A SPECIAL NOTICE TO ALL
CALVERT GROUP SHAREHOLDERS
We're pleased to announce that on April 21, 1997, Barbara Krumsiek joined
Calvert Group as president and chief executive officer. Ms. Krumsiek comes to
Calvert Group from Alliance Capital Management, where she served as senior vice
president and managing director of their mutual funds division. She has 20 years
experience in mutual fund management and marketing.
Ms. Krumsiek replaces former Calvert Group president, Clifton S. Sorrell,
who stepped down earlier this year after nearly 10 years in the top post.
We look forward to Ms. Krumsiek leading the company into the next century
and bringing Calvert Group mutual funds to a growing number of new investors. We
welcome her to the Calvert Group family.
CALVERT INCOME FUND
Dear Shareholder:
This report for the Calvert Income Fund covers the six-month period ended
March 31, 1997.
The financial markets continued to exhibit a high degree of volatility, as
investors tried to gauge the pace of economic growth and direction for interest
rates.
Short-term interest rates remained low on a historical basis but began to
trend higher heading into 1997. In March, the Federal Reserve intervened to slow
the pace of economic growth and took steps to raise rates. Long-term rates
traded in a fairly tight band through 1996, but broke out of that range and
moved higher in the first quarter of 1997 on indications that the economy was
strengthening. A more robust pace of economic growth can signal inflation, which
causes bond yields to move higher.
Stock prices continued to rise, as measured by the most widely reported
market averages, the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average. However, many market sectors, specifically small companies
and stocks in the financial services and technology industry groups, were left
out of the advance. Thus, many measures of broader stock market performance did
not share the same fate as the S&P and the Dow.
Fund Strategy and Performance
The Fund led its benchmark for the six months and lagged for the 12 months,
mainly due to our more defensive stance.
Expecting that rates would trend higher, we adjusted the Fund's maturity
structure to focus more on short- and intermediate-term securities and less on
long-term issues. This helped to reduce the impact of rising rates on the Fund's
price. Duration was just above six years at the beginning of the period and down
to about five and a half years at the close.
We eliminated the Fund's exposure to mortgage-backed securities, which
represented approximately 14% of assets in September, and pared back our
holdings of Treasury securities. Mortgages perform best in a stable interest
rate environment. When rates rise, homeowners tend not to prepay their
mortgages, which effectively increases the average life of mortgage-backed
securities. Prices of longer-term securities decline more in response to a rise
in rates.
Proceeds from sales of mortgage-backed issues and Treasuries were
reinvested primarily in corporate bonds. Our corporate position was raised from
about 33% of assets in September to roughly 65% in March and is comprised mainly
of bonds issued by banks and other financial companies and industrials.
(Industrials is a very broad grouping that is essentially comprised of all
companies not included in the financial services, transportation or utilities
categories.)
Outlook
In our view, interest rates will likely move gradually higher, but we don't
expect a steep increase. In light of this outlook, the Calvert Income Fund
remains defensively structured.
We appreciate your investment.
Sincerely,
Barbara J. Krumsiek
President
April 25, 1997
Portfolio Statistics
Maturity Schedule
% of Portfolio 3/31/97 9/30/96
Less than 1 Year 3% 1%
1-5 Years 23% 10%
5-10 Years 35% 30%
10-20 Years 5% 28%
20-30 Years 27% 27%
30 Years and Above 6% 4%
Weighted Average 15 years 15 years
SEC Yields
Thirty Days Ended 3/31/97 9/30/96
A Shares 5.52% 5.68%
Average Annual Total Returns
for periods ended March 31, 1997
Class A Shares
One Year .28%
Five Years 6.35%
Ten Years 7.76%
Performance Comparison
Comparison of change in value of $10,000 investment.
Total returns assume reinvestment of dividends and 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. Past performance is no guarantee of
future results.
Principal
Debt Securities - 82.8% Amount Value
Corporate Bonds - 71.6%
ABN Amro Bank of Nevada Chicago Branch Subordinate Notes
dtd. 5/31/95, 7.55%, 6/28/06 $1,000,000 $1,005,360
American General Institute Capital A,
7.57%, 12/1/45 2,000,000 1,799,294
Arvin Industries Inc., 6.875%, 2/15/01 2,000,000 1,933,840
BT Institutional Capital Trust, 8.09%, 12/1/26 1,000,000 950,503
CIT Capital Trust, 7.70%, 2/15/27 1,000,000 938,200
Deutsche Bank Financial, Inc., 6.70%, 12/13/06 1,500,000 1,426,455
Export Import Bank of Korea, 6.50%, 2/10/02 1,000,000 966,250
First National Bank of Omaha, 7.32%, 12/1/10 1,000,000 958,650
First Union Capital One, 7.935%, 1/15/27 2,000,000 1,923,920
International Business Machine Corp.,
7.00%, 10/30/25 1,500,000 1,365,390
Lehman Brothers Holdings, Inc., 6.90%, 1/29/01 2,000,000 1,978,400
Leland Stanford Jr. University, 7.65%, 6/15/26 1,000,000 1,006,030
Mcleod, Inc., 10.50%, 3/1/07 1,000,000 550,000
Nationsbank Corp., 7.50%, 9/15/06 1,500,000 1,492,305
Renaissance Capital Trust, 8.54%, 3/1/27 1,500,000 1,463,640
Salomon, Inc., 6.50%, 3/1/00 2,000,000 1,966,780
Smith Barney Holdings, Inc., 7.00%, 3/15/04 1,000,000 975,810
Societe Generale New York, 7.40%, 6/1/06 1,000,000 987,720
TIG Capital Trust, 8.597%, 1/15/27 1,000,000 989,922
Toronto Dominion Bank, 6.50%, 1/15/07 1,000,000 985,827
USG Corp., 8.50%, 8/1/05 2,000,000 2,035,000
Wells Fargo Capital, 6.875%, 4/1/06 1,000,000 956,740
28,656,036
Mortgage Securities - 0.0%
Government National Mortgage Association, Pool 137518,
11.00%, 10/15/15 2,341 2,645
2,645
Municipal Bonds - 8.7%
Chickasaw Nation Oklahoma Certificate of Participation,
10.00%, 8/1/03* 1,310,000 1,179,000
Maryland State Economic Development Corp.,
8.00%, 10/1/05 1,000,000 987,840
Maryland State Economic Development Corp.,
8.625%, 10/1/19 750,000 762,195
Texas Veterans Housing Fund II
General Obligation, 7.35%, 12/1/21 600,000 554,568
3,483,603
Repurchase Agreements - 2.5%
Paine Webber, 6.35%, dated 3/31/97, due 4/1/97
(Collateral: $1,029,383 FHLMC, 7.00%, 10/1/26) 1,000,000 1,000,000
1,000,000
Total Debt Securities (Cost $33,826,401) 33,142,284
Equity Securities - 3.6% Shares Value
Preferred Stocks
Australian & New Zealand Bank, Preferred 13,000 $347,750
Bankers Trust NY, Preferred 15,000 384,375
ELF Overseas, Ltd., Series A, Preferred 12,500 326,563
Santander Oversea Bank, Inc., Series D, Preferred 15,000 378,750
Total Equity Securities (Cost $1,388,250) 1,437,438
TOTAL INVESTMENTS (Cost $35,214,651) - 86.4% 34,579,722
Other assets and liabilities, net - 13.6% 5,430,018
Net Assets - 100% $40,009,740
Assets Value
Investments in securities, at value $34,579,722
Cash 1,930,600
Receivable for securities sold 9,350,660
Receivable for shares sold 28,995
Interest and dividends receivable 559,618
Other assets 15,040
Total assets 46,464,635
Liabilities
Payable for securities purchased 6,337,170
Payable for shares redeemed 64,264
Payable to Calvert Asset Management Co., Inc. 28,064
Payable to Calvert Shareholders Services, Inc. 5,175
Payable to Calvert Distributors, Inc. 5,238
Accrued expenses and other liabilities 14,984
Total liabilities 6,454,895
Net assets $40,009,740
Net Assets Consist of:
Paid-in capital applicable to 2,434,563 outstanding shares of
beneficial interest;
unlimited number of no par shares authorized $40,851,032
