PROSPECTUS
January 31, 1996
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,
1996) has been filed with the Securities and Exchange Commission and is
incorporated by reference. This free Statement is available upon request
from the Fund: 800-368-2748.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
FEDERAL OR ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. WHEN INVESTORS SELL SHARES
OF THE FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY
PAID
FUND EXPENSES
A. Shareholder Transaction Costs Class A Class C
Maximum 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 average net assets, after expense reimbursements or
waivers)
Management Fees 0.70% 0.70%
Rule 12b-1 Service
and Distribution Fees 0.15% 1.00%
All Other Expenses 0.41% 1.67%
Total Fund Operating Expenses<F1> 1.26% 3.37%
<F1> Net Fund Operating Expenses after reduction for fees paid indirectly
wer: Class A 1.23% and class C 3.34.
C. Example: You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return;(2) redemption at the end of
each period; and (3) for Class A, payment of maximum initial sales
charge at time of purchase:
1 Year 3 Years 5 Years 10 Years
Class A $50 $76 $104 $184
Class C $34 $104 $175 $366
The example, which is hypothetical, should not be considered a
representation of past or future expenses. Actual expenses and return
may be higher or lower than those shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the
Fund 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. If Management had not reimbursed or waived fees, the current
Other Expenses and Total Fund Operating Expenses for Class C shares would have
been 2.36% and 4.06%, respectively. 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, long-term shareholders in the Fund may pay more in total sales
charges than the economic equivalent of the maximum front-end sales
charge permitted by rules of the National Association of Securities
Dealers, Inc.
FINANCIAL HIGHLIGHTS
The following table provides information about the financial history of
the Fund's Class A and C shares. It expresses the information in terms
of a single share outstanding for the Fund throughout each period. The
table has been audited by 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.
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.
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 to average net assets:
Net investment income 6.86%
Total expenses<F5> --
Net expenses 1.07%
Expenses reimbursed and/or waived --
Portfolio turnover 34%
Net assets, end of period (in thousands) $45,936
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.
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
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<F4> 12.47%
Ratio to average net assets:
Net investment income 6.93%
Total expenses<F5> --
Net expenses 1.00%
Expenses reimbursed and/or waived --
Portfolio turnover 25%
Net assets, end of period (in thousands) $53,134
Number of shares outstanding
at end of period (in thousands) 2,886
<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.
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<F4> 13.66%
Ratio to average net assets:
Net investment income 7.59%
Total expenses<F5> --
Net expenses 1.04%
Expenses reimbursed and/or waived --
Portfolio turnover 18%
Net assets, end of period (in thousands) $43,494
Number of shares outstanding
at end of period (in thousands) 2,486
<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.
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<F4> 15.72%
Ratio to average net assets:
Net investment income 8.22%
Total expenses<F5> --
Net expenses 1.08%
Expenses reimbursed and/or waived --
Portfolio turnover 27%
Net assets, end of period (in thousands) $36,413
Number of shares outstanding
at end of period (in thousands) 2,193
<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.
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<F4> 3.63%
Ratio to average net assets:
Net investment income 8.42%
Total expenses<F5> --
Net expenses 1.05%
Expenses reimbursed and/or waived --
Portfolio turnover 5%
Net assets, end of period (in thousands) $32,201
Number of shares outstanding
at end of period (in thousands) 2,066
<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.
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 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<F4> 13.48%
Ratio to average net assets:
Net investment income 8.57%
Total expenses<F5> --
Net expenses 1.07%
Expenses reimbursed and/or waived --
Portfolio turnover 19%
Net assets, end of period (in thousands) $22,969
Number of shares outstanding
at end of period (in thousands) 1,404
<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.
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<F4> 14.67%
Ratio to average net assets:
Net investment income 9.07%
Total expenses<F5> --
Net expenses .94%
Expenses reimbursed and/or waived .25%
Portfolio turnover 37%
Net assets, end of period (in thousands) $20,375
Number of shares outstanding
at end of period (in thousands) 1,298
<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.
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<F4> (.84)%
Ratio to average net assets:
Net investment income 9.06%
Total expenses<F5> --
Net expenses .85%
Expenses reimbursed and/or waived .25%
Portfolio turnover 42%
Net assets, end of period (in thousands) $20,574
Number of shares outstanding
at end of period (in thousands) 1,345
<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.
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<F4> 18.38%
Ratio to average net assets:
Net investment income 9.16%
Total expenses<F5> --
Net expenses .85%
Expenses reimbursed and/or waived .33%
Portfolio turnover 23%
Net assets, end of period (in thousands) $21,456
Number of shares outstanding
at end of period (in thousands) 1,259
<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.
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.
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 to average net assets:
Net investment income 5.62%(a)
Total expenses<F5> --
Net expenses 2.65%(a)
Expenses reimbursed and/or waived 7.29%(a)
Portfolio turnover 34%
Net assets, end of period (in thousands) $413
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.
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
(a) Annualized
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 net 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 net 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 net 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
The 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 Stephen N. Van Order. 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. He has
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, 1995, Calvert Group
managed and administered assets in excess of $4.8 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, 1995,
pursuant to the Investment Advisory Agreement, the Advisor was entitled
to and did 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:
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 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, 1995, Class A
Distribution Plan expenses for the Fund were 0.15%.
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, 1995, 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 payable to the Fund
and mail it with your and 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
1004 Baltimore
Kansas City, MO 64105-1807
Through Your Broker $2,000 minimum $250 minimum
At the Calvert Visit the Calvert Branch Office to make investments 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 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 the proceeds of redemptions
against those funds until it is reasonably satisfied that the purchase
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.
For purposes of the exchange privilege, effective July 31, 1996, the
Fund is related to Summit Cash Reserves Fund by investment and investor
services. The Fund reserves the right to terminate or modify the
exchange privilege 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 account application for the easiest way to establish
services.
The easiest way to establish optional services on your Calvert Group
account is to select the options you desire when you complete your
account application. If you wish to add other options later, you may
have to provide us with additional information and a signature
guarantee. Please call Calvert Investor Relations at 800-368-2745 for
further assistance. For our mutual protection, we may require a
signature guarantee on certain written transaction requests. A signature
guarantee verifies the authenticity of your signature, and may be
obtained from any bank, 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 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 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 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 Seciton 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.
