March 31, 1998
SEMI-ANNUAL
REPORT
CALVERT NEW VISION
SMALL CAP FUND
Table of Contents
President's Letter 1
Portfolio Manager Remarks 2
Report of Independent Accountants 4
Schedule of Investments 5
Statement of Assets and Liabilities 7
Statement of Operations 8
Statements of Changes in Net Assets 9
Notes to Financial Statements 10
Financial Highlights 13
<PAGE>
CALVERT NEW VISION
SMALL CAP FUND
Principal Underwriter
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000 North
Bethesda, Maryland 20814
To Open an Account
800-368-2748
Yields and Prices
Calvert Information Network
(24 hours, 7 days a week)
800-368-2745
Service for Existing Account
Shareholders: 800-368-2745
Brokers: 800-368-2746
TDD for Hearing Impaired
800-541-1524
Branch Office
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified or
Overnight Mail
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105-1807
Calvert Group Web-Site
Address: http://www.calvertgroup.com
This report is intended to provide fund information to shareholders. It is not
authorized for distribution to prospective shareholders unless preceded or
accompanied by a prospectus.
Dear Shareholders:
At the end of 1997, a financial crisis in the developing nations of Southeast
Asia emerged as a threat to this historic bull market. Market pundits sounded
the warning bell, and fund managers cautioned investors to check their
expectations and confirm their objectives. However, as has been the case of
late, each new precipice turns out to be a launching pad for a new flight
upward.
Virtually every sector of the US equity market turned in double-digit returns
for the first quarter of 1998. Looking beyond the US, most international
markets also posted strong gains, notably the troubled Pacific Rim countries,
which snapped back sharply, and the Western European markets of Germany,
France and Great Britain. We're pleased to note that almost every Calvert
Group fund also reported strong absolute and relative returns.
The strength of the global stock market is due in large part to the
fundamental strength of major economies around the world. Favorable investment
conditions of low inflation and an expanding economy have so far helped the
market work through concerns for the consequences of Southeast Asia's
financial troubles and worries that companies' earnings growth may not be as
robust.
This protracted bull market has shown us time and again that its strength
should not be underestimated. For investors, its ability
to defy prediction reinforces the soundness of a long-term
approach that focuses on investors' goals rather than short-term market
trends.
Thank you for choosing Calvert Group. We appreciate your business and your
confidence in our investment programs.
Sincerely,
Barbara J. Krumsiek
President and CEO
April 24, 1998
<PAGE>
Portfolio Statistics
March 31, 1998
Investment Performance
6 Months 12 Months
ended ended
3/31/98 3/31/98
New Vision
Small Cap Fund 3.54% 35.31%
Russell 2000
Index TR 6.37% 42.02%
Lipper Small-Cap
Funds Average 5.32% 43.53%
Ten Largest Stock Holdings
% of Net Assets
Comdisco, Inc. 3.81%
National Data Corp. 3.77%
Genesee & Wyoming, Inc.,
Class A 3.27%
Fluke Corp. 3.02%
Sun Healthcare Group, Inc. 2.82%
Iteq, Inc. 2.75%
Health Management Systems, Inc. 2.51%
Eltron International, Inc. 2.46%
Polaroid Corp. 2.44%
Elan Corp. PLC, ADR 2.36%
Total 29.21%
Investment performance is for Class A shares and does not reflect the deduction
of any front-end sales charge.
TR represents total return.
Source: Lipper Analytical Services, Inc.
<PAGE>
JAMES AWAD of AWAD and associates
Would you comment on the Fund's results for the six-month period ending
March 31, 1998?
The Fund's performance during the past six months breaks neatly in half.
During the last three months of 1997, we were challenged by fallout from the
Asian currency crisis, which caused investors to seek shelter in the stocks of
large, well-known companies, as well as our need to restructure the portfolio
after taking the reigns from the former manager at the end of September. Our
efforts and shareholders' patience were rewarded in the second half of this
reporting period, when the small-cap market resumed its upward course and a
number of our stock picks turned in good gains. For the first quarter of 1998,
the Fund generated a total return of 8.16%, compared to a 10.06% return for
the Russell 2000 Index.
The timing of the Fund's rally couldn't have been much better for
shareholders who came aboard as a result of our merger with the Strategic Growth
Fund. The merger occurred on December 12, 1997. We welcome all new shareholders.
