<PAGE>
Calvert
Strategic
Growth
Fund
Annual Report
March 31, 1996
Investing with Vision(TM)
[LOGO] Calvert Group
A member of The Acacia Group(R)
<PAGE>
Calvert Strategic Growth Fund
Dear Shareholder:
This report covers performance results for the Calvert Strategic Growth Fund
for the 12-month period ending March 31, 1996.
The fiscal year closed on a strong note with returns from the second half
outpacing most indices. However, performance from the first half - during which
the Fund was defensively positioned - slowed the yearly gain, and the Fund
posted a 12.56% return for the period versus 32.07% and 29.09% for the S&P 500
and Russell 2000 indices, respectively.
Year in Review
During the first half of the fiscal year, the Fund took a defensive posture
based on negative readings of the Five Market Principles, investment criteria
developed and employed by the Fund manager to assess market risk. With the
benefit of hindsight, this defensive stance was overly cautious.
Historically, a negative reading of the Five Market Principles has preceded
market corrections of 20% or more within a short period of time. There have been
only two exceptions: 1968 and 1995.
Going forward, we have made the following adjustments:
. Before moving to a defensive position following a High Risk signal from the
model, we will wait for technical confirmation of a market top.
. During a High Risk market environment, we will maintain a cautiously invested
position. One of our primary goals is to preserve capital when market conditions
are risky. Last year, we erred on the side of caution.
During the second quarter of the fiscal year, the investment posture began to
change. This marked the turn in performance for the Fund. Market weakness in
July afforded an opportunity to enter high-quality growth stocks at lower
prices. Long exposure was increased, but we maintained a cautious stance during
the historically weak period from September through November. Maintaining a
higher level of cash allowed us to enter the market aggressively in the third
quarter of the fiscal year, resulting in strong performance.
As the market entered the new calendar year, we believed volatility would be
substantially greater than in 1995. Improvement in some of our key indicators,
however, suggested the volatility could be used as an opportunity to enhance
Investment Performance
<TABLE>
<CAPTION>
Periods Ended 3/31/96 6 Months 12 Months
- ----------------------------------------------
<S> <C> <C>
Strategic Growth Fund 13.10% 12.56%
S&P 500 Mthly Reinv. 11.70% 32.07%
Russell 2000 7.41% 29.09%
</TABLE>
Investment performance is for Class A shares and
does not reflect the deduction of any front-end sales charge.
ANNUAL REPORT CALVERT STRATEGIC GROWTH FUND - 1
<PAGE>
Portfolio return rather than a reason to watch from the sidelines. This strategy
paid off as the Fund turned in a strong fiscal fourth quarter.
Though we experienced some pressure on the Portfolio during the market's sharp
downward move in January, we treated the volatility as a buying opportunity in
high-quality growth stocks. Our conviction was rewarded as prices of many of our
holdings quickly rebounded and have appreciated significantly since mid-January.
We were also able to liquidate our position in precious metals near the top of
the recent move. The Fund was approximately 86% invested at the end of February.
The Calvert Strategic Growth Fund invests in high-quality growth equities for
capital appreciation. Unlike most mutual funds, Strategic Growth has the goal of
actively managing risk in order to protect capital during bear cycles. The
investment posture of the Fund during the past year reflects changing concerns
held by the portfolio manager about the overall market environment.
1996 Market Outlook
While we expect the bull market to continue this year, we also anticipate
increased volatility. This environment should create a market well-suited for
disciplined stock selection. Our strategy is to be cautiously invested and
attentive to any change in overall market trends.
The small- and mid-cap stock sector is one area that offers potential for
further gains this year. Unlike the relatively overvalued large-capitalization
stocks, small- and mid-caps are comprised of "niche" companies with more
attractive relative valuations. And while earnings growth of larger
capitalization stocks are showing signs of slowing down to reflect moderate
economic growth, small-cap stocks are gaining momentum. Our analysis shows the
beginning of a divergence between large- and small-caps. It also indicates
small-caps are not fully valued relative to their growth rates.
Summary
The Calvert Strategic Growth Fund is designed for investors with a long-term
investment horizon. An investor should expect times of extraordinary gains as
well as underperformance. We believe the Fund is poised to exhibit strong
relative performance in the years ahead.
We appreciate your investment in the Calvert Strategic Growth Fund.
Sincerely,
/s/ Cedd Moses /s/ Clifton S. Sorrell
Cedd Moses Clifton S. Sorrell
Portfolio Manager President
April 30, 1996
2 - CALVERT STRATEGIC GROWTH FUND ANNUAL REPORT
<PAGE>
Portfolio Statistics
Ten Largest Stock Holdings
as of March 31, 1996
<TABLE>
<CAPTION>
% of Net Assets
- ----------------------------------------------------------
<S> <C>
Cascade Communications Corp. 6.2%
Ascend Communications, Inc. 5.0%
Fore Systems 4.5%
Corporate Express, Inc. 3.3%
Pairgain Technologies, Inc. 3.2%
Business Objects, S.A., ADR 2.8%
Macromedia, Inc. 2.6%
McAfee Associates, Inc. 2.3%
C Cube Microsystems, Inc. 2.3%
Gucci Group, N.V. 2.1%
-----
Total 34.3%
=====
</TABLE>
Average Annual Total Returns
for periods ended March 31, 1996
Class A Shares
One Year 7.19%
Since Inception (5/94) 12.21%
Class C Shares
One Year 11.57%
Since Inception (5/94) 14.19%
Performance Comparison
Comparison of change in value of $10,000 investment
[GRAPH APPEARS HERE]
Period between 05/01/94 to 03/31/96
Calvert Strategic Growth Fund A Shares/Ending balance $12,444
Calvert Strategic Growth Fund C Shares/Ending balance $12,866
S & P 500/R//Ending balance $15,259
Russel 2000/Ending balance $14,298
Total returns assume reinvestment of dividends and, for Class A shares, reflect
the deduction of the Fund's maximum sales charge of 4.75%. No sales charge has
been applied to the indices used for comparison. Past performance is no
guarantee of future results.
ANNUAL REPORT CALVERT STRATEGIC GROWTH FUND - 3
<PAGE>
Report of Independent Accountants
To the Board of Trustees of the Calvert Fund and
Shareholders of the Calvert Strategic Growth Fund:
We have audited the accompanying statement of assets and liabilities of
Calvert Strategic Growth Fund, including the statement of investments, as of
March 31, 1996, and the related statement of operations for the year then ended,
the statements of changes in net assets and financial highlights for the year
then ended and for the period May 5, 1994 (commencement of operations) through
March 31, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
March 31, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Calvert Strategic Growth Fund as of March 31, 1996, and the results of its
operations, the changes in its net assets and the financial highlights for the
periods referred to above, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
May 8, 1996
4 - CALVERT STRATEGIC GROWTH FUND ANNUAL REPORT
<PAGE>
Statement of Investments
March 31, 1996
<TABLE>
<CAPTION>
Equity Securities - 71.1% Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Computer - Local Networks - 10.2%
Ascend Communications, Inc.*.................... 139,900 $ 7,537,113
Cisco Systems, Inc.*............................ 14,000 649,250
Fore Systems*................................... 94,500 6,756,750
Madge Networks, N.V.*........................... 9,700 389,213
----------
15,332,326
----------
Computer - Memory Devices - 3.0%
C Cube Microsystems, Inc.*...................... 65,800 3,454,500
EMC Corp.*...................................... 45,600 997,500
----------
4,452,000
----------
Computer - Peripheral Equipment - 1.6%
U.S. Robotics Corp.............................. 18,900 2,442,825
----------
2,442,825
----------
Computer - Services - 0.5%
Harbinger Corp.*................................ 36,900 654,975
Meta Group, Inc.*............................... 5,000 141,250
----------
796,225
----------
Computer - Software - 20.2%
Applix, Inc.*................................... 53,600 1,876,000
Arbor Software Corp.*........................... 8,400 363,300
Astea International, Inc.*...................... 68,100 2,008,950
Atria Software, Inc.*........................... 6,000 328,500
Baan Co., N.V.*................................. 21,700 1,250,463
Business Objects, S.A., ADR*.................... 49,000 4,165,000
Cambridge Technology Partners*.................. 13,900 794,037
CBT Group Publishing Ltd., ADR*................. 34,300 2,521,050
Clarify, Inc.*.................................. 2,700 105,975
Crystal Dynamics, Inc., Series D................ 13,334 100,005
Documentum, Inc.*............................... 500 17,625
HNC Software, Inc.*............................. 8,500 578,000
Inference Corp., Class A*....................... 47,600 880,600
Informix Corp.*................................. 72,100 1,901,637
Inso Corp.*..................................... 16,100 742,613
Intuit*......................................... 26,300 1,183,500
Legato Systems, Inc.*........................... 7,600 286,900
Macromedia, Inc.*............................... 90,400 3,864,600
McAfee Associates, Inc.*........................ 64,100 3,509,475
Novadigm, Inc.*................................. 72,400 1,095,050
Peoplesoft, Inc.*............................... 16,500 948,750
Prism Solutions, Inc.*.......................... 4,000 106,000
</TABLE>
ANNUAL REPORT CALVERT STRATEGIC GROWTH FUND - 5
<PAGE>
<TABLE>
<CAPTION>
Equity Securities (Cont'd) Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Computer - Software (Cont'd)
Red Brick Systems, Inc.*........................ 2,500 $ 107,500
Remedy Corp.*................................... 29,800 1,683,700