Purchases made at net asset value ("NAV"). Except for money market
funds, if you make a purchase at NAV, you may exchange that amount to
another fund at no additional sales charge.
Reinstatement Privilege. If you redeem Fund shares and then within 30
days decide to reinvest in the same Fund, you may do so at the net asset
value next computed after the reinvestment order is received, without a
sales charge. You may use the reinstatement privilege only once. The
Fund reserves the right to modify or eliminate this privilege.
To Open an Account:
Prospectus
800-368-2748
January 31, 1996
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
Calvert Group Web-Site
Address: http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Table of Contents
Fund Expenses
Financial Highlights
Investment Objective and Policies
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
January 31, 1996
THE CALVERT FUND
Calvert U. S. Government Fund
4550 Montgomery Avenue, Bethesda, Maryland 20814
INVESTMENT OBJECTIVES
Calvert U.S. Government Fund ("the 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 the Fund may invest.
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 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,
1996) 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
CALVERT U.S. GOVERNMENT FUND
A. Shareholder Transaction Costs Class A Class C
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 - 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%
C. Example: You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return;(2) redemption at the end of
each period; and (3) for Class A, payment of maximum initial sales
charge at time of purchase:
1 Year 3 Years 5 Years 10 Years
Class A $53 $86 $121 $220
Class C $35 $107 $182 $377
The example, which is hypothetical, should not be considered a
representation of past or future expenses. Actual expenses and return
may be higher or lower than those shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the
Fund 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 Funds' investments and business affairs. The Funds
incur Other Expenses for maintaining shareholder records, furnishing
shareholder statements and reports, and other services. If Management
had not reimbursed or waived fees, the current Other Expenses and Total
Fund Operating Expenses for Class A Shares would have been 0.79% and
1.62%, respectively. For Class C shares, the current Other Expenses and
Total Fund Operating Expenses for Class A Shares would have been 1.93%
and 3.53%, respectively. 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, long-term shareholders in the Fund may pay more in total sales
charges than the economic equivalent of the maximum front-end sales
charge permitted by rules of the National Association of Securities
Dealers, Inc.
FINANCIAL HIGHLIGHTS
The following table provides information about the financial history of
the Fund's Class A and C shares. It expresses the information in terms
of a single share outstanding for the Fund throughout each period. The
table has been audited by those independent accountants whose reports
are included in the respective Annual Reports to Shareholders of the
Funds. The table should be read in conjunction with the financial
statements and their related notes. The current Annual Report to
Shareholders is incorporated by reference into the Statement of
Additional Information.
Class A Shares
Year Ended
September 30, 1995
Net asset value, beginning of period $13.74
Income from investment operations
Net investment income .78
Net realized and unrealized gain
(loss) on investments .86
Total from investment operations 1.64
Distributions to shareholders
Dividends from net investment income (.77)
Distribution from capital gains --
Total Distributions (.77)
Total increase (decrease) in
net asset value .87
Net asset value, end of period $14.61
Total return<F4> 12.30%
Ratio to average net assets:
Net investment income 5.52%
Total expenses<F5> 1.62%
Net expenses 1.60%
Expenses reimbursed and/or waived --
Portfolio turnover 133%
Net assets, end of period (in thousands) $9,037
Number of shares outstanding
at end of year (in thousands) 619
<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.
Class A Shares
Year Ended
September 30, 1994
Net 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<F4> (5.19)%
Ratio to average net assets:
Net investment income 4.99%
Total expenses<F5> --
Net expenses 1.02%
Expenses reimbursed and/or waived --
Portfolio turnover 99%
Net assets, end of period (in thousands) $9,721
Number of shares outstanding
at end of period (in thousands) 708
<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.
Class A Shares
Year Ended
September 30, 1993
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<F4> 8.70%
Ratio to average net assets:
Net investment income 5.49%
Total expenses<F5> --
Net expenses .95%
Expenses reimbursed and/or waived --
Portfolio turnover 191%
Net assets, end of period (in thousands) $13,652
Number of shares outstanding
at end of period (in thousands) 844
<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.
Class A Shares
Year Ended
September 30, 1992
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<F4> 10.07%
Ratio to average net assets:
Net investment income 6.15%
Total expenses<F5> --
Net expenses 1.11%
Expenses reimbursed and/or waived --
Portfolio turnover --
Net assets, end of period (in thousands) $13,223
Number of shares outstanding
at end of period (in thousands) 841
<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.
Class A Shares
Year Ended
September 30, 1991
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<F4> 12.07%
Ratio to average net assets:
Net investment income 6.69%
Total expenses<F5> --
Net expenses 1.26%
Expenses reimbursed and/or waived --
Portfolio turnover --
Net assets, end of period (in thousands) $11,935
Number of shares outstanding
at end of period (in thousands) 785
<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.
Class A Shares
Year Ended
September 30, 1990
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<F4> 7.91%
Ratio to average net assets:
Net investment income 7.77%
Total expenses<F5> --
Net expenses .75%
Expenses reimbursed and/or waived .51%
Portfolio turnover --
Net assets, end of period (in thousands) $5,624
Number of shares outstanding
at end of period (in thousands) 388
<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.
Class A Shares
Year Ended
September 30, 1989
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 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<F4> 10.20%
Ratio to average net assets:
Net investment income 8.32%
Total expenses<F5> --
Net expenses .75%
Expenses reimbursed and/or waived .54%
Portfolio turnover --
Net assets, end of period (in thousands) $3,380
Number of shares outstanding
at end of period (in thousands) 233
<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.
Class A Shares
Year Ended
September 30, 1988
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 --
Total from investment operations 1.23
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<F4> 15.36%
Ratio to average net assets:
Net investment income 8.60%
Total expenses<F5> --
Net expenses .53%
Expenses reimbursed and/or waived 1.10%
Portfolio turnover 8%
Net assets, end of period (in thousands) $2,988
Number of shares outstanding
at end of period (in thousands) 208
<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.
Class A Shares
Year Ended
September 30, 1987
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<F4> (.54)%
Ratio to average net assets:
Net investment income 8.58%
Total expenses<F5> --
Net expenses .50%
Expenses reimbursed and/or waived 1.31%
Portfolio turnover 115%
Net assets, end of period (in thousands) $2,417
Number of shares outstanding
at end of period (in thousands) 179
<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.