Undistributed net investment income (loss) (4,251)
Accumulated net realized gain (loss) on investments (202,112)
Net unrealized appreciation (depreciation) on investments (634,929)
Net assets $40,009,740
Net Asset Value per Share $16.43
Net Investment Income
Investment Income
Interest income $1,548,895
Dividend income 58,771
Total investment income 1,607,666
Expenses
Investment advisory fee 151,221
Transfer agency fees and expenses 34,820
Distribution Plan expenses 33,240
Trustees' fees and expenses 2,444
Custodian fees 10,700
Registration fees 18,770
Reports to shareholders 20,799
Professional fees 4,820
Miscellaneous 6,356
Reimbursement from Advisor (620)
Total expenses 282,550
Fees paid indirectly (10,700)
Net expenses 271,850
Net Investment Income 1,335,816
Realized and Unrealized Gain (Loss) on
Investments
Net realized gain (loss) 294,738
Change in unrealized appreciation or depreciation (276,953)
Net Realized and Unrealized Gain
(Loss) on Investments 17,785
Increase (Decrease) in Net Assets
Resulting From Operations $1,353,601
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $1,335,816 $2,648,037
Net realized gain (loss) 294,738 83,953
Change in unrealized appreciation or depreciation (276,953) (889,184)
Increase (Decrease) in Net Assets
Resulting From Operations 1,353,601 1,842,806
Distributions to shareholders from
Net investment income:
Class A Shares (1,337,201) (2,606,323)
Class C Shares (2,866) (54,133)
Distribution in excess of net realized gain:
Class A Shares - (62,966)
Class C Shares - (1,516)
Total distributions (1,340,067) (2,724,938)
Capital share transactions:
Shares sold:
Class A Shares 2,203,371 4,750,562
Class C Shares 4,736 1,203,271
Shares issued from merger:
Class A Shares - 7,603,794
Class C Shares - 303,797
Reinvestment of distributions:
Class A Shares 1,100,044 2,243,906
Class C Shares 2,459 54,829
Shares redeemed:
Class A Shares (7,718,039) (11,964,864)
Class C Shares (1,406,144) (905,976)
Total capital share transactions (5,813,573) 3,289,319
Total Increase (Decrease) in Net Assets (5,800,039) 2,407,187
Net Assets
Beginning of period 45,809,779 43,402,592
End of period (including undistributed net investment
income of $(4,251) and $0, respectively) $40,009,740 $45,809,779
Capital Share Activity
Shares sold:
Class A Shares 131,407 284,027
Class C Shares 291 72,532
Shares issued from merger:
Class A Shares - 461,675
Class C Shares - 18,753
Reinvestment of distributions:
Class A Shares 65,802 134,740
Class C Shares 151 3,352
Shares redeemed:
Class A Shares (460,226) (717,676)
Class C Shares (85,584) (55,738)
Total capital share activity (348,159) 201,665
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. Shares of the Fund are sold with a maximum
front-end sales charge of 3.75%. On October 29, 1996, all outstanding Class C
shares in the Fund were converted into an equivalent value of Class A shares.
This transaction was a non-taxable exchange and no sales charge was applied to
the Class A shares issued.
On May 23, 1996, the net assets of Calvert U.S. Government Fund were merged
into the Fund. The acquisition was accomplished by a tax free exchange of
480,428 shares of the Fund (valued at $7,907,591) for the 555,054 shares of the
U.S. Government Fund outstanding at May 23, 1996. The U.S. Government Fund's net
assets at that date, including $172,000 of unrealized depreciation and $328,884
of undistributed realized net losses were combined with those of the Fund. The
aggregate net assets of the Fund and U.S. Government Fund immediately before the
acquisition were $40,339,463 and $7,910,153, respectively.
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.
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 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.
Estimates: The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reported
period. Actual results could differ from those estimates.
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
.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 $6,775 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 $20,500 plus up to $1,500 for each Board and Committee meeting attended.
Trustee's fees are allocated to each of the funds served.
Note C--Investment Activity
During the period, purchases and sales of investments, other than
short-term securities, were $394,113,779 and $404,246,086, respectively.
The cost of investments owned at March 31, 1997 was substantially the same
for federal income tax and financial reporting purposes. Net unrealized
depreciation aggregated $634,929, of which $105,360 related to appreciated
securities and $740,289 related to depreciated securities.
Net realized capital loss carryforwards acquired in the merger of the U.S.
Government Fund, of approximately $329,000, may be utilized to offset current or
future capital gains for federal income tax purposes, until expiration in 2001
through 2002.
Class A Shares
Net asset value, beginning $16.47 $16.82 $15.68
Income from investment operations
Net investment income .52 1.01 1.11
Net realized and unrealized gain (loss) (.04) (.32) 1.14
Total from investment operations .48 .69 2.25
Distributions from
Net investment income (.52) (1.01) (1.11)
In excess of net realized gain - (.03) -
Total distributions (.52) (1.04) (1.11)
Total increase (decrease)
in net asset value (.04) (.35) 1.14
Net asset value, ending $16.43 $16.47 $16.82
Total return* 2.92% 4.21% 14.90%
Ratios to average net assets:
Net investment income 6.20%(a) 6.02% 6.89%
Total expenses 1.30%(a) 1.26% 1.26%
Net expenses 1.25%(a) 1.23% 1.23%
Portfolio turnover 971% 153% 135%
Net assets, ending (in thousands) $40,010 $44,431 $42,637
Number of shares outstanding,
ending (in thousands) 2,435 2,698 2,535
Class A Shares
Net asset value, beginning $18.41 $17.50 $16.61
Income from investment operations
Net investment income 1.16 1.23 1.28
Net realized and unrealized gain (loss)(2.42) .91 .89
Total from investment operations (1.26) 2.14 2.17
Distributions from
Net investment income (1.16) (1.23) (1.28)
Net realized gain (.31) - -
Total distributions (1.47) (1.23) (1.28)
Total increase (decrease)
in net asset value (2.73) .91 .89
Net asset value, ending $15.68 $18.41 $17.50
Total return* (6.94%) 12.74% 13.66%
Ratios to average net assets:
Net investment income 6.86% 6.93% 7.59%
Total expenses - - -
Net expenses 1.07% 1.00% 1.04%
Portfolio turnover 34% 25% 18%
Net assets, ending (in thousands) $45,936 $53,134 $43,494
Number of shares outstanding,
ending (in thousands) 2,929 2,886 2,486
CLASS C SHARES
Net asset value, beginning $16.19 $16.56 $15.63 $17.35
Income from investment operations
Net investment income .01 .74 .81 .57
Net realized and unrealized
gain (loss) .31 (.42) 1.09 (1.67)
Total from investment operations .32 .32 1.90 (1.10)
Distributions from
Net investment income (.04) (.66) (.97) (.62)
In excess of net realized gain - (.03) - -
Total distributions (.04) (.69) (.97) (.62)
Total increase (decrease)
in net asset value .28 (.37) .93 (1.72)
Net asset value, ending $16.47 $16.19 $16.56 $15.63
Total return* 2.01% 1.96% 12.58% (5.47%)
Ratios to average net assets:
Net investment income 3.65%(a) 3.96% 4.71% 5.62%(a)
Total expenses 3.29%(a) 3.37% 3.37% -
Net expenses 3.26%(a) 3.34% 3.34% 2.65%(a)
Expenses reimbursed .63%(a) - .69% 7.29%(a)
Portfolio turnover 2% 153% 135% 34%
Net assets, ending (in thousands) $1,064 $1,379 $766 $413
Number of shares outstanding,
ending (in thousands) 65 85 46 26
(a) Annualized
* Total return is not annualized and does not reflect deduction of Class A
fron-end sales charges.
Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reduction are included in the
ratio of net expenses.