SQA, Inc.*...................................... 5,000 136,250
----------
30,555,480
----------
Computer - Systems - 2.9%
Citrix Sytems, Inc.*............................ 44,400 1,964,700
Discreet Logic, Inc.*........................... 11,670 160,463
HCIA, Inc.*..................................... 27,800 1,306,600
Imnet Systems, Inc.*............................ 23,850 721,463
Oracle Corp..................................... 4,300 202,637
----------
4,355,863
----------
Electronics - Instruments - 0.7%
Tektronix, Inc.................................. 34,300 1,114,750
----------
1,114,750
----------
Electronics - Semiconductors - 6.2%
Cypress Semiconductor Corp.*.................... 50,000 587,500
DSP Communications, Inc.*....................... 39,800 995,000
Flextronics International, Ltd.*................ 29,500 899,750
Micron Technology, Inc.......................... 40,600 1,273,825
Sanmina Corp.*.................................. 58,200 1,731,450
Uniphase Corp.*................................. 29,000 1,123,750
Xylan Corp.*.................................... 2,000 104,000
Zoran Corp.*.................................... 121,900 2,712,275
----------
9,427,550
----------
Medical and Pharmaceutical - 5.7%
Biochem Pharma, Inc.*........................... 41,100 1,685,100
Compdent Corp.*................................. 53,700 1,933,200
Dura Pharmaceuticals, Inc.*..................... 45,900 2,277,787
Foundation Health Corp.*........................ 9,600 366,000
Jones Medical Industries, Inc................... 33,250 1,280,125
Physician Sales and Services, Inc.*............. 41,100 1,017,225
----------
8,559,437
----------
Office Equipment and Supplies - 1.8%
Staples, Inc.*.................................. 136,425 2,779,659
----------
2,779,659
----------
Printing and Publishing - 0.1%
Xeikon, N.V., ADR............................... 2,000 38,750
----------
38,750
----------
Retail - 6.3%
Corporate Express, Inc.*........................ 150,700 4,973,100
Gadzooks, Inc.*................................. 11,000 382,250
Gucci Group, N.V.*.............................. 66,600 3,196,800
</TABLE>
6 - CALVERT STRATEGIC GROWTH FUND ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Equity Securities (Cont'd) Shares Value
- -------------------------------------------------------------------------------
Retail (Cont'd)
Home Centers Diy, Ltd.*......................... 10,000 $ 65,000
Intimate Brands, Inc., Class A.................. 48,900 947,437
-----------
9,564,587
-----------
Telecommunications - 11.9%
Cascade Communications Corp.*................... 104,700 9,396,825
Harmonic Lightwaves, Inc.*...................... 27,200 374,000
Pairgain Technologies, Inc.*.................... 74,500 4,823,875
Premiere Technologies, Inc.*.................... 13,850 322,013
Premisys Communications, Inc.*.................. 44,900 1,459,250
Qualcomm, Inc.*................................. 38,700 1,606,050
-----------
17,982,013
-----------
Total Equity Securities (Cost $97,678,515)..... 107,401,465
-----------
Options Purchased - 39.3% Contracts
- -------------------------------------------------------------------------------
S&P 500 Index Call Options
Expiration 6/22/96, Strike Price 645........... 14,000 32,375,000
S&P 500 Index Put Options
Expiration 6/22/96, Strike Price 650........... 14,000 27,037,500
-----------
Total Options Purchased (Premium $62,937,000).. 59,412,500
-----------
Principal
Repurchase Agreements - 6.6% Amount
- -------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette: 5.35%,
dated 3/29/96, due 4/1/96
($10,232,480, Ref Corp Strip,
Zero Coupon, 7/15/02)........................ $10,000,000 10,000,000
-----------
Total Repurchase Agreements (Cost $10,000,000). 10,000,000
-----------
U.S. Government Agencies and
Instrumentalities - 9.9%
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 5.29%, 5/1/96. 15,000,000 14,933,875
-----------
Total U.S. Government Agencies and
Instrumentalities (Cost $14,933,875)......... 14,933,875
-----------
U.S. Treasury - 5.7%
- -------------------------------------------------------------------------------
U.S. Treasury Bills, 4.95%, 5/2/96............. 4,700,000 4,679,132
U.S. Treasury Bills, 5.305%, 5/9/96............ 90,000 89,514
U.S. Treasury Notes, 5.00%, 2/15/99............ 4,000,000 3,906,240
-----------
Total U.S. Treasury (Cost $8,688,052)......... 8,674,886
-----------
Community Loan Notes - 0.5%
- -------------------------------------------------------------------------------
Illinois Facilities Fund, 4.00%, 9/30/96 +...... 100,000 96,887
Low Income Housing Fund, 4.00%, 1/12/99 +....... 350,000 333,676
Rural Community Assistance Corp., 3.50%,
6/28/96 +...................................... 100,000 98,251
</TABLE>
ANNUAL REPORT CALVERT STRATEGIC GROWTH FUND - 7
<PAGE>
<TABLE>
<CAPTION>
Principal
Community Loan Notes (Cont'd) Amount Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Unitarian Universalist Affordable
Housing Corp., 3.50%, 6/28/96 +................ $50,000 $ 49,125
Washington Area Community Investment Fund,
3.50%, 6/28/96 +............................... 50,000 49,125
Working Capital Management,
4.00%, 9/30/96 +............................... 50,000 48,444
-----------
Total Community Loan Notes (Cost $700,000)... 675,508
-----------
TOTAL INVESTMENTS
(Cost $194,937,442) -- 133.1%............ 201,098,234
Securities Sold Short -- (7.1%)........... (10,713,688)
Options Written -- (33.6%)................ (50,750,000)
Other assets and liabilities, net -- 7.6%. 11,461,172
------------
Net Assets - 100%......................... $151,095,718
============
</TABLE>
Schedule of Securities Sold Short
March 31, 1996
<TABLE>
<CAPTION>
Equity Securities Shares Value
- -------------------------------------------------------------------------------
<S>............................................. <C> <C>
Avid Technology, Inc............................ 46,400 $ 974,400
Broderbund Software, Inc........................ 15,500 585,125
Cirrus Logic, Inc............................... 81,400 1,470,288
Cypress Semiconductor Corp...................... 50,000 587,500
EMC Corp........................................ 45,600 997,500
Foundation Health Corp.......................... 9,600 366,000
Intuit.......................................... 26,300 1,183,500
Micron Technology, Inc.......................... 40,600 1,273,825
Physician Reliance Network, Inc................. 14,000 554,750
Qualcomm, Inc................................... 38,700 1,606,050
Tektronix, Inc.................................. 34,300 1,114,750
------------
TOTAL EQUITY SECURITIES SOLD SHORT
(Proceeds $12,766,110)..................... $10,713,688
===========
</TABLE>
Schedule of Options Written
March 31, 1996
<TABLE>
<CAPTION>
Options Written Contracts
- -------------------------------------------------------------------------------
<S>............................................. <C> <C>
S&P 500 Index Call Options
Expiration 6/22/96, Strike Price 650........... 14,000 $27,125,000
S&P 500 Index Put Options
Expiration 6/22/96, Strike Price 645........... 14,000 23,625,000
-----------
TOTAL OPTIONS WRITTEN
(Premium $55,970,132)....................... $50,750,000
===========
</TABLE>
* Non income producing.
+ Restricted security.
See notes to financial statements.
8 - CALVERT STRATEGIC GROWTH FUND ANNUAL REPORT
<PAGE>
Statement of assets and liabilities
March 31, 1996
<TABLE>
<CAPTION>
Assets Value
- ------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value...................................... $201,098,234
Cash..................................................................... 551,144
Receivable for securities sold........................................... 2,661,423
Receivable for shares sold............................................... 215,513
Interest and dividends receivable........................................ 41,489
Deposits with brokers.................................................... 15,452,229
Other assets............................................................. 26,615
------------
Total assets............................................................ 220,046,647
------------
Liabilities
- ------------------------------------------------------------------------------------------
Payable for securities purchased......................................... 5,934,528
Payable for shares redeemed.............................................. 1,194,986
Securities sold short, at value (proceeds $12,766,110)................... 10,713,688
Options written, at value (premium $55,970,132).......................... 50,750,000
Payable to Calvert Asset Management Co., Inc............................. 263,553
Payable to Calvert Shareholder Services, Inc............................. 26,536
Payable to Calvert Distributors, Inc..................................... 47,588
Accrued expenses and other liabilities................................... 20,050
------------
Total liabilities....................................................... 68,950,929
------------
Net assets............................................................. $151,095,718
------------
Net Assets Consist of:
- ------------------------------------------------------------------------------------------
Paid-in capital applicable to the following shares of beneficial interest;
unlimited number of no par shares authorized:
Class A: 6,739,990 shares outstanding.................................. $109,271,636
Class C: 1,379,762 shares outstanding.................................. 22,633,893
Accumulated net realized gain (loss) on investments...................... 5,756,843
Net unrealized appreciation (depreciation) on investments................ 13,433,346
------------
Net assets.............................................................. $151,095,718
============
Net Asset Value Per Share
- ------------------------------------------------------------------------------------------
Class A (based on net assets of $125,605,662)............................ $18.64
============
Class C (based on net assets of $25,490,056)............................. $18.47
============
</TABLE>
See notes to financial statements.
