SEPTEMBER 30, 1998
ANNUAL
REPORT
CALVERT NEW VISION SMALL CAP FUND
<PAGE>
Calvert New Vision
Small Cap Fund
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Suite 1000 North
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Registered, Certified
or Overnight Mail
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105-1807
Web Site
http://www.calvertgroup.com
Principal Underwriter
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000 North
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.
Calvert Group's
Family of Funds
Tax-Exempt Money Market Funds
CTFR Money Market Portfolio
CTFR California Money Market Portfolio
Taxable Money Market Funds
First Government Money Market Fund
CSIF Money Market Portfolio
Balanced Fund
CSIF Managed Growth Portfolio
Municipal Funds
CTFR Limited-Term Portfolio
CTFR Long-Term Portfolio
CTFR Vermont Municipal Portfolio
National Muni. Intermediate Portfolio
California Muni. Intermediate Portfolio
Maryland Muni. Intermediate Portfolio
Virginia Muni. Intermediate Portfolio
Taxable Bond Funds
CSIF Bond Portfolio
Income Fund
Equity Funds
New CSIF Managed Index Portfolio
CSIF Equity Portfolio
Capital Accumulation Fund
CWV International Equity Fund
New Vision Small Cap Fund
New Africa Fund
printed on recycled paper
using soy-based inks
<PAGE>
Table of Contents
President's Letter 1
Portfolio Manager Remarks 2
Report of Independent Accountants 4
Statement of Net Assets 5
Statements of Operations 9
Notes to Financial Statements 12
Financial Highlights 15
Dear Shareholders:
I'd like to take a minute to share with you our views on the current
investment environment and offer some information you can use to put recent
financial market events in perspective.
Today's investment climate reflects an unprecedented confluence of factors:
1. Global economic turmoil. The financial crisis touched off in Asia has
spread, by way of Russia, to emerging markets in Latin America, Africa and
elsewhere. Weakened economies abroad affect the profit outlook for U.S.
companies.
2. Low interest rates in the U.S. The shakeup of world economies and markets
caused investors to seek shelter in the safest securities, especially U.S.
Treasuries. Increased demand for fixed-income securities has pushed Treasury
yields to historic lows.
3. A high level of volatility. The Standard & Poor's 500 Stock Index posted 17
consecutive quarters of positive returns before surprising investors with
negative returns for the third quarter of 1998. Since the end of that quarter,
the S&P 500 has rallied back and, as of this writing, is in positive territory
again for the year.
No one can assure you there won't be further jolts. However, we believe the
underpinnings of the market are solid. Our forecast calls for slower growth in
the U.S., but not a recession, and continued low interest rates. We are also
encouraged by recent progress to implement solutions that should help to take
the pressure off world markets.
You should know that Calvert Group fund managers are working to capitalize on
opportunities, within appropriate levels of risk for each portfolio. This
challenging environment underscores the value of professional money
management, and we certainly appreciate your trust.
Sincerely,
Barbara J. Krumsiek
President and CEO
October 20, 1998
<PAGE>
Calvert New Vision Small Cap Fund Portfolio Statistics
September 30, 1998
Investment Performance
6 Months 12 Months
ended ended
9/30/98 9/30/98
Class A (25.59%) (22.86%)
Class B (25.77% N/A
Class C (25.82%) (23.31%)
Russell 2000
Index TR (23.87%) (19.02%)
Lipper Small-Cap
Funds Average (24.85%) (20.60%)
Ten Largest Stock Holdings
% of Net Assets
Eltron International, Inc. 4.28%
Danaher Corp. 3.65%
National Data Corp. 3.52%
Elan Corp. PLC, ADR 3.24%
Doral Financial Corp. 2.86%
Mid-Atlantic Realty Trust 2.70%
New Horizons Worldwide, Inc. 2.55%
Comdisco, Inc. 2.42%
Genesee & Wyoming, Inc.,
Class A 2.33%
Shared Medical Systems Corp. 2.30%
Total 29.85%
Asset Allocation
Stocks 83%
Bonds 8%
Cash & Cash Equivalents 9%
100%
Investment performance does not reflect the deduction of any front-end or
deferred sales charge.