Specifically which companies helped or hindered overall returns? On the positive
side, our largest holding, Comdisco, turned in strong gains. The company leases
and sells computers and other high-tech equipment. Also doing their part to
boost returns were Health Management Systems, Furniture Brands International,
Network Long Distance and Sano Corporation, a recent acquisition of the Irish
pharmaceutical company, Elan.
Companies sold at a profit during the quarter included C.H. Robinson
Worldwide, Ovid Technologies and Shared Medical Systems. The railroad holding
company Genesee & Wyoming, Inc. was down amid general concerns for this sector
resulting from Union Pacific's logistics woes. Eltron International, makers of
bar code printers, was punished for reporting below-expectations earnings for
the fourth quarter of 1997. Sun Healthcare Group, a provider of long-term
healthcare services, was off after being downgraded by Merrill Lynch.
Were you able to find attractive investment candidates despite the fact that
stock prices have been on a protracted uphill climb?
Yes. In the small-cap arena, we continued to find fundamentally sound,
well-run companies trading at a discount to their intrinsic value. As events in
Asia settle down and investors begin to return to fundamental analysis, we
expect small-cap stocks will outperform large-caps. The companies we select are
likely to be market or niche leaders, have healthy balance sheets, positive and
growing cash flows and significant management ownership. As examples, we point
to portfolio holdings Comdisco; National Data Corporation, an information
systems provider; and the jam company, J.M. Smucker. We expect to hold these
stocks for several years.
What's your outlook for the balance of 1998?
Our companies should continue to benefit from the strong domestic economy. We
are in a period of low inflation with moderate growth and a budget surplus
while consumer confidence remains high though not over stimulated. Further, US
companies, particularly small caps, are efficient and well positioned to take
advantage of those strengths through 1998. We are off to a good start in 1998
and are optimistic about the future.
April 24, 1998
<PAGE>
PORTFOLIO STATISTICS
March 31, 1998
Average Annual Total Returns
Class A Shares
as of 3/31/98
One year 28.86%
Since inception 2.58%
(1/31/97)
Class C Shares
as of 3/31/98
One year 34.69%
Since inception 6.55%
(1/31/97)
Performance Comparison
Comparison of change in value of $10,000 investment.
Line graph here showing comparison of Funds from 2/1/97 to 3/31/98
Calvert New Vision Small Cap Fund (A) $10,274
Calvert New Vision Small Cap Fund (B) $10,452
Russell 2000 Index TR $13,203
Lipper Small-Cap Funds Index $12,452
Total returns assume reinvestment of dividends and reflect the deduction of the
Fund's maximum front-end sales charge of 4.75%. No sales charge has been
applied to the indices used for comparison.
Past performance is no guarantee of future results.
<PAGE>
<PAGE>
STATEMENT OF NET ASSETS
March 31, 1998
Equity Securities - 86.8% Shares Value
Auto/Truck - 1.1%
Miller Industries, Inc. * 154,600 $1,130,512
1,130,512
Banks - 2.1%
Doral Financial Corp. 69,500 2,093,688
2,093,688
Communications - 1.1%
Periphonics Corp. * 85,000 1,091,719
1,091,719
Computer Services - 2.1%
Crystal Dynamics, Inc., Series D + 13,334 62,403
Scansource, Inc. * 97,000 2,037,000
2,099,403
Computer Technology - 3.2%
EA Industries, Inc. * 148,700 855,025
Printronix, Inc. * 46,000 770,500
Transact Technologies, Inc. * 163,200 1,509,600
3,135,125
Consulting Services - 3.8%
Comdisco, Inc. 86,500 3,773,562
3,773,562
Data Processing - 3.8%
National Data Corp. 90,000 3,740,625
3,740,625
Drugs and Pharmaceuticals - 2.7%
Dynamic Healthcare Technologies * 144,600 356,981
Elan Corp. PLC, ADR * 36,200 2,339,425
2,696,406
Electrical Equipment and Components - 1.8%
Ametek, Inc. 27,550 824,778
