend the offering of shares for a period of time
or to reject any specific purchase order. If your check does not clear, your
purchase will be cancelled and you will be charged a $10 fee plus costs incurred
by the Fund. When you purchase by check or with Calvert Money Controller, the
Fund can hold payment on redemptions until it is reasonably satisfied that the
investment is collected (normally 10 business days). To avoid this collection
period, you can wire federal funds from your bank, which may charge you a fee.
Certain financial institutions or broker-dealers which have entered into a sales
agreement with the Distributor may enter confirmed purchase orders on behalf of
customers by phone, with payment to follow within a number of days of the order
as specified by the program. If payment is not received in the time specified,
the financial institution could be held liable for resulting fees or losses.
EXCHANGES
You may exchange shares of the Fund for shares of other Calvert Group Funds.
If your investment goals change, the Calvert Group Family of Funds has a variety
of investment alternatives that includes common stock funds, tax-exempt and
corporate bond funds, and money market funds. The exchange privilege is a
convenient way to buy shares in other Calvert Group Funds in order to respond to
changes in your goals or in market conditions. However, to protect a Fund's
performance and to minimize costs, Calvert Group discourages frequent exchanges
and may prohibit additional purchases of Fund shares by persons engaged in too
many short-term trades. Before you make an exchange from a Fund or Portfolio,
please note the following:
Call your broker or a Calvert representative for information and a prospectus
for any of Calvert's other Funds registered in your state. Read the prospectus
of the Fund or Portfolio into which you want to exchange for relevant
information, including class offerings.
Shares of a particular class of the Fund may be exchanged only for shares of the
same class of another Calvert Fund, except that any class may be exchanged for
Class A shares of any Calvert money market fund.
Each exchange represents the sale of shares of one Fund and the purchase of
shares of another. Therefore, you could realize a taxable gain or loss on the
transaction.
Complete and sign an application for an account in that Fund or Portfolio,
taking care to register your new account in the same name and taxpayer
identification number as your existing Calvert account(s). Exchange instructions
may then be given by telephone if telephone redemptions have been authorized and
the shares are not in certificate form.
Shares on which you have already paid a sales charge at Calvert Group and shares
acquired by reinvestment of dividends or distributions may be exchanged into
another Fund at no additional charge.
Shareholders (and those managing multiple accounts) who make two purchases and
two exchange redemptions of shares of the same Portfolio during any 6-month
period will be given written notice that they may be prohibited from making
additional investments. This policy does not prohibit a shareholder from
redeeming shares of the Fund, and does not apply to trades solely among money
market funds.
The Fund reserves the right to terminate or modify the exchange privilege with
60 days' written notice.
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour yield and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers use a push button phone to obtain prices, yields and account balances.
Complete instructions for this service may be found on the back of each
statement.
Calvert Money Controller
Calvert Money Controller eliminates the delay of mailing a check or the expense
of wiring funds. You can request this free service on your application.
This service allows you to authorize electronic transfers of money to purchase
or sell shares. You use Calvert Money Controller like an "electronic check" to
move money ($50 to $300,000) between your bank account and your Calvert Group
account with one phone call. Allow one or two business days after the call for
the transfer to take place; for money recently invested, allow normal check
clearing time (up to 10 business days) before redemption proceeds are sent to
your bank.
You may also arrange systematic monthly or quarterly investments (minimum $50)
into your Calvert Group account. After you give us proper authorization, your
bank account will be debited to purchase Fund shares. A debit entry will appear
on your bank statement. Share purchases made through Calvert Money Controller
will be subject to the applicable sales charge. If you would like to make
arrangements for systematic monthly or quarterly redemptions from your Calvert
Group account, call your broker or Calvert Group for a Money Controller
Application.
Telephone Transactions
Calvert may record all telephone calls.
If you have telephone transaction privileges, you may purchase, redeem, or
exchange shares, wire funds and use Calvert Money Controller by telephone. You
automatically have telephone privileges unless you elect otherwise. The Fund,
the transfer agent and their affiliates are not liable for acting in good faith
on telephone instructions relating to your account, so long as they follow
reasonable procedures to determine that the telephone instructions are genuine.
Such procedures may include recording the telephone calls and requiring some
form of personal identification. You should verify the accuracy of telephone
transactions immediately upon receipt of your confirmation statement.
Optional Services
Complete the "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 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
You can help in an effort to reduce Fund expenses and save paper and trees for
the environment.
If you have multiple accounts with Calvert, you may receive combined mailings of
some shareholder information, such as semi-annual and annual reports. Please
contact Calvert Investor Relations at 800-368-2745 to receive additional copies
of information.
Special Services and Charges
The Fund pays for shareholder services but not for special services that are
required by a few shareholders, such as a request for a historical transcript of
an account. You may be required to pay a research fee for these special
services.
If you are purchasing shares of the Fund through a program of services offered
by a broker-dealer or financial institution, you should read the program
materials in conjunction with this Prospectus. Certain features may be modified
in these programs, and administrative charges may be imposed by the
broker-dealer or financial institution for the services rendered.
Tax-Saving Retirement Plans
Contact Calvert Group for complete information kits discussing the plans, and
their benefits, provisions and fees.
Calvert Group can set up your new account under one of several tax-deferred
plans. These plans let you invest for retirement and shelter your
investment income from current taxes. Minimums may differ from those listed
in the chart on page _____. Also, reduced sales charges may apply. See
"Exhibit A - Reduced Sales Charges."
Individual retirement accounts (IRAs): available to anyone who has earned
income. You may also be able to make investments in the name of your
spouse, if your spouse has no earned income. Qualified Profit-Sharing and
Money-Purchase Plans (including 401(k) Plans): available to self-employed
people and their partners, or to corporations and their employees.
Simplified Employee Pension Plan (SEP-IRA): available to self-employed people
and their partners, or to corporations. Salary reduction pension plans (SAR-SEP
IRAs) are also available to employers with 25 or fewer employees.
403(b)(7) Custodial Accounts: available to employees of most non-profit
organizations and public schools and universities.
SELLING YOUR SHARES
You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next net asset value calculated after your redemption
request is received and accepted. See the chart below for specific requirements
necessary to make sure your redemption request is acceptable. Remember that the
Fund may hold payment on the redemption of your shares until it is reasonably
satisfied that investments made by check or by Calvert Money Controller have
been collected (normally up to 10 business days).
Redemption Requirements To Remember
To ensure acceptance of your redemption request, please follow the procedures
described here and below.
Once your shares are redeemed, the proceeds will normally be sent to you on the
next business day, but if making immediate payment could adversely affect the
Fund, it may take up to seven (7) days. Calvert Money Controller redemptions
generally will be credited to your bank account on the first or second business
day after your phone call. When the New York Stock Exchange is closed (or when
trading is restricted) for any reason other than its customary weekend or
holiday closings, or under any emergency circumstances as determined by the
Securities and Exchange Commission, redemptions may be suspended or payment
dates postponed.
Minimum account balance is $1,000 per Fund.
Please maintain a balance in your account of at least $1,000 per Fund, per
class. If, due to redemptions, the account falls below $1,000, or you fail to
invest at least $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.
HOW TO SELL YOUR SHARES
By Mail To:
Calvert Group
4550 Montgomery Ave.
Bethesda, MD 20814
Effective 4/1/95:
Calvert Group
P.O. Box 419544
Kansas City, MO
64179-6542
You may redeem available shares from your account at any time by sending a
letter of instruction, including your name, account and Fund number, the number
of shares or dollar amount, and where you want the money to be sent. Additional
requirements, below, may apply to your account. The letter of instruction must
be signed by all required authorized signers. If you want the money to be wired
to a bank not previously authorized, then a voided bank check must be enclosed
with your letter. If you do not have a voided check or if you would like funds
sent to a different address or another person, your letter must be signature
guaranteed.
Type of Registration Requirements
Corporations,
Associations Letter of instruction and a corporate resolution,
signed by person(s) authorized to act on the
account, accompanied by signature guarantee(s).
Trusts Letter of instruction signed by the Trustee(s)
(as Trustee), with a signature guarantee. (If the
Trustee's name is not registered on your account,
provide a copy of the trust document, certified
within the last 60 days.)
By Telephone
Please call 800-368-2745. You may redeem shares from your account by telephone
and have your money mailed to your address of record or wired to an address or
bank you have previously authorized. A charge of $5 is imposed on wire transfers
of less than $1,000. See "Telephone Transactions" on page ___.
Calvert Money Controller
Please allow sufficient time for Calvert Group to process your initial request
for this service (normally 10 business days). You may also authorize automatic
fixed amount redemptions by Calvert Money Controller. All requests must be
received by 4:00 p.m. (Eastern time). Accounts cannot be closed by this service.
Exchange to Another Calvert Group Fund
You must meet the minimum investment requirement of the other Calvert Group Fund
or Portfolio. You can only exchange between accounts with identical names,
addresses and taxpayer identification number, unless previously authorized with
a signature-guaranteed letter.
Systematic Check Redemptions
If you maintain an account with a balance of $10,000 or more, you may have
regular checks for a fixed amount 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, CAPITAL GAINS AND TAXES
Each year, the Funds distribute substantially all of their net investment income
and capital gains to shareholders.
Dividends from the Funds' net investment income are declared and paid on a
monthly basis. Net investment income consists of the interest income, net
short-term capital gains, if any, and dividends declared and paid on
investments, less expenses. Distributions of the Funds' net short-term capital
gains (treated as dividends for tax purposes) and its net long-term capital
gains, if any, are normally declared and paid by the Fund once a year; however,
the Fund does not anticipate making any such distributions unless available
capital loss carryovers have been used or have expired. Dividend and
distribution payments will vary between classes; dividend payments are generally
anticipated to be higher for Class A shares.
Dividend and Distribution Payment Options.
Dividends and any distributions are automatically reinvested in the same
Portfolio at net asset value (no sales charge), unless you elect to have the
dividends of $10 or more paid in cash (by check or by Calvert Money Controller).
Dividends and distributions may be automatically invested in an identically
registered account with the same account number in any other Calvert Group Fund
at net asset value. If reinvested in the same Fund account, new shares will be
purchased at net asset value on the reinvestment date, which is generally 1 to 3
days prior to the payment date. You must notify the Fund in writing prior to the
record date to change your payment options. If you elect to have dividends
and/or distributions paid in cash, and the U.S. Postal Service cannot deliver
the check, or if it remains uncashed for six months, it, as well as future
dividends and distributions, will be reinvested in additional shares.
"Buying a Dividend"
At the time of purchase, the share price of the Fund may reflect undistributed
income, capital gains or unrealized appreciation of securities. Any income or
capital gains from these amounts which are later distributed to you are fully
taxable. On the record date for a distribution, the Fund's share value is
reduced by the amount of the distribution. If you buy shares just before the
record date ("buying a dividend") you will pay the full price for the shares and
then receive a portion of the price back as a taxable distribution.
Federal Taxes
In January, the Funds will mail you Form 1099-DIV indicating the federal tax
status of dividends and capital gain distributions paid to you by the Funds
during the past year. Generally, dividends and distributions are taxable in the
year they are paid. However, any dividends and distributions paid in January but
declared during the three months prior are taxable in the year declared.
Dividends and distributions are taxable to you regardless of whether they are
taken in cash or reinvested. Dividends, including short-term capital gains, are
taxable as ordinary income. Distributions from long-term capital gains are
taxable as long-term capital gains, regardless of how long you have owned Fund
shares.
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 Funds will mail you Form 1099-B indicating the date of and
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.
Other Tax Information
In addition to federal taxes, you may be subject to state or local taxes on your
investment, depending on the laws in your area. You will be notified to the
extent, if any, that dividends reflect interest received from U.S. government
securities. Such dividends may be exempt from certain state income taxes.
Taxpayer Identification Number
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
Funds to withhold 31% of your dividends and certain redemptions. In addition,
you may be subject to a fine. You will also be prohibited from opening another
account by exchange. If this TIN information is not received within 60 days
after your account is established, your account may be redeemed at the current
NAV on the date of redemption. The Funds reserve 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 (i) 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); (ii) directors,
officers and employees of the Advisor, Distributor, and their affiliated
companies; (iii) directors, officers and registered representatives of brokers
distributing the Fund's shares; and immediate family members of persons listed
in (i), (ii), and (iii), above; (iv) 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; and (v) trust departments of banks or savings institutions
for trust clients of such bank or savings institution.
Established Accounts. Shares of Calvert Income Fund may be sold at net asset
value to accounts opened on or before January 12, 1987.
Dividends and Capital Gain Distributions from other Calvert Group Funds. You may
prearrange to have your dividends and capital gain distributions from another
Calvert Group Fund automatically invested in another account with no additional
sales charge. Dividends and distributions from Calvert Group money market funds
used to purchase shares of the Fund will not be subject to the applicable sales
charge, effective April 1, 1995.
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.
Redemptions From Other Mutual Funds. You may purchase shares of the above funds
at net asset value, without sales charge, to the extent that the purchase
represents proceeds from a redemption (within the previous 60 days) of shares of
another mutual fund. When making a purchase at net asset value under this
provision, the Fund or Portfolio must receive one of the following with your
direct purchase order: (i) the redemption check representing the proceeds of the
shares redeemed, endorsed to the order of the Fund or Portfolio, or (ii) a copy
of the confirmation from the other fund, showing the redemption transaction.
Standard back office procedures should be followed for wire order purchases.
Purchases with redemptions from money market funds are not eligible for this
privilege. This provision is effective through March 15, 1995 only, but may be
extended at the discretion of the Distributor.
================================================================================
To Open an Account: Prospectus
800-368-2748 January 31, 1995
Yields and Prices:
Calvert Information Network THE CALVERT FUND
24 hours, 7 days a week
800-368-2745
Calvert U.S. Government Fund
Service for Existing Account:
Shareholders 800-368-2745 Calvert Income Fund
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
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Effective April 1, 1995:
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105-1807
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc. (effective 3/1/95)
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Table of Contents
Fund Expenses
Financial Highlights
Investment Objectives and Policies
Yield and Total Return
Management of the Fund
SHAREHOLDER GUIDE:
Alternative Sales Options
How to Buy Shares
Net Asset Value
When Your Account Will Be Credited
Exchanges
Other Calvert Group Services
Selling Your Shares
How to Sell Your Shares
Dividends, Capital Gains and Taxes
Exhibit A - Reduced Sales Charges
<PAGE>
PROSPECTUS Exhibit 17 (b)
January 31, 1995, As Revised September 30, 1995
THE CALVERT FUND
CALVERT INCOME FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
INVESTMENT OBJECTIVE Calvert Income Fund seeks to maximize long-term income, to
the extent consistent with prudent investment management and preservation of
capital, through investment in bonds and other income producing securities.
The Fund offers two classes of shares, each with different expense levels and
sales charges. You may choose to purchase (i) Class A shares, with a sales
charge imposed at the time you purchase the shares ("front-end sales charge");
or (ii) Class C shares which impose neither a front-end sales charge nor a
contingent deferred sales charge. Class C shares are not available through all
dealers. Class C shares have a higher level of expenses than Class A shares,
including higher Rule 12b-1 fees. These alternatives permit you to choose the
method of purchasing shares that is most beneficial to you, depending on the
amount of the purchase, the length of time you expect to hold the shares, and
other circumstances. See "Alternative Sales Options" for further details.