** From March 1, 1994, inception
<PAGE>
A SPECIAL NOTICE TO ALL
CALVERT GROUP SHAREHOLDERS
We're pleased to announce that on April 21, 1997, Barbara Krumsiek joined
Calvert Group as president and chief executive officer. Ms. Krumsiek comes to
Calvert Group from Alliance Capital Management, where she served as senior vice
president and managing director of their mutual funds division. She has 20 years
experience in mutual fund management and marketing.
Ms. Krumsiek replaces former Calvert Group president, Clifton S. Sorrell,
who stepped down earlier this year after nearly 10 years in the top post.
We look forward to Ms. Krumsiek leading the company into the next century
and bringing Calvert Group mutual funds to a growing number of new investors. We
welcome her to the Calvert Group family.
CALVERT STRATEGIC GROWTH FUND
Dear Shareholder:
This report for the Calvert Strategic Growth Fund covers the 12-month
period ended March 31, 1997.
The market's advance continued into the second quarter of 1996, the first
period covered by this report. In June, signs of stronger economic growth
increased fears of higher interest rates, which caused stocks to stumble. The
market rallied back during the fourth quarter of 1996 and first quarter of 1997
as measured by the most widely covered market averages, the Standard & Poor's
500 Stock Index and the Dow Jones Industrial Average, but many stock market
groups did not participate in the advance.
Short-term interest rates remained low on a historical basis but began to
trend higher heading into 1997. In March, the Federal Reserve intervened to slow
the pace of economic growth and took steps to raise rates.
A Review of the Fund's Objective
The Strategic Growth Fund's investment objective is maximum long-term
growth. In favorable markets, we select stocks that we believe have exceptional
earnings potential. These are typically stocks with small- to mid-market
capitalizations. When our outlook for the market is decidedly negative, we have
the flexibility to employ defensive strategies, including selling stock short
and moving assets into cash positions. In determining the outlook for the
market, the Fund's manager utilizes a proprietary risk-assessment model called
the Five Market Principles. Based on an analysis of a number of factors, the
Five Market Principles model indicates the degree of market risk (high, moderate
and low) and signals buy and sell points.
Fund Performance and Strategy
This was a very difficult period for the Fund. After beating our benchmarks
soundly for the nine months ending December 31, 1996, all gains were lost in the
first quarter of 1997.
Our strategy throughout the fiscal year was to participate in the market's
upside potential while also paying close attention to the moderately high level
of risk signaled by the Five Market Principles model. We began with roughly 70%
of assets committed to equity securities and a 28% cash position. When some of
our market indicators deteriorated in mid-year, we raised the Fund's cash level
to approximately 40%. This defensive strategy buoyed the Fund's performance
relative to the benchmark indexes when the market suffered a setback at the end
of June into July.
Anticipating that small- to mid-cap companies would rally back, we took
advantage of this opportunity and added to positions in promising companies.
However, the market's advance in the second half of 1996 into the first quarter
of 1997 was led by large-cap companies. Our large commitment to technology
stocks, which were hit hard during the first quarter of 1997, and put options on
the Standard & Poor's 500 Stock Index also worked against us. (Put options offer
protection against a potential decline in the value of the stock market.)
As we explained in our letter to shareholders dated March 31, this was an
especially frustrating situation, especially since the majority of the small-cap
growth stocks held in the Fund's portfolio have met or exceeded analysts'
earnings estimates and are projected to generate earnings growth well above the
average for companies included in the Standard & Poor's Index.
In mid-March, the Five Market Principles model signaled an
intermediate-term sell signal, and we again raised our cash position. This
defensive strategy has helped us to outperform our benchmark indexes from March
17 through the date of this letter.
Outlook
While we ask that investors measure our performance on a long-term basis,
we realize that negative returns are never good news. We remain confident in the
Fund's ability to generate positive returns over the long-term and appreciate
your continued support.
Sincerely,
Cedd Moses Barbara J. Krumsiek
Portfolio Manager President
April 25, 1997
Portfolio Statistics
Ten Largest Stock Holdings
as of March 31, 1997
of Net Assets
Vantive Corp. 4.0%
Clarify, Inc. 3.5%
Gucci Group, N.V. 2.9%
Dollar Tree Stores, Inc. 2.7%
Sapient Corp. 2.7%
Sanmina Corp. 2.5%
Harbinger Corp. 2.5%
Delta Air Lines, Inc. 2.1%
Qualcomm, Inc. 2.1%
TJX Companies, Inc. 2.0%
Total 27.0%
Average Annual Total Returns
for periods ended March 31, 1997
Class A Shares
One Year -24.92%
Since Inception (5/94) -.66%
Class C Shares
One Year -21.75%
Since Inception (5/94) .23%
Calvert Strategic Growth Fund
Comparison of change in value of $10,000 investment
Total returns assume reinvestment of dividends and, for Class A shares,
reflect the deduction of the Fund's maximum sales charge of 4.75%. Past
performance is no guarantee of future results.
Report of Independent Accountants
To the Board of Trustees of The Calvert Fund
and Shareholders of 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 31,1997 and the related statement of operations for the year then ended
and the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the two years in the
period 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, 1997, 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, 1997, and the results of its
operations, changes in its net assets and financial highlights for the
respective periods stated in the first paragraph, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
May 9, 1997
Equity Securities - 47.2% Shares Value
Airline - 2.1%
Delta Air Lines, Inc. 27,900 $2,347,087
Commercial Services - 0.0%
NCOGroup, Inc. * 2,500 54,687
54,687
Computer Services - 6.9%
Harbinger Corp. * 125,450 2,759,900
Sapient Corp. * 92,200 2,950,400
Technology Solutions Co. * 70,990 1,961,099
7,671,399
Electronics - Semiconductor Equipment - 0.8%
PRI Automation, Inc. * 18,500 883,375
883,375
Electronics - Semiconductor Manufacturing - 5.7%
Applied Materials, Inc. * 36,100 1,674,137
Sanmina Corp. * 62,800 2,810,300
Vitesse Semiconductor Corp. * 67,950 1,877,119
6,361,556
Health Care - 2.0%
Oxford Health Plans, Inc. * 37,600 2,204,300
2,204,300
Medical - Ethical Drugs - 2.0%
Dura Pharmaceuticals, Inc. * 62,600 2,237,950
2,237,950
Oil and Gas - Equipment - 2.1%
Smith International, Inc. * 28,200 1,286,625
Varco International, Inc. * 42,400 1,060,000
2,346,625
Oil and Gas - Field Services - 0.3%
Trico Marine Services, Inc. * 7,900 375,250
375,250
Gucci Group, N.V. 44,900 3,238,413
TJX Companies, Inc. 52,400 2,240,100
5,478,513
Equity Securities (Cont'd) Shares Value
Retail - Discount and Variety - 2.7%
Dollar Tree Stores, Inc. 82,000 $3,034,000
3,034,000
Software - Applications - 11.4%
Clarify, Inc.* 161,600 3,898,600
Documentum, Inc. * 32,800 606,800
Parametric Technology Corp. * 26,800 1,209,350
Pegasystems, Inc. * 13,700 275,713
Siebel Systems, Inc. * 129,600 2,170,800
Vantive Corp. * 218,200 4,473,100
12,634,363
Software - Education and Entertainment - 0.1%
Crystal Dynamics, Inc., Series D * 13,334 62,403
62,403
Telecommunications - 6.2%
Advanced Fibre Communications * 62,700 2,022,075
DSC Communications Corp. * 97,200 2,035,125
Qualcomm, Inc. * 41,600 2,345,200