WPI Group, Inc. * 117,750 971,438
1,796,216
Electronics - 2.5%
Eltron International, Inc. * 99,500 2,437,750
2,437,750
Entertainment - 2.6%
Ascent Entertainment Group, Inc. * 72,000 742,500
Cinar Films, Inc., Class B * 19,100 814,138
Gaylord Entertainment Co. 27,000 965,250
2,521,888
<PAGE>
Equity Securities (Cont'd) Shares Value
Food - 2.4%
Corn Products International, Inc. * 20,000 $717,500
Smucker (J.M.) Co., Class B 65,300 1,648,825
2,366,325
Health Care Facilities - 3.6%
Aviron * 32,500 751,562
Sun Healthcare Group, Inc. * 150,000 2,793,750
3,545,312
Health Care Management Services - 3.7%
American Retirement Corp. * 53,000 1,205,750
Health Management Systems, Inc. * 199,000 2,487,500
3,693,250
Hotel / Motel - 0.8%
Servico, Inc. * 35,000 739,375
739,375
Household Furnishing - 4.1%
Falcon Products, Inc. 58,200 763,875
Furniture Brands International, Inc. * 50,000 1,609,375
Heilig Meyers Co. 119,000 1,673,438
4,046,688
Insurance - 1.8%
Gryphon Holdings, Inc. * 99,200 1,773,200
1,773,200
Leisure - 2.4%
K2, Inc. 104,500 2,331,656
2,331,656
Machinery and Engineering - 4.2%
JLG Industries, Inc. 91,300 1,517,862
Middleby Corp. * 155,000 1,104,375
Somanetics Corp. * 86,500 513,594
Tokheim Corp. * 56,000 1,022,000
4,157,831
Medical Products - 2.0%
ATS Medical, Inc. * 255,000 2,008,125
2,008,125
Oil and Gas - 0.9%
Comstock Resources, Inc. * 77,000 837,375
837,375
Photography - 2.4%
Polaroid Corp. 55,000 2,420,000
2,420,000
Production Technology Equipment - 3.0%
Fluke Corp. 125,500 2,996,312
2,996,312
<PAGE>
Equity Securities (Cont'd) Shares Value
Publishing - 2.4%
Houghton Mifflin Co. 37,000 $1,179,375
Wiley (John) & Sons, Inc., Class A 22,350 1,230,647
2,410,022
Railroads - 3.3%
Genesee & Wyoming, Inc., Class A * 123,000 3,244,125
3,244,125
Real Estate Investment Trusts - 8.0%
Excel Realty Trust, Inc. 25,000 890,625
Haagen Alexander Properties, Inc. 74,400 1,246,200
Innkeepers USA Trust 65,000 1,064,375
LTC Properties, Inc. 49,000 946,312
Meridian Industrial Trust, Inc. 72,300 1,735,200
Mid Atlantic Realty Trust 149,000 2,030,125
7,912,837
Retail - 3.4%
Syms Corp. * 156,000 2,203,500
U.S. Vision, Inc. * 117,500 1,204,375
3,407,875
Service Organizations - 7.5%
Iteq, Inc. * 191,000 2,721,750
Lanvision Systems, Inc. * 181,700 908,500
Mac Gray Corp. * 45,500 756,438
New Horizons Worldwide, Inc. * 104,500 1,371,562
Right Management Consultants, Inc. * 41,000 486,875
Startek, Inc. * 103,050 1,236,600
7,481,725
Telecommunications - 3.0%
Network Long Distance, Inc. * 108,000 1,647,000
Nextlink Communications, Inc., Class A * 42,000 1,349,250
Sourcecom Corp., Series B, Preferred * + 100,000 0
2,996,250
Transportation / Logistics - 1.1%
Robinson (C.H.) Worldwide, Inc. 44,000 1,144,000
1,144,000
Total Equity Securities (Cost $82,310,384) 86,029,177
Principal
Repurchase Agreements - 7.7% Amount
State Street Bank: 5.60%, dated 3/31/98,
due 4/1/98
(Collateral: $7,768,919, FNNT,
5.71%, 3/22/00) $7,600,000 7,600,000
Total Repurchase Agreements
(Cost $7,600,000) 7,600,000
Corporate Obligations - 2.3%
American Retirement Corp., 5.75%, 10/1/02 1,000,000 1,101,250
Assisted Living Concepts, 6.00%, 11/1/02 1,000,000 1,132,660
Total Corporate Obligations (Cost $2,027,660) 2,233,910
<PAGE>
Principal
Community Loan Notes - 2.3% Amount Value
Cascadia Revolving Loan Fund, 4.00%, 4/30/99 + $75,000 $74,576
Dorchester Bay Economic Development Corp.,
4.50%, 6/30/00 + 100,000 98,589
Illinois Facilities Fund, 4.00%, 9/30/99 + 250,000 242,568
Low Income Housing Fund, 4.00%, 1/12/99 + 350,000 333,886
Mercy Loan Fund, 4.50%, 1/13/01 + 200,000 191,492
Minnesota Non Profits Assistance Fund, 3.00%,
4/30/01 + 200,000 198,716
Northeast South Dakota Energy Conservation
Corp.,
4.00%, 4/30/99 + 75,000 74,576
Ohio Community Development Finance Fund,
5.00%, 5/31/99 + 500,000 495,555
Rural Community Assistance Fund, 4.00%,
6/28/99 + 100,000 98,482
Self Help Ventures Fund, 4.50%, 3/31/00 + 300,000 283,800