ANNUAL REPORT CALVERT STRATEGIC GROWTH FUND - 9
<PAGE>
Statement of Operations
Year Ended March 31, 1996
<TABLE>
<CAPTION>
Net Investment Income
- -------------------------------------------------------------------------------
<S> <C>
Investment Income
Interest income............................................ $ 4,790,342
Dividend income............................................ 55,464
-----------
Total investment income................................... 4,845,806
-----------
Expenses
Investment advisory fee.................................... 2,282,948
Transfer agency fees and expenses.......................... 363,268
Distribution Plan expenses:
Class A................................................... 317,541
Class C................................................... 247,589
Trustees' fees and expenses................................ 13,288
Administrative fees........................................ 303,551
Custodian fees............................................. 41,393
Registration fees.......................................... 55,166
Reports to shareholders.................................... 117,892
Professional fees.......................................... 27,402
Miscellaneous expenses..................................... 144,042
Reimbursement from Advisor................................. (178,157)
-----------
Total expenses............................................ 3,735,923
Fees paid indirectly...................................... (41,393)
-----------
Net expenses............................................. 3,694,530
-----------
Net Investment Income................................... 1,151,276
-----------
Realized and Unrealized Gain (Loss)
on Investments
- -------------------------------------------------------------------------------
Net realized gain (loss) on:
Securities................................................ 7,426,909
Options written........................................... (49,591)
Securities sold short..................................... (1,750,242)
Futures................................................... 1,283,981
-----------
6,911,057
Change in unrealized appreciation or depreciation........... 9,845,857
-----------
Net Realized and Unrealized Gain
(Loss) on Investments.................................... 16,756,914
-----------
Increase (Decrease) in Net Assets
Resulting From Operations................................ $17,908,190
===========
</TABLE>
See notes to financial statements.
10 - CALVERT STRATEGIC GROWTH FUND ANNUAL REPORT
<PAGE>
Statements of Changes in Net Assets
<TABLE> From Inception
<CAPTION> May 5, 1994
Year Ended Through
Increase (Decrease in Net Assets March 31, 1996 March 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income.......................... $ 1,151,276 $ 727,864
Net realized gain (loss)
on investments................................ 6,911,057 2,798,748
Change in unrealized appreciation
or depreciation............................... 9,845,857 3,587,489
------------ ------------
Increase (Decrease) in Net Assets
Resulting From Operations..................... 17,908,190 7,114,101
------------ ------------
Distributions to shareholders from
Net investment income:
Class A Shares................................ (1,548,699) (158,700)
Class C Shares................................ (152,946) (18,795)
Net realized gain:
Class A Shares................................ (1,624,507) (1,696,519)
Class C Shares................................ (328,896) (303,040)
------------ ------------
Total distributions............................ (3,655,048) (2,177,054)
------------ ------------
Capital share transactions:
Shares sold:
Class A Shares................................ 64,185,609 110,223,061
Class C Shares................................ 15,176,622 23,305,871
Reinvestment of distributions:
Class A Shares................................ 2,842,563 1,855,219
Class C Shares................................ 465,985 321,835
Shares redeemed:
Class A Shares................................ (60,303,058) (9,531,758)
Class C Shares................................ (12,307,161) (4,329,259)
------------ ------------
Total capital share transactions............... 10,060,560 121,844,969
------------ ------------
Total Increase (Decrease) in Net Assets......... 24,313,702 126,782,016
Net Assets
- --------------------------------------------------------------------------------
Beginning of period............................ 126,782,016 ----
End of period (including undistributed net
investment income of $0 and
$550,369, respectively) ...................... $151,095,718 $126,782,016
============ ============
</TABLE>
See notes to financial statements.
ANNUAL REPORT CALVERT STRATEGIC GROWTH FUND - 11
<PAGE>
Notes to Financial Statements
Note A--Significant Accounting Policies
General: The Calvert Strategic Growth Fund (the "Fund"), a series of The
Calvert Fund, is registered under the Investment Company Act of 1940 as a non-
diversified, open-end management investment company. The operations of each
series are accounted for separately. The Fund offers Class A and Class C shares
of beneficial interest. Class A shares are sold with a maximum front-end sales
charge of 4.75%. Class C shares, which have no transaction-based sales charge,
have a higher annual expense rate than Class A. Each class has different: (a)
dividend rates, due to differences in Distribution Plan expenses and other class
specific expenses, (b) exchange privileges and (c) class specific voting rights.
Security Valuation: Securities listed or traded on a national securities
exchange are valued at the last reported sale price. Unlisted securities and
listed securities for which the last sale price is unavailable are valued at the
most recent bid price or based on a yield equivalent obtained from the
securities' market maker. The Fund may invest in securities whose resale is
subject to restrictions. Restricted securities and other securities and assets
for which market quotations are not available or deemed inappropriate are valued
in good faith under the direction of the Board of Trustees.
Repurchase Agreements: The Fund may enter into repurchase agreements with
recognized financial institutions or registered broker/dealers and, in all
instances, holds underlying securities with a value exceeding the total
repurchase price, including accrued interest.
Options: The Fund may write or purchase option securities. The option premium
is the basis for recognition of unrealized or realized gain or loss on the
option. The cost of securities acquired or the proceeds from securities sold
through the exercise of the option is adjusted by the amount of the premium.
Futures Contracts: The Fund may enter into futures contracts agreeing to buy or
sell a financial instrument for a set price at a future date. The Fund maintains
securities with a value equal to its obligation under each contract. Initial
margin deposits of either cash or securities are made upon entering into futures
contracts; thereafter, variation margin payments are made or received daily
reflecting the change in market value. Unrealized or realized gains and losses
are recognized based on the change in market value. Risks of futures contracts
arise from the possible illiquidity of the futures markets and the movement in
the value of the investment or in interest rates.
Securities Sold Short: The Fund may sell securities that it does not own in
anticipation of a decline in their market price. Gains or losses represent the
difference between the sale proceeds and the price of the security.
Deposits with Brokers: The Fund maintains liquid assets, including equivalent
securities, sufficient to cover, on a daily basis, the current values of written
options and securities sold short.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Dividend income is recorded on the ex-dividend date.
12 - CALVERT STRATEGIC GROWTH FUND ANNUAL REPORT
<PAGE>
Interest income, accretion of discount and amortization of premium are recorded
on an accrual basis. Dividends declared on securities sold short are reported as
an expense.
Distributions to Shareholders: Distributions to shareholders are recorded by
the Fund on ex-dividend date. Dividends from net investment income and
distributions from net realized capital gains, if any, are paid at least
annually. Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles; accordingly,
periodic reclassifications are made within the Fund's capital accounts to
reflect income and gains available for distribution under income tax
regulations.
The Fund designates $623,630 as long-term capital gain distributions from 1996
earnings.
Expense Offset Arrangements: The Fund has an arrangement with its custodian
bank whereby the custodian's fees are paid indirectly by credits earned on the
Fund's cash on deposit with the bank. Such deposit arrangement is an alternative
to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required
since the Fund intends to continue to qualify as a regulated investment company
under the Internal Revenue Code and to distribute substantially all of its
earnings.
Note B--Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Trustees of the Fund.
For its services, the Advisor receives a monthly fee based on an annual rate of
1.5% of the Fund's average daily net assets. Effective May, 1995, the Fund began
paying a monthly performance fee of plus or minus .15%, on an annual basis, of
average daily net assets of the performance period depending on the Fund's
performance compared to the Russell 2000 Index.
The Advisor reimburses the Fund for its operating expenses (excluding brokerage
fees, taxes, interest, Distribution Plan expenses and extraordinary items)
exceeding the following annual rates of average daily net assets: 2.5% on the
first $30 million, 2.0% on the next $70 million and 1.5% on the excess of $100
million. Expenses reimbursed by the Advisor before December 31, 1994 may, to the
extent permitted by law, be repaid by the Fund from January 1, 1995 through
December 31, 1996. All expense reimbursements made from January 1, 1995 through
December 31, 1996 may be repaid from January 1, 1997 through December 31, 1998.
Expense repayments are subject to the above stated expense limitations.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor and
principal underwriter for the Fund. Distribution Plans, adopted by each class of
shares, allow the Fund to pay the distributor for expenses and services
associated with distribution of shares. The expenses paid may not exceed .35%
and 1.0% annually of average daily net assets of each Class A and Class C,
respectively.
ANNUAL REPORT CALVERT STRATEGIC GROWTH FUND - 13
<PAGE>
The Distributor received $247,094 as its portion of commissions charged on sales
of the Fund's shares.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Fund.
Calvert Administrative Services Company, an affiliate of the Advisor, provides
administrative services to the Fund for an annual fee, payable monthly, of .20%
of the average daily net assets of the Fund.
Each Trustee who is not affiliated with the Advisor receives an annual fee of
$20,250 plus up to $1,200 for each Board and Committee meeting attended.
Additional fees of up to $10,000 annually may be paid to the Chairperson of
special committees of the Board. Trustees fees are allocated to each of the
funds served.
Note C--Investment Activity
During the year, purchases and sales of investments, other than short-term and
U.S. government securities, were $325,722,668 and $254,704,133, respectively.
U.S. government security purchases were $23,990,498 and sales were $26,043,423.
The cost of investments owned at March 31, 1996 for federal income tax purposes
was $192,408,575. Net unrealized appreciation aggregated $8,689,659, of which
$12,529,162 related to appreciated securities and $3,839,503 related to
depreciated securities.
The following summarizes the Fund's transactions in written call and put options
during the year:
<TABLE>
<CAPTION>
Options Contracts Premiums
- ------------------------------------------------------------------
<S> <C> <C>
Outstanding, beginning of year 1,980 $ 1,077,079
Written 30,525 58,255,128
Exercised (664) (617,617)
Closed (3,251) (2,477,862)
Expired (590) (266,596)
---------- ------------
Outstanding, ending of year 28,000 $55,970,132
========== ============
</TABLE>
Securities having an aggregate market value of $59,412,500 were identified to
cover open options written at March 31, 1996.