TO OPEN AN ACCOUNT Call your broker, or complete and return the enclosed Account
Application. Minimum investment is $2,000.
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 for the Fund (dated January 31, 1995 and
revised September 30, 1995) has been filed with the Securities and Exchange
Commission and is incorporated by reference. This free Statement is available
upon request from the Fund: 800-368-2748.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE FEDERAL OR
ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY. WHEN INVESTORS SELL SHARES OF THE FUND, THE VALUE
MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY PAID
================================================================================
<TABLE>
<CAPTION>
FUND EXPENSES
Class A Class C
<S> <C> <C>
A. Shareholder Transaction Costs
Maximum Sales Charge on Purchases (as a 3.75% None
percentage of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses<F1>
Fiscal Year 1994
(as a percentage of net assets, net of
any applicable expense
reimbursement/fee waiver)
Management Fees 0.70% 0.70%
Rule 12b-1 Service and Distribution Fees
0.25% 1.00%
Other Expenses 0.31% 1.13%
Total Fund Operating Expenses 1.26% 2.83%
<FN>
<F1>Expense ratios for Class A shares have been restated to reflect expenses
anticipated for fiscal year 1995.
</FN>
</TABLE>
C. 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 period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Class A<F2> $50 $76 $104 $184
Class C $29 $88 $149 $316
<FN>
<F2>Assumes payment of maximum initial sales charge at time of purchase.
</FN>
</TABLE>
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 may bear directly
(shareholder transaction costs) or indirectly (annual fund operating expenses).
A. Shareholder Transaction Costs are charges you pay when you buy or sell shares
of the Fund. See "Reduced Sales Charges" at Exhibit A to see if you qualify for
possible reductions in the sales charge. If you request a wire redemption of
less than $1,000, you will be charged a $5 wire fee.
B. Annual Fund Operating Expenses. Management Fees are paid by the Fund to
Calvert Asset Management Company, Inc. ("Investment Advisor") for managing the
Fund's investments and business affairs. 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 share price and are not charged directly to individual
shareholder accounts. Please refer to "Management of the Fund" for further
information.
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.
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.
================================================================================
FINANCIAL HIGHLIGHTS
The following table provides information about the financial history of the
Fund's Class A and C shares. They express the information in terms of a single
share outstanding for the Fund throughout each period. The table has been
audited by those independent accountants whose reports are included in the
Annual Reports to Shareholders of the Fund. The table should be read in
conjunction with the financial statements and their related notes. The current
Annual Report to Shareholders is incorporated by reference into the Statement of
Additional Information.
<TABLE>
<CAPTION>
Class C Shares
From Inception (March 1, 1994)
To September 30, 1994
<S> <C>
Net asset value, beginning of period $17.35
Income from investment operations
Net investment income .57
Net realized and unrealized gain (loss) on (1.67)
investments
Total from investment operations (1.10)
Distributions to shareholders
Dividends from net investment income (.62)
Distribution from capital gains --
Total Distributions (.62)
Total increase (decrease) in net asset value (1.72)
Net asset value, end of period $15.63
Total return<F3> (5.47)%
Ratio of expenses to average net assets 2.65%(a)
Ratio of net income to average net assets 5.62%(a)
Increase reflected in above net investment income 7.29%(a)
ratios due to expense reimbursement
Portfolio turnover 34%
Net assets, end of period $413,187
Number of shares outstanding at end of period (in
thousands) 26
<FN>
<F3>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Class A Shares
Year Ended September 30, 1994
<S> <C>
Net asset value, beginning of period $18.41
Income from investment operations
Net investment income 1.16
Net realized and unrealized gain (loss) on (2.42)
investments
Total from investment operations (1.26)
Distributions to shareholders
Dividends from net investment income (1.16)
Distribution from capital gains (.31)
Total Distributions (1.47)
Total increase (decrease) in net asset value (2.73)
Net asset value, end of period $15.68
Total return<F3> (6.94)%
Ratio of expenses to average net assets 1.07%
Ratio of net income to average net assets 6.86%
Increase reflected in above net investment income --
ratios due to expense reimbursement
Portfolio turnover 34%
Net assets, end of period $45,935,905
Number of shares outstanding at end of period (in
thousands) 2,929
<FN>
<F3>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
(a) Annualized
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund Class A Shares
Year Ended September 30,
1993 1992
<S> <C> <C>
Net asset value, beginning of year $17.50 $16.61
Income from investment operations
Net investment income 1.23 1.28
Net realized and unrealized gain on investments .91 .89
Total from investment operations 2.14 2.17
Distributions to shareholders
Dividends from net investment income (1.23) (1.28)
Distribution from capital gains -- --
Total Distributions (1.23) (1.28)
Total increase in net asset value .91 .89
Net asset value, end of year $18.41 $17.50
Total return<F4> 12.47% 13.66%
Ratio of expenses to average net assets 1.00% 1.04%
Ratio of net income to average net assets 6.93% 7.59%
Portfolio turnover 25% 18%
Net assets, end of year $53,134,459 $43,494,326
Number of shares outstanding at end of year (in 2,886 2,486
thousands)
<FN>
<F4>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund Class A Shares
Year Ended September 30, 1991
<S> <C>
Net asset value, beginning of year $15.58
Income from investment operations
Net investment income 1.31
Net realized and unrealized gain on investments 1.03
Total from investment operations 2.34
Distributions to shareholders
Dividends from net investment income (1.31)
Distribution from capital gains --
Total Distributions (1.31)
Total increase in net asset value 1.03
Net asset value, end of year $16.61
Total return<F4> 15.72%
Ratio of expenses to average net assets 1.08%
Ratio of net income to average net assets 8.22%
Portfolio turnover 27%
Net assets, end of year $36,412,545
Number of shares outstanding at end of year (in 2,193
thousands)
<FN>
<F4>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund Class A Shares
Year Ended September 30,
1990 1989
<S> <C> <C>
New asset value, beginning of year $16.36 $15.70
Income from investment operations
Net investment income 1.36 1.36
Net realized and unrealized gain (loss) on
investments (.78) .71
Total from investment operations .58 2.07
Distributions to shareholders
Dividends from net investment income (1.36) (1.41)
Distribution from capital gains -- --
Total Distributions (1.36) (1.41)
Total increase (decrease) in net asset value (.78) .66
Net asset value, end of year $15.58 $16.36
Total return<F5> 3.63% 13.48%
Ratio of expenses to average net assets 1.05% 1.07%
Ratio of net income to average net assets 8.42% 8.57%
Portfolio turnover 5% 19%
Net assets, end of year $32,201,363 $22,969,095
Number of shares outstanding at end of year (in 2,066 1,404
thousands)
<FN>
<F5>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund Class A Shares
Year Ended September 30,
1988 1987
<S> <C> <C>
New asset value, beginning of year $15.29 $17.04
Income from investment operations
Net investment income 1.42 1.51
Net realized and unrealized gain (loss) on .71 (1.61)
investments
Total from investment operations 2.13 (.10)
Distributions to shareholders
Dividends from net investment income (1.42) (1.47)
Distribution from capital gains (.30) (.18)
Total Distributions (1.72) (1.65)
Total increase (decrease) in net asset value .41 (1.75)
Net asset value, end of year $15.70 $15.29
Total return<F6> 14.67% (.84)%
Ratio of expenses to average net assets .94% .85%
Ratio of net income to average net assets 9.07% 9.06%
Increase reflected in above net investment income .25% .25%
ratio due to expense reimbursement
Portfolio turnover 37% 42%
Net assets, end of year $20,374,751 $20,573,546
Number of shares outstanding at end of year (in
thousands) 1,298 1,345
<FN>
<F6>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
</FN>
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Calvert Income Fund Class A Shares
Year Ended September 30,
1986 1985
<S> <C> <C>
New asset value, beginning of year $15.78 $14.30
Income from investment operations
Net investment income 1.57 1.72
Net realized and unrealized gain (loss) on 1.26 1.53
investments
Total from investment operations 2.83 3.25
Distributions to shareholders
Dividends from net investment income (1.57) (1.77)
Distribution from capital gains -- --
Total Distributions (1.57) (1.77)
Total increase (decrease) in net asset value 1.26 1.48
Net asset value, end of year $17.04 $15.78
Total return<F7> 18.38% 23.31%
Ratio of expenses to average net assets .85% .82%
Ratio of net income to average net assets 9.16% 10.74%
Increase reflected in above net investment income .33% .61%
ratio due to expense reimbursement
Portfolio turnover 23% 11%
Net assets, end of year $21,455,859 $13,428,901
Number of shares outstanding at end of year (in 1,259 851
thousands)
<FN>
<F7>Total return does not reflect deduction of Class A front-end sales charges.
Total return prior to 1989 is not audited.
</FN>
</TABLE>
================================================================================
INVESTMENT OBJECTIVE AND POLICIES
Calvert Income Fund invests in a variety of fixed-income securities, 65% of
which must be of investment grade quality.
Calvert Income Fund seeks to maximize long-term income, to the extent consistent
with prudent investment management and preservation of capital, primarily
through investment in investment grade bonds and other income-producing
securities. The Fund is nondiversified. Debt securities may be long-term,
intermediate-term, short-term, or any combination thereof, depending on the
Advisor's evaluation of current and anticipated market patterns and trends.
Calvert Income Fund invests 80% of its assets in corporate obligations and other
fixed-income securities. At least 65% of its assets at the date of investment
are rated within the four highest grades established by Moody's Investors
Services, Inc. (Aaa, Aa, A, or Baa), or by Standard and Poor's Corporation (AAA,
AA, A, or BBB), or if not rated, are of comparable quality as determined by the
Advisor. Though still investment grade, securities rated BBB/Baa possess certain
speculative elements and are generally more susceptible to changing market
conditions. All fixed income instruments are subject to interest-rate risk; that
is, when market interest rates rise, the current principal value of a bond will
decline.
The remaining 35% of the Fund's total assets may consist of other debt
securities (see below) including bonds rated below BBB or Baa ("non-investment
grade securities," commonly known as "junk bonds"). With lower rated bonds,
there is a greater possibility that an adverse change in the financial condition
of the issuer may affect its ability to pay principal and interest. In addition,
to the extent the Fund holds any such bonds, it may be negatively affected by
adverse economic developments, increased volatility or a lack of liquidity. See
the Statement of Additional Information, "Non-Investment Grade Debt Securities,"
and bond ratings.
Calvert Income Fund may also purchase obligations issued or guaranteed as to
principal by the U.S. Government or its agencies or instrumentalities;
certificates of deposit, time deposits, and bankers' acceptances of U.S. banks
and their branches located outside of the U.S. and of U.S. branches of foreign
banks, provided that the bank has total assets of at least one billion dollars
or the equivalent in other currencies; commercial paper which at the date of
investment is rated Prime-2 or better by Moody's, A-2 or better by Standard &
Poor's, or, if not rated, is of comparable quality as determined by the Advisor;
and any of the above securities subject to repurchase agreements with recognized
securities dealers and banks. Up to 20% of the value of the Fund's total assets
may consist of other debt securities (including securities convertible into or
carrying warrants to purchase common stock or other equity securities) and
income-producing preferred and common stocks.
GNMA Certificates
GNMA Certificates, or GNMAs, are mortgage-backed securities representing
ownership of mortgage or construction loans that are issued by lenders such as
mortgage bankers, commercial banks and savings and loan associations and are
either insured by the Federal Housing Administration or guaranteed by the
Veterans Housing Administration. The GNMA may be secured by a single mortgage,
such as a large multi-family housing development, or, more typically, by a
"pool" or group of single-family housing mortgages.
Once approved by GNMA, the timely payment of interest and principal on each
mortgage is guaranteed by GNMA and backed by the full faith and credit of the
U.S. Government. GNMAs differ from bonds in that principal is paid back monthly
by the borrower over the term of the loan rather than returned in a lump sum at
maturity. GNMAs are called "pass-through" securities because both interest and
principal payments (including prepayments) are passed through to the holder of
the GNMA. Upon receipt, principal payments will be reinvested by the Fund in
additional securities at the then prevailing interest rate. The amount of any
premium that may be paid upon purchase of a GNMA is not guaranteed. The Advisor
will attempt, through careful evaluation of available GNMA issues and prevailing
market conditions, to invest in GNMAs which provide a high income return but are
not subject to substantial risk of loss of principal. Accordingly, the Advisor
may forgo the opportunity to invest in certain issues of GNMAs which would
provide a high current income yield if the Advisor believes that such issues
would be subject to a risk of prepayment or loss of principal over the long-term
that would outweigh the short-term increment in yield.
Collateralized Mortgage Obligations
Collateralized mortgage obligations ("CMOs") are bonds which are the general
obligations of the bond issuer. CMOs may be issued by governmental entities,
such as the Federal Home Loan Mortgage Corporation (FHLMC), and by
non-governmental entities, such as banks and other mortgage lenders. CMOs
generally are secured by collateral consisting of individual mortgages or a pool
of mortgages. CMOs are not direct obligations of the Government.
FNMA and FHLMC Certificates
Each Fund may invest in pass-through certificates issued by the Federal National
Mortgage Association ("FNMA") and Federal Home Loan Mortgage Corporation
("FHLMC"). Unlike GNMAs, which are typically interests in pools of mortgages
insured or guaranteed by government agencies, FNMA and FHLMC certificates
represent undivided interests in pools of conventional mortgage loans.
Nondiversified
There may be risks associated with the Fund being nondiversified. Specificially,
since a relatively high percentage of the assets of the Fund may be invested in
the obligations of a limited number of issuers, the value of the shares of the
Fund may be more susceptible to any single economic, political or regulatory
event than the shares of a diversified fund would be.
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, currency exchange 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 currency exchange contracts, or swap agreements,
and purchasing indexed securities. The Fund can use these practices either as
substitution or as protection against an adverse move in the Fund's portfolio to
adjust the risk and return characteristics of the Fund's portfolio. 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 the Fund and may involve a
small investment of cash relative to the magnitude of the risk assumed. Any
instruments determined to be illiquid are subject to the Fund's 15% restriction
on illiquid securities. See the Statement of Additional Information for more
detail about these strategies.
The Fund may enter into repurchase agreements and may purchase securities on a
forward or when-issued basis.
In a repurchase agreement, the Fund buys a security subject to the right and
obligation to sell it back at a higher price. These transactions must be fully
secured at all times, but they involve some credit risk to the Fund if the other
party defaults on its obligation and the Fund is delayed or prevented from
liquidating the collateral.
Purchasing obligations for future delivery or on a "when-issued" basis may
increase the Fund's overall investment exposure and involves a risk of loss if
the value of the securities declines prior to the settlement date. The
transactions are fully secured at all times.