TR represents total return.
Source: Lipper Analytical Services, Inc.
New subadvisor assumed management of the Fund effective October 1997.
<PAGE>
Portfolio Statistics
September 30, 1998
Average Annual Total Returns
Class A Shares
One year (26.52%)
Since inception (14.75%)
(1/31/97)
Class B Shares
Since inception (29.48%)
(3/31/98)
Class C Shares
One year (24.07%)
Since inception (12.63%)
(1/31/97)
Performance Comparison
Comparison of change in value of $10,000 investment.
Line graph here from 2/1/97 - 9/98:
Calvert New Vision Small Cap Fund (A) $7,645
Calvert New Vision Small Cap Fund (C) $7,966
Lipper Small Cap Fund Index - $9,409
Russell 2000 Index TR - 10,051
Top Five Economic Sectors
% of Equity Holdings
Business Equipment and
Services 19.0%
Health Care 12.3%
Consumer Services 10.2%
Financial Services 8.7%
Technology 6.7%
Total returns assume reinvestment of dividends and reflect the deduction of
the Fund's maximum front-end or deferred sales charge. No sales charge has
been applied to the indices used for comparison. The value of an investment
in Class A & C shares is plotted in the line graph. The value of an
investment in another class of shares would be different.
Past performance is no guarantee of future results.
James Awad
of
AWAD and associates
What impact have global events had on the Fund's performance?
The market volatility brought about by the financial turmoil in Asia and
Russia has worked against the small-cap market. While the stocks in your Fund
generally do not have operating exposure to Asia and Russia, troubles abroad
have driven investors to seek liquidity and security in the most well known
and actively traded companies and in safe-haven fixed-income investments.
The result has been the Standard & Poor's 100 Stock Index, which is comprised
of the largest of the blue chip companies, and U.S. Treasury securities have
posted good returns year-to-date. Momentum investors, meanwhile, have
supported the technology stocks this year. Virtually every other major index
is flat to negative year-to-date with small-cap stocks as a group producing
significant negative returns.
What was your investment strategy?
We have maintained our bottom-up approach and continue to seek out the best
run companies in the small-cap market. We want well-run companies populated
with outstanding management whose stock is selling at a discount to our
calculated fair value. These companies have consistent earnings, healthy
balance sheets, strong operational cash flows and dominate their niche or
market. Further they have stock valuations that are generally below their
industry average. In this market, values are evident at every turn. We have
continued to execute this strategy throughout the year and will continue to do
so in 1999.
How do you view Fund returns relative to your peer group?
Fund returns for the past six- and 12-month periods have been in-line with
those for the average small-cap fund tracked by Lipper Analytical Services.
Our returns are a bit behind the returns for the unmanaged Russell 2000 Stock
Index. Usually during periods of financial stress, the markets reward
investors who buy growth stocks at value prices, but this disciplined approach
has not paid off for investors this year.
What's your outlook for the coming months?
The global marketplace is struggling with a number of issues. Japan continues
to be unwilling to accept that hard decisions must be made and executed;
Russia remains effectively leaderless; Southeast Asian economies are
struggling to regain their footing; Latin America is trying to avoid being
pulled under by the rest of the emerging world's problems; and Europe is
approaching unification. On the home front, we are witnessing a softening
economy, declining consumer confidence and an unusually high level of market
volatility. In the face of these challenging conditions, investors appear to
be making decisions based on fear and greed.
Looking ahead, we expect the domestic economy will perform adequately, and
reason will again take hold. Once investors feel the pain of declining
revenues and profits and realize that prices paid will not be made back
through earnings until the end of the twenty-first century, they will again
focus on fundamentals.