Class A Shares
From Inception
(May 22, 1986) To
September 30, 1986
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<F4> .72%
Ratio to average net assets:
Net investment income 7.01%(a)
Total expenses<F5> --
Net expenses .50%(a)
Expenses reimbursed and/or waived 4.53%(a)
Portfolio turnover --
Net assets, end of period (in thousands) $903
Number of shares outstanding
at end of period (in thousands) 61
<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.
(a) Annualized
Class C Shares
Year Ended
September 30, 1995
Net asset value, beginning of period $13.71
Income from investment operations
Net investment income .42
Net realized and unrealized gain
(loss) on investments .94
Total from investment operations 1.36
Distributions to shareholders
Dividends from net investment income (.58)
Distribution from capital gains --
Total Distributions (.58)
Total increase (decrease) in
net asset value .78
Net asset value, end of period $14.49
Total return 10.21%
Ratio to average net assets:
Net investment income 3.60%
Total expenses<F5> 3.53%
Net expenses 3.50%
Expenses reimbursed and/or waived 1.75%
Portfolio turnover 133%
Net assets, end of period (in thousands) $435
Number of shares outstanding
at end of period (in thousands) 30
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
Class C Shares
From Inception
(March 1, 1994) To
September 30, 1994
Net 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 (3.58)%
Ratio to average net assets:
Net investment income 4.39%(a)
Total expenses<F5> --
Net expenses 2.41%(a)
Expenses reimbursed and/or waived 7.96%(a)
Portfolio turnover 99%
Net assets, end of period (in thousands) $302
Number of shares outstanding
at end of period (in thousands) 22
<F5>Effective September 30, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
(a) Annualized
INVESTMENT OBJECTIVE 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.
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, the 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
The 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
The Fund can use various techniques to increase or decrease its exposure
to changing security prices, interest rates, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts
and leveraged notes, entering into swap agreements, and purchasing
indexed securities. The Fund can use these practices either as
substitution for an allowable security or as protection against an
adverse move in the Fund's portfolio to adjust the risk and return
characteristics of the Fund's portfolio. 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.
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.
Other Policies
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, 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 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 U.S. Government Fund is a 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 Income
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 are made by Stephen N. Van Order. 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, 1995, Calvert Group
managed and administered assets in excess of $__ 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
Pursuant to the Investment Advisory Agreement, the Advisor was entitled
to and did receive investment advisory fees of 0.60%, based on average
daily net assets during the fiscal year ended September 30, 1995.
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 0.25% annually of
the average daily net asset value of Class A shares. 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:
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-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.
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 0.25% of the average daily net asset value of
Class A shares, to pay expenses associated with the distribution and
servicing of Class A shares. Amounts paid by the Fund to CDI under the
Class A Distribution Plan are used to pay to dealers and others,
including CDI salespersons who service accounts, service fees at an
annual rate of up to 0.25% of the average daily net asset value of Class
A shares, and to pay CDI for its marketing and distribution expenses,
including, but not limited to, preparation of advertising and sales
literature and the printing and mailing of prospectuses to prospective
investors. During the fiscal year ended September 30, 1995, Class A
Distribution Plan expenses for the Fund were 0.23%.
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
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, 1995,
Class C Distribution Plan expenses were 1.00%.
Arrangements with Broker-Dealers and Others
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing
registered representatives who have sold or are expected to sell a
minimum dollar amount of shares of the Fund and/or shares of other Funds
underwritten by CDI. CDI may make expense reimbursements for special
training of a dealer's registered representatives, advertising or
equipment, or to defray the expenses of sales contests. 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 payable to the Fund
and mail it with your and 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
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 per class.
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 proceeds of redemptions against
those funds until it is reasonably satisfied that the purchase 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 two
business days after the call for the transfer to take place; for money
recently invested, allow normal check clearing time (up to 10 business
days) before redemption proceeds are sent to your bank.
You may also arrange systematic monthly or quarterly investments
(minimum $50) into your Calvert Group account. After you give us proper
authorization, your bank account will be debited to purchase Fund
shares. A debit entry will appear on your bank statement. Share
purchases made through Calvert Money Controller will be subject to the
applicable sales charge. If you would like to make arrangements for
systematic monthly or quarterly redemptions from your Calvert Group
account, call your broker or Calvert Group for a Money Controller
Application.
Telephone Transactions
Calvert may record all telephone calls.
If you have telephone transaction privileges, you may purchase, redeem,
or exchange shares, wire funds and use Calvert Money Controller by
telephone. You automatically have telephone privileges unless you elect
otherwise. The Fund, the transfer agent and their affiliates are not
liable for acting in good faith on telephone instructions relating to
your account, so long as they follow reasonable procedures to determine
that the telephone instructions are genuine. Such procedures may include
recording the telephone calls and requiring some form of personal
identification. You should verify the accuracy of telephone transactions
immediately upon receipt of your confirmation statement.
Optional Services
Complete the account application for the easiest way to establish
services.
The easiest way to establish optional services on your Calvert Group
account is to select the options you desire when you complete your
account application. If you wish to add other options later, you may
have to provide us with additional information and a signature
guarantee. Please call Calvert Investor Relations at 800-368-2745 for
further assistance. For our mutual protection, we may require a
signature guarantee on certain written transaction requests. A signature
guarantee verifies the authenticity of your signature, and may be
obtained from any bank, 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 per Fund.
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 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 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 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 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; and (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.
Purchases made at net asset value ("NAV"). Except for money market
funds, if you make a purchase at NAV, you may exchange that amount to
another fund at no additional sales charge.
Reinstatement Privilege. If you redeem Fund shares and then within 30
days decide to reinvest in the same Fund, you may do so at the net asset
value next computed after the reinvestment order is received, without a
sales charge. You may use the reinstatement privilege only once. The
Fund reserves the right to modify or eliminate this privilege.
To Open an Account: Prospectus
800-368-2748 January 31,
1996
Yields and Prices:
Calvert Information Network THE CALVERT FUND
24 hours, 7 days a week Calvert U.S. Government 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 64105-1807
Calvert Group Web-Site
Address: http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Table of Contents
Fund Expenses
Financial Highlights
Investment 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>
The Calvert Fund
Calvert Income Fund
Statement of Additional Information
January 31, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
TABLE OF CONTENTS
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
Investment 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, 1996
THE CALVERT FUND
Calvert Income Fund
4550 Montgomery Avenue, Bethesda, Maryland 20814
- --------------------------------------------------------------------------
New Account (800) 368-2748 Shareholder (800) 368-2745
- --------------------------------------------------------------------------
Information:(301) 951-4820 Services: (301) 951-4810
Broker (800) 368-2746 TDD for the Hearing-
==========================================================================
Services: (301) 951-4850 Impaired: (800) 541-1524
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in
conjunction with the Fund's Prospectus dated January 31, 1996, which may
be obtained free of charge by writing the Fund at the above address or
calling the Fund.