Foreign Investments
The Fund may invest up to 20% of its assets in securities of foreign issuers,
and hedge its foreign securities holdings against anticipated adverse moves in
foreign currency exchange rates. The Fund may use either the spot (cash)
markets, forward contracts, or currency financial futures and options
transactions. It is impossible to forecast with precision the foreign currency
values, and the Fund could incur a loss on such currency transactions if the
market moves against the position it has taken. Securities of foreign issuers
may offer greater potential for capital appreciation or income than the
securities of domestic issuers and may involve investment risks that are greater
than those inherent in the securities of domestic issuers. Such differences
might possibly result from future political and economic developments,
disparities in economic systems, and imposition of foreign governmental
restrictions. There may also be less publicly available information about a
foreign issuer than about a domestic issuer; foreign issuers are not generally
subject to uniform auditing, accounting and reporting requirements comparable to
those applicable to domestic issuers.
Other Policies
The Fund may borrow money from banks as a temporary measure for extraordinary or
emergency purposes. An explanation of this and the policies below is set forth
in the Statement of Additional Information.
The Fund may lend its portfolio securities to member firms of the New York Stock
Exchange and commercial banks with assets of $1 billion or more, but only if the
value of the securities loaned from a Fund will not exceed one-third of the
Fund's assets.
The Fund has adopted certain fundamental investment restrictions which are
discussed in detail in the Statement of Additional Information. Unless
specifically noted otherwise, the investment objective, policies and
restrictions of the Fund are fundamental and may not be changed without
shareholder approval.
Although U.S. Government-backed obligations in the Fund's portfolio may be
guaranteed by the Government, the Fund's net asset value per share and yield are
not guaranteed and will change in response to market conditions. There can be no
assurance that the Fund will be successful in meeting its investment objective.
YIELD AND TOTAL RETURN
The Fund may advertise yield and total return for each class.
Yield measures the current investment performance for each class of the Fund,
that is, the rate of income on its portfolio investments divided by the share
price. Yield is computed by annualizing the result of dividing the net
investment income per share over a 30-day period by the maximum offering price
per share on the last day of that period. Yields are calculated according to
accounting methods that are standardized for all stock and bond funds.
Both yield and total return are based on historical results and are not intended
to indicate future performance.
Total return is calculated separately for each class. It includes not only the
effect of income dividends but also any change in net asset value, or principal
amount, during the stated period. The total return of a class shows its overall
change in value, including changes in share price and assuming all of the class'
dividends and capital gain distributions are reinvested. A cumulative total
return reflects the class' performance over a stated period of time. An average
annual total return reflects the hypothetical annual compounded return that
would have produced the same cumulative total return if the performance had been
constant over the entire period. Because average annual returns tend to smooth
out variations in the returns, you should recognize that they are not the same
as actual year-by-year results. Both types of total return usually will include
the effect of paying the front-end sales charge, in the case of Class A shares.
Of course, total returns will be higher if sales charges are not taken into
account. Quotations of "overall return" do not reflect deduction of the sales
charge. You should consider overall return figures only if you qualify for a
reduced sales charge, or for purposes of comparison with comparable figures
which also do not reflect sales charges, such as mutual fund averages compiled
by Lipper Analytical Services, Inc. Further information about the Fund's
performance is contained in its Annual Report to Shareholders, which may be
obtained without charge.
MANAGEMENT OF THE FUND
The Trust's Board of Trustees supervises the Trust's activities and reviews its
contracts with companies that provide it with services.
Calvert Income Fund is a series of The Calvert Fund (the "Trust"), an open-end
management investment company organized as a Massachusetts business trust on
March 15, 1982. The other series of the Fund are Calvert Strategic Growth Fund
and Calvert U.S. Government Fund.
The Trust is not required to hold annual shareholder meetings, but special
meetings may be called for certain purposes such as electing Trustees, changing
fundamental policies, or approving a management contract. As a shareholder, you
receive one vote for each share of the Fund you own. Matters affecting classes
differently, such as Distribution Plans, will be voted on separately by the
affected class(es).
Portfolio Managers
Investment selections for the Fund are made by Colleen M. Denzler, C.F.A., and
Stephen N. Van Order. Ms. Denzler has been with the Calvert Group since 1986,
and has been a member of the Portfolio Investment Department since January 1987.
She is a member of the Institute of Chartered Financial Analysts and the
Washington Society of Investment Analysts. Mr. Van Order joined Calvert Group in
October 1992 as the head of the trading desk. He oversees the day-to-day
investments and operations of the department and participates in setting market
and portfolio strategy. Previously, Mr. Van Order was Director of Long Term
Funding at Federal National Mortgage Association (Fannie Mae). In his former
capacity, Mr. Van Order was responsible for Fannie Mae's long term borrowing
programs, hedging programs and debt marketing program. Both have managed the
Fund since early 1995.
Calvert Group is one of the largest investment management firms in the
Washington, D.C. area.
Calvert Group, Ltd., parent of the Fund's investment advisor, transfer agent,
and distributor, is a subsidiary of Acacia Mutual Life Insurance Company of
Washington, D.C. Calvert Group is one of the largest investment management firms
in the Washington, D.C. area. Calvert Group, Ltd. and its subsidiaries are
located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. As of
December 31, 1994, Calvert Group managed and administered assets in excess of
$4.2 billion and more than 200,000 shareholder and depositor accounts.
Calvert Asset Management serves as Advisor to the Fund.
Calvert Asset Management Company, Inc. (the "Advisor") is the Fund's investment
advisor. The Advisor provides the Fund with investment supervision and
management; administrative services and office space; furnishes executive and
other personnel to the Fund; and pays the salaries and fees of all Trustees 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 Advisor has agreed to limit the Fund's expenses to the most
restrictive state limitation in effect.
The Advisor receives a fee based on a percentage of the Fund's assets.
For its services during the fiscal year ended September 30, 1994, the Advisor
was entitled pursuant to the Investment Advisory Agreement, to receive an
investment advisory fee of 0.70% of the Fund's respective 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 which are described here and in
the chart below.
An account application accompanies this prospectus. A completed and signed
application is required for each new account you open, regardless of the method
you choose for making your initial investment. Additional forms may be required
from corporations, associations, and certain fiduciaries. If you have any
questions or need extra applications, call your broker, or Calvert Group at
800-368-2748. Be sure to specify which class you wish to purchase.
To invest in any of Calvert's tax-deferred retirement plans, please call Calvert
Group at 800-368-2748 to receive information and the required separate
application.
Alternative Sales Options
The Fund offers two classes of shares:
Class A Shares - Front End Load Option
Class A shares are sold with a front-end sales charge at the time of purchase.
Class A shares are not subject to a sales charge when they are redeemed.
Class C shares - Level Load Option
Class C shares are sold without a sales charge at the time of purchase or
redemption.
Class C shares have higher expenses
The Fund bears some of the costs of selling its shares under Distribution Plans
adopted with respect to its Class A and Class C shares pursuant to Rule 12b-1
under the 1940 Act. Payments under the Class A Distribution Plan are limited to
a maximum of 0.50% annually of the average daily net asset value of Class A. The
Class C Distribution Plan provides for the payment of an annual distribution fee
to CDI of up to 0.75%, plus a service fee of up to 0.25%, for a total of 1.00%
of the average daily net assets attributable to their respective classes.
Considerations for deciding which class of shares to buy
Income distributions for Class A shares will probably be higher than those for
Class C shares, as a result of the distribution expenses described above. (See
also "Total Return.") You should consider Class A shares if you qualify for a
reduced sales charge under Class A or if you plan to hold the shares for several
years.
Class A Shares
Class A shares are offered at net asset value plus a front-end sales charge as
follows:
Concession to
As a % of Net Dealers as a %
As a % of Amount Invested of Amount
Amount of Investment Offering Price Invested
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Less than $50,000 3.75% 3.90% 3.00%
$50,000 but less than $100,000 3.00% 3.09% 2.25%
$100,000 but less than $250,000 2.25% 2.30% 1.75%
$250,000 but less than $500,000 1.75% 1.78% 1.25%
$500,000 but less than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
*For new investments (new purchases but not exchanges) of $1 million or more a
broker-dealer will have the choice of being paid a finder's fee by CDI in one of
the following methods: (1) CDI may pay a broker-dealer, on a monthly basis for
12 months, an annual rate of 0.30%. Payments will be made monthly at the rate of
0.025% of the amount of the investment, less redemptions; or (2) CDI may pay a
broker-dealer 0.25% of the amount of the purchase; however, CDI reserves the
right to recoup any portion of the amount paid to the dealer if the investor
redeems some or all of the shares from the Fund within thirteen months of the
time of purchase.
Sales charges on Class A shares may be reduced or eliminated in certain cases.
See Exhibit A to this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a portion to
your broker-dealer. Upon written notice to dealers with whom it has dealer
agreements, CDI may reallow up to the full applicable sales charge. Dealers to
whom 90% or more of the entire sales charge is reallowed may be deemed to be
underwriters under the Securities Act of 1933.
In addition to any sales charge reallowance or finder's fee, your broker-dealer,
or other financial service firm through which your account is held, currently
will be paid periodic service fees at an annual rate of up to 0.25% of the
average daily net asset value of Class A shares held in accounts maintained by
that firm.
Class A Distribution Plan
The Fund has adopted a Distribution Plan with respect to its Class A shares (the
"Class A Distribution Plan"), which provides for payments at a maximum annual
rate of 0.50% of the average daily net asset value of the Fund's Class A shares
to pay expenses associated with the distribution and servicing. Amounts paid by
the Fund to CDI under the Class A Distribution Plan are used to pay to dealers
and others, including CDI salespersons who service accounts, service fees at an
annual rate of up to 0.25% of the average daily net asset value of Class A
shares, and to pay CDI for its marketing and distribution expenses, including,
but not limited to, preparation of advertising and sales literature and the
printing and mailing of prospectuses to prospective investors. During the fiscal
year ended September 30, 1994, Class A Distribution Plan expenses for the Fund
were 0.06%.
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the respective class.
Class C Shares
Class C shares are not available through all dealers. Class C shares are offered
at net asset value, without a front-end sales charge or a contingent deferred
sales charge. Class C expenses are higher than those of Class A.
Class C Distribution Plan
The Fund has adopted a Distribution Plan with respect to its Class C shares (the
"Class C Distribution Plan"), which provides for payments at an annual rate of
up to 1.00% of the average daily net asset value of Class C shares, to pay
expenses of the distribution and servicing of Class C shares. Amounts paid by
the Fund under the Class C Distribution Plan are currently used by CDI to pay
dealers and other selling firms quarterly compensation at an annual rate of up
to 0.75%, plus a service fee, as described above under "Class A Distribution
Plan," of up to 0.25%, of the average daily net asset value of each share sold
by such others. For the fiscal year ended September 30, 1994, Class C
Distribution Plan expenses were 1.00% for the Fund.
Arrangements with Broker-Dealers and Others
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing registered
representatives who have sold or are expected to sell a minimum dollar amount of
shares of the Fund and/or shares of other Funds underwritten by CDI. CDI may
make expense reimbursements for special training of a dealer's registered
representatives, advertising or equipment, or to defray the expenses of sales
contests. Eligible marketing and distribution expenses may be paid pursuant to
the Fund's Rule 12b-1 Distribution Plan.
Dealers or others may receive different levels of compensation depending on
which class of shares they sell. Payments pursuant to a Distribution Plan are
included in the operating expenses of the class.
HOW TO BUY SHARES
(BE SURE TO SPECIFY WHICH CLASS YOU ARE BUYING)
Method New Accounts Additional Investments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the Fund and payable to the Fund and
mail it with your mail it with your
application to: investment slip to:
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas City, MO 64179-6542 Kansas City, MO 64105-6739
By Registered, Certified, or Overnight Mail:Calvert Group
c/o NFDS, 6th Floor
104 Baltimore
Kansas City, MO 64105-1807
Through Your Broker $2,000 minimum $250 minimum
At the Calvert Visit the Calvert Branch Office to make investments
Branch Office by check. See back cover page for location.
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR BROKER, OR CALVERT GROUP AT 800-368-2745
By Exchange $2,000 minimum $250 minimum
(From your account in another Calvert Group Fund)
When opening an account by exchange, your new account must be established with
the same name(s), address and taxpayer identification number as your existing
Calvert account.
By Bank Wire $2,000 minimum $250 minimum
By Calvert Money Not Available for $50 minimum
Controller* Initial Investment
*Please allow sufficient time for Calvert Group to process your initial request
for this service, normally 10 business days. The maximum transaction amount is
$300,000, and your purchase request must be received by 4:00 p.m. Eastern time.
NET ASSET VALUE
Net asset value per share ("NAV)" refers to the worth of one share. NAV is
computed by adding the value of all portfolio holdings, plus other assets,
deducting liabilities and then dividing the result by the number of shares
outstanding. The NAVs of each class will vary daily based on the market values
of the Fund's investments.
Portfolio securities and other assets are valued based on market quotations,
except that securities maturing within 60 days are valued at amortized cost. If
quotations are not available, securities are valued by a method that the Board
of Trustees believes accurately reflects fair value.
The NAV for the Fund is calculated at the close of the Fund's business day,
which coincides with the closing of the regular session of the New York Stock
Exchange (normally 4:00 p.m. Eastern time). The Fund is open for business each
day the New York Stock Exchange is open. All purchases of Fund shares will be
confirmed and credited to your account in full and fractional shares (rounded to
the nearest 1/1000 of a share).
WHEN YOUR ACCOUNT WILL BE CREDITED
Before you buy shares, please read the following information to make sure your
investment is accepted and credited properly.
Your purchase will be processed at the next offering price based on the next net
asset value calculated after your order is received and accepted. If your
purchase is received by 4:00 p.m. Eastern time, your account will be credited on
the day of receipt. If your purchase is received after 4:00 p.m. Eastern time,
it will be credited the next business day. All purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks. No cash will be accepted. The
Fund reserves the right to suspend the offering of shares for a period of time
or to reject any specific purchase order. If your check does not clear, your
purchase will be cancelled and you will be charged a $10 fee plus costs incurred
by the Fund. When you purchase by check or with Calvert Money Controller, the
Fund can hold payment on redemptions until it is reasonably satisfied that the
investment is collected (normally 10 business days). To avoid this collection
period, you can wire federal funds from your bank, which may charge you a fee.
Certain financial institutions or broker-dealers which have entered into a sales
agreement with the Distributor may enter confirmed purchase orders on behalf of
customers by phone, with payment to follow within a number of days of the order
as specified by the program. If payment is not received in the time specified,
the financial institution could be held liable for resulting fees or losses.
EXCHANGES
You may exchange shares of the Fund for shares of other Calvert Group Funds.
If your investment goals change, the Calvert Group Family of Funds has a variety
of investment alternatives that includes common stock funds, tax-exempt and
corporate bond funds, and money market funds. The exchange privilege is a
convenient way to buy shares in other Calvert Group Funds in order to respond to
changes in your goals or in market conditions. However, to protect a Fund's
performance and to minimize costs, Calvert Group discourages frequent exchanges
and may prohibit additional purchases of Fund shares by persons engaged in too
many short-term trades. Before you make an exchange from a Fund or Portfolio,
please note the following:
Call your broker or a Calvert representative for information and a prospectus
for any of Calvert's other Funds registered in your state. Read the prospectus
of the Fund or Portfolio into which you want to exchange for relevant
information, including class offerings.