We see the best fundamentals in the small-cap market. These stocks have
suffered despite consistent earnings and revenue growth. Consequently,
relative valuations are at historical lows. As investors cast about for true
value, they will find strong efficient operators with a domestic focus and
cheap stocks in the small-cap market.
October 14, 1998
<PAGE>
Report of Independent Accountants
To the Board of Trustees of The Calvert Fund and Shareholders of Calvert New
Vision Small Cap Fund:
In our opinion, the accompanying statement of net assets and the related
statement of operations, statement of changes in net assets and financial
highlights present fairly, in all material respects, the financial position of
Calvert New Vision Small Cap Fund, (hereafter referred to as the "Fund"), at
September 30, 1998 and the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended and the financial highlights for each of the periods indicated therein,
in conformity with generally accepted accounting principles. Theses financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1998 by correspondence with
custodians provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 6, 1998
<PAGE>
Statement of Net Assets
september 30, 1998
Equity Securities - 82.8% Shares Value
Aerospace/Defense - 1.1%
Kellstrom Industries, Inc. * 57,500 $797,813
797,813
Auto Parts and Equipment - 3.7%
Danaher Corp. 84,502 2,535,060
2,535,060
Banks - 4.8%
Doral Financial Corp. 124,000 1,984,000
Investors Financial Services Corp. 27,800 1,362,200
3,346,200
Communications - 1.8%
Periphonics Corp. * 148,750 1,227,188
1,227,188
Computer Services - 0.1%
Crystal Dynamics, Inc., Series D *+ 13,334 62,403
62,403
Computer Technology - 2.8%
Printronix, Inc. * 61,000 854,000
Transact Technologies, Inc. * 163,200 1,101,600
1,955,600
Consulting Services - 2.4%
Comdisco, Inc. 123,000 1,675,875
1,675,875
Consumer Products - 1.2%
Gibson Greetings, Inc. 40,000 812,500
812,500
Data Processing - 3.5%
National Data Corp. 79,000 2,439,125
2,439,125
Drugs and Pharmaceuticals - 3.4%
Dynamic Healthcare Technologies * 144,600 144,600
Elan Corp. PLC, ADR * 31,200 2,248,350
2,392,950
Electrical Equipment and Components - 1.4%
Ametek, Inc. 32,550 561,488
Richardson Electronics, Ltd. 60,000 420,000
981,488
Electronics - 4.3%
Eltron International, Inc. * 99,500
2,972,563
2,972,563
<PAGE>
Equity Securities (Cont'd) Shares Value
Entertainment - 2.5%
Ascent Entertainment Group, Inc. * 32,000 $256,000
Cinar Films, Inc., Class B * 7,500 134,531
Gaylord Entertainment Co. 44,200 1,317,713
1,708,244
Food - 3.7%
Corn Products International, Inc. * 42,000 1,060,500
Smucker (J.M.) Co., Class B 70,300 1,511,450
2,571,950
Health Care Facilities - 2.4%
Aviron * 37,500 578,906
Sun Financing I, Preferred Convertibles 60,000 748,980
Sun Healthcare Group, Inc. * 50,000 325,000
1,652,886
Health Care Management Services - 3.1%
American Retirement Corp. * 58,000 902,625
Health Management Systems, Inc. * 159,000 1,222,312
2,124,937
Health Care Information Technology - 1.8%
Eclipsys Corp. * 55,000 1,258,125
1,258,125
Hotel / Motel - 0.9%
Servico, Inc. * 85,000 637,500
637,500
Insurance - 2.0%
Gryphon Holdings, Inc. * 99,200 1,388,800