Sourcecom Corp., Series B, Preferred * 100,000 430,000
6,832,400
Total Equity Securities (Cost $57,759,566) 52,523,908
Principal
Corporate Obligations - 21.8% Amount
Baldwin Park, California Redevelopment Agency, VRDN,
5.66%, 8/1/23, LOC: Wells Fargo Bank, Confirming LOC:
Sumitomo Bank Ltd. ** $14,500,000 14,500,000
PRD Finance LLC., VRDN, 5.53%, 4/1/27, LOC:
First American Bank, MI ** 9,725,000 9,725,000
Total Corporate Obligations (Cost $24,225,000) 24,225,000
Repurchase Agreements - 17.1%
State Street Bank: 5.75%, dated 3/31/97, due 4/1/97
(Collateral: $20,071,946, FFCB, 6.44%, 11/5/99) 19,000,000 19,000,000
Total Repurchase Agreements (Cost $19,000,000) 19,000,000
U.S. Treasury - 3.5%
U.S. Treasury Notes, 5.00%, 2/15/99 4,000,000 3,901,800
Total U.S.Treasury (Cost $3,946,890) 3,901,800
Principal
Municipal Obligations - 3.1% Amount Value
Gardena, California Certificates of Participation,
VRDN, 6.35%,
7/1/25, LOC: Sumitomo Trust & Banking, Confirming
LOC: Dai-Ichi Kangyo ** $3,475,000 $3,475,000
Total Municipal Obligations (Cost $3,475,000) 3,475,000
Options Purchased - 3.1% Contracts
S&P 500 Index Put Options
Expiration 5/17/97, Strike Price 790 265 993,750
S&P 500 Index Put Options
Expiration 5/17/97, Strike Price 800 265 1,205,750
S&P 500 Index Put Options
Expiration 6/21/97, Strike Price 790 330 1,204,500
Total Options Purchased (Premium $2,405,018) 3,404,000
Principal
Community Loan Notes - 2.0% Amount
Cascadia Revolving Loan Fund, 4.00%, 4/30/99 75,000 72,453
Dorchester Bay Economic Development Corp.,
4.00%, 7/15/97 50,000 47,605
Illinois Facilities Fund, 4.00%, 9/30/99 250,000 249,955
Low Income Housing Fund, 4.00%, 1/12/99 350,000 343,231
Mercy Loan Fund, 4.00%, 1/13/01 200,000 196,166
Minnesota Non Profits Assistance Fund,
3.00%, 4/30/01 200,000 192,278
Northeast South Dakota Energy Conservation Corp.,
4.00%, 4/30/99 75,000 72,453
Ohio Community Development Finance Fund,
5.00%, 5/31/99 500,000 485,360
Rural Community Assistance Fund, 4.00%, 6/28/99 100,000 95,210
Self Help Ventures Fund, 4.00%, 3/31/00 300,000 27,654
Unitarian Universalist Affordable
Housing Corp., 4.00%, 6/28/99 80,000 76,168
Washington Area Community Investment Fund,
4.00%, 6/28/99 100,000 95,210
Working Capital, 4.00%, 9/30/97 50,000 49,181
Total Community Loan Notes (Cost $2,330,000) 2,222,924
Certificates of Deposit - 0.3%
Self Help Credit Union, 5.10%, 2/24/98 100,000 99,581
South Shore Bank, 5.35%, 2/9/98 200,000 199,108
Total Certificates of Deposit (Cost $300,000) 298,689
TOTAL INVESTMENTS (Cost $113,441,474) - 98.1% 109,051,321
Other assets and liabilities, net - 1.9% 2,097,244
Net Assets - 100% $111,148,565
SCHEDULE OF SECURITIES SOLD SHORT
MARCH 31, 1997
Equity Securities Shares Value
Gateway 2000, Inc. 21,800 $1,117,250
International Flavors and Fragrances 12,600 551,250
MBNA Corp. 18,800 524,050
Microsoft Corp. 12,100 1,109,419
TOTAL EQUITY SECURITIES SOLD SHORT
(Proceeds $3,507,356) $3,301,969
Assets
Investment in securities, at value $90,051,321
Repurchase Agreements 19,000,000
Cash 295,202
Receivable for securities sold 2,354,435
Receivable for shares sold 277,319
Interest and dividends receivable 149,577
Deposits with brokers 11,134,403
Other assets 25,681
Total assets 123,287,938
Liabilities
Payable for securities purchased 8,062,330
Payable for shares redeemed 479,873
Securities sold short, at value (proceeds $3,507,356) 3,301,969
Payable to Calvert Asset Management Co., Inc. 154,580
Payable to Calvert Administrative Services Co. 20,107
Payable to Calvert Shareholder Services, Inc. 30,080
Payable to Calvert Distributors, Inc. 36,313
Accrued expenses and other liabilities 54,121
Total liabilities 12,139,373
Net assets $111,148,56
Net Assets Consist of:
Paid-in capital applicable to the following shares of beneficial interest;
unlimited number of no par shares authorized:
Class A: 6,798,190 shares outstanding $111,527,830
Class C: 1,207,832 shares outstanding 19,574,492
Accumulated net gain (loss) on investments (15,768,991)
Net unrealized appreciation (depreciation) on investments (4,184,766)
Net assets $111,148,565
Net Asset Value per Share
Class A (based on net assets of $94,624,910) $13.92
Class C (based on net assets of $16,523,655) $13.68
Net Investment Income
Investment Income
Interest income $2,290,257
Dividend income (net of foreign taxes of $3,749) 49,322
Total investment income 2,339,579
Expenses
Investment advisory fee 2,368,558
Transfer agency fees and expenses 369,737
Distribution Plan expenses:
Class A 330,161
Class C 255,511
Trustees' fees and expenses 18,144
Administrative fees 315,231
Custodian fees 43,926
Registration fees 45,189
Reports to shareholders 119,748
Professional fees 33,266
Miscellaneous expenses 98,205
Reimbursement from Advisor (133,668)
Total expenses 3,864,008
Fees paid indirectly (43,926)
Net expenses 3,820,082
Net Investment Income (Loss) (1,480,503)
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) on:
Securities (54,447,117)
Options written 39,363,392
Securities sold short 2,005,998
(13,077,727)
Change in unrealized appreciation or depreciation (17,618,112)
Net Realized and Unrealized Gain
(Loss) on Investments (30,695,839)
Increase (Decrease) in Net Assets
Resulting From Operations $(32,176,342)
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $(1,480,503) $1,151,276
Net realized gain (loss) (13,077,727) 6,911,057
Change in unrealized appreciation
or depreciation (17,618,112) 9,845,857
Increase (Decrease) in Net Assets
Resulting From Operations (32,176,342) 17,908,190
Distributions to shareholders from
Net investment income:
Class A Shares - (1,548,699)
Class C Shares - (152,946)
Net realized gain:
Class A Shares (7,118,058) (1,624,507)
Class C Shares (1,330,049) (328,896)
Total distributions (8,448,107) (3,655,048)
Capital share transactions :
Shares sold:
Class A Shares 56,234,527 64,185,609
Class C Shares 8,079,284 15,176,622
Reinvestment of distributions:
Class A Shares 6,395,403 2,842,563
Class C Shares 1,289,807 465,985
Shares redeemed:
Class A Shares (59,113,828) (60,303,058)
Class C Shares (12,207,897) (12,307,161)
Total capital share transactions 677,296 10,060,560
Total Increase (Decrease) in Net Assets (39,947,153) 24,313,702
Net Assets
Beginning of year 151,095,718 126,782,016
End of year $111,148,565 $151,095,718
Capital Share Activity
Shares sold:
Class AShares 2,902,855 3,803,233
Class CShares 417,613 905,375
Reinvestment of distributions:
Class A Shares 345,512 164,542
Class C Shares 70,791 27,150
Shares redeemed:
Class A Shares (3,190,167) (3,537,947)
Class C Shares (660,334) (725,836)
Total capital share activity (113,730) 636,517
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.
Seurities Sold Short: The Fund may sell securities that it does not own in
anticipation of a decline in their market price. Gain or losses represent the
difference between the sale proceeds and the current market value 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.
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.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of income and expenses duritng the reporting
period. Actual results could differ from those estimates.
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 up to .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.
During the period from January 1, 1995 through December 31, 1996, the
Advisor agreed to voluntarily reimburse certain Fund expenses. Under the
investment advisory agreement, such expenses could be recaptured by the Advisor
from January 1, 1997 through December 31, 1998 provided the Fund"s expenses
ratio does not exceed the lowest state expense limitation prevailing at the time
of the voluntary reimbursement. Pursuant to this agreement, $47,638 of such
expenses are subjectto recapture by the Advisor and voluntary expenses waived
prior to January 1, 1995 are now permanently waived.