Unitarian Universalist Affordable Housing
Corp.,
4.50%, 6/28/99 + 80,000 78,871
Washington Area Community Investment Fund,
4.50%, 6/28/99 + 100,000 98,589
Working Capital Management, 4.00%, 9/30/02 + 50,000 48,514
Total Community Loan Notes (Cost $2,380,000) 2,318,214
Certificates of Deposit - 0.3%
Self Help Credit Union, 5.35%, 2/24/99 100,000 100,000
South Shore Bank, 5.30%, 2/9/99 200,000 199,108
Total Certificates of Deposit (Cost $300,000) 299,108
TOTAL INVESTMENTS (Cost $94,618,044) - 99.4% 98,480,409
Other assets in excess of liabilities - 0.6% 571,036
Net Assets - 100% $99,051,445
Net Assets Consist of:
Paid-in capital applicable to the following shares of beneficial
interest; unlimited number of no par shares authorized:
Class A: 5,468,804 shares outstanding 82,506,465
Class C: 663,102 shares outstanding 9,676,466
Undistributed net investment income (loss) (200,116)
Accumulated net realized gain (loss) on investments 3,206,265
Net unrealized appreciation (depreciation) on investments 3,862,365
Net Assets $99,051,445
Net Asset Value Per Share
Class A (based on net assets of $88,368,232) $16.16
Class C (based on net assets of $10,683,213) $16.11
+ Restricted securities
* Non-income producing.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1998
Net Investment Income
Investment Income
Interest Income $105,266
Dividend income295,170
Total investment income 400,436
Expenses
Investment advisory fee 264,389
Transfer agency fees and expenses 128,250
Distribution Plan expenses:
Class A 65,023
Class C 33,675
Trustee's fees and expenses 4,076
Administrative fees 29,377
Custodian fees 12,928
Registration fees 50,261
Reports to shareholders 44,739
Professional fees 11,690
Miscellaneous 678
Reimbursement from Advisor (54,606)
Total expenses 590,480
Fees paid indirectly (12,928)
Net expenses 577,552
Net Investment Income (Loss) (177,116)
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on:
Securities 3,455,411
Options written 2,299
3,457,710
Change in unrealized appreciation or depreciation 3,388,685
Net Realized and Unrealized Gain
(Loss) on Investments 6,846,395
Increase (Decrease) in Net Assets
Resulting From Operations $6,669,279
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Jan. 31, 1997
Ended (Inception)
March 31, to Sept. 30,
Increase (Decrease) in Net Assets 1998 1997
Operations
Net investment income (loss) $(177,116) $(11,644)
Net realized gain (loss) 3,457,710 (8,459)
Change in unrealized appreciation
or depreciation 3,388,685 473,680
Increase (Decrease) in Net Assets
Resulting From Operations 6,669,279 453,577
Distributions to shareholders from
Net investment income:
Class A Shares (23,000) -
Net realized gain:
Class A Shares (204,302) -
Class C Shares (27,040) -
Total distributions (254,342) -
Capital share transactions:
Shares sold:
Class A Shares 6,087,999 3,645,491
Class C Shares 966,941 542,095
Shares issued from merger:
Class A Shares 82,605,320 -
Class C Shares 10,607,601 -
Reinvestment of distributions:
Class A Shares 209,341 -
Class C Shares 26,432 -
Shares redeemed:
Class A Shares (9,275,792) (765,893)
Class C Shares (2,169,550) (297,054)
Total capital share transactions 89,058,292 3,124,639
Total Increase (Decrease) in Net Assets 95,473,229 3,578,216
Net Assets
Beginning of period 3,578,216 -
End of period (including undistributed net
investment
income (loss) of $(200,116) and $0,
respectively.) $99,051,445 $3,578,216
Capital Share Activity
Shares sold:
Class A Shares 400,563 262,408
Class C Shares 63,905 40,453
Shares issued from merger:
Class A Shares 5,456,474 -
Class C Shares 718,100 -
Reinvestment of distributions:
Class A Shares 14,308 -
Class C Shares 1,810 -
Shares redeemed:
Class A Shares (610,879) (54,070)
Class C Shares (141,081) (20,085)
Total capital share activity 5,903,200 228,706
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 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.