Each exchange represents the sale of shares of one Fund and the purchase of
shares of another. Therefore, you could realize a taxable gain or loss on the
transaction.
Complete and sign an application for an account in that Fund or Portfolio,
taking care to register your new account in the same name and taxpayer
identification number as your existing Calvert account(s). Exchange instructions
may then be given by telephone if telephone redemptions have been authorized and
the shares are not in certificate form.
Shares on which you have already paid a sales charge at Calvert Group and shares
acquired by reinvestment of dividends or distributions may be exchanged into
another Fund at no additional charge.
Shareholders (and those managing multiple accounts) who make two purchases and
two exchange redemptions of shares of the same Portfolio during any 6-month
period will be given written notice that they may be prohibited from making
additional investments. This policy does not prohibit a shareholder from
redeeming shares of the Fund, and does not apply to trades solely among money
market funds.
The Fund reserves the right to terminate or modify the exchange privilege with
60 days' written notice.
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour yield and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers use a push button phone to obtain prices, performance information,
account balances, and authorize certain transactions.
Calvert Money Controller
Calvert Money Controller eliminates the delay of mailing a check or the expense
of wiring funds. You can request this free service on your application.
This service allows you to authorize electronic transfers of money to purchase
or sell shares. You use Calvert Money Controller like an "electronic check" to
move money ($50 to $300,000) between your bank account and your Calvert Group
account with one phone call. Allow one or two business days after the call for
the transfer to take place; for money recently invested, allow normal check
clearing time (up to 10 business days) before redemption proceeds are sent to
your bank.
You may also arrange systematic monthly or quarterly investments (minimum $50)
into your Calvert Group account. After you give us proper authorization, your
bank account will be debited to purchase Fund shares. A debit entry will appear
on your bank statement. Share purchases made through Calvert Money Controller
will be subject to the applicable sales charge. If you would like to make
arrangements for systematic monthly or quarterly redemptions from your Calvert
Group account, call your broker or Calvert Group for a Money Controller
Application.
Telephone Transactions
Calvert may record all telephone calls.
If you have telephone transaction privileges, you may purchase, redeem, or
exchange shares, wire funds and use Calvert Money Controller by telephone. You
automatically have telephone privileges unless you elect otherwise. The Fund,
the transfer agent and their affiliates are not liable for acting in good faith
on telephone instructions relating to your account, so long as they follow
reasonable procedures to determine that the telephone instructions are genuine.
Such procedures may include recording the telephone calls and requiring some
form of personal identification. You should verify the accuracy of telephone
transactions immediately upon receipt of your confirmation statement.
Optional Services
Complete the "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 Calvert Investor Relations at
800-368-2745 for further assistance. For our mutual protection, we may require a
signature guarantee on certain written transaction requests. A signature
guarantee verifies the authenticity of your signature, and may be obtained from
any bank, savings and loan association, credit union, trust company,
broker-dealer firm or member of a domestic stock exchange. A signature guarantee
cannot be provided by a notary public.
Householding of General Mailings
Householding reduces Fund expenses and saves paper and trees for the
environment.
If you have multiple accounts with Calvert, you may receive combined mailings of
some shareholder information, such as semi-annual and annual reports. Please
contact Calvert Investor Relations at 800-368-2745 to receive additional copies
of information.
Special Services and Charges
The Fund pays for shareholder services but not for special services that are
required by a few shareholders, such as a request for a historical transcript of
an account. You may be required to pay a research fee for these special
services.
If you are purchasing shares of the Fund through a program of services offered
by a broker-dealer or financial institution, you should read the program
materials in conjunction with this Prospectus. Certain features may be modified
in these programs, and administrative charges may be imposed by the
broker-dealer or financial institution for the services rendered.
Tax-Saving Retirement Plans
Contact Calvert Group for complete information kits discussing the plans, and
their benefits, provisions and fees.
Calvert Group can set up your new account under one of several tax-deferred
plans. These plans let you invest for retirement and shelter your investment
income from current taxes. Minimums may differ from those listed in the chart on
page _____. Also, reduced sales charges may apply. See "Exhibit A - Reduced
Sales Charges."
Individual retirement accounts (IRAs): available to anyone who has earned
income. You may also be able to make investments in the name of your spouse, if
your spouse has no earned income.
Qualified Profit-Sharing and Money-Purchase Plans (including 401(k) Plans):
available to self-employed people and their partners, or to corporations and
their employees.
Simplified Employee Pension Plan (SEP-IRA): available to self-employed people
and their partners, or to corporations. Salary reduction pension plans (SAR-SEP
IRAs) are also available to employers with 25 or fewer employees.
403(b)(7) Custodial Accounts: available to employees of most non-profit
organizations and public schools and universities.
SELLING YOUR SHARES
You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next net asset value calculated after your redemption
request is received and accepted. See the chart below for specific requirements
necessary to make sure your redemption request is acceptable. Remember that the
Fund may hold payment on the redemption of your shares until it is reasonably
satisfied that investments made by check or by Calvert Money Controller have
been collected (normally up to 10 business days).
Redemption Requirements To Remember
To ensure acceptance of your redemption request, please follow the procedures
described here and below.
Once your shares are redeemed, the proceeds will normally be sent to you on the
next business day, but if making immediate payment could adversely affect the
Fund, it may take up to seven (7) days. Calvert Money Controller redemptions
generally will be credited to your bank account on the first or second business
day after your phone call. When the New York Stock Exchange is closed (or when
trading is restricted) for any reason other than its customary weekend or
holiday closings, or under any emergency circumstances as determined by the
Securities and Exchange Commission, redemptions may be suspended or payment
dates postponed.
Minimum account balance is $1,000.
Please maintain a balance in your account of at least $1,000, per class. If, due
to redemptions, the account falls below $1,000, or you fail to invest at least
$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.
HOW TO SELL YOUR SHARES
By Mail To:
Calvert Group
P.O. Box 419544
Kansas City, MO
64179-6544
You may redeem available shares from your account at any time by sending a
letter of instruction, including your name, account and Fund number, the number
of shares or dollar amount, and where you want the money to be sent. Additional
requirements, below, may apply to your account. The letter of instruction must
be signed by all required authorized signers. If you want the money to be wired
to a bank not previously authorized, then a voided bank check must be enclosed
with your letter. If you do not have a voided check or if you would like funds
sent to a different address or another person, your letter must be signature
guaranteed.
Type of
Registration Requirements
Corporations, Associations Letter of instruction and a corporate resolution,
signed by person(s) authorized to act on the
account, accompanied by signature guarantee(s).
Trusts Letter of instruction signed by the Trustee(s)
(as Trustee), with a signature guarantee. (If the
Trustee's name is notregistered on your account,
provide a copy of the trust document, certified
within the last 60 days.)
By Telephone
Please call 800-368-2745. You may redeem shares from your account by telephone
and have your money mailed to your address of record or wired to an address or
bank you have previously authorized. A charge of $5 is imposed on wire transfers
of less than $1,000. See "Telephone Transactions" on page ___.
Calvert Money Controller
Please allow sufficient time for Calvert Group to process your initial request
for this service (normally 10 business days). You may also authorize automatic
fixed amount redemptions by Calvert Money Controller. All requests must be
received by 4:00 p.m. (Eastern time). Accounts cannot be closed by this service.
Exchange to Another Calvert Group Fund
You must meet the minimum investment requirement of the other Calvert Group Fund
or Portfolio. You can only exchange between accounts with identical names,
addresses and taxpayer identification number, unless previously authorized with
a signature-guaranteed letter.
Systematic Check Redemptions
If you maintain an account with a balance of $10,000 or more, you may have up to
two (2) regular checks for a fixed amount 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, CAPITAL GAINS 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 on a
monthly basis. Net investment income consists of the interest income, net
short-term capital gains, if any, and dividends declared and paid on
investments, less expenses. Distributions of the Fund's net short-term capital
gains (treated as dividends for tax purposes) and its net long-term capital
gains, if any, are normally declared and paid by the Fund once a year; however,
the Fund does not anticipate making any such distributions unless available
capital loss carryovers have been used or have expired. Dividend and
distribution payments will vary between classes; dividend payments are generally
anticipated to be higher for Class A shares.
Dividend and Distribution Payment Options.
Dividends and any distributions are automatically reinvested in the same
Portfolio at net asset value (no sales charge), unless you elect to have the
dividends of $10 or more paid in cash (by check or by Calvert Money Controller).
Dividends and distributions may be automatically invested in an identically
registered account with the same account number in any other Calvert Group Fund
at net asset value. If reinvested in the same Fund account, new shares will be
purchased at net asset value on the reinvestment date, which is generally 1 to 3
days prior to the payment date. You must notify the Fund in writing prior to the
record date to change your payment options. If you elect to have dividends
and/or distributions paid in cash, and the U.S. Postal Service cannot deliver
the check, or if it remains uncashed for six months, it, as well as future
dividends and distributions, will be reinvested in additional shares.
"Buying a Dividend"
At the time of purchase, the share price of the Fund may reflect undistributed
income, capital gains or unrealized appreciation of securities. Any income or
capital gains from these amounts which are later distributed to you are fully
taxable. On the record date for a distribution, the Fund's share value is
reduced by the amount of the distribution. If you buy shares just before the
record date ("buying a dividend") you will pay the full price for the shares and
then receive a portion of the price back as a taxable distribution.
Federal Taxes
In January, the Fund will mail you Form 1099-DIV indicating the federal tax
status of dividends and capital gain distributions paid to you by the Fund
during the past year. Generally, dividends and distributions are taxable in the
year they are paid. However, any dividends and distributions paid in January but
declared during the three months prior are taxable in the year declared.
Dividends and distributions are taxable to you regardless of whether they are
taken in cash or reinvested. Dividends, including short-term capital gains, are
taxable as ordinary income. Distributions from long-term capital gains are
taxable as long-term capital gains, regardless of how long you have owned Fund
shares.
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 date of and
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.
Other Tax Information
In addition to federal taxes, you may be subject to state or local taxes on your
investment, depending on the laws in your area. You will be notified to the
extent, if any, that dividends reflect interest received from U.S. government
securities. Such dividends may be exempt from certain state income taxes.
Taxpayer Identification Number
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 and certain redemptions. In addition, you
may be subject to a fine. You will also be prohibited from opening another
account by exchange. If this TIN information is not received within 60 days
after your account is established, your account may be redeemed at the current
NAV on the date of redemption. The Fund reserves the right to reject any new
account or any purchase order for failure to supply a certified TIN.
EXHIBIT A
REDUCED SALES CHARGES (CLASS A ONLY)
You may qualify for a reduced sales charge through several purchase plans
available. You must notify the Fund at the time of purchase to take advantage of
the reduced sales charge.
Right of Accumulation. The sales charge is calculated by taking into account not
only the dollar amount of a new purchase of shares, but also the higher of cost
or current value of shares previously purchased in Calvert Group Funds that
impose sales charges. This automatically applies to your account for each new
purchase.
Letter of Intent. If you plan to purchase $50,000 or more of Fund shares over
the next 13 months, your sales charge may be reduced through a "Letter of
Intent." You pay the lower sales charge applicable to the total amount you plan
to invest over the 13-month period, excluding any money market fund purchases.
Part of your shares will be held in escrow, so that if you do not invest the
amount indicated, you will have to pay the sales charge applicable to the
smaller investment actually made. For more information, see the Statement of
Additional Information.
Group Purchases. If you are a member of a qualified group, you may purchase
shares of the Fund at the reduced sales charge applicable to the group taken as
a whole. The sales charge is calculated by taking into account not only the
dollar amount of the shares you purchase, but also the higher of cost or current
value of shares previously purchased and currently held by other members of your
group.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring Fund shares at a discount, and
(iii) satisfies uniform criteria which enable CDI and dealers offering Fund
shares to realize economies of scale in distributing such shares. A qualified
group must have more than 10 members, must be available to arrange for group
meetings between representatives of CDI or dealers distributing the Fund's
shares, must agree to include sales and other materials related to the Fund in
its publications and mailings to members at reduced or no cost to CDI or
dealers, and must seek to arrange for payroll deduction or other bulk
transmission of investments to the Fund.
Pension plans may not qualify participants for group purchases; however, such
plans may qualify for reduced sales charges under a separate provision (see
below). Members of a group are not eligible for a Letter of Intent.
Retirement Plans Under Section 457, Section 403(b)(7), or Section 401(k). There
is no sales charge on shares purchased for the benefit of a retirement plan
under Section 457 of the Internal Revenue Code of 1986, as amended ("Code"), or
for a plan qualifying under Section 403(b)(7) of the Code if, at the time of
purchase, Calvert Group has been notified in writing that the 403(b)(7) plan has
at least 200 eligible employees. Furthermore, there is no sales charge on shares
purchased for the benefit of a retirement plan qualifying under Section 401(k)
of the Code if, at the time of such purchase, the 401(k) plan administrator has
notified Calvert Group in writing that a) its 401(k) plan has at least 200
eligible employees; or b) the cost or current value of shares the plan has in
Calvert Group of Funds (except money market funds) is at least $1 million.
Neither the Fund, nor CDI, nor any affiliate thereof will reimburse a plan or
participant for any sales charges paid prior to receipt of such written
communication and confirmation by Calvert Group. Plan administrators should send
requests for the waiver of sales charges based on the above conditions to:
Calvert Group Retirement Plans, 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814.
Other Circumstances. There is no sales charge on shares of any fund (portfolio
or series) of the Calvert Group of Funds sold to (i) 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); (ii) directors,
officers and employees of the Advisor, Distributor, and their affiliated
companies; (iii) directors, officers and registered representatives of brokers
distributing the Fund's shares; and immediate family members of persons listed
in (i), (ii), and (iii), above; (iv) 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; (v) trust departments of banks or savings institutions for
trust clients of such bank or savings institution; and (vi) 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."
Established Accounts. Shares of Calvert Income Fund may be sold at net asset
value to accounts opened on or before January 12, 1987.
Dividends and Capital Gain Distributions from other Calvert Group Funds. You may
prearrange to have your dividends and capital gain distributions from another
Calvert Group Fund automatically invested in another account with no additional
sales charge. Dividends and distributions from Calvert Group money market funds
used to purchase shares of the Fund are not be subject to the applicable sales
charge.
Reinstatement Privilege. If you redeem Fund shares and then within 30 days
decide to reinvest in the same Fund, you may do so at the net asset value next
computed after the reinvestment order is received, without a sales charge. You
may use the reinstatement privilege only once. The Fund reserves the right to
modify or eliminate this privilege.