==========================================================================
INVESTMENT OBJECTIVES AND POLICIES
==========================================================================
As described int he Prospectus, 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. There can be, of
course, no assurance that the Fund will be successful in meeting its
investment objective.
Collateralized Mortgage Obligations
The Fund may, in pursuit of its 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 are not direct obligations
of the U.S. Government. 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.
U.S. Government-Backed Obligations
The Fund may, in pursuit of its investment objective, invest in
Ginnie Maes, Fannie Maes, Freddie Macs, U.S. Treasury obligations, and
other U.S. Government-backed obligations.
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. The 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
The 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 the
Fund's assets. Repurchase agreements are short-term money market
investments, designed to generate current income.
The Fund will only engage in repurchase agreements with
recognized securities dealers and banks determined to present minimal
credit risk by the Advisor.
The Fund will only engage in repurchase agreements reasonably
designed to secure fully during the term of the agreement the seller's
obligation to repurchase the underlying security and will monitor the
market value of the underlying security during the term of the
agreement. If the value of the underlying security declines and is not
at least equal to the repurchase price due 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
The Fund may invest in lower quality debt securities (generally
those rated BB or lower by S&P or Ba or lower by Moody's), subject to
the Fund's investment policy, which provides that the Fund may not
invest more than 35% of its assets in securities rated below BBB or Baa
by either rating service, or in unrated securities determined by the
Advisors to be comparable to securities rated below BBB or Baa 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. The Fund may, in pursuit of its investment objectives,
engage in the writing of 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 35% of the market value of the Fund's net assets. The Fund may
also write secured put options against U.S. Government-backed obligations and
uses 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 inheren
in more conservative investment approaches. Calvert Income Fund anticipates that
the market value of securities covering call options will not exceed 5% of net
assets during the coming year.
Covered Options on Debt Securities. The 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 the Fund is obligated as the writer
of a call option, it will own the underlying security subject to the
option and, in the case of put options, 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: 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.
(See non-fundamental investment restriction number 1.)
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 the Fund and thus reduce declines in the net
asset value per share of the Fund if securities covered by such options
decline in value. Exercise of a call option by the purchaser however
will cause the Fund to forego future appreciation of the securities
covered by the option.
When the Fund writes a secured put option, it will gain a
profit in the amount of the premium, less a commission, so long as the
price of the underlying security remains above the exercise price.
However, the Fund remains obligated to purchase the underlying security
from the buyer of the put option (usually in the event the price of the
security falls below the exercise price) at any time during the option
period. If the price of the underlying security falls below the exercise
price, the Fund may realize a loss in the amount of the difference
between the exercise price and the sale price of the security, less the
premium received.
The Fund 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.
The 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.
The Fund's turnover may increase through the exercise of a call
option; this will generally occur if the market value of a "covered"
security increases and the Fund has not entered into a closing purchase
transaction.
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 the Fund's status as a regulated investment company under
Subchapter M of the Internal Revenue Code, it is the Fund's policy to
limit any gains on put or call options and other securities held less
than three months to less than 30% of the Fund's annual gross income.
Risks Related to Options Transactions. The Fund can close out
its positions in exchange traded options only on an exchange which
provides a secondary market in such options. Although the 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. The 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 the 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, the
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. 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 the 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. The 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 the Fund intends to purchase or sell only such futures for
which an active secondary market appears to exist, there can be no
assurance that such a market will exist for any particular futures
contract at any particular time. This might prevent the Fund from
closing a futures position, which could require the Fund to make daily
cash payments with respect to its position in the event of adverse price
movements. 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 Fund's ability to
close out its options positions in futures contracts will depend upon
whether an active secondary market for such options develops and is in
existence at the time the Fund seeks to close its 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
The 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. The Fund will exercise its right to
terminate a securities loan in order to preserve its right to vote upon
matters of importance affecting holders of the securities. The 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, the
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 the 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.
Corporate Bond Ratings:
Description of Moody's Investors Service Inc.'s/Standard & Poor's bond
ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat larger than
in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which make the bond somewhat more susceptible to the adverse
effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
higher rated categories.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. The higher the degree of speculation, the
lower the rating. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposure to adverse conditions.
C/C: This rating is only for income bonds on which no interest
is being paid.
D: Debt in default; payment of interest and/or principal is in
arrears.
Commercial Paper Ratings:
MOODY'S INVESTORS SERVICE, INC.:
The Prime rating is the highest commercial paper rating
assigned by Moody's. Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of
the issuer; (2) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be
inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5)
amount and quality of long-term debt; (6) trend of earnings over a
period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by
management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
Issuers within this Prime category may be given ratings 1, 2, or 3,
depending on the relative strengths of these factors.
STANDARD & POOR'S CORPORATION:
Commercial paper rated A by Standard & Poor's has the following
characteristics: (i) liquidity ratios are adequate to meet cash
requirements; (ii) long-term senior debt rating should be A or better,
although in some cases BBB credits may be allowed if other factors
outweigh the BBB; (iii) the issuer should have access to at least two
additional channels of borrowing; (iv) basic earnings and cash flow
should have an upward trend with allowances made for unusual
circumstances; and (v) typically the issuer's industry should be well
established and the issuer should have a strong position within its
industry and the reliability and quality of management should be
unquestioned. Issuers rated A are further referred to by use of numbers
1, 2 and 3 to denote the relative strength within this highest
classification.
==========================================================================
INVESTMENT RESTRICTIONS
==========================================================================
The 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.
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 25% or more of the value of its assets in
any one industry; provided, however, that there is no limitation with
respect to investments in obligations issued or guaranteed by the United
States Government or its agencies and instrumentalities.
(3) With respect to 75% of the Fund's 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 Fund's 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 operating (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 puts, 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.
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
==========================================================================
The Fund declares 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 the Fund once a year; however, the Fund does 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, the 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.
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 the Fund. The 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.