1,388,800
Leisure - 1.5%
K2, Inc. 59,500 1,052,406
1,052,406
Machinery and Engineering - 2.9%
JLG Industries, Inc. 81,300 1,295,719
Somanetics Corp. * 96,500 174,906
Tokheim Corp. * 71,000 514,750
1,985,375
Manufacturing - 0.6%
Hawk Corp, Class A * 45,000 433,125
433,125
Medical Information Systems - 3.3%
Shared Medical Systems Corp. 30,000 1,595,625
Transition Systems, Inc. * 80,000 670,000
2,265,625
Medical Products - 1.9%
ATS Medical, Inc. * 230,000 1,351,250
1,351,250
<PAGE>
Equity Securities (Cont'd) Shares Value
Multi-Sector Companies - 2.7%
Annuity and Life Re Holdings, Ltd. * 60,000 $1,185,000
Cunningham Graphics International, Inc. * 50,500 618,625
Excel Legacy Corp. * 25,000 72,656
1,876,281
Publishing - 4.2%
Houghton Mifflin Co. 50,000 1,550,000
Wiley (John) & Sons, Inc., Class A 22,350 1,373,128
2,923,128
Railroads - 2.3%
Genesee & Wyoming, Inc., Class A * 123,000 1,614,375
1,614,375
Real Estate Investment Trusts - 6.1%
Innkeepers USA Trust 60,000 712,500
LTC Properties, Inc. 64,000 1,116,000
Mid Atlantic Realty Trust 139,000 1,876,500
New Plan Excel Realty Trust, Inc. 24,000 559,500
4,264,500
Retail - 3.6%
Syms Corp. * 146,000 1,514,750
U.S. Vision, Inc. * 117,500 984,062
2,498,812
Service Organizations - 4.3%
Lanvision Systems, Inc. * 181,700 317,975
New Horizons Worldwide, Inc. * 106,500 1,770,562
Startek, Inc. * 103,050 888,806
2,977,343
Telecommunications - 1.5%
IXC Communications, Inc. * 32,378 963,246
Nextlink Communications, Inc., Class A * 2,000 46,750
Sourcecom Corp., Series B, Preferred * + 100,000 0
1,009,996
Transport Services - 1.0%
Dynamex, Inc. 77,500 678,125
678,125
Total Equity Securities (Cost $70,711,900) 57,471,548
Principal
Corporate Obligations - 4.0% Amount Value
American Retirement Corp., 5.75%, 10/1/02 $1,000,000 867,500
Angeion Corp., 7.50%, 4/15/03 1,000,000 1,001,020
Assisted Living Concepts, 6.00%, 11/1/02 1,000,000 866,250
Total Corporate Obligations
(Cost $3,024,884) 2,734,770
Community Loan Notes - 3.2%
Cascadia Revolving Loan Fund,
4.50%, 4/30/99 + 75,000 72,786
Dorchester Bay Economic Development Corp.,
4.50%, 6/30/00 + 100,000 96,391
Illinois Facilities Fund, 4.00%, 9/30/99 + 250,000 237,730
Principal
Community Loan Notes - (Cont'd) Amount Value
Low Income Housing Fund, 4.00%, 1/12/99 + $350,000 $344,260
Mercy Loan Fund, 4.50%, 1/13/01 + 200,000 197,120
Minnesota Non Profits Assistance Fund,
4.00%, 4/30/01 + 200,000 193,590
Northeast South Dakota Energy
Conservation Corp.,
4.00%, 4/30/99 + 75,000 72,586
Ohio Community Development Finance Fund,
5.00%, 5/31/99 + 500,000 484,905
Self Help Ventures Fund, 4.50%, 3/31/00 + 300,000 292,251
Unitarian Universalist Affordable Housing Corp.,
4.50%, 6/28/99 + 80,000 77,075
Washington Area Community Investment Fund,
4.50%, 6/28/99 + 100,000 96,344
Working Capital Management, 4.00%, 9/30/02 + 50,000 47,546
Total Community Loan Notes
(Cost $2,280,000) 2,212,584
Certificates of Deposit - 0.4%
Self Help Credit Union, 5.35%, 2/24/99 100,000 99,581
South Shore Bank, 5.30%, 2/9/99 200,000 199,129
Total Certificates of Deposit
(Cost $300,000) 298,710
Repurchase Agreements - 8.8%
State Street Bank: 5.35%, dated 9/30/98,
due 10/1/98
(Collateral: $6,400,509, U.S.