================================================================================
To Open an Account: Prospectus
800-368-2748 January 31, 1995
As Revised September 30, 1995
Yields and Prices:
Calvert Information Network THE CALVERT FUND
24 hours, 7 days a week CALVERT INCOME FUND
800-368-2745
Service for Existing Account:
Shareholders 800-368-2745
Brokers 800-368-2746
TDD for Hearing-Impaired:
800-541-1524
Branch Office:
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified or
Overnight Mail:
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
================================================================================
Table of Contents
Fund Expenses
Financial Highlights
Investment Objective and Policies
Yield and Total Return
Management of the Fund
SHAREHOLDER GUIDE:
Alternative Sales Options
How to Buy Shares
Net Asset Value
When Your Account Will Be Credited
Exchanges
Other Calvert Group Services
Selling Your Shares
How to Sell Your Shares
Dividends, Capital Gains and Taxes
Exhibit A - Reduced Sales Charges
<PAGE>
The Calvert Fund Exhibit 17 (c)
Statement of Additional Information
January 31, 1995
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 Redwood Street (effective 3/1/95)
Baltimore, Maryland 21202-3316 4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objectives
and Policies 1
Investment Restrictions 9 Dividends and Taxes 10
Calculation of Yield and
Total Return 12
Net Asset Value 13
Purchase and Redemption
of Shares 14
Reduced Sales Charges
(Class A) 14
Advertising 14
Trustees and Officers 15
Investment Advisor 17
Method of Distribution 17
Transfer and
Shareholder Servicing
Agent 19
Portfolio Transactions 19
Independent Accountants
and Custodians 20
General Information 20
Financial Statements 21
Appendix 22
- -------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION-January 31, 1995
<TABLE>
<CAPTION>
THE CALVERT FUND
Calvert U.S. Government Fund
Calvert Income Fund
4550 Montgomery Avenue, Bethesda, Maryland 20814
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
New Account (800) 368-2748 Shareholder (800) 368-2745
- -------------------------------------------------------------------------------
Information: (301) 951-4820 Services: (301) 951-4810
Broker (800) 368-2746 TDD for the Hearing-
===============================================================================
Services: (301) 951-4850 Impaired: (800) 541-1524
</TABLE>
This Statement of Additional Information is not a prospectus. Investors should
read the Statement of Additional Information in conjunction with the Fund's
Prospectus dated January 31, 1995, which may be obtained free of charge by
writing the Fund at the above address or calling the Fund.
===============================================================================
INVESTMENT OBJECTIVES AND POLICIES
Calvert U.S. Government Fund pursues its objective of providing high current
income consistent with safety of principal by investing in a professionally
managed portfolio consisting primarily of U.S. Government-backed obligations.
There is no limitation on the maturity of obligations in which Calvert U.S.
Government Fund may invest.
Calvert Income Fund seeks to maximize long-term income to the extent consistent
with prudent investment management and preservation of capital, through
investment in bonds and other income producing securities of investment grade
quality. The Fund may invest in debt securities backed by the full faith and
credit of the U.S. Government, such as Government National Mortgage Association
("GNMA") certificates, and may also invest in other debt securities such as
collateralized mortgage obligations.
Each Fund offers investors the opportunity to invest in a professionally managed
securities portfolio which may be more diversified, stable and liquid than might
be obtainable by an investor on an individual basis. There can be, of course, no
assurance that any Fund will be successful in meeting its investment objective.
Collateralized Mortgage Obligations
Calvert U.S. Government Fund and Calvert Income Fund may, in pursuit of their
investment objectives, invest in collateralized mortgage obligations.
Collateralized mortgage obligations ("CMOs") are fully-collateralized bonds
which are general obligations of the issuer of the bonds. CMOs generally are
secured by collateral consisting of mortgages or a pool of mortgages. The
collateral is assigned to the trustee named in the indenture pursuant to which
the bonds are issued. Payments of principal and interest on the underlying
mortgages are not passed through directly to the holder of the CMO; rather,
payments to the trustee are dedicated to payment of interest on and repayment of
principal of the CMOs. This means that the character of payments of principal
and interest is not passed through, so that payments to holders of CMOs
attributable to interest paid and principal repaid on the underlying mortgages
or pool of mortgages do not necessarily constitute income and return of capital,
respectively, to the CMO holders. Also, because payments of principal and
interest are not passed through, CMOs secured by the same pool or mortgages may
be, and frequently are, issued with a variety of classes or series, which have
different maturities and are retired sequentially. CMOs are designed to be
retired as the underlying mortgages are repaid. In the event of prepayment on
such mortgages, the class of CMO first to mature generally will be paid down.
Thus there should be sufficient collateral to secure the CMOs that remain
outstanding even if the issuer does not supply additional collateral. FHLMC has
introduced a CMO which is a general obligation of FHLMC.
This requires FHLMC to use its general funds to make payments on the CMO if
payments from the underlying mortgages are insufficient.
CMOs are not direct obligations of the U.S. Government. However, Calvert U.S.
Government Fund will purchase only those CMOs which are U.S. Government-backed
obligations, in that they are fully collateralized by mortgages (such as those
insured by the Federal Housing Administration or guaranteed by the Veterans
Administration) or mortgage-related obligations (such as GNMA, FNMA or FHLMC
Certificates) which are issued or guaranteed by the United States Government,
its agencies, or its instrumentalities.
U.S. Government-Backed Obligations
Calvert U.S. Government Fund and Calvert Income Fund may, in pursuit of
their investment objectives, invest in Ginnie Maes, Fannie Maes, Freddie
Macs, U.S. Treasury obligations, and other U.S. Government-backed
obligations.
Ginnie Maes. Calvert U.S. Government Fund and Calvert Income Fund may
invest in Ginnie Maes. Ginnie Maes, issued by the Government National
Mortgage Association, are typically interests in pools of mortgage loans
insured by the Federal Housing Administration or guaranteed by the Veterans
Administration. A "pool" or group of such mortgages is assembled and, after
approval from GNMA, is offered to investors through various securities
dealers. GNMA is a U.S. Government corporation within the Department of
Housing and Urban Development. Ginnie Maes are backed by the full faith and
credit of the United States, which means that the U.S. Government
guarantees that interest and principal will be paid when due. Fannie Maes
and Freddie Macs.
Fannie Maes and Freddie Macs are issued by the Federal National Mortgage
Association ("FNMA") and Federal Home Loan Mortgage Corporation ("FHLMC"),
respectively. Unlike GNMA certificates, which are typically interests in
pools of mortgages insured or guaranteed by government agencies, FNMA and
FHLMC certificates represent undivided interests in pools of conventional
mortgage loans. Both FNMA and FHLMC guarantee timely payment of principal
and interest on their obligations, but this guarantee is not backed by the
full faith and credit of the U.S. Government. FNMA's guarantee is supported
by its ability to borrow from the U.S. Treasury, while FHLMC's guarantee is
backed by reserves set aside to protect holders against losses due to
default.
U.S. Treasury Obligations. Direct obligations of the United States Treasury
are backed by the full faith and credit of the United States. They differ
only with respect to their rates of interest, maturities, and times of
issuance. U.S. Treasury obligations consist of: U.S. Treasury bills (having
maturities of one year or less), U.S. Treasury notes (having maturities of
one to ten years ) and U.S. Treasury bonds (generally having maturities
greater than ten years).
Other U.S. Government Obligations. Each Fund may invest in other
obligations issued or guaranteed by the U.S. Government, its agencies, or
its instrumentalities. (Certain obligations issued or guaranteed by a U.S.
Government agency or instrumentality may not be backed by the full faith
and credit of the United States.)
Repurchase Agreements
Each Fund may, in pursuit of its investment objectives, purchase securities
subject to repurchase agreements. Repurchase agreements are transactions in
which a person purchases a security and simultaneously commits to resell
that security to the seller at a mutually agreed upon time and price. The
seller's obligation is secured by the underlying security. The repurchase
price reflects the initial purchase price plus an agreed upon market rate
of interest. While an underlying security may bear a maturity in excess of
one year, the term of the repurchase agreement is always less than one
year. Repurchase agreements not terminable within seven days will be
limited to no more than 10% of each Fund's assets. Repurchase agreements
are short-term money market investments, designed to generate current
income.
Each Fund will only engage in repurchase agreements with recognized
securities dealers and banks determined to present minimal credit risk by
the Advisor.
Each 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 to 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.
Non-Investment Grade Debt Securities
Calvert Income Fund may invest in lower quality debt securities (generally
those rated BB or lower by S&P or Ba or lower by Moody's), subject to the
Fund's investment policy which provides that the Fund may not invest more
than 20% of its assets in securities rated below BBB by either rating
service, or in unrated securities determined by the Advisors to be
comparable to securities rated below BBB by either rating service. These
securities have moderate to poor protection of principal and interest
payments and have speculative characteristics. These securities involve
greater risk of default or price declines due to changes in the issuer's
creditworthiness than investment-grade debt securities. Because the market
for lower-rated securities may be thinner and less active than for
higher-rated securities, there may be market price volatility for these
securities and limited liquidity in the resale market. Market prices for
these securities may decline significantly in periods of general economic
difficulty or rising interest rates. Unrated debt securities may fall into
the lower quality category. Unrated securities usually are not attractive
to as many buyers as rated securities are, which may make them less
marketable.
The quality limitation set forth in the Fund's investment policy is
determined immediately after the Fund's acquisition of a given security.
Accordingly, any later change in ratings will not be considered when
determining whether an investment complies with the Fund's investment
policy. When purchasing high-yielding securities, rated or unrated, the
Advisors
prepare their 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.
Options and Futures Contracts
Covered Options. Calvert U.S. Government Fund may, in pursuit of its
investment objectives, engage in the writing of covered call options and
secured put options against U.S. Government-backed obligations and in a
variety of other investment techniques seeking to hedge against changes in
the general level of interest rates, including the purchase of put and call
options on debt securities and the purchase and sale of interest rate
futures contracts and options on such futures. The Fund will not engage in
such transactions for the purpose of speculation or leverage. Such
investment policies and techniques may involve a greater degree of risk
than those inherent in more conservative investment approaches.
Covered Options on Debt Securities. Calvert U.S. Government Fund may write
"covered options" on debt securities in standard contracts traded on
national securities exchanges and in the over-the-counter market. At
present, exchange-traded options are available only on U.S. Treasury bills,
notes and bonds. The Fund will 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.
The Fund may write only "covered options." This means that, in the case of
call options, so long as each 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, the Fund will, through its custodian, deposit and
maintain with a securities depository U.S. Treasury obligations with a
market value equal to or greater than the exercise price of the option.
The Fund will not engage in options or futures transactions unless it
receives appropriate regulatory approvals permitting the Fund to engage in
such transactions. The Fund observes the following operating policy, which
may be changed without the approval of a majority of the outstanding
shares: The Fund will not invest in options and futures contracts if as a
result more than 5% of its assets would be so invested or if the aggregate
market value of the futures contracts it holds would exceed 30% of the
market value of its total assets.
Calvert Income Fund may, in pursuit of its investment objectives, write
"covered call options" in standard contracts traded on national securities
exchanges or quoted on NASDAQ, provided that: (1) the Fund continues to own
the securities covering each call option until the call option has been
exercised or until the Fund has purchased a closing call to offset its
obligation to deliver securities pursuant to the call option it had
written; and (2) the market value of all securities covering call options
in the Fund does not exceed 20% of the market value of the Fund's total
assets. Calvert Income Fund anticipates that the market value of securities
covering call options will not exceed 5% of assets during the coming year.
Characteristics of Covered Options. When a Fund writes a covered call
option, the Fund 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, the Fund 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 each
Fund and thus reduce declines in the net asset value per share of the Fund
if securities covered by such options decline in value. Exercise of a call
option by the purchaser however will cause the Fund to forego future
appreciation of the securities covered by the option.
When Calvert U.S. Government 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
falls below the exercise price) at any time during the option period. If
the price of the underlying security falls below the exercise price, the
Fund may realize a loss in the amount of the difference between the
exercise price and the sale price of the security, less the premium
received.
Each Fund purchases securities which may be covered with call options
solely on the basis of considerations consistent with the investment
objectives and policies of the Fund.
Each Fund will purchase a put or call option only when engaging in a "closing
purchase transaction" that is, the purchase of a put or call option on the same
security with the same exercise price and expiration date as a covered put or
call option the Fund has previously written. Of course, there is no assurance
that the Fund will be able to secure a favorable price in effecting such a
transaction, and circumstances might require that it hold a security it
otherwise might have sold.
Each 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.
Expiration of a put or call option or entry into a closing purchase transaction
will result in a short-term capital gain, unless the cost of a closing purchase
transaction exceeds the premium the Fund received when it initially wrote the
option, in which case a short-term capital loss will result. If the purchaser
exercises a put or call option, the Fund will realize a gain or loss from the
sale of the security acquired or sold pursuant to the option, and in determining
the gain or loss the premium will be included in the proceeds of sale. To
preserve each Fund's status as a regulated investment company under Subchapter M
of the Internal Revenue Code, it is each Fund's policy to limit any gains on put
or call options and other securities held less than three months to less than
30% of each Fund's annual gross income.
Risks Related to Options Transactions. A Fund can close out its positions in
exchange traded options only on an exchange which provides a secondary market in
such options. Although each Fund 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. Exchange markets in options on U.S.
Government securities are relatively new and it is difficult to accurately
predict the extent of trading interest that may develop with respect to such
options. This might prevent a Fund from closing an options position, which could
impair the Fund's ability to hedge its portfolio effectively. Also, a Fund's
inability to close out a call position may have an adverse effect on its
liquidity because the Fund may be required to hold the securities underlying the
option until the option expires or is exercised.
The hours of trading for options on U.S. Government securities may not
correspond exactly to the hours of trading for the underlying securities. To the
extent that the options markets close before the U.S. Government securities
markets, significant movements in rates and prices may occur in the Government
securities markets that cannot be reflected in the options markets.
Interest Rate Futures Transactions. A change in the general level of interest
rates will affect the market value of debt securities in a Fund's portfolio.
Calvert U.S. Government Fund may purchase and sell interest rate futures
contracts ("futures contracts") as a hedge against changes in interest rates in
accordance with the strategies described below. 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 purchasing 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 each Fund being obligated to make such payments if
its futures position becomes less valuable and entitled to receive such payments
if its position becomes more valuable.
Futures contracts have been designed by boards of trade which have been
designated "contract markets" by the Commodity Futures Trading Commission
("CFTC"). As a series of a registered investment company, each Fund is eligible
for exclusion from the CFTC's definition of "commodity pool operator," meaning
that the Fund may invest in futures contracts under specified conditions without
registering with the CFTC. Among these conditions are requirements that the Fund
invest in futures only for hedging purposes and that the Fund commit no more
than 5% of the fair market value of its assets to commodity interest trading.
Futures contracts trade on contract markets in a manner that is similar to the
way a stock trades on a stock exchange, and the boards of trade, through their
clearing corporations, guarantee performance of the contracts. Currently, there
are futures contracts based on long-term U.S. Treasury bonds, U.S. Treasury
notes, three-month U.S. Treasury bills, and three-month domestic bank
certificates of deposit.