Nondiversified Status
The Fund is a "nondiversified" investment company under the
Investment Act of 1940 (the "Act"), which means the Fund is not limited
by the Act in the proportion of its assets that may be invested in the
securities of a single issuer. A nondiversified fund may invest in a
smaller number of issuers than a diversified fund. Thus, an investment
in the Fund may, under certain circumstances, present greater risk of
loss to an investor than an investment in a diversified fund. However,
the Fund intends to conduct its operations so as to qualify to be taxed
as a "regulated investment company" for purposes of the Code, which will
relieve the Fund of any liability for federal income tax to the extent
its earnings are distributed to shareholders. To qualify for this
Subchapter M tax treatment, the Fund will limit its investments to
satisfy the Code diversification requirements so that, at the close of
each quarter of the taxable year, (i) not more than 25% of the fund's
assets will be invested in the securities of a single issuer or of two
or more issuers which the Fund controls and which are determined to be
engaged in the same or similar trades or businesses or related trades or
businesses, and (ii) with respect to 50% of its assets, not more than 5%
of its assets will be invested in the securities of a single issuer and
the Fund will not own more than 10% of the outstanding voting securities
of a single issuer. Investments in United States Government securities
are not subject to these limitations; while securities issued or
guaranteed by foreign governments are subject to the above tests in the
same manner as the securities of non-governmental issuers. The Fund
intends to comply with the SEC staff position that securities issued or
guaranteed as to principal and interest by any single foreign government
are considered to be securities of issuers in the same industry.
==========================================================================
CALCULATION OF YIELD AND TOTAL RETURN
==========================================================================
Yield
The 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. The Fund's yield by class is
computed according to the following formula:
Yield = 2[(+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 the Fund's
performance in meeting its investment objective.
Yield
30 Day Period Ended
Class of Shares September 30, 1995
Class A Shares 5.56%
Class C Shares 4.93%
Total Return
The 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.
Return for the Funds' shares for the periods ended September
30, 1995 are as follows:
Class A Shares Class A Shares Average Class C Shares
Overall Return Annual Return Average Annual
Return
==========================================================================
One year 14.90% 10.59% 12.58%
Five years 9.62% 8.78% N/A
Ten years 9.65% 9.23% N/A
Class C Shares
From Inception N/A N/A 3.35%
(March 1, 1994)
==========================================================================
NET ASSET VALUE
==========================================================================
The net asset value per share of the 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 Fund does not determine net asset value on certain
national holidays or other days on which the New York Stock Exchange is
closed: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
The Fund's net asset value per share is 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)
==========================================================================
The Fund imposes reduced sales charges for Class A shares in
certain situations in which the Principal Underwriter and the dealers
selling Fund shares may expect to realize significant economies of scale
with respect to such sales. Generally, sales costs do not increase in
proportion to the dollar amount of the shares sold; the per-dollar
transaction cost for a sale to an investor of shares worth, say, $5,000
is generally much higher than the per-dollar cost for a sale of shares
worth $1,000,000. Thus, the applicable sales charge declines as a
percentage of the dollar amount of shares sold as the dollar amount
increases.
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter of
Intent, the Underwriter and selling dealers can expect to realize the
economies of scale applicable to that stated goal amount. Thus the Fund
imposes the sales charge applicable to the goal amount. Similarly, the
Underwriter and selling dealers also experience cost savings when
dealing with existing Fund shareholders, enabling the Fund to afford
existing shareholders the Right of Accumulation. The Underwriter and
selling dealers can also expect to realize economies of scale when
making sales to the members of certain qualified groups which agree to
facilitate distribution of Fund shares to their members. See "Exhibit A
- - Reduced Sales Charges" in the Prospectus.
==========================================================================
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,
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, Calvert New World Fund and Calvert World Values Fund. Age:
47. 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. Age: 59.
Address: 900 Oak Tree Road, South Plainfield, New Jersey 07080.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist
with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem
Medical Imaging in Allentown, Pennsylvania. Age: 46. Address: 2040
Nuuanu Avenue #1805, Honolulu, Hawaii, 96817.
<F1> 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. Age: 73. 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. Age: 47. 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. Age: 63. 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 and
Calvert New World Fund. Age: 47. Address: 7205 Pomander Lane, Chevy
Chase, Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of
Acacia Federal Savings Bank. Age: 58. Address: 4823 Prestwick Drive,
Fairfax, Virginia 22030.
<F1> 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. Age: 58. Address: Box
93, Chelsea, Vermont 05038.
<F1> 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 and Calvert New
World Fund. Mr. Silby is an officer, director and shareholder of Silby,
Guffey & Company, Inc., which serves as general partner of Calvert
Social Venture Partners ("CSVP"). CSVP is a venture capital firm
investing in socially responsible small companies. He is also a Director
of Acacia Mutual Life Insurance Company. Age: 47. Address: 1715 18th
Street, N.W., Washington, D.C. 20009.
<F1> 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 director of Calvert-Sloan Advisers,
L.L.C., and a trustee/director of each of the investment companies in
the Calvert Group of Funds. Age: 54.
<F1> RENO J. MARTINI, Senior Vice President. Mr. Martini is Senior
Vice President of Calvert Group, Ltd., and Senior Vice President and
Chief Investment Officer of Calvert Asset Management Company, Inc. Mr.
Martini is also a director and President of Calvert-Sloan Advisers,
L.L.C., and a director and officer of Calvert New World Fund. Age: 46.
<F1> 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. Mr. Wolfsheimer is Vice President and
Treasurer of Calvert-Sloan Advisers, L.L.C., and a director of Calvert
Distributors, Inc. Age: 43.
<F1> WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant
Secretary. Mr. Tartikoff is an officer of each of the investment
companies in the Calvert Group of Funds, and is Senior Vice President,
Secretary, and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company. Age:
48.
<F1> EVELYNE S. STEWARD, Vice President. Ms. Steward is Senior
Vice President of Calvert Group, Ltd., and a director of Calvert-Sloan
Advisers, L.L.C. She is the sister of Philip J. Schewetti, the portfolio
manager of the CSIF Equity Portfolio. Age: 43.
<F1> DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc., and is an officer of each of
the other investment companies in the Calvert Group of Funds, except for
Calvert New World Fund, Inc. Age: 45.
<F1> SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds. Age: 37.