Treasury, 3.64%, 11/30/00) 6,100,000 6,100,000
Total Repurchase Agreements
(Cost $6,100,000) 6,100,000
Total Investments (Cost $82,416,784) - 99.2% 68,817,612
Other assets in excess of liabilities - 0.8% 567,483
Net Assets - 100% $69,385,095
Net Assets Consist of:
Paid-in capital applicable to the following shares of beneficial
interest; unlimited number of no par shares authorized:
Class A: 5,129,373 shares outstanding $77,344,597
Class B: 43,535 shares outstanding 650,586
Class C: 594,082 shares outstanding 8,630,114
Accumulated net realized gain (loss) on investments (3,641,030)
Net unrealized appreciation (depreciation) on investments (13,599,172)
Net Assets $69,385,095
Net Asset Value Per Share
Class A (based on net assets of $61,765,401) $12.04
Class B (based on net assets of $522,894) $12.01
Class C (based on net assets of $7,096,800) $11.95
+ Restricted securities represents 3.3% of net assets.
* Non-income producing.
See notes to financial statements.
<PAGE>
Statement of Operations
Year ended September 30, 1998
Net Investment Income
Investment Income
Interest Income $273,410
Dividend income (net of foreign taxes of $1,428) 859,189
Total investment income 1,132,599
Expenses
Investment advisory fee 661,145
Transfer agency fees and expenses 314,317
Distribution Plan expenses:
Class A 163,286
Class B 1,508
Class C 79,953
Trustee's fees and expenses 8,814
Administrative fees 73,461
Custodian fees 24,637
Registration fees 88,014
Reports to shareholders 41,481
Professional fees 22,267
Miscellaneous 209
Reimbursement from Advisor (61,061)
Total expenses 1,418,031
Fees paid indirectly (83,240)
Net expenses 1,334,791
Net Investment Income (Loss) (202,192)
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on:
Securities (3,403,528)
Options written 2,299
(3,401,229)
Change in unrealized appreciation or (depreciation) (11,074,307)
Net Realized and Unrealized Gain
(Loss) on Investments (14,475,536)
Increase (Decrease) in Net Assets
Resulting From Operations $(14,677,728)
See notes to financial statements.
<PAGE>
Statements of Changes in Net Assets
January 31,
1997
Year Ended (Inception)
Sept. 30, to Sept. 30,
Increase (Decrease) in Net Assets 1998 1997
Operations
Net investment income (loss) $(202,192) $(11,644)
Net realized gain (loss) (3,401,229) (8,459)
Change in unrealized appreciation
or (depreciation) (11,074,307) 473,680
Increase (Decrease) in Net Assets
Resulting From Operations (14,677,728) 453,577
Distributions to shareholders from
Net investment income:
Class A Shares (23,622) -
Net realized gain:
Class A Shares (204,302) -
Class C Shares (27,040) -
Total distributions (254,964) -
Capital share transactions:
Shares sold:
Class A Shares 14,788,873 3,645,491
Class B Shares 676,583 -
Class C Shares 2,286,844 542,095
Shares issued from merger:
Class A Shares 79,719,091 -
Class C Shares 10,469,904 -
Reinvestment of distributions:
Class A Shares 207,755 -
Class C Shares 26,430 -
Shares redeemed:
Class A Shares (22,901,575) (765,893)
Class B Shares (25,997) -
Class C Shares (4,508,337) (297,054)
Total capital share transactions 80,739,571 3,124,639
Total Increase (Decrease) in Net Assets 65,806,879 3,578,216
Net Assets
Beginning of year 3,578,216 -
End of year $69,385,095 $3,578,216
See notes to financial statements.