The purchase and sale of futures contracts is for the purpose of hedging each
Fund's holdings of long-term debt securities. Futures contracts based on U.S.
Government securities and GNMA Certificates historically have reacted to an
increase or decrease in interest rates in a manner similar to the manner in
which mortgage-related securities reacted to the change. If interest rates
increase, the value of such securities in the Fund's portfolio would decline,
but the value of a short position in futures contracts would increase at
approximately the same rate, thereby keeping the net asset value of the Fund
from declining as much as it otherwise would have. Thus, if a Fund owns
long-term securities and interest rates were expected to increase, it might sell
futures contracts rather than sell its holdings of long-term securities. If, on
the other hand, the Fund held cash reserves and interest rates were expected to
decline, the Fund might enter into futures contracts for the purchase of U.S.
Government securities or GNMA certificates and thus take advantage of the
anticipated risk in the value of long-term securities without actually buying
them until the market had stabilized. At that time, the futures contracts could
be liquidated and the Fund's cash reserves could then be used to buy long-term
securities in the cash market. The Fund could accomplish similar results by
selling securities with long maturities and investing in securities with short
maturities when interest rates are expected to increase or by buying securities
with long maturities and selling securities with short maturities when interest
rates are expected to decline. But by using futures contracts as an investment
tool to manage risk it might be possible to accomplish the same result easily
and quickly.
Options on Futures Contracts. Calvert U.S. Government Fund may purchase and
write call and put options on futures contracts which are traded on a U.S.
exchange or board of trade and enter into closing transactions with respect to
such options to terminate an existing position. 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
which it purchases. In connection with such options which it writes, 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.
Purchase of 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 Fund's portfolio of debt securities against the risk of declining
prices.
Purchase of Call Options on Futures Contracts. The purchase of call options on
futures contracts represents a means of obtaining temporary exposure to market
appreciation at limited risk. It is analogous to the purchase of a futures
contract and is used to protect against a market advance when the Fund is not
fully invested.
Writing Call Options on Futures Contracts. The writing of call options on
futures contracts constitutes a partial hedge against declining prices of the
debt securities which are deliverable upon exercise of the futures contracts. 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 holdings of debt
securities.
Writing Put Options on Futures Contracts. The writing of put options on futures
contracts is analogous to the purchase of futures contracts. If an option is
exercised, the net cost to the Fund of the debt securities acquired by it will
be reduced by the amount of the option premium received. Of course, if market
prices have declined, the Fund's purchase price upon exercise may be greater
than the price at which the debt securities might be purchased in the cash
market.
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, the Fund may suffer a loss on the futures contracts or
options which it would not have experienced if it had not hedged. The success of
a hedging strategy depends on the Advisor's ability to predict the direction of
interest rates and other economic factors. Correlation is imperfect between
movements in the prices of futures or options 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. If a Fund used a futures or options contract to hedge
against a decline in the market, and the market later advances (or vice versa),
the Fund may suffer a greater loss than if it had not hedged. However, the value
of a diversified portfolio such as a Fund's will tend to move in the direction
of the market generally.
A Fund can close out its futures positions only on an exchange or board of trade
which provides a secondary market in such futures. Although each 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.
In such situations, if the Fund has insufficient cash, it may have to sell
portfolio securities to meet daily margin requirements at a time when it would
be disadvantageous to do so. The inability to close futures or options positions
could have an adverse effect on the Fund's ability to hedge effectively. There
is also risk of loss by the Fund of margin deposits in the event of bankruptcy
of a broker with whom the Fund has an open position in a futures contract. To
partially or completely offset losses on futures contracts, the Fund will
normally hold the securities against which the futures positions were taken
until the futures positions can be closed out, so that the Fund receives the
gain (if any) from the portfolio securities. This might have an adverse effect
on the Fund's overall liquidity.
Options on futures transactions bear several risks apart from those inherent in
options transactions generally. A Funds 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 position. 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.
Restricted Securities
Calvert Income Fund may invest in restricted (privately placed) securities and
other securities which are not readily marketable. Such securities may offer
greater potential for capital appreciation or income than non-restricted
securities. The Fund may not invest in such securities if, at the time of
acquisition, such investment would cause the total percentage of restricted or
non-readily marketable securities in the Fund to exceed 10% of its total assets.
Restricted securities may be sold only in privately negotiated transactions, in
a public offering for which a registration statement is in effect under the
Securities Act of 1933 (the "Act") or, where applicable, pursuant to Rule 144A
of the Act. If registration is required to effect sales of the security the Fund
may be obligated to bear all or part of the registration expenses and wait until
the appropriate registration statement becomes effective before it makes the
sale. If adverse market conditions develop during such a period, the Fund may
not be able to obtain as favorable a price as that prevailing when it decided to
sell. The Fund's investments in restricted securities are valued at fair value
as determined by the Advisor under the supervision of the Board of Trustees. In
determining fair value, the market price of comparable securities, if any, the
book value per share, and other intrinsic financial information regarding the
issuer and the securities will be taken into consideration. If, as a result of
the appreciation in value of restricted securities or the depreciation in value
of unrestricted securities, either Fund's proportion of such assets should
exceed 10% of the value of its assets, the Board will take appropriate steps to
protect liquidity.
Loans of Portfolio Securities
Each Fund may lend the securities from its portfolio to member firms of the New
York Stock Exchange and commercial banks with assets of one billion dollars or
more. Any such loans must be secured continuously in the form of cash or cash
equivalents such as U.S. Treasury bills, the amount of 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. Each 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.
Each Fund may make loans of its securities only if the value of the securities
loaned from the Fund will not exceed one-third of the Fund's assets.
The advantage of such loans is that the Fund continues to receive the equivalent
of the interest earned or dividends paid by the issuer 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 deliveries 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, each Fund will make loans of its portfolio securities
only to those firms the Advisor deems creditworthy and only on such terms as the
Advisor believes should compensate for such risk. On termination of the loan the
borrower is obligated to return the securities to the Fund; any gain or loss in
the market value of the security during the loan period will inure to the Fund.
The Fund may pay reasonable custodial fees in connection with the loan.
International Money Market Instruments
Calvert Income Fund may, in pursuit of its investment objective, invest in U.S.
dollar-denominated obligations of foreign branches of U.S. banks and U.S.
branches of foreign banks. Such obligations are not insured by the Federal
Deposit Insurance Corporation. Foreign and domestic bank reserve requirements
may differ. Payment of interest and principal upon these obligations and the
marketability and liquidity of such obligations in the secondary market may also
be affected by governmental action in the country of domicile of the branch
(generally referred to as "sovereign risk"). Examples of governmental actions
would be the imposition of exchange or currency controls, interest limitations
or withholding taxes on interest income, seizure of assets, or the declaration
of a moratorium on the payment of principal or interest. In addition, evidences
of ownership of portfolio securities may be held outside of the U.S., and each
Fund may be subject to the risks associated with the holding of such property
overseas.
The obligations of foreign branches of U.S. banks and of U.S. branches of
foreign banks may be general obligations of the parent bank in addition to being
obligations of the issuing branch, or may be limited to being an obligation of
the issuing branch by the terms of the specific obligation or by government
action or regulation. Obligations which are limited to being obligations of the
issuing branch may involve greater risks than obligations which are generally
obligations of the parent bank in addition to being obligations of the issuing
branch.
The Fund will carefully consider these factors in making such investments and
will invest no more than 25% of the value of its assets in U.S.
dollar-denominated obligations of foreign branches of U.S. banks and U.S.
branches of foreign banks.
Bond Ratings
Description of Moody's Investors Service Inc.'s/Standard & Poor's bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of investment risk
and are generally referred to as "gilt edge." Interest payments are protected by
a large or by an exceptionally stable margin and principal is secure. This
rating indicates an extremely strong capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make long-term risks appear somewhat larger than in
Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present which make the
bond somewhat more susceptible to the adverse effects of circumstances and
economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay principal and
interest. Whereas they normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay principal and interest for bonds in this category than
for bonds in the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is regarded as
predominantly speculative with respect to capacity to pay interest and repay
principal. There may be some large uncertainties and major risk exposure to
adverse conditions. The higher the degree of speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
Commercial Paper Ratings
Commercial paper rated A by Standard & Poor's Corporation has the following
characteristics: liquidity ratios are adequate to meet cash requirements;
long-term senior debt is rated "A" or better; the issuer has access to at least
two additional channels of borrowing; basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and the reliability and quality of management are
unquestioned. The relative strength or weakness of the above factors determines
whether an issuer's commercial paper is rated A-1, A-2, or A-3.
Issuers rated Prime-1 by Moody's Investors Service, Inc., are considered to have
superior capacity for repayment of short-term promissory obligations. Such
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structure with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers rated Prime-2 have a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
INVESTMENT RESTRICTIONS
The Calvert Fund has adopted the following investment restrictions and
fundamental policies. These restrictions 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. Shares have equal rights as to voting, except
that only shares of a series are entitled to vote on matters, such as changes in
investment objective, policies or restrictions, affecting only that series.
None of the Funds may:
1. 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 the Fund's total assets
would be invested in securities of such issuer.
2. Concentrate more than 25% of the value of its
assets in any one industry; provided, however, that there is
no limitation with respect to investments in obligations
issued or guaranteed by the United States Government or its
agencies and instrumentalities.
3. Purchase more than 10% of the outstanding voting
securities of any issuer. In addition, all series of The
Calvert Fund may not together purchase more than 10% of the
outstanding voting securities of any issuer.
4. Make loans (other than loans of its portfolio
securities, loans through the purchase of money market
instruments and repurchase agreements, or loans through the
purchase of bonds, debentures or other debt securities of
the types commonly offered privately and purchased by
financial institutions). The purchase of a portion of an
issue of publicly distributed debt obligations shall not
constitute the making of loans.
5. Underwrite the securities of other issuers.
6. Purchase securities which are subject to legal or
contractual restrictions on resale or for which there is no
readily available market or which are repurchase agreements
not terminable within seven days if more than 10% of the
value of any Fund's net assets would be invested in such
securities.
7. Purchase from or sell to any of the Fund's officers
or Trustees, or firms of which any of them are members, any
securities (other than capital stock of the Fund), but such
persons or firms may act as brokers for the Fund for
customary commissions.
8. Issue senior securities or borrow money, except
from banks as a temporary measure for extraordinary or
emergency purposes and then only in an amount up to 10% of
the value of its total assets in order to meet redemption
requests without immediately selling portfolio securities.
The writing of covered call options is not considered
issuing a senior security. In order to secure any such bank
borrowings under this section, the Fund may pledge, mortgage
or hypothecate its assets and then in an amount not greater
than 15% of the value of its total assets. The Fund will not
borrow for leverage purposes and investment securities will
not be purchased while any borrowings are outstanding.
9. Make short sales of securities, purchase any
securities on margin, or invest in warrants.
10. Write, purchase or sell puts, straddles or spreads,
or combinations thereof; provided, however, that Calvert
U.S. Government Fund may write cash secured put options and
engage in closing purchase transactions to the extent
permitted by their investment objectives and policies.
11. Purchase or retain the securities of any issuer if
any officer or Trustee of the Fund or its Investment Advisor
owns beneficially more than 1/2 of 1% of the securities of
such issuer or if together such individuals own more than 5%
of the securities of such issuer.
12. Invest for the purpose of exercising control or
management of another issuer.
13. Invest in commodities, commodities futures
contracts, or real estate, although it may invest in
securities which are secured by real estate or real estate
mortgages and may invest in the securities of issuers which
invest or deal in commodities, commodity futures, real
estate or real estate mortgages.
14. Invest in interests in oil, gas, or other mineral
exploration or development programs, although it may invest
in securities of issuers which invest in or sponsor such
programs.
15. Purchase the securities of other investment
companies, except as they may be acquired as part of a
merger, consolidation or acquisition of assets, or in
connection with a trustee's/director's deferred compensation
plan, as long as there is no duplicaton of advisory fees.
16. Purchase the securities of companies which have a
record of less than three years' continuous operation if, as
a result, more than 5% of the value of the Fund's total
assets would be invested in securities of such issuer.
Any investment restriction which involves a maximum percentage of securities or
assets shall not be considered to be violated unless an excess over the
applicable percentage occurs immediately after and results from an acquisition
of securities or utilization of assets.
DIVIDENDS AND TAXES
Calvert U.S. Government Fund and Calvert Income Fund declare and pay dividends
from net investment income on a monthly basis. Net investment income consists of
the interest income earned (adjusted for amortization of original issue or
market discounts or premiums) and dividends declared and paid on investments,
less expenses. Distributions of net capital gains, if any, are normally declared
and paid by each Fund once a year; however, the Funds do not intend to make any
such distributions from securities profits unless available capital loss
carryovers, if any, have been used or have expired. Dividends and distributions
paid may differ among the classes.
Under the backup withholding provisions of the Interest and Dividend Tax
Compliance Act of 1983, the Fund is required to withhold 31% of any dividends
and capital gains distributions, and 31% of each redemption transaction, 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 Internal Revenue Code because of
underreporting (however, failure to provide certification as to the application
of section 3406(a)(1)(C) will result only in backup withholding on dividends,
not on redemptions); or (c) the Fund is notified by the Internal Revenue Service
that the TIN provided by the shareholder is incorrect or that there has been
underreporting of interest or dividends by the shareholder. Affected
shareholders will receive statements at least annually specifying the amount
withheld.
In addition, each Fund is required under the broker reporting provisions of the
Tax Equity and Fiscal Responsibility Act of 1982 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, however, 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 also are generally not subject to either
requirement but, along with certain foreign partnerships and foreign
corporations, may instead be subject to withholding under Section 1441 of the
Internal Revenue Code. Shareholders claiming exemption from backup withholding
and broker reporting should call or write the Fund for further information.
Each Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code. By so qualifying, the Fund will not
be subject to federal income taxes, nor to excise tax under the Tax Reform Act
of 1986 (the "Act"), to the extent its earnings are distributed.
Dividends and distributions are automatically reinvested at net asset value in
additional shares. Shareholders may elect to have their dividends and
distributions paid out in cash, or invested at net asset value in another
Calvert Group Fund.
Distributions from realized net short-term capital gains, as well as dividends
from net investment income, are currently taxable to shareholders as ordinary
income.
Net long-term capital gains distributions, if any, will generally be includable
as long-term capital gain in the gross income of shareholders who are citizens
or residents of the United States. Whether such realized securities gains and
losses are long-term or short-term depends on the period the securities are held
by the Fund, not the period for which the shareholder holds shares of the Fund.
Dividends and distributions are taxable regardless of whether they are
reinvested in additional shares of a Fund or not. A shareholder may also be
subject to state and local taxes on dividends and distributions from each Fund.
Each Fund will notify shareholders each January as to the federal tax status of
dividends and distributions paid by the Fund and the amount of dividends
withheld, if any, during the previous fiscal year.