The Fund originally issued an audited report dated March 31, 1997. The Fund has
since established a year-end dated September 30, and issued an annual report
dated September 30, 1997.
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 $90,214,376, 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. 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. 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 fees are 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,
$109,243 was payable at period end. The Advisor voluntarily waived and
reimbursed the Fund for advisory fees, administrative fees, and other operating
expenses of $54,606. 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, $8,344 was payable at period 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%
and 1.00% annually of average daily net assets of each Class A and Class C,
respectively. Under the terms of the agreement, $27,857 was payable at period
end. The Distributor received $25,822 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.
Under the terms of the agreement, $8,368 was payable at period end.
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 $23,540,612 and $21,939,033, respectively. The cost
of investments owned at March 31, 1998 was substantially the same for federal
income tax and financial reporting purposes. Net unrealized appreciation
aggregated $3,862,365, of which $9,579,333 related to appreciated securities and
$5,716,968 related to depreciated securities.
Note D- Line of Credit
Effective July 1, 1997, 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 March 31, 1998.
Note E- Subsequent Events
Effective April 1, 1998, the Fund will begin 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. Class B
shares have a higher level of expenses than Class A shares, including higher
Distribution Plan expenses.
Effective June 1, 1998, the Fund will convert its existing Class C shares to
new Class C shares. Class C shares will be sold without a front-end sales
charge. With certain exceptions, the Fund may impose a deferred sales charge
on shares sold within one year. Class C shares will have a higher level of
expenses than Class A shares, including higher Distribution Plan expenses.
<PAGE>
FINANCIAL HIGHLIGHTS
Periods Ended
March 31, Sept. 30,
Class A Shares 1998 1997^
Net asset value, beginning $15.65 $15.00
Income from investment operations
Net investment income (loss) .03 (.05)
Net realized and unrealized
gain (loss) .52 .70
Total from investment operations .55 .65
Distributions from
Net investment income - -
Net realized gain (.04) -
Total distributions (.04) -
Total increase (decrease) in net
asset value .51 .65
Net asset value, ending $16.16 $15.65
Total return* 3.54% 4.33%
Ratios to average net assets:
Net investment income (loss) (.49%)(a) (.71%)(a)
Total expenses+ 1.89%(a) 1.36% (a)
Net expenses 1.86%(a) .90%(a)
Expenses reimbursed .16%(a) 3.36%(a)
Portfolio turnover 41% 196%
Average commission rate paid $.0501 $.0488
Net assets, ending (in thousands) $88,368 $3,260
Number of shares outstanding,
ending (in thousands) 5,469 208
Periods Ended
March 31, Sept. 30,
Class C Shares 1998 1997^
Net asset value, beginning $15.62 $15.00
Income from investment operations
Net investment income (loss) (.52) (.10)
Net realized and unrealized
gain (loss) 1.05 .72
Total from investment operations .53 .62
Distributions from
Net investment income - -
Net realized gain (.04) -
Total distributions (.04) -
Total increase (decrease) in net
asset value .49 .62
Net asset value, ending $16.11 $15.62
Total return* 3.39% 4.13%
Ratios to average net assets:
Net investment income (loss) (1.50%)(a) (.95%)(a)
Total expenses+ 2.97%(a) 1.47%(a)
Net expenses 2.75%(a) 1.15%(a)
Expenses reimbursed .37%(a) 9.44%(a)
Portfolio turnover 41% 196%
Average commission rate paid $.0501 $.0488
Net assets, ending (in thousands) $10,683 $318
Number of shares outstanding,
ending (in thousands) 663 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 Class A front-end sales charge.