14 - CALVERT STRATEGIC GROWTH FUND ANNUAL REPORT
<PAGE>
Note D--Capital Shares
Transactions in shares of beneficial interest "capital shares" were as follows:
<TABLE>
<CAPTION>
From Inception
May 5, 1994
Year Ended Through
Share Activity March 31, 1996 March 31, 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A:
Shares sold 3,803,233 6,768,943
Reinvestment of distributions 164,542 108,719
Shares redeemed (3,537,947) (567,500)
----------- ----------
Net share activity 429,828 6,310,162
=========== ==========
Class C:
Shares sold 905,375 1,410,707
Reinvestment of distributions 27,150 18,816
Shares redeemed (725,836) (256,450)
----------- ----------
Net share activity 206,689 1,173,073
=========== ==========
</TABLE>
ANNUAL REPORT CALVERT STRATEGIC GROWTH FUND - 15
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Shares Class C Shares
-------------------------------------------------
Periods Ended March 31,
-------------------------------------------------
1996 1995** 1996 1995**
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........... $16.96 $15.00 $16.86 $15.00
========= =========== ========= ==========
Income from investment operations
- ---------------------------------
Net investment income......................... .13 .20 (.02) .12
Net realized and unrealized gain (loss)
on investments............................... 1.96 2.21 1.94 2.18
--------- ----------- --------- ----------
Total from investment operations............. 2.09 2.41 1.92 2.30
--------- ----------- --------- ----------
Distributions from
- ------------------
Net investment income......................... (.20) (.04) (.10) (.03)
Net realized gain............................. (.21) (.41) (.21) (.41)
--------- ----------- --------- ----------
Total distributions.......................... (.41) (.45) (.31) (.44)
--------- ----------- --------- ----------
Total increase (decrease) in net asset value... 1.68 1.96 1.61 1.86
--------- ----------- --------- ----------
Net asset value, end of period................. $18.64 $16.96 $18.47 $16.86
========= =========== ========= ==========
Total return*.................................. 12.56% 16.08% 11.57% 15.32%
========= =========== ========= ==========
Ratios to average net assets:
Net investment income........................ .90% 1.47%(a) .02% .83%(a)
========= =========== ========= ==========
Total expenses+.............................. 2.32% -- 3.18% --
========= =========== ========= ==========
Net expenses................................. 2.29% 2.55%(a) 3.16% 3.45%(a)
========= =========== ========= ==========
Expenses reimbursed.......................... .14% .31%(a) -- .20%(a)
========= =========== ========= ==========
Portfolio turnover............................. 402% 480% 402% 480%
========= =========== ========= ==========
Net assets, end of period (in thousands)....... $125,606 $107,004 $25,490 $19,778
Number of shares outstanding
at end of period (in thousands).............. 6,740 6,310 1,380 1,173
========= =========== ========= ==========
</TABLE>
(a) Annualized
* Total return is not annualized and does not reflect deduction of Class A
front-end sales charge.
+ Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
** From May 5, 1994, inception.
16 - CALVERT STRATEGIC GROWTH FUND ANNUAL REPORT
<PAGE>
CALVERT U.S. GOVERNMENT FUND
Dear Shareholder:
The first quarter of 1996 proved to be a troublesome one for bond markets
as strong economic data served to ignite investors' fears that inflation might
be heating up again.
From July of 1995 through January 1996, the Federal Reserve embarked on a
program to stimulate the economy with a series of four cuts in short-term
interest rates. But in February and March of this year, the Labor Department
reported stronger-than-expected employment numbers. The increase in non-farm
payrolls, for example, was the largest reported in more than 12 years.
Concerned that the economy was gathering steam, investors adjusted their
inflationary expectations higher and long-term interest rates began to rise. The
yield on the benchmark 30-year Treasury bond rose to 6.7% by quarter's end and
bond prices, which move inversely to interest rates, dropped. Overall, the first
quarter was one of the worst on record for bonds, with long-term Treasurys
turning in a negative total return of approximately 8.5%.
TREASURY YIELD CURVE
[CHART APPEARS HERE]
FUND PERFORMANCE AND STRATEGY
For the period covered by this report, the Portfolio's six-month total
return of 1.58% closely matched that of the Lipper General U.S. Government Funds
Average of 1.61%. As of March 31, 1996, the Portfolio's weighted average
maturity was 12 years.
INVESTMENT PERFORMANCE
<TABLE>
<CAPTION>
Periods Ended 3/31/96 6 Months 12 Months
- ----------------------------------------------------------
<S> <C> <C>
U.S. Government Fund 1.58% 8.95%
Lipper General U.S. Govt.
Funds Average 1.61% 9.28%
Investment performance is for Class A shares and
does not reflect the deduction of any front-end sales charge.
</TABLE>
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT U.S. GOVERNMENT FUND - 1
<PAGE>
OUTLOOK
Recent economic data, particularly the unusually large number of new jobs
created during the first quarter, suggest that the economy is stronger than was
previously believed. The current unemployment rate of 5.5%, for example, is the
lowest it's been in years. Furthermore, the Federal Reserve has publicly stated
its commitment to maintaining an economic growth rate in the range of 2% to
2.5%, about where it is right now. Thus, in the near term, we do not expect the
Fed to stimulate the economy with additional cuts in interest rates. Long-term
interest rates are likely to stablilize in the near term and trade in a wide
range going forward.
We appreciate your investment in the Calvert U.S. Government Fund.
Sincerely,
/s/ CLIFTON S. SORRELL
Clifton S. Sorrell
President
April 30, 1996
2 - CALVERT U.S. GOVERNMENT FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
PORTFOLIO STATISTICS
MATURITY SCHEDULE
<TABLE>
<CAPTION>
% of Portfolio 3/31/96 9/30/95
- -----------------------------------------------
<S> <C> <C>
Less Than 1 Year 24% 15%
1-3 Years -- --
3-5 Years 17% 29%
5-7 Years -- --
7-10 Years 24% 23%
10-20 Years 11% 10%
20 Years and Above 24% 23%
Weighted Average 12 years 12 years
SEC YIELDS
Thirty Days Ended 3/31/96 9/30/95
- -----------------------------------------------
Class A Shares 5.00% 4.52%
Class C Shares 3.19% 2.95%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
for periods ended March 31, 1996
<TABLE>
<CAPTION>
Class A Shares Class C Shares
<S> <C> <C> <C>
One Year 4.90% One Year 6.10%
Five Year 5.72% Since Inception (3/94) 4.26%
Since Inception (5.86) 6.96%
</TABLE>
PERFORMANCE COMPARISON
Comparison of change in value of $10,000 investment
[GRAPH APPEARS HERE]
Period between 03/01/87 and 03/31/95
U.S. Government Fund/Ending balance $19,387
Lehman Government CD/Ending balance $22,435
Total returns assume reinvestment of dividends and, for Class A shares, reflect
the deduction of the Fund's maximum sales charge of 3.75%. No sales charge has
been applied to the index used for comparison. The sales of an investment in
Class A shares is plotted in the line graph. The value of an investment in Class
C shares would be different. Past performance is no guarantee of future results.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT U.S. GOVERNMENT FUND - 3
<PAGE>
STATEMENT OF NET ASSETS
MARCH 31, 1996
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS, AGENCIES PRINCIPAL
AND INSTRUMENTALITIES - 88.0% AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Mortgage Assn., 5.27%, 4/4/96............................. $1,000,000 $ 999,561
Federal National Mortgage Assn., 5.59%, 7/01/96............................. 1,000,000 1,000,650
Federal National Mortgage Assn., 6.85%, 9/12/05............................. 2,000,000 1,972,120
Small Business Administration, 8.05%, 6/1/12................................ 869,101 893,541
U.S. Treasury Notes, 7.50%, 10/31/99........................................ 1,400,000 1,465,002
U.S. Treasury Bonds, 6.875%, 8/15/25........................................ 1,000,000 1,014,110
----------
Total U.S. Government Obligations, Agencies
and Instrumentalities (Cost $7,407,197)................................... 7,344,984
----------
MORTGAGE SECURITIES - 11.5%
- --------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., 7.00%, 8/01/25............................. 977,861 952,808
Government National Mortgage Assn., 11.00%, 10/15/15........................ 3,069 3,442
----------
Total Mortgage Securities (Cost $962,288)................................. 956,250
----------
TOTAL INVESTMENTS (Cost $8,369,485) - 99.5%............................... 8,301,234
Other assets and liabilities, net - 0.5%.................................. 40,076
----------
NET ASSETS - 100%......................................................... $8,341,310
==========
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------------
Paid-in capital applicable to the following shares of beneficial interest,
unlimited number of no par shares authorized:
Class A: 551,004 shares outstanding..................................... $8,360,051
Class B: 26,598 shares outstanding...................................... 374,286
Undistributed net investment income......................................... 4,108
Accumulated net realized gain (loss) on investments......................... (328,884)
Net unrealized appreciation (depreciation) on investments................... (68,251)
----------
Net assets................................................................ $8,341,310
==========
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------------------------------
Class A (based on net assets of $7,959,945)................................. $14.45
==========
Class C (based on net assets of $381,365)................................... $14.34
==========
</TABLE>
See notes to financial statements.