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.
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 1.00% annually of average daily net assets of each Class A and Class C,
respectively.
The Distributor received $194,570 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.
Each Trustee who is not affiliated with the Advisor receives an annual fee
of $20,500 plus $1,500 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
securities, were $173,858,312 and $209,163,855, respectively.
The cost of investments owned at March 31, 1997 was substantially the same
for federal income tax and financial reporting purposes. Net unrealized
depreciation aggregated $4,390,153, of which $2,658,033 related to appreciated
securities and $7,048,186 related to depreciated securities.
Net realized capital loss carryforwards, for federal income tax purposes,
of $1,727,755 at March 31, 1997 may be utilized to offset current and future
capital gains until expiration through March 31, 2005.
The following summarizes the Fund's transactions in written call and put
options during the year:
Options Contracts Premiums
Outstanding, beginning of year 28,000 $55,970,132
Written 13,604 7,197,453
Exercised (901) (569,448)
Closed (21,238) (40,465,073)
Expired (19,465) (22,133,064)
Outstanding, ending of year - -
Class A Shares
Net asset value, beginning $18.64 $16.96 $15.00
Income from investment operations
Net investment income (loss) (.16) .13 .20
Net realized and unrealized gain (loss) (3.53) 1.96 2.21
Total from investment operations (3.69) 2.09 2.41
Distributions from
Net investment income - (.20) (.04)
Net realized gain (1.03) (.21) (.41)
Total distributions (1.03) (.41) (.45)
Total increase (decrease)
in net asset value (4.72) 1.68 1.96
Net asset value, ending $13.92 $18.64 $16.96
Total return* (21.17%) 12.56% 16.08%
Ratios to average net assets:
Net investment income (loss) (.73%) .90% 1.47%(a)
Total expenses 2.32% 2.32% -
Net expenses 2.30% 2.29% 2.55%(a)
Expenses reimbursed .10% .14% .31%(a)
Portfolio turnover 151% 402% 480%
Average commission rate paid $.0782 - -
Net assets, ending (in thousands) $94,625 $125,606 $107,004
Number of shares outstanding,
ending (in thousands) 6,798 6,740 6,310
Class C Shares
Net asset value, beginning $18.47 $16.86 $15.00
Income from investment operations
Net investment income (loss) (.35) (.02) .12
Net realized and unrealized
gain (loss) (3.41) 1.94 2.18
Total from investment operations (3.76) 1.92 2.30
Distributions from
Net investment income - (.10) (.03)
Net realized gain (1.03) (.21) (.41)
Total distributions (1.03) (.31) (.44)
Total increase (decrease)
in net asset value (4.79) 1.61 1.86
Net asset value, ending $13.68 $18.47 $16.86
Total return* (21.75%) 11.57% 15.32%
Ratios to average net assets:
Net investment income (loss) (2.00%) .02% .83%(a)
Total expenses 3.11% 3.18% -
Net expenses 3.09% 3.16% 3.45%(a)
Expenses reimbursed - - .20%(a)
Portfolio turnover 151% 402% 480%
Average commission rate paid $.0782 - -
Net assets, ending (in thousands) $16,524 $25,490 $19,778
Number of shares outstanding,
ending (in thousands) 1,208 1,380 1,173
(a) Annualized
* Total return is not annualized and does not reflect deduction of Class A
fron-end sales charges.
Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reduction are included in the
ratio of net expenses.
** From May 5, 1994, inception
<PAGE>
A SPECIAL NOTICE TO ALL
CALVERT GROUP SHAREHOLDERS
We're pleased to announce that on April 21, 1997, Barbara Krumsiek joined
Calvert Group as president and chief executive officer. Ms. Krumsiek comes to
Calvert Group from Alliance Capital Management, where she served as senior vice
president and managing director of their mutual funds division. She has 20 years
experience in mutual fund management and marketing.
Ms. Krumsiek replaces former Calvert Group president, Clifton S. Sorrell,
who stepped down earlier this year after nearly 10 years in the top post.
We look forward to Ms. Krumsiek leading the company into the next century
and bringing Calvert Group mutual funds to a growing number of new investors. We
welcome her to the Calvert Group family.
CALVERT NEW VISION
SMALL CAP FUND
Dear Shareholder:
We welcome all investors to the Calvert New Vision Small Cap Fund, which
began operations on January 31, 1997. This is the Fund's first annual report. It
covers the two-month period from the Fund's inception to March 31.
During this period, the stock market experienced an exceptionally high
degree of volatility. The most widely referenced market averages, the Standard &
Poor's 500 Stock Index and the Dow Jones Industrial Average, posted positive
gains; however many averages of the broader market's performance did not.
Small-cap stocks especially were left out of the market's advance, which had a
negative effect on this new Fund's performance.
Fund Objective
The New Vision Small Cap Fund seeks long-term capital appreciation through
investment primarily in equity securities of small companies traded in US stock
markets. We consider a small company to be one with a market capitalization
(share price 5 number of shares outstanding) of $1 billion or less at the time
of our initial investment. We utilize a rigorous quantitative screening process
to cull out those stocks that appear to have the best potential for growth.
Using that list as a starting point, our research team then performs additional
levels of analysis to identify the most promising investments. Investments must
also meet the Fund's standards for responsible practices and policies regarding
the environment, involvement in the manufacture of weapons systems,
employee relations and product safety.
Fund Performance and Strategy
The Fund's launch was unfortunately during a period of underperformance for
small-company stocks. Historically, small-cap companies have outperformed
large-cap issues during the first months of the year, but this trend did not
hold in 1997.
Our focus during this period was on identifying high-quality small-cap
issues and investing the Fund's cash position. As of the close of this period,
we were 41% invested. In light of the exceptionally volatile market conditions,
we are being extremely selective, adding only those stocks that our
quantitative, fundamental and technical analyses show to have very strong
potential for growth. Specifically, we are looking to identify fast-growing,
leading-edge companies whose products or services bring to market the latest
advances in industries such as medicine, technology and communications.
Outlook
In our opinion, small-cap stocks are now trading at compelling valuations.
Companies represented in the S&P 500 Index are expected to grow earnings at 15%
(estimated '97), whereas companies represented in the Russell 2000, an index
that includes a greater percentage of small companies, are forecast to grow
earnings at 35% (estimated '97) and have considerably lower price/earnings
multiples. (A company's P/E ratio is an indication of how much investors are
willing to pay for the company's growth potential. The lower the P/E, the less
expensive the growth potential.)
Although prices of small-cap stocks tend to fluctuate more widely than
those of large-cap stocks, we believe that ownership in America's visionary
small companies can play an important role in a long-term investment strategy.
We're very excited about the Fund's long-term prospects.
Sincerely,
Cedd Moses Barbara J. Krumsiek
Portfolio Manager President
April 25, 1997
Portfolio Statistics
Ten Largest Stock Holdings
as of March 31, 1997
% of Net Assets
Harbinger Corp. 4.7%
PRIAutomation, Inc. 3.4%
Vantive Corp. 3.0%
Sapient Corp. 2.9%
Clarify, Inc. 2.7%
Varco International, Inc. 2.7%
Cymer, Inc. 2.5%
Documentum, Inc. 2.5%
Vitesse Semiconductor Corp. 2.3%
Siebel Systems, Inc. 2.2%
Total 28.9%
Report of Independent Accountants
To the Board of Trustees of The Calvert Fund
and Shareholders of Calvert New Vision Small Cap Fund:
We have audited the accompanying statement of assets and liabilities of
Calvert New Vision Small Cap Fund, including the statement of investments, as of
March 31, 1997, and the related statement of operations, statement of changes in
net assets and financial highlights for the period January 31, 1997
(commencement of operations) through March 31, 1997. 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 audit.