^ From January 31, 1997 inception
<PAGE>
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
CWVF International Equity Fund
New Vision Small Cap Fund
New Africa Fund
<PAGE>
March 31, 1998
SEMI-ANNUAL
REPORT
CALVERT INCOME FUND
<PAGE>
CALVERT INCOME FUND
To Open an Account
800-368-2748
Yields and Prices
Calvert Information Network
(24 hours, 7 days a week)
800-368-2745
Service for Existing Account
Shareholders: 800-368-2745
Brokers: 800-368-2746
TDD for Hearing Impaired
800-541-1524
Branch Office
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified or
Overnight Mail
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105-1807
Calvert Group Web-Site
Address: 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 shareholders 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
CWVF International Equity Fund
New Vision Small Cap Fund
New Africa Fund
<PAGE>
Table of Contents
President's Letter 1
Portfolio Manager Remarks 2
Schedule of Investments 4
Statement of Assets and Liabilities 6
Statement of Operations 7
Statements of Changes in Net Assets 8
Notes to Financial Statements 9
Financial Highlights 12
Dear Shareholders:
At the end of 1997, a financial crisis in the developing nations of Southeast
Asia emerged as a threat to this historic bull market. Market pundits sounded
the warning bell, and fund managers cautioned investors to check their
expectations and confirm their objectives. However, as has been the case of
late, each new precipice turns out to be a launching pad for a new flight
upward.
Virtually every sector of the US equity market turned in double-digit returns
for the first quarter of 1998. Looking beyond the US, most international
markets also posted strong gains, notably the troubled Pacific Rim countries,
which snapped back sharply, and the Western European markets of Germany,
France and Great Britain. We're pleased to note that almost every Calvert
Group fund also reported strong absolute and relative returns.
The strength of the global stock market is due in large part to the
fundamental strength of major economies around the world. Favorable investment
conditions of low inflation and an expanding economy have so far helped the
market work through concerns for the consequences of Southeast Asia's
financial troubles and worries that companies' earnings growth may not be as
robust.
This protracted bull market has shown us time and again that its strength
should not be underestimated. For investors, its ability
to defy prediction reinforces the soundness of a long-term
approach that focuses on investors' goals rather than short-term market
trends.
Thank you for choosing Calvert Group. We appreciate your business and your
confidence in our investment programs.
Sincerely,
Barbara J. Krumsiek
President and CEO
April 24, 1998
<PAGE>
Portfolio Statistics
March 31, 1998
Investment Performance
6 Months 12 Months
ended ended
3/31/98 3/31/98
Income Fund 5.69% 14.01%
Lehman Aggregate
Bond Index TR 4.55% 11.99%
Lipper Corporate
Debt Funds
BBB Rated Average 4.24% 12.65%
Maturity Schedule
Weighted Average
3/31/98 9/30/97
15 years 14 years
SEC Yields
30 days ended
3/31/98 9/30/97
5.78% 4.72%
Portfolio Quality Structure
AA 9%
A 18%
NR 2%
BB 21%
BBB 49%
Cash Equivalents 1%
Investment performance does not reflect the deduction of any front-end sales
charge. TR represents total return.
Source: Lipper Analytical Services, Inc.
NR: Obligation is not rated by a commercial credit rating service, such as
Moody's Investors Services, Inc., or Standard & Poor's Corporation; obligation
has been determined to be of appropriate quality for the Portfolio by Calvert
Asset Management Company, Inc. the Investment Advisor.
<PAGE>
GREG HABEEB
OF CALVERT ASSET MANAGEMENT COMPANY
What were the leading economic factors affecting Fund management and
performance?
The stage was set by a robust economy, continued low levels of inflation and
declining interest rates. Financial problems in Southeast Asia played a role
in keeping rates low. Market observers predicted a glut of lower priced goods
would flood the market, as these nations tried to export their way out of the
currency crisis.
The Federal Reserve maintained its neutral monetary policy by not stepping in
to ratchet rates either up or down. Given the instability in Asia, the Fed did
not want to act prematurely but will be closely monitoring the strength of the
economy to see whether problems in Asia are in fact working to slow the US
economy's expansion.
Was the Fund structured to take advantage of the decline in rates?