4 - CALVERT U.S. GOVERNMENT FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------
<S> <C>
Investment Income
Interest income................................................... $305,618
--------
Expenses
Investment advisory fee........................................... 27,549
Transfer agency fee and expenses.................................. 13,869
Distribution Plan expenses:
Class A......................................................... 10,048
Class C......................................................... 2,229
Contract services................................................. 8,222
Trustees' fees and expenses........................................ 414
Custodian fees.................................................... 1,295
Registration fees................................................. 11,217
Reports to shareholders........................................... 3,695
Professional fees................................................. 412
Miscellaneous..................................................... 542
Reimbursement from Advisor........................................ (3,989)
--------
Total expenses.................................................. 75,503
Fees paid indirectly............................................ (1,295)
--------
Net expenses.................................................. 74,208
--------
NET INVESTMENT INCOME....................................... 231,419
========
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
- -------------------------------------------------------------------------------
Net realized gain (loss)........................................ 95,279
Change in unrealized appreciation or depreciation............... (181,700)
--------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS........................................... (86,421)
--------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS....................................... $144,989
========
</TABLE>
See notes to financial statements.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT U.S. GOVERNMENT FUND - 5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
INCREASE (DECREASE) IN NET ASSETS MARCH 31, 1996 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income (loss)........................... $ 231,410 $ 520,731
Net realized gain (loss)............................... 95,279 (117,178)
Change in unrealized appreciation
or depreciation...................................... (181,700) 693,772
----------- -----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............................ 144,989 1,097,325
----------- -----------
Distributions to shareholders from
Net investment income:
Class A Shares....................................... (224,728) (500,219)
Class C Shares....................................... (6,890) (16,196)
----------- -----------
Total distributions.................................... (231,618) (516,415)
----------- -----------
Capital share transactions:
Shares sold:
Class A Shares....................................... 258,922 856,683
Class C Shares....................................... 121,480 204,255
Reinvestment of distributions:
Class A Shares....................................... 223,102 479,506
Class C Shares....................................... 6,598 15,952
Shares redeemed:
Class A Shares....................................... (1,475,115) (2,580,096)
Class C Shares....................................... (179,208) (107,730)
----------- -----------
Total capital share transactions....................... (1,044,221) (1,131,430)
----------- -----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS............................................ (1,130,850) (550,520)
NET ASSETS
- ------------------------------------------------------------------------------------------
Beginning of period.................................... 9,472,160 10,022,680
----------- -----------
End of period (including undistributed net investment
income (loss) of $4,108 and $4,316, respectively).... $ 8,341,310 $ 9,472,160
=========== ===========
</TABLE>
See notes to financial statements.
6 - CALVERT U.S. GOVERNMENT FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
General: The Calvert U.S. Government Fund (the "Fund"), a series of The Calvert
Fund, is registered under the Investment Company Act of 1940 as a diversified,
open-end management investment company. The operations of each series are
accounted for separately. The Fund offers Class A and Class C shares of
beneficial interest. Class A shares are sold with a maximum front-end sales
charge of 3.75%. Class C shares, which have no transaction-based sales charge,
have a higher annual expense rate than Class A. Each class has different: (a)
dividend rates, due to differences in Distribution Plan expenses and other class
specific expenses, (b) exchange privileges and (c) class specific voting rights.
Security Valuation: Securities listed or traded on a national securities
exchange are valued at the last reported sale price. Unlisted securities and
listed securities for which the last sale price is unavailable are valued at the
most recent bid price or based on a yield equivalent obtained from the
securities' market maker. Other securities and assets for which market
quotations are not available or deemed inappropriate are valued in good faith
under the direction of the Board of Trustees.
Repurchase Agreements: The Fund may enter into repurchase agreements with
recognized financial institutions or registered broker/dealers and, in all
instances, holds underlying securities with a value exceeding the total
repurchase price, including accrued interest.
Options: The Fund may write or purchase option securities. The option premium is
the basis for recognition of unrealized or realized gain or loss on the option.
The cost of securities acquired or the proceeds from securities sold through the
exercise of the option is adjusted by the amount of the premium. The Fund
maintains liquid assets sufficient to cover, on a daily basis, the current
values of written options.
Futures Contracts: The Fund may enter into futures contracts agreeing to buy or
sell a financial instrument for a set price at a future date. The Fund maintains
securities with a value equal to its obligation under each contract. Initial
margin deposits of either cash or securities are made upon entering in futures
contracts; thereafter, variation margin payments are made or received daily
reflecting the change in market value. Unrealized or realized gains and losses
are recognized based on the change in market value. Risks of futures contracts
arise from the possible illiquidity of the futures markets and the movement in
the value of the investment or in interest rates.
Security Transactions and Investment Income: Security transactions are accounted
for on trade date. Realized gains and losses are recorded on an identified cost
basis. Interest income, accretion of discount and amortization of premium are
recorded on an accrual basis.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT U.S. GOVERNMENT FUND - 7
<PAGE>
Distributions to Shareholders: Distributions to shareholders are recorded by the
Fund on ex-dividend date. Dividends from net investment income are paid monthly.
Distributions from net realized capital gains, if any, are paid at least
annually. Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles; accordingly,
periodic reclassifications are made within the Fund's capital accounts to
reflect income and gains available for distribution under income tax
regulations.
Expense Offset Arrangement: The Fund has an arrangement with its custodian bank
whereby the custodian's fees are paid indirectly by credits earned on the Fund's
cash on deposit with the bank. Such deposit arrangement is an alternative to
overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required
since the Fund intends to continue to qualify as a regulated investment company
under the Internal Revenue Code and to distribute substantially all of its
earnings.
NOTE B--REGULATED PARTY TRANSACTIONS
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Trustees of the Fund.
For its services, the Advisor receives a monthly fee based on an annual rate of
.60% of the Fund's average daily net assets.
The Advisor reimburses the Fund for its operating expenses (excluding brokerage
fees, taxes, interest, Distribution Plan expenses and extraordinary items)
exceeding the following annual rates of average daily net assets: 2.5% on the
first $30 million, 2.0% on the next $70 million and 1.5% on the excess of $100
million.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor and
principal underwriter for the Fund. Distribution Plans, adopted by each class of
shares, allow the Fund to pay the distributor for expenses and services
associated with distribution of shares. The expenses paid may not exceed .25%
and 1.0% annually of average daily net assets of each Class A and Class C,
respectively.
The Distributor received $1,510 as its portion of the commissions charged on
sales of the Fund's shares.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Fund.
Each Trustee who is not affiliated with the Advisor receives an annual fee of
$20,250 plus up to $1,200 for each Board and Committee meeting attended.
Trustee's fees are allocated to each of the funds served.
8 - CALVERT U.S. GOVERNMENT FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
NOTE C--INVESTMENT ACTIVITY
During the period, purchases and sales of investments, other than short-term and
U.S. government securities, were $0 and $1,337,100, respectively. U.S.
government security purchases were $1,126,875 and sales were $1,308,312.
The cost of investments owned at March 31, 1996 was substantially the same for
federal income tax and financial reporting purposes. Net unrealized depreciation
aggregated $68,251, of which $74,617 related to appreciated securities and
$142,868 related to depreciated securities.
Net realized capital loss carryforwards, for federal income tax purposes, of
approximately $424,000 at September 30, 1995 may be utilized to offset current
and future capital gains until expiration in 2003.