We conducted our audit 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, 1997, by correspondence with the custodian. 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 audit provides 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 New Vision Small Cap Fund as of March 31, 1997, and the results of its
operations, changes in its net assets and financial highlights for the period
stated in the first paragraph, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
May 9, 1997
Equity Securities - 38.9% Shares Value
Computer Services - 9.4%
Harbinger Corp. * 3,000 $66,000
Sapient Corp. * 1,300 41,600
Technology Solutions Co. * 900 24,863
132,463
Electronics - Laser Systems/Component - 2.5%
Cymer, Inc. * 1,000 35,875
35,875
Electronics - Semiconductor Equipment - 3.4%
PRI Automation, Inc. * 1,000 47,750
47,750
Electronics - Semiconductor Manufacturing - 4.6%
Sanmina Corp. * 700 31,325
Vitesse Semiconductor Corp. * 1,200 33,150
64,475
Oil and Gas - Equipment - 2.7%
Varco International, Inc. * 1,500 37,500
37,500
Oil and Gas - Field Services - 2.0%
Trico Marine Services, Inc. * 600 28,500
28,500
Software - Applications - 12.2%
Clarify, Inc.* 1,600 38,600
Documentum, Inc. * 1,900 35,150
Pegasystems, Inc. * 1,200 24,150
Siebel Systems, Inc. * 1,900 31,825
Vantive Corp. * 2,100 43,050
172,775
Software - Database/Development Tools - 1.7%
Rational Software Corp. * 1,200 24,750
24,750
Telecommunications - 0.4%
Ciena Corp. * 200 5,687
TOTAL INVESTMENTS (Cost $660,040) - 38.9% 549,775
Other assets and liabilities, net - 61.1% 865,210
Net Assets - 100% $1,414,985
Assets Value
Investments in securities, at value $549,775
Cash 812,452
Receivable for securities sold 24,123
Receivable for shares sold 19,004
Receivable from Calvert Asset Management Co., Inc. 9,562
Other assets 41,288
Total assets 1,456,204
Liabilities
Payable for securities purchased 31,811
Payable for Calvert Administrative Services Co. 114
Payable to Calvert Shareholders Services, Inc. 778
Payable to Calvert Distributors, Inc. 397
Accrued expenses and other liabilities 8,119
Total liabilities 41,219
Net assets $1,414,985
Net Assets Consist of:
Paid-in capital applicable to the following shares of beneficial interest;
unlimited number of no par shares authorized:
Class A: 101,347 shares outstanding $1,458,093
Class C: 16,690 shares outstanding 235,822
Accumulated net realized gain (loss) on investments (168,665)
Net unrealized appreciation (depreciation) on investments (110,265)
Net assets $1,414,985
Net Asset Value per Share
Class A (based on net assets of $1,214,896) $11.99
Class C (based on net assets of $200,089) $11.99
Net Investment Income
Investment Income
Dividend income -
Total investment income -
Expenses
Investment advisory fee $1,796
Transfer agency fees and expenses 1,459
Distribution Plan expenses:
Class A 437
Class C 246
Administrative fees 200
Custodian fees 1,629
Registration fees 8,723
Reports to shareholders 2,148
Professional fees 5,500
Miscellaneous 352
Reimbursement from Advisor (20,861)
Total expenses 1,629
Fees paid indirectly (1,629)
Net expenses 0
Net Investment Income (Loss) 0
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) (168,665)
Change in unrealized appreciation or depreciation (110,265)
Net Realized and Unrealized Gain
(Loss) on Investments (278,930)
Increase (Decrease) in Net Assets
Resulting From Operations ($278,930)
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) -
Net realized gain (loss) (168,665)
Change in unrealized appreciation or depreciation (110,265)
Increase (Decrease) in Net Assets
Resulting From Operations (278,930)
Capital share transactions:
Shares sold:
Class A Shares 1,525,010
Class C Shares 241,183
Shares redeemed:
Class A Shares (66,917)
Class C Shares (5,361)
Total capital share transactions 1,693,915
Total Increase (Decrease) in Net Assets 1,414,985
Net Assets
Beginning of period -
End of period $1,414,985
Capital Share Activity
Shares sold:
Class A Shares 106,577
Class C Shares 17,144
Shares redeemed:
Class A Shares (5,230)
Class C Shares (454)
Total capital share activity 118,037
Note A-Significant Accounting Policies
General: The Calvert New Vision Small Cap 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, which commenced operations on
January 31, 1997, 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. 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.
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.
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 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.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
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 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
.90% of the Fund's average daily net assets.
The Advisor may recapture any fees it defers or expenses it assumes through
December 31, 1997. The Advisor has until December 31, 1999 to recapture fees
deferred or expenses reimbursed during the previous two-year period.
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Fund for an annual fee, payable monthly,
of .10% of the average daily net assets of the Fund.
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 1.00% annually of average daily net assets of each Class A and Class C,
respectively.
The Distributor received $1,444 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 $20,500 plus $1,500 for each Board and Committee meeting attended. Trustees
fees are allocated to each of the funds served.
Note C-Investment Activity
During the period, purchases and sales of investments, other than
short-term securities, were $1,142,651 and $313,946, respectively.
The cost of investments owned at March 31, 1997 was substantially the same
for federal income tax and financial reporting purposes. Net unrealized
depreciation aggregated $110,265, of which $1,350 related to appreciated
securities and $111,615 related to depreciated securities.
Net realized capital loss carryforwards, for federal income tax purposes,
of $149,194 at March 31, 1997 may be utilized to offset current and future
capital gains until expiration through March 31, 2005.
Class A Shares
Net asset value, beginning $15.00
Income from investment operations
Net investment income (loss) -
Net realized and unrealized gain (loss) (3.01)
Total from investment operations (3.01)
Distributions from
Net investment income -
Net realized gain -
Total distributions -
Total increase (decrease) in net asset value (3.01)
Net asset value, ending $11.99
Total return* (20.07)%
Ratios to average net assets:
Net investment income (loss) -
Total expenses .82%(a)
Net expenses -
Expenses reimbursed 8.96%(a)
Portfolio turnover 97%
Average commission rate paid $.0500
Net assets, ending (in thousands) $1,215
Number of shares outstanding, ending (in thousands) 101
Class C Shares
Net asset value, beginning $15.00
Income from investment operations
Net investment income (loss) -
Net realized and unrealized gain (loss) (3.01)
Total from investment operations (3.01)
Distributions from
Net investment income -
Net realized gain -
Total distributions -
Total increase (decrease) in net asset value (3.01)
Net asset value, ending $11.99
Total return* (20.07)%
Ratios to average net assets:
Net investment income (loss) -
Total expenses .82%(a)
Net expenses -
Expenses reimbursed 21.08%(a)
Portfolio turnover 97%
Average commission rate paid $.0500
Net assets, ending (in thousands) $200
Number of shares outstanding, ending (in thousands) 17
(a) Annualized
This ratio reflects total expenses before reduction for fees paid indirectly;
such reductions are included in the ratio of net expenses.
*Total return does not reflect deduction of Class A front-end sales charge.
<PAGE>
A SPECIAL NOTICE TO ALL
CALVERT GROUP SHAREHOLDERS
We're pleased to announce that on April 21, 1997, Barbara Krumsiek joined
Calvert Group as president and chief executive officer. Ms. Krumsiek comes to
Calvert Group from Alliance Capital Management, where she served as senior vice
president and managing director of their mutual funds division. She has 20 years
experience in mutual fund management and marketing.
Ms. Krumsiek replaces former Calvert Group president, Clifton S. Sorrell,
who stepped down earlier this year after nearly 10 years in the top post.
We look forward to Ms. Krumsiek leading the company into the next century
and bringing Calvert Group mutual funds to a growing number of new investors. We
welcome her to the Calvert Group family.
CALVERT CAPITAL
ACCUMULATION FUND
Dear Shareholder:
This report for the Calvert Capital Accumulation Fund covers the six-month
period ended March 31, 1997. The Fund's fiscal year was changed from September
30 to March 31, so this report covers a short audit period.
After a mid-year stumble, the market rallied back during the fourth quarter
of 1996 and first quarter of 1997,
judging by the most widely covered market averages, the Standard & Poor's
500 Stock Index and the Dow Jones Industrial Average, but many stock market
groups did not participate in the advance.