Yes. In light of Calvert Asset Management's bullish outlook for the bond
market, we had somewhat lengthened the Fund's maturity during the last six
months. Prices of longer-term securities rise more in response to a decline in
interest rates than those of shorter-term securities. This slightly more
aggressive approach allowed us to participate more fully in the decline in rates
and resulting price appreciation than our more conservative peers. Our six- and
12-month returns were above the returns for the average corporate bond fund
tracked by Lipper Analytical Services, Inc.
Which sectors of the bond market outperformed?
Yields on Treasury securities dipped severely below those on comparable
maturity corporate bonds as the Asian currency crisis brought about a "flight
to quality." The widening spread between Treasuries and corporates was a
challenge to our management style. We employ a practice of frequent relative
value trading, an active approach that requires us to aggressively seek out
and capitalize on short-term trading opportunities. Given that investors'
appetites for non-Treasury securities was weak, corporations postponed new
issuance and the pool of eligible securities dried up.
When rates hit a three-year low going into the first quarter of 1998, pent-up
supply came to the market. This issuance was well-received and the spread
between Treasuries and corporates narrowed somewhat.
What's your near-term outlook for the
bond market?
We expect bonds to trade near current levels until the Fed's next move. The
Fed is weighing the economy's continued strength - demonstrated by strong
consumer spending and a robust housing market - against concerns for
inflation. So far, the rise in wages has not spilled over into consumer
prices, most likely because of reduced costs for energy, information
technology products and some other consumer goods.
We remain bullish on the bond market. Inflation still appears muted, which
makes it less likely the Fed will need to take bold action to raise rates and
slow the pace of the economy's growth. We're also encouraged by the government's
continued ability to finance debt with current revenues. This leads to reduced
issuance of Treasury securities and tighter supply conditions in the bond
market, which puts downward pressure on yields and upward pressure on prices.
April 24, 1998
<PAGE>
PORTFOLIO STATISTICS
March 31, 1998
Average Annual Total Returns
As of 3/31/98
One year 9.74%
Five year 5.96%
Ten year 8.51%
Since inception 9.76%
(10/12/82)
Performance Comparison
Comparison of change in value of $10,000 investment.
Line graph here showing comparison from 4/1/98 to 3/31/98
Calvert Income Fund $22,683
Lehman Aggregate Bond Index $23,550
Lipper Corp. Debt Funds BBB Rated Index $23,500
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.
<PAGE>
SCHEDULE OF INVESTMENTS
March 31, 1998
Principal
Debt Securities - 107.3% Amount Value
Corporate Bonds - 97.9%
BNP US Funding LLC, 7.738%, 12/31/49 $2,500,000 $2,495,890
Cable and Wireless Communication, 6.625%,
3/6/05 2,000,000 2,010,740
Conseco, Inc., 6.40%, 2/10/03 2,000,000 1,989,700
Fuji JGB Investment LLC, 9.87%, 12/31/49 1,500,000 1,490,625
Hilton Hotels Corp., 7.20%, 12/15/09 1,000,000 975,400
Hospitality Properties Trust, 7.00%, 3/1/08 600,000 589,950
HSB Capital 1, 6.50375%, 7/15/27 1,000,000 990,930
Mark IV Industries, Inc., 7.50%, 9/1/07 1,000,000 1,000,000
Medpartners Inc., 6.875%, 9/1/00 1,000,000 944,600
Merita Bank Ltd., 7.15%, 12/29/49 1,500,000 1,518,021
Meyer Fred Inc., 7.375, 3/1/05 2,500,000 2,493,750
National Australia Bank, Ltd., 6.40%, 12/10/07 1,000,000 1,005,750
North American Mortgage, 7.315%, 8/25/03 3,000,000 3,081,180
Petroleum Geo Services, 6.625%, 3/30/08
6.625%, 3/30/08 2,000,000 1,991,620
7.125%, 3/30/28 4,500,000 4,506,840
Riggs Capital II, 8.875%, 3/15/27 3,200,000 3,451,616
Socgen Real Estate Co., LLC, 7.64%, 12/29/49 600,000 591,750
Sovereign Bancorp, Inc., 6.75%, 9/1/00 1,500,000 1,495,170
TU Electric Cap IV, 6.55%, 1/30/37 2,000,000 1,931,340