NOTE D--CAPITAL SHARES
Transactions in shares of beneficial interest ("capital shares") were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
SHARE ACTIVITY 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A:
Shares sold...................................... 17,467 60,800
Reinvestment of distributions.................... 15,174 34,307
Shares redeemed.................................. (100,284) (184,137)
-------- --------
Net share activity............................. (67,643) (89,030)
======== ========
Class C:
Shares sold...................................... 8,301 14,612
Reinvestment of distributions.................... 452 1,133
Shares redeemed.................................. (12,203) (7,705)
-------- --------
Net share activity............................. (3,450) 8,040
======== ========
</TABLE>
NOTE E--SUBSEQUENT EVENT
The shareholders of each class of the Fund were asked to vote on April 26, 1996
on a merger into the Calvert Income Fund. Shareholder approval was granted on
May 16, 1996 to effect a tax-free exchange of net assets of the Fund, Class A
shares of approximately $7.7 million and Class C shares of approximately $.3
million, for respective shares of the Calvert Income Fund.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT U.S. GOVERNMENT FUND - 9
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PERIODS ENDED
---------------------------------
MARCH 31, SEPTEMBER 30,
CLASS A SHARES 1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $ 14.61 $ 13.74 $ 16.17
======= ======= =======
Income from investment operations
- ---------------------------------
Net investment income...................... .38 .78 .75
Net realized and unrealized gain
(loss) on investments.................... (.16) .86 (1.53)
------- ------- -------
Total from investment operations......... .22 1.64 (.78)
------- ------- -------
Distributions from
- ------------------
Net investment income...................... (.38) (.77) (.75)
Net realized gain.......................... -- -- (.90)
------- ------- -------
Total distributions...................... (.38) (.77) (1.65)
------- ------- -------
Total increase (decrease) in net asset value. (.16) .87 (2.43)
------- ------- -------
NET ASSET VALUE, END OF PERIOD............... $ 14.45 $ 14.61 $ 13.74
------- ------- -------
Total return*................................ 1.58% 12.30% (5.19%)
======= ======= =======
Ratios to average net assets:
Net investment income...................... 5.14%(a) 5.52% 4.99%
======= ======= =======
Total expenses+............................ 1.55%(a) 1.62% --
======= ======= =======
Net expenses............................... 1.52%(a) 1.60% 1.02%
======= ======= =======
Portfolio turnover........................... 13% 133% 99%
======= ======= =======
NET ASSETS, END OF PERIOD (IN THOUSANDS)..... $ 7,960 $ 9,037 $ 9,721
======= ======= =======
Number of shares outstanding
at end of period (in thousands)............ 551 619 708
======= ======= =======
YEARS ENDED
---------------------------------
SEPTEMBER 30,
CLASS A SHARES 1993 1992 1991
- -------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD......... $ 15.72 $ 15.19 $ 14.50
======= ======= =======
Income from investment operations
- ---------------------------------
Net investment income...................... .87 .95 1.00
Net realized and unrealized gain
(loss) on investments.................... .45 .53 .69
------- ------- -------
Total from investment operations......... 1.32 1.48 1.69
------- ------- -------
Distributions from
- ------------------
Net investment income...................... (.87) (.95) (1.00)
Net realized gain.......................... -- -- --
------- ------- -------
Total distributions...................... (.87) (.95) (1.00)
------- ------- -------
Total increase (decrease) in net asset value. .45 .53 .69
------- ------- -------
NET ASSET VALUE, END OF PERIOD............... $ 16.17 $ 15.72 $ 15.19
------- ------- -------
Total return*................................ 8.70% 10.07% 12.07%
======= ======= =======
Ratios to average net assets:
Net investment income...................... 5.49% 6.15% 6.69%
======= ======= =======
Total expenses+............................ -- -- --
======= ======= =======
Net expenses............................... .95% 1.11% 1.26%
======= ======= =======
Portfolio turnover........................... 191% -- --
======= ======= =======
NET ASSETS, END OF PERIOD (IN THOUSANDS)..... $13,652 $13,223 $11,935
======= ======= =======
Number of shares outstanding
at end of period (in thousands)............ 844 841 785
======= ======= =======
</TABLE>
10 - CALVERT U.S. GOVERNMENT FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
<TABLE>
<CAPTION>
PERIODS ENDED
-----------------------------
MARCH 31, SEPTEMBER 30,
CLASS C SHARES 1996 1995 1994**
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $14.49 $13.71 $14.77
====== ====== ======
Income from investment operations
- ---------------------------------
Net investment income...................... .22 .42 .34
Net realized and unrealized gain
(loss) on investments.................... (.14) .94 (1.01)
------ ------ ------
Total from investment operations......... .08 1.36 (.67)
------ ------ ------
Distributions from
- ------------------
Net investment income...................... (.23) (.58) (.39)
Net realized gain.......................... -- -- --
------ ------ ------
Total distributions...................... (.23) (.58) (.39)
------ ------ ------
Total increase (decrease) in net asset value. (.15) .78 (1.06)
------ ------ ------
NET ASSET VALUE, END OF PERIOD............... $14.34 $14.49 $13.71
------ ------ ------
Total return*................................ 50% 10.21% (3.58%)
====== ====== ======
Ratios to average net assets:
Net investment income...................... 3.16%(a) 3.60% 4.39%(a)
====== ====== ======
Total expenses+............................ 3.53%(a) 3.53% --
====== ====== ======
Net expenses............................... 3.50%(a) 3.50% 2.41%(a)
====== ====== ======
Expenses reimbursed........................ 1.79%(a) 1.75% 7.96%(a)
====== ====== ======
Portfolio turnover........................... 13% 133% 99%
====== ====== ======
NET ASSETS, END OF PERIOD (IN THOUSANDS)..... $ 381 $ 435 $ 302
====== ====== ======
Number of shares outstanding
at end of period (in thousands)............ 27 30 22
====== ====== ======
</TABLE>
(a) Annualized
* Total return is not annualized for periods of less than one year and does
not reflect deduction of Class A front-end sales charge.
+ Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
** From March 1, 1994, inception.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT U.S. GOVERNMENT - 11
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
12 - CALVERT U.S. GOVERNMENT FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
CALVERT INCOME FUND
Dear Shareholder:
The first quarter of 1996 proved to be a troublesome one for bond markets
as strong economic data served to ignite investors' fears that inflation might
be heating up again.
From July of 1995 through January 1996, the Federal Reserve embarked on a
program to stimulate the economy with a series of four cuts in short-term
interest rates. But in February and March of this year, the Labor Department
reported stronger-than-expected employment numbers. The increase in non-farm
payrolls, for example, was the largest reported in more than 12 years.
Concerned that the economy was gathering steam, investors adjusted their
inflationary expectations higher and long-term interest rates began to rise.
The yield on the benchmark 30-year Treasury bond rose to 6.7% by quarter's end
and bond prices, which move inversely to interest rates, dropped. Overall, the
first quarter was one of the worst on record for bonds, with long-term Treasurys
turning in a negative total return of approximately 8.5%.
Treasury Yield Curve
[GRAPH APPEARS HERE]
Fund Performance And Strategy
For the period covered by this report, the Fund's six-month total return of
2.38% outperformed the Lipper Corporate Debt Funds Average of 2.04%. We would
attribute this to having a more defensive position with a shorter average
maturity than our peers. As of March 31, 1996, the Fund's weighted average
maturity was 13 years.
<TABLE>
<CAPTION>
Investment Performance
- ----------------------------------------------------------------
Periods Ended 3/31/96 6 Months 12 Months
- ----------------------------------------------------------------
<S> <C> <C>
Income Fund 2.38% 11.45%
Lipper
Corp. Debt BBB
Funds Average 2.04% 11.72%
</TABLE>
Investment performance is for Class A shares and
does not reflect the deduction of any front-end sales charge.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT INCOME FUND - 1
<PAGE>
Outlook
Recent economic data, particularly the unusually large number of new jobs
created during the first quarter, suggest that the economy is stronger than was
previously believed. The current unemployment rate of 5.5%, for example, is the
lowest it's been in years. Furthermore, the Federal Reserve has publicly stated
its commitment to maintaining an economic growth rate in the range of 2% to
2.5%, about where it is right now. Thus, in the near term, we do not expect the
Fed to stimulate the economy with additional cuts in interest rates. Long-term
interest rates are likely to stabilize in the near term and trade in a wide
range going forward.
We appreciate your investment in the Calvert Income Fund.
Sincerely,
/s/ Clifton S. Sorrell
Clifton S. Sorrell
President
April 30, 1996
Quality Structure of Portfolio
NR 3%
Government 40%
AAA/Aaa 10%
AA/Aa 14%
A/a 14%
BBB/Baa 8%
BB/Ba 11%
NR: Obligation is not rated by a commercial credit rating service, such as
Moody's Investors Services, Inc., or Standard & Poor's Corporation; obligation
has been determined to be of appropriate quality for the Portfolio by Calvert
Asset Management Company, Inc., the Investment Advisor.
2 - CALVERT INCOME FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
Portfolio Statistics
Maturity Schedule
<TABLE>
<CAPTION>
% of Portfolio 3/31/96 9/30/95
- ------------------------------------------------
<S> <C> <C>
Less than 1 Year 15% 6%
1-5 Years 5% 10%
5-10 Years 38% 37%
10-20 Years 20% 15%
20-30 Years 20% 24%
30 Years and Above 2% 8%
Weighted Average 3 Years 16 Years
</TABLE>
SEC Yields
<TABLE>
<CAPTION>
Thirty Days Ended 3/31/96 9/30/95
- ------------------------------------------------
<S> <C> <C>
A Shares 5.21% 5.56%
C Shares 3.23% 4.93%
</TABLE>
Average Annual Total Returns
for periods ended March 31, 1996
Class A Shares Class C Shares
One Year 7.28% One Year 8.99%
Five Years 7.90% Since Inception (3/94) 3.15%
Ten Years 7.59%
Performance Comparison
Comparison of change in value of $10,000 investment
[GRAPH APPEARS HERE]
Period Between 04/01/86 to 03/31/96
Calvert Income Fund/Ending balance $22,861
Lehman Aggregate BD/Ending balance $20,791
Total returns assume reinvestment of dividends and, for Class A shares, reflect
the deduction of the Fund's maximum front-end sales charge of 3.75%. No sales
charge has been applied to the index used for comparison. The value of an
investment in Class A shares is plotted in the line graph. The value of an
investment in Class C shares would be different. Past performance is no
guarantee of future results.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT INCOME FUND - 3
<PAGE>
Statement of Net Assets
March 31, 1996
<TABLE>
<CAPTION>
Principal
Debt Securities - 94.9% Amount Value
- ---------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Agency Obligations - 27.2%
Federal Farm Credit Bank Discount Note, 5.28%, 4/17/96........ $1,000,000 $ 997,653
Federal Home Loan Mortgage Corp., 5.80%, 3/19/99.............. 2,000,000 1,978,360
Federal Home Loan Mortgage Corp., 6.97%, 10/3/05.............. 1,000,000 994,990
Federal National Mortgage Assn., 5.94%, 12/12/05.............. 3,000,000 2,844,900
Federal National Mortgage Assn., 5.875%, 2/2/06............... 4,000,000 3,780,360
Small Business Administration, 8.05%, 6/1/12.................. 869,101 893,541
-----------
11,489,804
-----------
Mortgage Securities - 19.6%
Advanta Mortgage Loan Trust Series 1993-4, 5.50%, 3/25/10..... 1,254,588 1,198,524
Bank America National Trust & Savings, Mortgage pass-thru
Series 1978, 9.00%, 4/5/08................................... 28,018 28,018
Federal Home Loan Mortgage Corp.:
CMO Series A, 11.875%, 6/15/13............................... 20,082 20,713