<PAGE>
January 31,
Year Ended 1997 (Inception)
Sept. 30, to Sept. 30,
Capital Share Activity 1998 1997
Shares sold:
Class A Shares 985,936 262,408
Class B Shares 45,527 -
Class C Shares 152,487 40,453
Shares issued from merger:
Class A Shares 5,456,474 -
Class C Shares 718,100 -
Reinvestment of distributions:
Class A Shares 14,127 -
Class C Shares 1,810 -
Shares redeemed:
Class A Shares (1,535,502) (54,070)
Class B Shares (1,992) -
Class C Shares (298,683) (20,085)
Total capital share activity 5,538,284 228,706
See notes to financial statements.
<PAGE>
Notes to Financial Statements
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
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 three classes of shares of beneficial interest. Class
A shares are sold with a maximum front-end sales charge of 4.75%. Effective
April 1, 1998, the Fund began to offer Class B shares of beneficial interest.
Class B shares are sold without a front-end sales charge. With certain
exceptions, the Fund will impose a deferred sales charge at the time of
redemption, depending on how long you have owned the shares. Effective June 1,
1998, the Fund converted its existing Class C shares to new Class C shares.
Class C shares are sold without a front-end sales charge. With certain
exceptions, the Fund will impose a deferred sales charge on shares sold within
one year. Class B and Class C shares have a higher level of expenses than
Class A shares, including higher Distribution Plan expenses. 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.
On December 12, 1997, the net assets of Calvert Strategic Growth Fund were
merged into the Fund. The acquisition was accomplished by a tax-free exchange
of 6,174,574 shares of the Fund (valued at $90,188,995) for the 5,697,864
shares of the Calvert Strategic Growth Fund outstanding at December 12, 1997.
The Calvert Strategic Growth Fund's net assets at that date, including
$2,998,545 of unrealized depreciation and $899,711 of undistributed net losses
were combined with those of the Fund. The aggregate net assets of the Fund and
Calvert Strategic Growth Fund immediately before the acquisition were
$4,817,712 and $90,188,995, 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 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. Investments for which market quotations are not
available or deemed inappropriate are valued in good faith under the direction
of the Board of Trustees.
In determining fair value, the Board considers all relevant qualitative and
quantitative information available. These factors are subject to change over
time and are reviewed periodically. The values assigned to fair value
investments are based on available information and do not necessarily
represent amounts that might ultimately be realized, since such amounts depend
on future developments inherent in long-term investments. Further, because of
the inherent uncertainty of valuation, those estimated values may differ
significantly from the values that would have been used had a ready market of
the investments existed, and the differences could be material.
At September 30, 1998, $2,573,697 or 3.7% of net assets, were valued by the
Board of Trustees.
<PAGE>
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. Although risk is mitigated by
the collateral, the Fund could experience a delay in recovering its value and
a possible loss of income or value if the counterparty fails to perform in
accordance with the terms of the agreement.
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.
Risks from writing or purchasing option securities arise from possible
illiquidity of the options market and the movement in the value of the
investment or in interest rates. The risk associated with purchasing options
is limited to the premium originally paid.
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. Investment income, expenses and realized and
unrealized gains and losses are allocated to separate classes of shares based
upon the relative net assets of each class.
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 and transfer agent's fees may be paid indirectly
by credits earned on the Fund's cash on deposit with the bank. Such a 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. Under the terms of
the agreement, $76,626 was payable at year end.
<PAGE>
The Advisor voluntarily waived and reimbursed the Fund for advisory fees,
administrative fees, and other operating expenses of $61,061.
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. Under the terms of the
agreement, $5,727 was payable at year end.
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%, 1.00% and 1.00% annually of average daily net assets of each
Class A, Class B and Class C, respectively. Under the terms of the agreement,
$18,994 was payable at year end.
The Distributor received $62,578 as its portion of the commissions charged on
sales of the Fund's shares.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, is the
shareholder servicing agent for the Fund. Under the terms of the agreement,
$6,397 was payable at year end. National Financial Data Services, Inc., is
the transfer and dividend disbursing agent.