<F1> BETH-ANN ROTH, Esq., Assistant Secretary. Ms. Roth is
Associate General Counsel of Calvert Group, Ltd. and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds. Age: 41.
Each of the above directors/trustees and officers is a
director/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. Blatz,
Diehl, Pugh and Sorrell are among the directors, Calvert World Values
Fund, Inc., of which only Messrs. Guffey, Silby and Sorrell are among
the directors, and Calvert New World Fund, Inc., of which only Messrs.
Sorrell and Martini are among the directors. The address of directors
and officers, unless otherwise noted, is 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814. Trustees and officers of the Fund as a
group own less than 1% of the Fund's outstanding shares.
The Audit Committee of the Board is composed of Messrs. Baird,
Blatz, Feldman, Guffey and Pugh. The Board's Investment Policy Committee
is composed of Messrs. Borts, Diehl, Gavian, Rochat, Silby and Sorrell.
During fiscal 1995, trustees of the Fund not affiliated with
the Fund's Advisor were paid $3,439. 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 may
elect to defer receipt of all or a percentage of their fees and invest
them in any fund in the Calvert Family of Funds through the Trustees
Deferred Compensation Plan (shown as "Pension or Retirement Benefits
Accrued as part of Fund Expenses," below). Deferral of the fees is
designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees.
<F2>Officers 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.
Trustee Compensation Table
Fiscal Year 1995 Aggregate Pension or Total Compensation
(unaudited Compensation Retirement from Registrant and
numbers) from Registrant Benefits Accrued Fund Complex paid to
for service as as part of Trustees<F3>
Trustee Registrant
Name of Trustee Expenses<F2>
..........................................................................
Richard L. Baird, Jr. $1,845 $0 $33,450
Frank H. Blatz, Jr. $1,864 $1,864 $36,801
Frederick T. Borts $1,464 $0 $25,050
Charles E. Diehl $1,790 $1,790 $35,101
Douglas E. Feldman $1,844 $0 $30,600
Peter W. Gavian $1,240 $531 $31,951
John G. Guffey, Jr. $1,750 $0 $40,450
Arthur J. Pugh $1,839 $0 $36,801
D. Wayne Silby $1,675 $0 $47,965
<F2> Messrs. Blatz, Diehl, Gavian, and Pugh have chosen to defer a portion
of their compensation. As of September 30, 1995, total deferred
compensation, including dividends and capital appreciation, was
$389,972, $320,855, $85,937, and $145,282, for each trustee,
respectively.
<F3> As of December 31, 1995. The Fund Complex consists of eight (8)
registered investment companies.
==========================================================================
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, 1997, 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 0.70% of the average daily net
assets of Calvert Income Fund.
The Advisor provides the Fund with investment advice and
research, office space, administrative services, furnishes executive and
other personnel to the Fund, 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 Fund pays 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 the 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 Fund's 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, 1993, 1994, and 1995,
Calvert Income Fund paid advisory fees for of $330,336, $351,249, and
$307,737, respectively.
==========================================================================
METHOD OF DISTRIBUTION
==========================================================================
The Fund has entered into an agreement with Calvert
Distributors, Inc. ("CDI") whereby CDI, acting as principal underwriter
for the Fund, makes a continuous offering of the Fund's securities on a
"best efforts" basis. Under the terms of the agreements, CDI is entitled
to receive a distribution fee from Calvert Income Fund of 0.25% of the
Fund's Class A average daily net assets, and 1.00% of the Fund's Class C
average daily net assets. For the fiscal years ended September 30, 1993,
1994, and 1995, the Fund paid Class A Distribution Plan expenses of $0,
$10,102, and $64,981, respectively. Of the Class A distribution expenses
paid in fiscal 1995, $62,438 compensated dealers for their share
distribution promotional services, and the remainder was used for the
printing and mailing of prospectuses and sales materials to investors
(other than current shareholders). For the fiscal periods ending
September 30, 1994, and 1995 Class C Distribution Plan expenses were
$807 and $5,779, respectively. Fiscal year 1995 Class C Distribution
Plan expenses were used entirely to compensate dealers distributing
shares, and to compensate the underwriter.
For Class A shares, CDI also receives the portion of the sales
charge in excess of the dealer reallowance. For fiscal years 1993, 1994,
and 1995, CDI received net sales charges of $22,726, $14,697, and
$7,656, respectively.
Pursuant to Rule 12b-1 under the Investment Company Act of
1940, The Fund has adopted a Distribution Plan which permits it 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 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, 1997, 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, 1993, 1994, and 1995,
Calvert Income Fund paid Calvert Shareholder Services, Inc. fees of
$59,504, $64,339, and $59,078, 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.
The 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,
the 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, 1993, 1994, and 1995, the portfolio turnover rates of Calvert Income
Fund were 25%, 34%, and 135%, 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 Fund with
statistical, research, or other information and services. Such
broker-dealers may receive compensation for executing portfolio
transactions that is in excess of the compensation another broker-dealer
would have received for executing such transactions if the Advisor
determines in good faith that such compensation is reasonable in
relation to the value of the information 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, 1993, 1994, and
1995, no brokerage commissions were paid by 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 1996. 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, 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 Fund offers two separate classes of
shares: Class A and Class C. Each class represents interests in the same
portfolio of investments but, as further described in the prospectus,
each class is subject to differing sales charges and expenses, which
differences will result in differing net asset values and distributions.
Upon any liquidation of the Fund, shareholders of each class are
entitled to share pro rata in the net assets belonging to that series
available for distribution.
The Fund will send shareholders confirmations of purchase and
redemption transactions, as well as periodic transaction statements and
unaudited semi-annual and audited annual financial statements of the
Fund's investment securities, assets and liabilities, income and
expenses, and changes in net assets.
The Prospectus and this Statement of Additional Information do
not contain all the information in the Trust's registration statement.
The registration statement is on file with the Securities and Exchange
Commission and is available to the public.