CMO Series 1560, 6.60%, 10/15/22............................. 1,000,000 928,350
Federal National Mortgage Assn.:
CMO Series 1993-211 PH, 6.00%, 3/25/08....................... 1,000,000 940,430
CMO Series 1993-122 C, 6.50%, 2/25/23........................ 1,500,000 1,348,020
7.00%, 8/1/25................................................ 977,861 952,808
GMAC Mortgage Corp. of Iowa, Series 1984-18B, 11.25%, 2/1/99.. 14,676 14,676
Prudential Home Mortgage Securities, 6.75%, 12/26/23.......... 1,000,000 887,500
Vendee Mortgage Trust, 7.00%, 5/15/08......................... 1,000,000 989,020
Vendee Mortgage Trust, 6.75%, 4/15/22......................... 1,000,000 928,750
Washington Mutual Savings Bank, Mortgage pass-thru,
9.00%, 5/25/08............................................... 35,259 35,260
-----------
8,272,069
-----------
Corporate Bonds - 22.9%
Continental Valorem Corp. (Optional Put), 6.60%, 6/1/13....... 700,000 700,000
K-Mart Corp., 6.00%, 1/1/08................................... 315,000 268,537
Nabisco Inc., 7.05%, 7/15/07.................................. 2,000,000 1,942,200
Nationwide Mutual Insurance, 7.50%, 2/15/24................... 650,000 616,401
Pacific Bell, 7.375%, 7/15/43................................. 1,000,000 953,610
Parker & Parsley Petro Co., 8.875%, 4/15/05.................. 2,000,000 2,140,760
USG Corp., 8.50%, 8/1/05...................................... 2,000,000 2,050,000
Union Carbide Corp., 6.79%, 6/1/25............................ 1,000,000 990,720
-----------
9,662,228
-----------
Municipal Bonds - 20.6%
Arkansas Development Financial Authority CMO, 6.80%, 2/15/10.. 600,000 566,424
Chickasaw Nation Oklahoma Certificate of Participation,
10.00%, 8/1/03............................................... 1,310,000 1,355,562
Eastern Connecticut Resource Recovery Authority Revenue
Bonds, 7.50%, 1/1/20......................................... 800,000 743,000
Gardena California Revenue VRDN, 6.35%, 7/1/25................ 1,500,000 1,500,000
4 - CALVERT INCOME FUND SEMI-ANNUAL REPORT (UNAUDITED)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Debt Securities (Cont'd) Amount Value
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Municipal Bonds - (Cont'd)
Iowa Financial Authority Economic Development Revenue VRDN,
5.65%, 3/1/11.............................................................. $ 1,000,000 $ 1,000,000
Long Beach California Pension Obligation Revenue Bonds,
7.24%, 9/1/11.............................................................. 1,000,000 973,720
San Bernardino California Certificate of Participation VRDN,
5.40%, 7/1/16.............................................................. 2,000,000 2,000,000
Texas Veterans Housing Fund II General Obligation, 7.35%, 12/1/21........... 600,000 579,804
-----------
8,718,510
-----------
Yankee Dollar Denominated Bonds - 4.6%
Ontario Province Global Bond, 6.00%, 2/21/06................................ 1,000,000 938,167
Petroliam Nasional Berhad, 7.125%, 8/15/05.................................. 1,000,000 1,006,999
-----------
1,945,166
-----------
Total Debt Securities (Cost $40,609,607)............................... 40,087,777
-----------
Options Purchased - 0.1%
- -------------------------------------------------------------------------------------------------------
U.S. Treasury Bond June '96 Future, 40 Put Contracts, Expiration 5/18/96,
Strike Price 110 (Premium $39,619)......................................... 43,750
-----------
Equity Securities - 3.4% Shares
- -------------------------------------------------------------------------------------------------------
Preferred Stocks - 3.4%
Austrailian & New Zealand Bank, Preferred.................................. 13,000 349,375
Bankers Trust NY, Preferred................................................ 15,000 376,875
ELF Overseas, Ltd., Series A, Preferred.................................... 12,500 325,000
Santander Oversea Bank, Inc., Series D, Preferred........................... 15,000 378,750
-----------
Total Equity Securities (Cost $1,388,250).............................. 1,430,000
-----------
TOTAL INVESTMENTS (Cost $42,037,476) - 98.4%........................... 41,561,527
Other assets and liabilities, net - 1.6%............................... 685,655
-----------
Net Assets - 100%..................................................... $42,247,182
===========
Net Assets Consist of:
- -------------------------------------------------------------------------------------------------------
Paid-in capital applicable to the following shares of beneficial interest,
unlimited number of no par shares authorized:
Class A: 2,445,776 shares outstanding..................................... $40,629,921
Class C: 83,759 shares outstanding........................................ 1,367,526
Undistributed net investment income......................................... 37,841
Accumulated net realized gain (loss) on investments......................... 687,843
Net unrealized appreciation (depreciation) on investments................... (475,949)
-----------
Net assets............................................................. $42,247,182
===========
Net Asset Value Per Share
- -------------------------------------------------------------------------------------------------------
Class A (based on net assets of $40,870,756)................................ $16.71
===========
Class C (based on net assets of $1,376,426)................................. $16.43
===========
</TABLE>
See notes to financial statements.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT INCOME FUND - 5
<PAGE>
Statement of Operations
Six Months Ended March 31, 1996
<TABLE>
<CAPTION>
Net Investment Income
-----------------------------------------------------------------------------------------------
<S> <C>
Investment Income
Interest income........................................................... $ 1,485,984
Dividend income (net of foreign taxes of $5,299).......................... 52,107
-----------
Total investment income................................................ 1,538,091
-----------
Expenses
Investment advisory fee................................................... 152,837
Transfer agency fees and expenses......................................... 42,305
Distribution Plan expenses:
Class A................................................................ 31,935
Class C................................................................ 5,440
Trustees' fees and expenses............................................... 1,934
Custodian fees............................................................ 6,337
Registration fees......................................................... 11,940
Reports to shareholders................................................... 16,084
Professional fees......................................................... 4,582
Miscellaneous............................................................. 13,150
Reimbursement from Advisor................................................ (33)
-----------
Total expenses......................................................... 286,511
Fees paid indirectly................................................... (6,337)
-----------
Net expenses......................................................... 280,174
-----------
Net Investment Income............................................ 1,257,917
-----------
Realized and Unrealized Gain (Loss) on
Investments
-----------------------------------------------------------------------------------------------
Net realized gain (loss).................................................... 952,691
Change in unrealized appreciation or depreciation........................... (1,179,156)
-----------
Net Realized and Unrealized Gain
(Loss) on Investments............................................ (226,465)
-----------
Increase (Decrease) in Net Assets
Resulting From Operations........................................ $ 1,031,452
===========
</TABLE>
See notes to financial statements.
6 - CALVERT INCOME FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, September 30,
Increase (Decrease) in Net Assets 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income (loss).......................... $ 1,257,917 $ 3,017,175
Net realized gain (loss).............................. 952,691 (197,657)
Change in unrealized appreciation
or depreciation...................................... (1,179,156) 3,274,958
------------ -------------
Increase (Decrease) in Net Assets
Resulting From Operations............................. 1,031,452 6,094,476
------------ -------------
Distributions to shareholders from
Net investment income:
Class A Shares....................................... (1,211,775) (2,966,046)
Class C Shares....................................... (20,720) (38,710)
Net realized gain:
Class A Shares....................................... (65,620) --
Class C Shares....................................... (1,571) --
------------ -------------
Total distributions................................... (1,299,686) (3,004,756)
------------ -------------
Capital share transactions:
Shares sold:
Class A Shares........................................ 2,442,001 5,198,976
Class C Shares........................................ 798,113 565,580
Reinvestment of distributions:
Class A Shares........................................ 1,077,764 2,746,478
Class C Shares........................................ 24,634 34,511
Shares redeemed:
Class A Shares........................................ (5,037,364) (14,290,345)
Class C Shares........................................ (192,324) (291,420)
------------ -------------
Total capital share transactions....................... (887,176) (6,036,220)
------------ -------------
Total Increase (Decrease) in
Net Assets.............................................. (1,155,410) (2,946,500)
Net Assets
- -------------------------------------------------------------------------------------
Beginning of period.................................... 43,402,592 46,349,092
------------ -------------
End of period (including undistributed net investment
income (loss) of $37,841 and $12,419, respectively).. $42,247,182 $ 43,402,592
============ =============
</TABLE>
See notes to financial statements.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT INCOME FUND - 7
<PAGE>
Notes to Financial Statements
Note A--Significant Accounting Policies
General: The Calvert Income Fund (the "Fund"), a series of The Calvert Fund, is
registered under the Investment Company Act of 1940 as a non-diversified, open-
end management investment company. The operations of each series are accounted
for separately. The Fund offers Class A and Class C shares of beneficial
interest. Class A shares are sold with a maximum front-end sales charge of
3.75%. Class C shares, which have no transaction-based sales charge, have a
higher annual expense rate than Class A. Each class has different: (a) dividend
rates, due to differences in Distribution Plan expenses and other class specific
expenses, (b) exchange privileges and (c) class specific voting rights.
Security Valuation: Securities listed or traded on a national securities
exchange are valued at the last reported sale price. Unlisted securities and
listed securities for which the last sale price is not available are valued at
the most recent bid price or based on a yield equivalent obtained from the
securities' market maker. Municipal securities are valued utilizing the average
of bid prices or at bid prices based on a matrix system (which considers such
factors as security prices, yields, maturities and ratings) furnished by dealers
through an independent pricing service. Other securities and assets for which
market quotations are not available or deemed inappropriate are valued in good
faith under the direction of the Board of Trustees.
Repurchase Agreements: The Fund may enter into repurchase agreements with
recognized financial institutions or registered broker/dealers and, in all
instances, holds underlying securities with a value exceeding the total
repurchase price, including accrued interest.
Options: The Fund may write or purchase option securities. The option premium
is the basis for recognition of unrealized or realized gain or loss on the
option. The cost of securities acquired or the proceeds from securities sold
through the exercise of the option is adjusted by the amount of the premium. The
fund maintains liquid assets sufficient to cover, on a daily basis, the current
values of written options.