CALCULATION OF YIELD AND TOTAL RETURN
Yield
Each Fund may advertise its "yield" from time to time. Yield quotations are
calculated separately for each class, are historical, and are not intended to
indicate future performance. "Yield" quotations for each class refer to the
aggregate imputed yield-to-maturity of each of the Fund's investments based on
the market value as of the last day of a given thirty-day or one-month period,
less accrued expenses (net of reimbursement ), divided by the average daily
number of outstanding shares for that class which are entitled to receive
dividends, times the maximum offering price on the last day of the period (so
that the effect of the sales charge is included in the calculation), compounded
on a "bond equivalent," or semi-annual, basis. Each Fund's yield by class is
computed according to the following formula:
Yield = 2[(a-b/cd + 1)6 - 1]
where a = dividends and interest earned during the period using the aggregate
imputed yield-to-maturity for each of the Fund's investments as noted above; b =
expenses accrued for the period (net of reimbursement); c = the average daily
number of shares of that class outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.
Yield will fluctuate in response to changes in interest rates and general
economic conditions, portfolio quality, portfolio maturity, and operating
expenses. Yield is not fixed or insured and therefore is not comparable to a
savings or other similar type of account. Yield during any particular time
period should not be considered an indication of future yield. It is, however,
useful in evaluating each Fund's performance in meeting its investment
objective.
<TABLE>
<CAPTION>
Yield (Class A shares)
30 Day Period Ended
Fund September 30, 1994
<S> <C>
Calvert U.S. Government Fund 5.94%
Calvert Income Fund 6.89%
</TABLE>
<TABLE>
<CAPTION>
Yield (Class C shares)
30 Day Period Ended
Fund September 30, 1994
<S> <C>
Calvert U.S. Government Fund 4.88%
Calvert Income Fund 6.26%
</TABLE>
Total Return
Each Fund may also advertise "total return." Total return is calculated
separately for each class. Total return is computed by taking the total number
of shares purchased by a hypothetical $1,000 investment after deducting any
applicable sales charge for Class A shares, adding all additional shares
purchased within the period with reinvested dividends and distributions,
calculating the value of those shares at the end of the period, and dividing the
result by the initial $1,000 investment. 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 (less the maximum sales
charge imposed during the period calculated); T = total return; n = number of
years, and ERV = the ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period.
Total return is historical in nature and is not intended to indicate future
performance. All total return quotations reflect the deduction of the Fund's
maximum sales charge, except quotations of "overall return" which do not deduct
the sales charge, and "actual return" which reflect deduction of sales charge
only for those periods when a sales charge was actually imposed. Thus, in the
above formula, for overall return, P = the entire $1,000 hypothetical initial
investment and does not reflect the deduction of any sales charge; for actual
return, P = a hypothetical initial payment of $1,000 less any sales charge
actually imposed at the beginning of the period for which the performance is
being calculated. Overall 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.
Overall and total return for the Funds' Class A shares for the
periods indicated are as follows:
<TABLE>
<CAPTION>
Periods Ended
September 30, 1994 Overall Return SEC Total Return
<S> <C> <C>
Calvert Income Fund
One year -6.94% -10.44%
Five years 7.42% 6.60%
Ten years 10.42% 10.00%
</TABLE>
<TABLE>
<CAPTION>
Periods Ended
September 30, 1994 Overall Return SEC Total Return
<S> <C> <C>
Calvert U.S. Government Fund
One year -5.19% -8.74%
Five years 6.53% 5.71%
From inception<F1> 7.04% 6.55%
<FN>
<F1>May 22, 1986
</FN>
</TABLE>
Total return for the Fund's Class C shares from March 1, 1994 to September 30,
1994 was -5.47% and -3.58% for the Income and U.S. Government Funds,
respectively.
NET ASSET VALUE
The net asset value per share of each Fund, the price at which shares are
redeemed, is determined every business day as of 4:00 p.m., Eastern time, and at
such other times as may be appropriate or necessary. The Funds do 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.
Each Fund's net asset value per share is computed separately for each class by
dividing the value of its total assets, less its liabilities, by the total
number of shares outstanding. Portfolio securities are valued as follows: (a)
securities for which market quotations are readily available are valued at the
most recent closing price, mean between bid and asked price, or yield equivalent
as obtained from one or more market makers for such securities; (b) securities
maturing within 60 days are valued at cost, plus or minus any amortized discount
or premium, unless the Board of Trustees determines such method not to be
appropriate under the circumstances; and (c) all other securities and assets for
which market quotations are not readily available are fairly valued by the
Advisor in good faith under the supervision of the Board of Trustees.
PURCHASE AND REDEMPTION OF SHARES
Share certificates will not be issued unless requested in writing by the
investor. No charge will be made for share certificate requests. No certificates
will be issued for fractional shares.
Amounts redeemed by check redemption may be mailed to the investor without
charge. Amounts of more than $50 and less than $300,000 may be transferred
electronically at no charge to the investor. Amounts of $1,000 or more will be
transmitted by wire without charge by the Fund to the investor's account at a
domestic commercial bank that is a member of the Federal Reserve System or to a
correspondent bank. A charge of $5 is imposed on wire transfers of less than
$1,000. If the investor's bank is not a Federal Reserve System member, failure
of immediate notification to that bank by the correspondent bank could result in
a delay in crediting the funds to the investor's bank account.
Telephone redemption requests which would require the redemption of shares
purchased by check or electronic funds transfer within the previous 10 business
days may not be honored. The Fund reserves the right to modify the telephone
redemption privilege.
Existing shareholders who at any time desire to arrange for the telephone
redemption procedure, or to change instructions already given, must send a
written notice either to the broker through which the shares were purchased or
to the Fund with a voided check from the bank account to receive the redemption
proceeds. New wiring instructions may be accompanied by a voided check in lieu
of a signature guarantee. Further documentation may be required from
corporations, fiduciaries, pension plans, and institutional investors.
The Fund's redemption check normally will be mailed to the investor on the next
business day following the date of receipt by the Fund of the written or
telephone redemption request. If the investor so instructs in the redemption
request, the check will be mailed or the redemption proceeds wired to a
predesignated account at the investor's bank. Redemption proceeds are normally
paid in cash. However, at the sole discretion of the Fund, the Fund has the
right to redeem shares in assets other than cash for redemption amounts
exceeding, in any 90-day period, $250,000 or 1% of the net asset value of the
Fund, whichever is less, or as allowed by law.
The right of redemption of Fund shares may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is closed
(other than customary weekend and holiday closings), when trading on the New
York Stock Exchange is restricted, or an emergency exists, as determined by the
Securities and Exchange Commission, or if the Commission has ordered such a
suspension for the protection of shareholders. Redemption proceeds are normally
mailed or wired the next business day but in no event later than seven days
after a proper redemption request has been received, unless redemptions have
been suspended or postponed as described above.
REDUCED SALES CHARGES (CLASS A)
Calvert U.S. Government Fund and Calvert Income Fund impose reduced sales
charges for Class A shares in certain situations in which the Principal
Underwriter and the dealers selling Fund shares may expect to realize
significant economies of scale with respect to such sales. Generally, sales
costs do not increase in proportion to the dollar amount of the shares sold; the
per-dollar transaction cost for a sale to an investor of shares worth, say,
$5,000 is generally much higher than the per-dollar cost for a sale of shares
worth $1,000,000. Thus, the applicable sales charge declines as a percentage of
the dollar amount of shares sold as the dollar amount increases.
When a shareholder agrees to make purchases of shares over a period of time
totaling a certain dollar amount pursuant to a Letter of Intent, the Underwriter
and selling dealers can expect to realize the economies of scale applicable to
that stated goal amount. Thus the Fund imposes the sales charge applicable to
the goal amount. Similarly, the Underwriter and selling dealers also experience
cost savings when dealing with existing Fund shareholders, enabling the Fund to
afford existing shareholders the Right of Accumulation. The Underwriter and
selling dealers can also expect to realize economies of scale when making sales
to the members of certain qualified groups which agree to facilitate
distribution of Fund shares to their members. See "Exhibit A - Reduced Sales
Charges" in the Prospectus.
ADVERTISING
The Fund or its affiliates may provide information such as, but not limited to,
the economy, investment climate, investment principles, sociological conditions
and political ambiance. Discussion may include hypothetical scenarios or lists
of relevant factors designed to aid the investor in determining whether the Fund
is compatible with the investor's goals. The Fund may list portfolio holdings or
give examples or securities that may have been considered for inclusion in the
Portfolio, whether held or not.
The Fund or its affiliates may supply comparative performance data and rankings
from independent sources such as Donoghue's Money Fund Report, Bank Rate
Monitor, Money, Forbes, Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Wiesenberger Investment Companies Service, Russell
2000/Small Stock Index, Mutual Fund Values Morningstar Ratings, Mutual Fund
Forecaster, Barron's, The Wall Street Journal, and Schabacker Investment
Management, Inc. Such averages generally do not reflect any front- or back-end
sales charges that may be charged by Funds in that grouping. The Fund may also
cite to any source, whether in print or on-line, such as Bloomberg, in order to
acknowledge origin of information. The Fund may compare itself or its portfolio
holdings to other investments, whether or not issued or regulated by the
securities industry, including, but not limited to, certificates of deposit and
Treasury notes. The Fund, its Advisor, and its affiliates reserve the right to
update performance rankings as new rankings become available.
TRUSTEES AND OFFICERS
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Director of Finance for the Family
Health Council, Inc. in Pittsburgh, Pennsylvania. The Family Health Council is a
non-profit corporation which provides family planning services, nutrition,
maternal/child health care, and various health screening services. Mr. Baird is
a trustee/director of each of the investment companies in the Calvert Group of
Funds, except for Acacia Capital Corporation, and Calvert World Values Fund.
Address: 211 Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in the law firm of
Abrams, Blatz, Gran, Hendricks & Reina, P.A. Address: 900 Oak Tree Road, South
Plainfield, New Jersey 07080.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a physician. Prior to that, he
was a radiologist at Bethlehem Medical Imaging in Allentown, Pennsylvania.
Address: 2040 Nuuanu Avenue #1805, Honolulu, Hawaii, 96817.
2 CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and Treasurer Emeritus
of the George Washington University, and has retired from University Support
Services, Inc. of Herndon, Virginia. He is also a Director of Acacia Mutual Life
Insurance Company. Address: 1658 Quail Hollow Court, McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices head and neck
reconstructive surgery in the Washington, D.C., metropolitan area. Address: 7536
Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is a principal of Gavian De Vaux
Associates, an investment banking firm. He was formerly President of Corporate
Finance of Washington, Inc. Address: 1953 Gallows Road, Suite 130, Vienna,
Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the Calvert Social
Investment Foundation, organizing director of the Community Capital Bank in
Brooklyn, New York, and a financial consultant to various organizations. In
addition, he is a Director of the Community Bankers Mutual Fund of Denver,
Colorado, and the Treasurer and Director of Silby, Guffey, and Co., Inc., a
venture capital firm. Mr. Guffey is a trustee/director of each of the other
investment companies in the Calvert Group of Funds, except for Acacia Capital
Corporation. Address: 7205 Pomander Lane, Chevy Chase, Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh was formerly Executive Vice President of the
Council of Better Business Bureaus, Inc. He also serves as a Director of Acacia
Federal Savings Bank. Address: 4823 Prestwick Drive, Fairfax, Virginia 22030.
1 DAVID R. ROCHAT, Senior Vice President and Trustee. Mr. Rochat is Executive
Vice President of Calvert Asset Management Company, Inc., Director and Secretary
of Grady, Berwald and Co., Inc., and Director and President of Chelsea
Securities, Inc. He was formerly Managing Director, Fixed Income Division, of
Donaldson, Lufkin & Jenrette Securities Corporation. Address: Box 93, Chelsea,
Vermont 05038.
1 D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a trustee/director of each of the
investment companies in the Calvert Group of Funds, except for Acacia Capital
Corporation. Mr. Silby is an officer, director and shareholder of Silby, Guffey
& Company, Inc., which serves as general partner of Calvert Social Venture
Partners ("CSVP"). CSVP is a venture capital firm investing in socially
responsible small companies. Address: 1715 18th Street, N.W., Washington, D.C.
20009.
1 CLIFTON S. SORRELL, JR., President and Trustee. 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 investment companies in the Calvert Group of
Funds.
1 RENO J. MARTINI, Senior Vice President. Mr. Martini is Senior Vice President
of Calvert Group, Ltd., and Senior Vice President and Chief Investment Officer
of Calvert Asset Management Company, Inc.
1 ROBERT L. BENNETT, Vice President. Mr. Bennet is a Director of Calvert Group,
Ltd. and its subsidiaries, President of Calvert Shareholder Services, Inc., and
Executive Vice President of Calvert Group, Ltd. He is an officer of each of the
investment companies in the Calvert Group of Funds.
1 RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior Vice
President and Controller of Calvert Group, Ltd. and its subsidiaries and an
officer of each of the other investment companies in the Calvert Group of Funds.
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, Secretary, and General Counsel of Calvert Group, Ltd.,
and each of its subsidiaries.
1 EVELYNE S. STEWARD, Vice President. Ms. Steward is Senior Vice
President of Calvert Group, Ltd.
1 DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President of Calvert Asset
Management Company, Inc. and is an officer of each of the other investment
companies in the Calvert Group of Funds.
3 SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is Associate
General Counsel of Calvert Group, Ltd., and its subsidiaries and is an officer
of each of the other investment companies in the Calvert Group of Funds.
1 BETH-ANN ROTH, Esq., Assistant Secretary. Ms. Roth is Associate General
Counsel of Calvert Group, Ltd., and its subsidiaries and is an officer of each
of the other investment companies in the Calvert Group of Funds.
2Officers and trustees deemed to be "interested persons" of the Fund under the
Investment Company Act of 1940, by virtue of of their affiliation with the
Fund's Advisor.
3Officers and trustees deemed to be "interested persons" of the Fund under the
Investment Company Act of 1940, by virtue of of their affiliation with the
Fund's Advisor.
Each of the above named trustees and officers is a trustee or officer of each of
the investment companies in the Calvert Group of Funds with the exception of
Calvert Social Investment Fund, of which only Messrs. Baird, Guffey, Silby and
Sorrell are among the Trustees, Acacia Capital Corporation, of which only
Messrs. Sorrell, Blatz, Diehl and Pugh are among the Directors, and Calvert
World Values Fund, Inc., of which only Messrs. Guffey, Silby, and Sorrell are
among the Directors. The address of Trustees and Officers, unless otherwise
noted, is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
Trustees and Officers as a group own less than 1% of the Fund's outstanding
shares.
The Board's Audit Committee is composed of Messrs. Baird, Blatz, Feldman, and
Pugh. The Investment Policy Committee is composed of Messrs. Borts, Diehl,
Gavian, Guffey, Rochat, Silby and Sorrell.
During fiscal 1994, trustees of the Fund not affiliated with the Fund's Advisor
were paid $1,018 and $4,382 by Calvert U.S. Government Fund and Calvert Income
Fund, respectively. Trustees of the Fund not affiliated with the Advisor
presently receive an annual fee of $20,250 for service as a member of the Board
of Trustees of the Calvert Group of Funds, and a fee of $750 to $1200 for each
regular Board or Committee meeting attended; such fees are allocated among the
respective Funds on the basis of net assets.