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 year, purchases and sales of investments, other than short-term
securities, were $44,229,605 and $47,367,541, respectively.
The cost of investments owned at September 30, 1998 was substantially the same
for federal income tax and financial reporting purposes. Net unrealized
depreciation aggregated $13,599,172, of which $3,261,655 related to
appreciated securities and $16,860,827 related to depreciated securities.
Note D - Line of Credit
A financing agreement is in place with all Calvert Group Funds and State
Street Bank and Trust Company ("the Bank"). Under the agreement, the Bank is
providing an unsecured line of credit facility, in the aggregate amount of $50
million ($25 million committed and $25 million uncommitted), to be accessed by
the Funds for temporary or emergency purposes only. Borrowings under this
facility bear interest at the overnight Federal Funds Rate plus .50% per
annum. A commitment fee of .10% per annum will be incurred on the unused
portion of the committed facility which will be allocated to all participating
funds. This fee is paid quarterly in arrears. The Fund had no loans
outstanding pursuant to this line of credit at September 30, 1998.
<PAGE>
Financial Highlights
Periods Ended
September 30, September 30,
Class A Shares 1998 1997^
Net asset value, beginning $15.65 $15.00
Income from investment operations
Net investment income (loss) (.02) (.05)
Net realized and unrealized gain (loss) (3.55) .70
Total from investment operations (3.57) .65
Distributions from
Net investment income - -
Net realized gain (.04) -
Total distributions (.04) -
Total increase (decrease) in net asset value (3.61) .65
Net asset value, ending $12.04 $15.65
Total return* (22.86%) 4.33%
Ratios to average net assets:
Net investment income (loss) (.17%) (.71%)(a)
Total expenses+ 1.82% 1.36% (a)
Net expenses 1.71% .90%(a)
Expenses reimbursed .06% 3.36%(a)
Portfolio turnover 68% 196%
Net assets, ending (in thousands) $61,765 $3,260
Number of shares outstanding, ending (in thousands) 5,129 208
Period Ended
September 30,
Class B Shares 1998#
Net asset value, beginning $16.18
Income from investment operations
Net investment income (loss) ( .05)
Net realized and unrealized gain (loss) (4.12)
Total from investment operations (4.17)
Distributions from
Net investment income -
Net realized gain -
Total distributions -
Total increase (decrease) in net asset value (4.17)
Net asset value, ending $12.01
Total return* (25.77%)
Ratios to average net assets:
Net investment income (loss)
(1.39%)(a)
Total expenses+ 3.40%(a)
Net expenses 2.99%(a)
Expenses reimbursed 4.28%(a)
Portfolio turnover 68%
Net assets, ending (in thousands) $523
Number of shares outstanding, ending (in thousands) 44
<PAGE>
Periods Ended
September 30, September 30,
Class C Shares 1998 1997^
Net asset value, beginning $15.62 $15.00
Income from investment operations
Net investment income (loss) (.15) (.10)
Net realized and unrealized gain (loss) (3.48) .72
Total from investment operations (3.63) .62
Distributions from
Net investment income - -
Net realized gain (.04) -
Total distributions (.04) -
Total increase (decrease) in net asset value (3.67) .62
Net asset value, ending $11.95 $15.62
Total return* (23.31%) 4.13%
Ratios to average net assets:
Net investment income (loss) (1.15%) (.95%)(a)
Total expenses+ 2.78% 1.47%(a)
Net expenses 2.64% 1.15%(a)
Expenses reimbursed .16% 9.44%(a)
Portfolio turnover 68% 196%
Net assets, ending (in thousands) $7,097 $318
Number of shares outstanding, ending (in thousands) 594 20
(a) Annualized
+ 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 any front-end or deferred
sales charge.
^ From January 31, 1997 inception.
# From April 1, 1998 inception.
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