Futures Contracts: The Fund may enter into futures contracts agreeing to buy or
sell a financial instrument for a set price at a future date. The Fund maintains
securities with a value equal to its obligation under each contract. Initial
margin deposits of either cash or securities are made upon entering in futures
contracts; thereafter, variation margin payments are made or received daily
reflecting the change in market value. Unrealized or realized gains and losses
are recognized based on the change in market value. Risks of futures contracts
arise from the possible illiquidity of the futures markets and the movement in
the value of the investment or in interest rates.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Dividend income is recorded on the ex-dividend date or,
in
8 - CALVERT INCOME FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
the case of dividends on certain foreign securities, as soon as the Fund is
informed of the ex-dividend date. Interest income, accretion of discount and
amortization of premium are recorded on an accrual basis.
Distributions to Shareholders: Distributions to shareholders are recorded by
the Fund on ex-dividend date. Dividends from net investment income are paid
monthly. Distributions from net realized capital gains, if any, are paid at
least annually. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles;
accordingly, periodic reclassifications are made within the Fund's capital
accounts to reflect income and gains available for distribution under income tax
regulations.
Expense Offset Arrangement: The Fund has an arrangement with its custodian bank
whereby the custodian's fees are paid indirectly by credits earned on the Fund's
cash on deposit with the bank. Such deposit arrangement is an alternative to
overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required
since the Fund intends to continue to qualify as a regulated investment company
under the Internal Revenue Code and to distribute substantially all of its
earnings.
Note B--Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Trustees of the Fund.
For its services, the Advisor receives a monthly fee based on an annual rate of
.70% of the Fund's average daily net assets.
The Advisor reimburses the Fund for its operating expenses (excluding brokerage
fees, taxes, interest, Distribution Plan expenses and extraordinary items)
exceeding the following annual rates of average daily net assets: 2.5% on the
first $30 million, 2.0% on the next $70 million and 1.5% on the excess of $100
million.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor and
principal underwriter for the Fund. Distribution Plans, adopted by each class of
shares, allow the Fund to pay the distributor for expenses and services
associated with distribution of shares. The expenses paid may not exceed .50%
and 1.0% annually of average daily net assets of each Class A and Class C,
respectively.
The Distributor received $8,427 as its portion of the commissions charged on
sales of the Fund's shares.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Fund.
Each Trustee who is not affiliated with the Advisor receives an annual fee of
$20,250 plus up to $1,200 for each Board and Committee meeting attended.
Trustee's fees are allocated to each of the funds served.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT INCOME FUND - 9
<PAGE>
Note C--Investment Activity
During the period, purchases and sales of investments, other than short-term
securities, were $31,307,985 and $37,359,098, respectively.
The cost of investments owned at March 31, 1996 was substantially the same for
federal income tax and financial reporting purposes. Net unrealized depreciation
aggregated $475,949, of which $370,079 related to appreciated securities and
$846,028 related to depreciated securities.
Net realized capital loss carryforwards, for federal income tax purposes, of
approximately $175,000 at September 30, 1995 may be utilized to offset current
and future capital gains until expiration in 2003.
Note D--Capital Shares
Transactions in shares of beneficial interest ("capital shares") were as
follows:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, September 30,
Share Activity 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C>
Class A:
Shares sold........................................... 142,877 322,555
Reinvestment of distributions......................... 63,573 172,149
Shares redeemed....................................... (295,489) (889,362)
--------- ---------
Net share activity................................... (89,039) (394,658)
========= =========
Class C:
Shares sold........................................... 47,491 35,781
Reinvestment of distributions......................... 1,479 2,165
Shares redeemed....................................... (11,454) (18,136)
========= =========
Net share activity................................... 37,516 19,810
========= =========
</TABLE>
Note E--Subsequent Event
The shareholders of each class of the Calvert U.S. Government Fund
("Government") were asked to vote on April 26, 1996 on a merger into the Fund.
Shareholder approval was granted on May 16, 1996 to effect a tax-free exchange
of net assets of Government, Class A shares of approximately $7.7 million and
Class C shares of approximately $.3 million, for respective shares of the Fund.
10 - CALVERT INCOME FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Periods Ended
--------------------------------
March 31, September 30,
Class A Shares 1996 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period....... $ 16.82 $ 15.68 $ 18.41
------- ------- -------
Income from investment operations
- ---------------------------------
Net investment income..................... .49 1.11 1.16
Net realized and unrealized gain
(loss) on investments.................... (.09) 1.14 (2.42)
------- ------- -------
Total from investment operations......... .40 2.25 (1.26)
-------- ------- -------
Distributions from
- ------------------
Net investment income..................... (.48) (1.11) (1.16)
Net realized gain......................... (.03) -- (.31)
------- ------- -------
Total distributions...................... (.51) (1.11) (1.47)
------- ------- -------
Total increase (decrease) in
net asset value........................... (.11) 1.14 (2.73)
------- ------- -------
Net asset value, end of period............. $ 16.71 $ 16.82 $ 15.68
------- ------- -------
Total return*.............................. 2.38% 14.90% (6.94%)
------- ------- -------
Ratios to average net assets:
Net investment income..................... 5.81%(a) 6.89% 6.86%
------- ------- -------
Total expenses+........................... 1.26%(a) 1.26% --
------- ------- -------
Net expenses.............................. 1.23%(a) 1.23% 1.07%
------- ------- -------
Portfolio turnover......................... 81% 135% 34%
------- ------- -------
Net assets, end of period (in thousands)... $40,871 $42,637 $45,936
------- ------- -------
Number of shares outstanding at
end of period (in thousands).............. 2,446 2,535 2,929
------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
Years Ended
-------------------------------
September 30,
Class A Shares 1993 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year......... $ 17.50 $ 16.61 $ 15.58
------- ------- -------
Income from investment operations
- ---------------------------------
Net investment income..................... 1.23 1.28 1.31
Net realized and unrealized gain
(loss) on investments.................... .91 .89 1.03
------- ------- -------
Total from investment operations......... 2.14 2.17 2.34
------- ------- -------
Distributions from
- ------------------
Net investment income..................... (1.23) (1.28) (1.31)
Net realized gain......................... -- -- --
------- ------- -------
Total distributions...................... (1.23) (1.28) (1.31)
------- ------- -------
Total increase (decrease) in
net asset value........................... .91 .89 1.03
------- ------- -------
Net asset value, end of year............... $ 18.41 $ 17.50 $ 16.61
------- ------- -------
Total return*.............................. 12.74% 13.66% 15.72%
------- ------- -------
Ratios to average net assets:
Net investment income..................... 6.93% 7.59% 8.22%
------- ------- -------
Total expenses+........................... -- -- --
------- ------- -------
Net expenses.............................. 1.00% 1.04% 1.08%
------- ------- -------
Portfolio turnover......................... 25% 18% 27%
------- ------- -------
Net assets, end of year (in thousands)..... $53,134 $43,494 $36,413
------- ------- -------
Number of shares outstanding at
end of year (in thousands)................ 2,886 2,486 2,193
------- ------- -------
</TABLE>
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT INCOME FUND - 11
<PAGE>
<TABLE>
<CAPTION>
Periods Ended
-----------------------------
March 31, September 30,
Class C Shares 1996 1995 1994**
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period.... $16.56 $15.63 $17.35
========== ======== =======
Income from investment operations
- ---------------------------------
Net investment income.................. .31 .81 .57
Net realized and unrealized
gain (loss) on investments.......... (.10) 1.09 (1.67)
---------- -------- -------
Total from investment operations...... .21 1.90 (1.10)
---------- -------- -------
Distributions from
- ------------------
Net investment income.................. (.31) (.97) (.62)
Net realized gain...................... (.03) - -
---------- -------- -------
Total distributions................... (.34) (.97) (.62)
---------- -------- -------
Total increase (decrease) in
net asset value........................ (.13) .93 (1.72)
---------- -------- -------
Net asset value, end of period.......... $16.43 $16.56 $15.63
========== ======== =======
Total return*........................... 1.17% 12.58% (5.47%)
========== ======== =======
Ratios to average net assets:
Net investment income.................. 3.68%(a) 4.71% 5.62%(a)
========== ======== =======
Total expenses+........................ 3.42%(a) 3.37% -
========== ======== =======
Net expenses........................... 3.39%(a) 3.34% 2.65%(a)
========== ======== =======
Expenses reimbursed.................... .01%(a) .69% 7.29%(a)
========== ======== =======
Portfolio turnover...................... 81% 135% 34%
========== ======== =======
Net assets, end of period (in thousands) $1,376 $766 $413
========== ======== =======
Number of shares outstanding at
end of period (in thousands)............ 84 46 26
========== ======== =======
</TABLE>
(a) Annualized
* Total return is not annualized and does not reflect deduction of Class A
front-end sales charges.
+ Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly;such reductions are included in the
ratio of net expenses.
** From March 1, 1994, inception.
12 - CALVERT INCOME FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
==============================================================================
To Open an Account:
-------------------
800-368-2748
Yields and Prices:
-------------------
Calvert Information Network
24 hours, 7 days a week
800-368-2745
Service for
Existing Account:
-------------------
Shareholders: 800-368-2745
Brokers: 800-368-2746
TDD for Hearing
Impaired:
-------------------
800-541-1524
Branch Office:
-------------------
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified
or Overnight Mail:
-------------------
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105-1807
Web Site
-------------------
Address: http://www.calvertgroup.com
Principal
Underwriter:
-------------------
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
==============================================================================
This report is intended to provide fund information to shareholders.
It is not authorized for distribution to prospective investors unless preceded
or accompanied by a prospectus.