Short-term interest rates remained low on a historical basis but began to
trend higher heading into 1997. In March, the Federal Reserve intervened to slow
the pace of economic growth and took steps to raise rates.
Fund Performance and Strategy
The most significant event for shareholders during this period was our
rebalancing of the portfolio to focus less on companies with very small market
capitalizations (market capitalization = share price 5 number of shares
outstanding). We had built a diversified core position in small-cap companies
through money managers Apodaca-Johnston Capital Management and Fortaleza Asset
Management, on the belief that this would enhance the Fund's performance.
Unfortunately, the small-cap universe has experienced a degree of
volatility relative to mid- and large-cap companies that was above what we
expected or considered appropriate for the Fund.
We reduced our small-cap exposure by moving assets from those money
managers to Brown Capital Management. Fund assets were moved from
Apodaca-Johnston in January and from Fortaleza in March. At the close of this
period, 100% of assets were managed by Brown Capital Management.
The Capital Accumulation Fund's performance lagged its benchmarks for the
six- and 12-month periods primarily due to our above-average weightings in some
of the weaker performing sectors, especially financial services and health care,
and our heavier representation in small-company stocks.
Brown Capital Management
Brown's investment strategy emphasizes "growth at a reasonable price"
meaning that it will purchase stocks with price earnings multiples that are in
line with their estimated earnings growth rate. Brown seeks these stocks from
among companies with superior management and strong potential for earnings
growth and profitability.
Over the past six months, this manager took steps to identify and invest in
several large companies that, in their opinion, will be able to sustain
double-digit growth over the next several years, operate at a higher level of
profitability than the overall market and were reasonably priced. These included
Hewlett-Packard, Illinois Tool Works, Intel, and Johnson & Johnson. As a result
of this initiative, the average market capitalization of the companies they
selected for the Fund has increased from $9.5 billion at the end of 1996 to
$15.3 billion at the close of this reporting
period.
Fund returns were hurt by an overweighting in the financial services and
technology sectors. Although the sell-off in these groups negatively affected
short-term performance, Brown is confident in the longer-term trends that
support their positive outlook for these stocks. Therefore, their response was
to selectively add to positions, specifically in Intel, Microsoft, Oracle, Cisco
Systems, and Chase Manhattan Bank.
Outlook
The economic climate looks favorable for stocks and bonds. While rates will
likely move a bit higher, we don't anticipate a sharp increase or a halt to the
current economic expansion.
The markets will likely continue to exhibit a high degree of volatility.
However, we think many sectors of the stock market, including small-company
stocks, financial services and technology issues, have experienced or are now
experiencing a correction. With this behind them, they should have room to
appreciate.
Thank you for your investment in the Calvert Capital Accumulation Fund.
Sincerely,
Barbara J. Krumsiek
President
April 25, 1997
Portfolio Statistics
Ten Largest Stock Holdings
as of March 31, 1997
% of Net Assets
Carnival Corp., Class A 3.4%
Cisco Systems, Inc. 3.2%
Solectron Corp. 3.1%
Home Depot, Inc. 3.0%
Chase Manhattan Corp. 3.0%
Cardinal Health, Inc. 2.9%
EMCCorp. 2.9%
Newell Co. 2.8%
Belden, Inc. 2.8%
MCN Corp. 2.7%
Total 29.8%
Average Annual Total Returns
for periods ended March 31, 1997
Class A Shares
One Year -.93%
Since Inception (10/31/94) 14.63%
Class C Shares
One Year 2.75%
Since Inception (10/31/94) 16.15%
Performance Comparison
Comparison of changes in value of $10,000 investment.
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 index used for comparison. Past performance is no
guarantee of future results.
Report of Independent Accountants
To the Board of Directors of Calvert World Values Fund, Inc.
and Shareholders of Calvert Capital Accumulation Fund:
We have audited the accompanying statement of assets and liabilities of
Calvert Capital Accumulation Fund, including the statement of investments, as of
March 31, 1997, and the related statements of operations for the six months then
ended and the year ended September 30, 1996, and the statements of changes in
net assets and financial highlights for the six months ended March 31, 1997, the
year ended September 30, 1996 and the period from October 31, 1994 (commencement
of operations) through September 30, 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, 1997, by correspondence with the custodian. 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 Capital Accumulation Fund as of March 31, 1997, and the results of its
operations, changes in its net assets and financial highlights for the
respective periods stated in the first paragraph, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
May 9, 1997
Equity Securities - 83.3% Shares Value
Biotechnology - 2.0%
Amgen, Inc. * 16,000 $894,000
894,000
Business Equipment and Services - 4.4%
Equifax, Inc. 37,000 1,008,250
Hewlett Packard Co. 17,900 953,175
1,961,425
Capital Goods - 2.1%
Illinois Tool Works, Inc. 11,200 914,200
914,200
Computer - Memory Devices - 2.9%
EMC Corp. * 36,000 1,278,000
1,278,000
Computer - Networks - 3.8%
Bay Networks, Inc. * 13,700 244,888
Cisco Systems, Inc. * 29,500 1,419,688
1,664,576
Computer - Software - 3.3%
Microsoft Corp. * 7,800 715,162
Sterling Software, Inc. * 27,150 750,019
1,465,181
Computer - Systems - 2.1%
Oracle Corp. * 24,387 940,424
940,424
Consumer Products and Services - 2.8%
Newell Co. 36,500 1,222,750
1,222,750
Electrical Equipment and Services - 4.5%
Belden, Inc. 34,200 1,218,375
Sterling Commerce, Inc. * 26,231 760,699
1,979,074
Electronics - Components - 2.6%
Vishay Intertechnology, Inc. 52,095 1,152,602
1,152,602
Electronics - Semiconductors - 5.2%
Intel Corp. 6,500 904,312
Solectron Corp. * 27,700 1,388,462
2,292,774
Equity Securities (Cont'd) Shares Value
Financial Services - 7.8%
Chase Manhattan Corp. 14,124 $1,322,360
Green Tree Financial Corp. 32,000 1,080,000
T. Rowe Price Associates, Inc. 27,500 1,020,938
3,423,298
Health Care - 10.4%
Cardinal Health, Inc. 23,650 1,285,969
Health Care & Retirement Corp. * 34,550 993,312
Johnson & Johnson 10,400 549,900
Pall Corp. 32,700 756,188
United Healthcare Corp. 20,900 995,362
4,580,731
Insurance - 1.9%
AFLAC, Inc. 22,600 847,500
847,500
Leisure - 3.4%
Carnival Corp., Class A 40,150 1,485,550
1,485,550
Medical - 3.3%
ALZA Corp. * 17,800 489,500
Scherer (R.P.) Corp. * 18,800 975,250
1,464,750
Oil and Gas - 2.7%
MCN Corp. 41,700 1,172,812
1,172,812
Property Management - 2.2%
Rouse Co. 33,900 991,575
991,575
Real Estate - 2.4%
Post Properties, Inc. 28,200 1,075,125
1,075,125
Restaurants - 1.2%
Cheesecake Factory, Inc. * 26,300 519,425
519,425
Retail - Department Stores - 2.0%
Nordstrom, Inc. 23,100 874,912
874,912
Retail - Discount and Variety - 4.7%
Caseys General Stores, Inc. 47,400 912,450
Dollar General Corp. 37,037 1,157,406
2,069,856
Equity Securities (Cont'd) Shares Value
Retail - Special Line - 5.6%
Autozone, Inc. * 51,900 $1,167,750
Home Depot, Inc. 24,800 1,326,800
2,494,550
Total Equity Securities (Cost $35,699,827) 36,765,090
Principal
Repurchase Agreements - 10.2% Amount
Union Bank of Switzerland: 6.70%, dated 3/31/97,
due 4/1/97
(Collateral: $4,659,612, FHLMC, 8.00%, 3/1/23) $4,500,000 4,500,000
Total Repurchase Agreements (Cost $4,500,000) 4,500,000
TOTAL INVESTMENTS (Cost $40,199,827) - 93.5% 41,265,090
Other assets and liabilities, net - 6.5% 2,858,357
Net Assets - 100% $44,123,447
Assets
Investments in securities, at value $36,765,090