Trustees of the Fund not affiliated with the Fund's Advisor ("noninterested
persons") may elect to defer receipt of all or a percentage of their annual fees
and invest them in any fund in the Calvert Family of Funds through the Trustees
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.
INVESTMENT ADVISOR
The Calvert Fund's Investment Advisor is Calvert Asset Management Company, Inc.,
4550 Montgomery Avenue, Bethesda, Maryland 20814, a subsidiary of Calvert Group,
Ltd., which is a subsidiary of Acacia Mutual Life Insurance Company of
Washington, D.C. ("Acacia Mutual").
The Advisory Contract between The Calvert Fund and the Advisor will remain in
effect until January 3, 1996, and from year to year thereafter, provided
continuance is approved at least annually by vote of the holders of a majority
of the outstanding shares of the Fund or by the Board of Trustees of the Fund;
and further provided that such continuance is also approved annually by the vote
of a majority of the trustees of the Fund who are not parties to the Contract or
interested persons of parties to the Contract or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on such
approval. The Contract may be terminated without penalty by either party upon 60
days' prior written notice; it automatically terminates in the event of its
assignment.
Under the Contract, the Advisor provides investment advice to The Calvert Fund
and oversees the day-to-day operations, subject to direction and control by the
Fund's Board of Trustees. For its services, the Advisor receives an annual fee
of 0.60% of the Calvert U.S. Government Fund's average daily net assets and
0.70% of the average daily net assets of Calvert Income Fund.
The Advisor provides the Funds with investment advice and research, office
space, administrative services, furnishes executive and other personnel to the
Funds, pays the salaries and fees of all trustees who are affiliated persons of
the Advisor, and pays all Fund advertising and promotional expenses. The Advisor
reserves the right to compensate broker-dealers in consideration of their
promotional or administrative services. The Funds pay all other operating
expenses, including custodial and transfer agency fees, federal and state
securities registration fees, legal and audit fees, and brokerage commissions
and other costs associated with the purchase and sale of portfolio securities.
However, the Advisor has agreed to reimburse each Fund for all expenses
(excluding brokerage, taxes, interest, Distribution Plan expenses, and
extraordinary items) exceeding, on a pro rata basis, the most restrictive state
expense limitation in effect, currently 2.5% of the first $30 million of the
Funds' average daily net assets, 2.0% of the next $70 million of such assets,
and 1.5% of such assets in excess of $100 million.
For the fiscal years ended September 30, 1992, 1993, and 1994, Calvert U.S.
Government Fund paid advisory fees of $76,486, $59,191, and $51,137,
respectively. Calvert Income Fund paid advisory fees for the same period of
$275,176, $330,336, and $351,249, respectively.
METHOD OF DISTRIBUTION
Each 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 agreements, CDI is entitled to receive a distribution fee from Calvert U.S.
Government Fund and Calvert Income Fund of 0.25% of each Fund's Class A average
daily net assets, and 1.00% of each Fund's Class C average daily net assets. For
Class A shares, CDI also receives the portion of the sales charge in excess of
the dealer reallowance.
For the fiscal years ended September 30, 1992 and 1993, Calvert U.S. Government
Fund paid no Class A Distribution Plan expenses. In 1994, the Fund paid Class A
Distribution Plan expenses of $10,102. For the seven months ended September 30,
1994, Class C Distribution Plan expenses totaled $807. For the same fiscal
years, CDI received net sales charges of $22,264, $22,726, and $14,697,
respectively.
For the fiscal years ended September 30, 1992 and 1993, Calvert Income Fund paid
no Class A Distribution Plan expenses. In 1994, the Fund paid Class A
Distribution Plan expenses of $29,833. For the seven months ended September 30,
1994, Class C Distribution Plan expenses totaled $1,102. CDI received net sales
charges of $53,757, $69,629, and $87,105, for the fiscal years ended September
30, 1992, 1993, and 1994, respectively.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, The Calvert
Fund has adopted a Distribution Plan which permits each Fund to pay certain fees
associated with the distribution of its shares. Such fees for Class A shares may
not exceed, on an annual basis, 0.25% of the average daily net assets of Calvert
U.S. Government Fund and Calvert Income Fund. Expenses under the Fund's Class C
Plan may not exceed, on an annual basis, 1.00% of the Fund's Class C average
daily net assets.
The Calvert Fund's Distribution Plans were approved by the Board of Trustees,
including the Trustees who are not "interested persons" of the Fund (as that
term is defined in the Investment Company Act of 1940) and who have no direct or
indirect financial interest in the operation of the Plans or in any agreements
related to the Plans. The selection and nomination of the Trustees who are not
interested persons of the Fund is committed to the discretion of such
disinterested Trustees. In establishing the Plans, the Trustees considered
various factors including the amount of the distribution fee. The Trustees
determined that there is a reasonable likelihood that the Plans will benefit the
Fund and its shareholders.
The Plans may be terminated by vote of a majority of the non-interested Trustees
who have no direct or indirect financial interest in the Plans, or by vote of a
majority of the outstanding shares of the Fund. Any change in the Plans that
would materially increase the distribution cost to the Fund requires approval of
the shareholders of the affected class; otherwise, the Plans may be amended by
the Trustees, including a majority of the non-interested Trustees as described
above.
The Plans will continue in effect until January 3, 1996, if not sooner
terminated in accordance with its terms. Thereafter, the Plans will continue in
effect for successive one-year periods provided that such continuance is
specifically approved by (i) the vote of a majority of the Trustees who are not
parties to the Plans or interested persons of any such party and who have no
direct or indirect financial interest in the Plans, and (ii) the vote of a
majority of the entire Board of Trustees.
Apart from the Plans, the Advisor, at its expense, may incur costs
and pay expenses associated with the distribution of shares of the Funds.
TRANSFER AND SHAREHOLDER SERVICING AGENT
Calvert Shareholder Services, Inc., a subsidiary of Calvert Group, Ltd., has
been retained by the Fund to act as transfer agent, dividend disbursing agent
and shareholder servicing agent. These responsibilities include: responding to
shareholder inquiries and instructions concerning their accounts; crediting and
debiting shareholder accounts for purchases and redemptions of Fund shares and
confirming such transactions; updating of shareholder accounts to reflect
declaration and payment of dividends; and preparing and distributing quarterly
statements to shareholders regarding their accounts. For these services, Calvert
Shareholder Services, Inc., receives a fee based on the number of shareholder
accounts and the number of shareholder transactions.
For its fiscal years ended September 30, 1992, 1993, and 1994, Calvert U.S.
Government Fund paid Calvert Shareholder Services, Inc. fees of $18,250,
$20,638, and $21,123, respectively. For its fiscal years ended September 30,
1992, 1993, and 1994, Calvert Income Fund paid Calvert Shareholder Services,
Inc. fees of $52,638, $59,504, and $64,339, respectively.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken on the basis of their desirability from an
investment standpoint. Investment decisions and choice of brokers and dealers
are made by the Advisor under the direction and supervision of the Board of
Trustees.
Each Fund's policy is to limit portfolio turnover to transactions necessary to
carry out its investment policies and to obtain cash redemption of its shares.
Depending upon market conditions, each Fund's turnover expressed as a percentage
may in some years exceed 100%, but is not expected to exceed 200%. For the years
ended September 30, 1992, 1993, and 1994, the portfolio turnover rates of
Calvert U.S. Government Fund were 0%, 191%, and 99%, respectively. For the years
ended September 30, 1992, 1993, and 1994, the portfolio turnover rates of
Calvert Income Fund were 18%, 25%, and 34%, respectively.
In all transactions, the Fund seeks to obtain the best price and most favorable
execution and selects broker-dealers on the basis of their professional
capability and the value and quality of their services. Broker-dealers may be
selected who provide the Funds with statistical, research, or other information
and services. Such broker-dealers may receive compensation for executing
portfolio transactions that is in excess of the compensation another
broker-dealer would have received for executing such transactions if the Advisor
determines in good faith that such compensation is reasonable in relation to the
value of the information or services provided. Although any statistical,
research or other information or services provided by broker-dealers may be
useful to the Advisor, its dollar value is generally indeterminable and its
availability or receipt does not materially reduce the Advisor's normal research
activities or expenses.
During the fiscal years ended September 30, 1992, 1993, and 1994, no brokerage
commissions were paid by Calvert U.S. Government Fund or Calvert Income 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 trustees of The
Calvert Fund or any of their affiliates during the last three fiscal years.
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
Coopers & Lybrand, L.L.P., has been selected by the Board of Trustees to serve
as independent accountants for fiscal year 1995. State Street Bank & Trust
Company, N.A., 225 Franklin Street, Boston, MA 02110, currently 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 custodian has 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 Portfolios.
GENERAL INFORMATION
The Calvert Fund (the "Trust") was organized as a Massachusetts business trust
on March 15, 1982. The Calvert Fund's series include Calvert Income Fund,
Calvert U.S. Government Fund, Calvert Short-Term U.S. Government Fund, and
Calvert Strategic Growth Fund. The Calvert Fund's Declaration of Trust contains
an express disclaimer of shareholder liability for acts or obligations of the
Trust. The shareholders of a Massachusetts business trust might, however, under
certain circumstances, be held personally liable as partners for its
obligations. The Declaration of Trust provides for indemnification and
reimbursement of expenses out of the Trust's assets for any shareholder held
personally liable for obligations of the Trust. The Declaration of Trust
provides that the Trust shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Trust and satisfy
any judgment thereon. The Declaration of Trust further provides that the Trust
may maintain appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Trust, its shareholders,
trustees, officers, employees and agents to cover possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both inadequate
insurance exists and the Trust itself is unable to meet its obligations.
Each share of each series represents an equal proportionate interest in that
series with each other share and is entitled to such dividends and distributions
out of the income belonging to such series as declared by the Board. The Funds
offers two separate classes of shares: Class A and Class C. Each class
represents interests in the same portfolio of investments but, as further
described in the prospectus, each class is subject to differing sales charges
and expenses, which differences will result in differing net asset values and
distributions. Upon any liquidation of the Funds, shareholders of each class are
entitled to share pro rata in the net assets belonging to that series available
for distribution.
The Funds will send shareholders confirmations of purchase and redemption
transactions, as well as periodic transaction statements and unaudited
semi-annual and audited annual financial statements of the Funds' 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 Trust's registration statement. The registration
statement is on file with the Securities and Exchange Commission and is
available to the public.
FINANCIAL STATEMENTS
Each Fund's audited financial statements included in its Annual Report to
Shareholders dated September 30, 1994, are expressly incorporated by reference
and made a part of this Statement of Additional Information. A copy of the
Annual Report may be obtained free of charge by writing or calling The Calvert
Fund.
APPENDIX
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)
<PAGE>
Supplement to The Calvert Fund
Statement of Additional Information dated January 31, 1995
Date of Supplement: September 30, 1995
Insert above Divdends and Taxes on Page 12 of the Statement of Additional.
Any previous reference to the Income Fund's Investment Restrictions are
replaced by the following:
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Calvert Income Fund ("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
of the Fund are represented.
The Fund may not:
(1) With respect to 75% of the Funds 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 the Fund's total assets would be invested in
securities of such issuer.
(2) Concentrate more than 25% of the value of its assets in any
one industry; provided, however, that there is no limitation
with respect to investments in obligations issued or
guaranteed by the United States Government or its agencies
and instrumentalities.
(3) With respect to 75% of the Funds assets, purchase more than
10% of the outstanding voting securities of any issuer. In
addition, all series of the Calvert Fund may not together
purchase more than 10% of the outstanding voting securities
of any issuer.
(4) Make loans (other than loans of its portfolio securities,
loans through the purchase of money market instruments and
repurchase agreements, or loans through the purchase of
goods, debentures or other debt securities of the types
commonly offered privately and purchased by financial
institutions). The purchase of a portion of an issue of
publicly distributed debt obligations shall not constitute
the making of loans.
(5) Underwrite the securities of other issuers.
(6) Purchase from or sell to any of the Funds Officers or
Trustees, or firms of which any of them are members, any
securities (other than capital stock of the Fund), but such
persons or firms may act as brokers for the Fund.
(7) Issue senior securities or borrow money except from banks as
a temporary measure for extraordinary or emergency purposes
and then only in an amount up to 10% of the value of its
total assets in order to meet redemption requests without
immediately selling portfolio securities. The writing of
covered call options is not considered issuing a senior
security. In order to secure any such borrowing under this
section, the Fund may pledge, mortgage or hypothecate its
assets and then in an amount not greater than 15% of the
value of its total assets. The Fund will not borrow for
leverage purposes and investment securities will not be
purchased while any borrowings are outstanding.
(8) Purchase or retain the securities of any issuer if any
Officer or Trustee of the Fund or its Investment Adviser
owns beneficially more than 1/2 of 1% of the securities of
such issuer or if together such individuals own more than 5%
of the securities of such issuer.
(9) Invest in interests in oil, gas, or other mineral,
exploration or development programs, although it may invest
in securities of issuers which invest in or sponsor such
programs.
(10) Purchase the securities of other investment companies,
except as they may be acquired as part of a merger,
consolidation or acquisition of assets, or in connection
with a trustee's/director's deferred compensation plan, as
long as there is no duplication of advisory fees.
(11) Purchase the securities of companies which have a record of
less than three years' continuous operation if, as a result,
more than 5% of the value of the Funds' total assets would
be invested in securities of such issuer.
(12) Purchase or sell physical commodities except that it may
enter into futures contracts and options thereon.
(13) Invest in real estate, although it may invest in securities
which are secured by real estate or real estate mortgages
and may invest in the securities of issuers which invest or
deal in real estate or real estate mortgages.
NONFUNDAMENTAL INVESTMENT RESTRICTIONS
The Fund has adopted the following operation (i.e.,
non-fundamental) investment policies and restrictions which may be
changed by the Board of Trustees without shareholder approval. The
Fund may not:
(1) Purchase a futures contract or an option thereon
if, with respect to positions in futures or options
on futures which do not represent bonafide hedging,
the aggregate initial margin and premiums on such
options would exceed 5% of the Fund's net asset
value.
(2) Invest in pots, calls, straddles, spread, or any
combination thereof, except to the extent permitted
by the Prospectus and Statement of Additional
Information, as each may from time to time be
amended.
(3) Effect short sales or securities, except if it owns
or has the right to obtain securities equivalent in
kind and amount to the securities sold short. For
purposes of this restriction, transactions in
futures contracts and options are not deemed to
constitute selling securities short.
(4) Purchase securities on margin, except (1) for use
of short-term credit necessary for clearance of
purchases and sales of portfolio securities and (2)
it may make margin deposits in connection with
futures contracts or options on futures or other
permissible investments.
(5) Invest more than 35% of its net assets in
non-investment grade debt securities.
(6) Invest more than 20% of its assets in the
securities of foreign issuers.
(7) Purchase illiquid securities if, as a result, more
than 15% of its net assets would be invested in
such securities.
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