==========================================================================
FINANCIAL STATEMENTS
==========================================================================
The Fund's audited financial statements included in its Annual
Report to Shareholders dated September 30, 1995, 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
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)
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
<PAGE>
The Calvert Fund
Calvert U.S. Government Fund
Statement of Additional Information
January 31, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
TABLE OF CONTENTS
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
Investment 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, 1996
THE CALVERT FUND
Calvert U.S. Government Fund
4550 Montgomery Avenue, Bethesda, Maryland 20814
- --------------------------------------------------------------------------
New Account (800) 368-2748 Shareholder (800) 368-2745
- --------------------------------------------------------------------------
Information: (301) 951-4820 Services: (301) 951-4810
Broker (800) 368-2746 TDD for the Hearing-
==========================================================================
Services: (301) 951-4850 Impaired: (800) 541-1524
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in
conjunction with the Fund's Prospectus dated January 31, 1996, which may
be obtained free of charge by writing the Fund at the above address or
calling the Fund.
==========================================================================
INVESTMENT OBJECTIVE 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.
The 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 may, in pursuit of its investment
objective, 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 may, in pursuit of its investment
objective, 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 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 its 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. The 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
The Fund may, in pursuit of its investment objective, 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 the
Fund's assets. Repurchase agreements are short-term money market
investments, designed to generate current income.
The Fund will only engage in repurchase agreements with
recognized securities dealers and banks determined to present minimal
credit risk by the Advisor.
The Fund will only engage in repurchase agreements reasonably
designed to secure fully during the term of the agreement the seller's
obligation to repurchase the underlying security and will monitor the
market value of the underlying security during the term of the
agreement. If the value of the underlying security declines and is not
at least equal to the repurchase price due 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.
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 the Fund is obligated as the writer
of a call option, it will own the underlying security subject to the
option and, in the case of put options, 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.
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 the Fund and thus reduce declines in the net
asset value per share of the Fund if securities covered by such options
decline in value. Exercise of a call option by the purchaser however
will cause the Fund to forego future appreciation of the securities
covered by the option.
When 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.
The 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.
The 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.
The Fund's turnover may increase through the exercise of a call
option; this will generally occur if the market value of a "covered"
security increases and the Fund has not entered into a closing purchase
transaction.
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 the Fund's status as a regulated investment company under
Subchapter M of the Internal Revenue Code, it is the Fund's policy to
limit any gains on put or call options and other securities held less
than three months to less than 30% of the Fund's annual gross income.
Risks Related to Options Transactions. A Fund can close out its
positions in exchange traded options only on an exchange which provides
a secondary market in such options. Although the 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 the 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, the
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 the 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 the Fund intends to purchase or sell only such futures for
which an active secondary market appears to exist, there can be no
assurance that such a market will exist for any particular futures
contract at any particular time. This might prevent the Fund from
closing a futures position, which could require the Fund to make daily
cash payments with respect to its position in the event of adverse price
movements. 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 Fund's ability to
close out its options positions in futures contracts will depend upon
whether an active secondary market for such options develops and is in
existence at the time the Fund seeks to close its 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.
Loans of Portfolio Securities
The 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. The Fund will exercise its right to
terminate a securities loan in order to preserve its right to vote upon
matters of importance affecting holders of the securities. The 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, the
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.
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.
U.S. Government Fund may not:
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 25% or more of the value of its
assets in any one industry; provided, however, that
there is no limitation with respect to investments in
obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities.
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 its 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 declares 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 the Fund once a year; however,
the Fund does 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, the 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.
The 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 the Fund. The 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
The 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. The Fund's yield by class is
computed according to the following formula:
Yield = 2[(+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 the Fund's
performance in meeting its investment objective.
Yield
30 Day Period Ended
Class of Shares September 30, 19954
Class A 4.52%
Class C 2.95%
Total Return
The 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.
Return for the Funds' shares for the periods indicated are as
follows:
Periods Ended Class A Overall Class A Average Class C Average
September 30, 1995 Return Annual Return Annual Return
============================================================================
One year 12.30% 8.13% 10.21%
Five years 7.37% 6.54% N/A
From inception<F1> 7.59% 7.15% 3.27%
<F1> Class A, May 22, 1986. Class C, March 1, 1994.
==========================================================================
NET ASSET VALUE
==========================================================================
The net asset value per share of the 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 Fund does not determine net asset value on certain
national holidays or other days on which the New York Stock Exchange is
closed: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
The Fund's net asset value per share is 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 imposes reduced sales charges for
Class A shares in certain situations in which the Principal Underwriter
and the dealers selling Fund shares may expect to realize significant
economies of scale with respect to such sales. Generally, sales costs do
not increase in proportion to the dollar amount of the shares sold; the
per-dollar transaction cost for a sale to an investor of shares worth,
say, $5,000 is generally much higher than the per-dollar cost for a sale
of shares worth $1,000,000. Thus, the applicable sales charge declines
as a percentage of the dollar amount of shares sold as the dollar amount
increases.
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter of
Intent, the Underwriter and selling dealers can expect to realize the
economies of scale applicable to that stated goal amount. Thus the Fund
imposes the sales charge applicable to the goal amount. Similarly, the
Underwriter and selling dealers also experience cost savings when
dealing with existing Fund shareholders, enabling the Fund to afford
existing shareholders the Right of Accumulation. The Underwriter and
selling dealers can also expect to realize economies of scale when
making sales to the members of certain qualified groups which agree to
facilitate distribution of Fund shares to their members. See "Exhibit A
- - Reduced Sales Charges" in the Prospectus.
==========================================================================
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,
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, Calvert New World Fund 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 radiologist
with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem
Medical Imaging in Allentown, Pennsylvania. Address: 2040 Nuuanu Avenue
#1805, Honolulu, Hawaii, 96817.
<F2> 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 and
Calvert New World Fund. Address: 7205 Pomander Lane, Chevy Chase,
Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of
Acacia Federal Savings Bank. Address: 4823 Prestwick Drive, Fairfax,
Virginia 22030.
<F2> 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. Address: Box 93,
Chelsea, Vermont 05038.
<F2> 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 and Calvert New
World Fund. Mr. Silby is an officer, director and shareholder of Silby,
Guffey & Company, Inc., which serves as general partner of Calvert
Social Venture Partners ("CSVP"). CSVP is a venture capital firm
investing in socially responsible small companies. He is also a Director
of Acacia Mutual Life Insurance Company. Address: 1715 18th Street,
N.W., Washington, D.C. 20009.
<F2> 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 director of Calvert-Sloan Advisers,
L.L.C., and a trustee/director of each of the investment companies in
the Calvert Group of Funds.
<F2> 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. Mr.
Martini is also a director and President of Calvert-Sloan Advisers,
L.L.C., and a director and officer of Calvert New World Fund.