Repurchase Agreements 4,500,000
Cash 1,949,305
Receivable for securities sold 848,805
Receivable for shares sold 156,738
Interest and dividends receivable 27,071
Other assets 17,294
Total assets 44,264,303
Liabilities
Payable for shares redeemed 52,588
Payable to Calvert Asset Management Co., Inc. 36,374
Payable to Calvert Administrative Services Co. 3,919
Payable to Calvert Shareholder Services, Inc. 13,118
Payable to Calvert Distributors, Inc. 15,491
Accrued expenses and other liabilities 19,366
Total liabilities 140,856
Net assets $44,123,447
Net Assets Consist of:
Paid-in capital applicable to the following shares of common stock,
250,000,000 shares of $0.01 par value authorized for Class A
and Class C combined:
Class A: 1,929,072 shares outstanding $37,528,132
Class C: 145,701 shares outstanding 2,892,342
Accumulated net realized gain (loss) on investments 2,637,710
Net unrealized appreciation (depreciation) on investments 1,065,263
Net assets $44,123,447
Net Asset Value per Share
Class A (based on net assets of $41,069,737) $21.29
Class C (based on net assets of $3,053,710) $20.96
Net Investment Income
Investment Income
Interest income $22,803 $33,542
Dividend income 109,065 94,791
Total investment income 131,868 128,333
Expenses
Investment advisory fee 177,369 243,241
Transfer agency fees and expenses 77,552 134,497
Distribution Plan expenses:
Class A 72,378 96,724
Class C 15,686 27,695
Directors' fees and expenses 3,072 2,366
Administrative fees 22,248 30,405
Custodian fees 23,059 53,679
Registration fees 19,016 47,117
Reports to shareholders 31,340 32,864
Professional fees 2,576 5,338
Miscellaneous 12,882 16,798
Total expenses 457,178 690,724
Fees paid indirectly (23,059) (53,679)
Net expenses 434,119 637,045
Net Investment Income (Loss) (302,251) (508,712)
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) 3,711,819 (770,972)
Change in unrealized appreciation or depreciation (5,901,118) 4,563,488
Net Realized and Unrealized Gain
(Loss) on Investments (2,189,299) 3,792,516
Increase (Decrease) in Net Assets
Resulting From Operations $(2,491,550) $3,283,804
Increase (Decrease)
in Net Assets
Operations
Net investment income (loss) $(302,251) $(508,712) $(110,326)
Net realized gain (loss) 3,711,819 (770,972) 678,368
Change in unrealized appreciation
or depreciation (5,901,118) 4,563,488 2,402,893
Increase (Decrease) in
Net Assets Resulting
From Operations (2,491,550) 3,283,804 2,970,935
Distributions to shareholders from
Net investment income:
Class A Shares - - (4,761)
Net realized gain:
Class A Shares - (495,825) -
Class C Shares - (67,810) -
Total distributions - (563,635) (4,761)
Capital share transactions:
Shares sold:
Class A Shares 13,167,135 30,827,635 14,367,141
Class C Shares 763,792 2,840,269 1,914,520
Reinvestment of distributions:
Class A Shares - 477,674 4,761
Class C Shares - 66,109 -
Shares redeemed:
Class A Shares (9,640,965) (10,158,587) (1,047,166)
Class C Shares (673,033) (1,877,841) (102,790)
Total capital share transactions 3,616,929 22,175,259 15,136,466
Total Increase (Decrease)
in Net Assets 1,125,379 24,895,428 18,102,640
Net Assets
Beginning of period 42,998,068 18,102,640 -
End of period $44,123,447 $42,998,068 $18,102,640
Capital Share Activity
Shares sold:
Class A Shares 592,465 1,470,804 808,632
Class C Shares 35,012 137,319 97,638
Reinvestment of distributions:
Class A Shares - 23,450 304
Class C Shares - 3,242 -
Shares redeemed:
Class A Shares (430,246) (477,461) (58,876)
Class C Shares (30,948) (91,346) (5,216)
Total capital share activity 166,283 1,066,008 842,482
Note A-ignificant Accounting Policies
General: The Calvert Capital Accumulation Fund (the "Fund"), a series of
Calvert World Values Fund, Inc., 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, which
commenced operations on October 31, 1994, offers Class A and Class C shares of
capital stock. 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.
Effective October 1, 1996, the fiscal year-end of the Fund changed from
September 30 to March 31.
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 rice 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 Directors.
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.
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.
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 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.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
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 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 Directors of the Fund.
For its services, the Advisor receives a monthly fee based on an annual rate of
.80% of the Fund's average daily net assets. Effective January 1997, the Fund
began paying a monthly performance fee of plus or minus up to .15%, on an annual
basis, of average daily net assets of the performance period depending on the
Fund's performance compared to the S&P Mid-Cap 400 Index.
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Fund for an annual fee, payable monthly,
of .10% of the average daily net assets of the Fund.
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 1.00% annually of average daily net assets of each Class A and Class C,
respectively.
The Distributor received $49,218 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 Director who is not affiliated with the Advisor receives an annual fee
of $4,000 plus $1,000 for each Board and Committee meeting attended. Director's
fees are allocated to each of the funds served.
Note C-Investment Activity
During the year, purchases and sales of investments, other than short-term
securities, were $46,760,213 and $48,539,079, respectively.
The cost of investments owned at March 31, 1997 was substantially the same
for federal income tax and financial reporting purposes. Net unrealized
appreciation aggregated $1,065,263, of which $1,852,570 related to appreciated
securities and $787,307 related to depreciated securities.
Class A Shares
Net asset value, beginning $22.55 $21.48 $15.00
Income from investment operations
Net investment income (loss) (.14) (.24) (.11)
Net realized and unrealized gain (loss) (1.12) 1.88 6.61
Total from investment operations (1.26) 1.64 6.50
Distributions from
Net investment income - - (.02)
Net realized gain - (.57) -
Total distributions - (.57) (.02)
Total increase (decrease)
in net asset value (1.26) 1.07 6.48
Net asset value, ending $21.29 $22.55 $21.48
Total return* (5.59%) 7.92% 43.40%
Ratios to average net assets:
Net investment income (loss) (1.27%)(a) (1.56%) (1.55%(a)
Total expenses 1.96%(a) 2.16% 2.35%(a)
Net expenses 1.86%(a) 1.98% 2.06%(a)
Expenses reimbursed - - .05%(a)
Portfolio turnover 117% 114% 95%
Average commission rate paid $.0541 $.0563 -
Net assets, ending (in thousands) $41,070 $39,834 $16,111
Number of shares outstanding,
ending (in thousands) 1,929 1,767 750
Class C Shares
Net asset value, beginning $22.34 $21.55 $15.00
Income from investment operations
Net investment income (loss) (.27) (.55) (.15
Net realized and unrealized gain (loss) (1.11) 1.91 6.70
Total from investment operations (1.38) 1.36 6.55
Distributions from
Net investment income - - -
Net realized gain - (.57) -
Total distributions - (.57) -
Total increase (decrease)
in net asset value (1.38) .79 6.55
Net asset value, ending $20.96 $22.34 $21.55
Total return* (6.18%) 6.56% 43.67%
Ratios to average net assets:
Net investment income (loss) (2.56%)(a) (2.82%) (3.13%)(a)
Total expenses 3.25%(a) 3.42% 3.79%(a)
Net expenses 3.14%(a) 3.24% 3.50%(a)
Expenses reimbursed - - 2.79%(a)
Portfolio turnover 117% 114% 95%
Average commission rate paid $.0541 $.0563 -
Net assets, ending (in thousands) $3,054 $3,164 $1,992
Number of shares outstanding,
ending (in thousands) 146 142 92
(a) Annualized
This ratio reflects total expenses before reduction for fees paid indirectly;
such reductions are included in the ratio of net expenses.
*Total return does not reflect deduction of Class A front-end sale charge.
** From October 31, 1994, inception.