<F2> 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. Mr. Wolfsheimer is Vice President and
Treasurer of Calvert-Sloan Advisers, L.L.C., and a director of Calvert
Distributors, Inc.
<F2> WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant
Secretary. Mr. Tartikoff is an officer of each of the investment
companies in the Calvert Group of Funds, and is Senior Vice President,
Secretary, and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company.
<F2> EVELYNE S. STEWARD, Vice President. Ms. Steward is Senior
Vice President of Calvert Group, Ltd., and a director of Calvert-Sloan
Advisers, L.L.C. She is the sister of Philip J. Schewetti, the portfolio
manager of the CSIF Equity Portfolio.
<F2> 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, except for
Calvert New World Fund, Inc.
<F2> SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds.
<F2> BETH-ANN ROTH, Esq., Assistant Secretary. Ms. Roth is
Associate General Counsel of Calvert Group, Ltd. and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds.
Each of the above directors/trustees and officers is a
director/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. Blatz,
Diehl, Pugh and Sorrell are among the directors, Calvert World Values
Fund, Inc., of which only Messrs. Guffey, Silby and Sorrell are among
the directors, and Calvert New World Fund, Inc., of which only Messrs.
Sorrell and Martini are among the directors. The address of directors
and officers, unless otherwise noted, is 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814. Trustees and officers of the Fund as a
group own less than 1% of the Fund's outstanding shares.
The Audit Committee of the Board is composed of Messrs. Baird,
Blatz, Feldman, Guffey and Pugh. The Board's Investment Policy Committee
is composed of Messrs. Borts, Diehl, Gavian, Rochat, Silby and Sorrell.
During fiscal 1995, trustees of the Fund not affiliated with
the Fund's Advisor were paid $728. 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 may
elect to defer receipt of all or a percentage of their fees and invest
them in any fund in the Calvert Family of Funds through the Trustees
Deferred Compensation Plan (shown as "Pension or Retirement Benefits
Accrued as part of Fund Expenses," below). Deferral of the fees is
designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees.
<F2>Officers 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.
Trustee Compensation Table
Fiscal Year 1995 Aggregate Pension or Total Compensation
(unaudited Compensation Retirement from Registrant and
numbers) from Registrant Benefits Accrued Fund Complex paid to
for service as as part of Trustees<F3>
Trustee Registrant
Name of Trustee Expenses<F2>
..........................................................................
Richard L. Baird, Jr. $1,845 $0 $33,450
Frank H. Blatz, Jr. $1,864 $1,864 $36,801
Frederick T. Borts $1,464 $0 $25,050
Charles E. Diehl $1,790 $1,790 $35,101
Douglas E. Feldman $1,844 $0 $30,600
Peter W. Gavian $1,240 $531 $31,951
John G. Guffey, Jr. $1,750 $0 $40,450
Arthur J. Pugh $1,839 $0 $36,801
D. Wayne Silby $1,675 $0 $47,965
<F3> Messrs. Blatz, Diehl, Gavian, and Pugh have chosen to defer a portion
of their compensation. As of September 30, 1995, total deferred
compensation, including dividends and capital appreciation, was
$389,972, $320,855, $85,937, and $145,282, for each trustee,
respectively.
<F4> As of December 31, 1995. The Fund Complex consists of eight (8)
registered investment companies.
==========================================================================
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, 1997, 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.
The Advisor provides the Fund 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 Fund pays 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 the 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, 1993, 1994, and 1995,
Calvert U.S. Government Fund paid advisory fees of $59,191, $51,137, and
$57,362, respectively.
==========================================================================
METHOD OF DISTRIBUTION
==========================================================================
The Fund has entered into an agreement with Calvert
Distributors, Inc. ("CDI") whereby CDI, acting as principal underwriter
for the Fund, makes a continuous offering of the Fund's securities on a
"best efforts" basis. Under the terms of the agreements, CDI is entitled
to receive a distribution fee from Calvert U.S. Government Fund of 0.25%
of the Fund's Class A average daily net assets, and 1.00% of the Fund's
Class C average daily net assets. For the fiscal year ended September
30, 1993, Calvert U.S. Government Fund paid no Class A Distribution Plan
expenses. In 1994 and 1995, the Fund paid Class A Distribution Plan
expenses of $10,102 and $21,114, respectively. Of the Class A
distribution expenses paid in fiscal 1995, $20,602 compensated dealers
for their share distribution promotional services, and the remainder was
used for the printing and mailing of prospectuses and sales materials to
investors (other than current shareholders). For the seven months ended
September 30, 1994, Class C Distribution Plan expenses totaled $807. For
fiscal 1995, the Class C Distribution Plan expenses were $3,805. Fiscal
year 1995 Class C Distribution Plan expenses were used entirely to
compensate dealers distributing shares, and to compensate the
underwriter.
For Class A shares, CDI also receives the portion of the sales
charge in excess of the dealer reallowance. For the 1993, 1994, and 1995
fiscal years, CDI received net sales charges of $22,726, $14,697, and
$2,379, respectively.
Pursuant to Rule 12b-1 under the Investment Company Act of
1940, The Calvert Fund has adopted a Distribution Plan which permits the
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.
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, 1997, 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, 1993, 1994, and 1995,
Calvert U.S. Government Fund paid Calvert Shareholder Services, Inc.
fees of $20,638, $21,123, and $19,313, 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.
The 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,
the 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, 1993, 1994,and 1995, the portfolio turnover rates of Calvert U.S.
Government Fund were 191%, 99%, and 133%, 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, 1993, 1994, and
1995, no brokerage commissions were paid by Calvert U.S. Government 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.
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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 1996. 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.
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GENERAL INFORMATION
==========================================================================
The Calvert Fund (the "Trust") was organized as a Massachusetts
business trust on March 15, 1982. The Calvert Fund's other series
include Calvert Income 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 Fund 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
Fund's investment securities, assets and liabilities, income and
expenses, and changes in net assets.
The Prospectus and this Statement of Additional Information do
not contain all the information in the Trust's registration statement.
The registration statement is on file with the Securities and Exchange
Commission and is available to the public.
==========================================================================
FINANCIAL STATEMENTS
==========================================================================
The Fund's audited financial statements included in its Annual
Report to Shareholders dated September 30, 1995, 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.
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APPENDIX
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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
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)
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