United Utilities Plc., 6.45%, 4/1/08 1,000,000 995,030
Zurich Capital Trust, 8.376%, 6/1/37 3,000,000 3,256,350
38,806,252
Mortgage Securities - 0.0%
Government National Mortgage Association,
Pool 137518,
11.00%, 10/15/15 1,527 1,734
1,734
Municipal Bonds - 4.5%
Chickasaw Nation Oklahoma Certificate of
Participation,
10.00%, 8/1/03 * 1,310,000 786,000
Dauphin County Pennsylvania Health
Center General
Authority Revenue Bond, 7.25%, 9/1/10 1,000,000 1,000,610
1,786,610
US Treasury - 4.9%
US Treasury Notes, 6.125%, 8/15/07 1,900,000 1,941,008
1,941,008
Total Debt Securities (Cost $43,200,789) 42,535,604
Equity Securities - 2.6% Shares Value
Preferred Stocks
Highwood Properties, Inc., Series A,
Preferred, 8.625% 1,000 $1,044,470
Total Equity Securities (Cost $1,039,520) 1,044,470
TOTAL INVESTMENTS (Cost $44,240,309)
- 109.9% 43,580,074
Securities Sold Short - (13.8%) (5,499,152)
Other assets in excess of liabilities - 3.9% 1,556,830
Net Assets - 100% $39,637,752
SCHEDULE OF SECURITIES SOLD SHORT
March 31, 1998
US Treasury Shares Value
US Treasury Notes, 6.125%, 8/15/07 1,900,000 $1,941,008
US Treasury Notes, 5.50%, 2/15/08 800,000 789,888
US Treasury Bonds, 6.125%, 11/15/27 2,700,000 2,768,256
Total Securities Sold Short
(Proceeds $5,515,956) 5,499,152
* This security is in default and was valued by the Board of Trustees. See
Note A.
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
Assets Value
Investments in securities, at value $43,580,074
Receivable for securities sold 12,026,545
Receivable for shares sold 58,255
Interest and dividends receivable 572,359
Other assets 10,649
Total assets 56,247,882
Liabilities
Payable to Bank 345,692
Payable for securities purchased 10,509,873
Payable for shares redeemed 7,079
Payable to Calvert Asset Management Co.,Inc. 32,709
Payable to Calvert Shareholders Services, Inc. 1,288
Payable to Calvert Distributors, Inc. 5,072
Securities sold short, at value
(proceeds $5,515,956) 5,499,152
Payable for interest receivable for securities
sold short 181,499
Accrued expenses and other liabilities 27,766
Total liabilities 16,610,130
Net assets $39,637,752
Net Assets Consist of:
Paid in capital applicable to 2,326,909
outstanding shares of beneficial interest,
unlimited number of no par shares authorized 39,016,304
Undistributed net investment income 164
Accumulated net realized gain (loss) on investments 1,264,715
Net unrealized appreciation (depreciation)
on investments (643,431)
Net Assets $39,637,752
Net Asset Value Per Share $17.03
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1998
Net Investment Income
Investment Income
Interest income $1,313,775
Dividend income 41,288
Total investment income 1,355,063
Expenses
Investment advisory fee 137,424
Transfer agency fees and expenses 29,641
Distribution plan expenses 29,448
Trustees' fees and expenses 2,652
Custodian fees 24,240
Registration fees 10,805
Reports to shareholders 16,292
Professional fees 30,366
Miscellaneous 8,343
Total expenses 289,211
Fees paid indirectly (24,240)
Net expenses 264,971
Net Investment Income 1,090,092
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) on securities 1,701,749
Change in unrealized appreciation or
depreciation (591,931)
Net Realized and Unrealized Gain
(Loss) on Investments 1,109,818
Increase (Decrease) in Net Assets
Resulting From Operations $2,199,910
See notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Six Months
Ended Year Ended
March 31, September 30,
Increase (Decrease) in Net Assets 1998 1997
Operations
Net investment income $1,090,092 $2,510,768
Net realized gain (loss) 1,701,749 1,530,802
Change in unrealized appreciation
or depreciation 591,931) 306,476
Increase (Decrease) in Net Assets
Resulting From Operations 2,199,910 4,348,046
Distributions to shareholders from
Net investment income:
Class A Shares (1,089,928) (2,507,902)
Class C Shares - (2,866)
Net realized gain:
Class A Shares (1,457,042) (13,944)
Total distributions (2,546,970) (2,524,712)
Capital share transactions:
Shares sold:
Class A Shares 2,457,414 3,817,591
Class C Shares - 4,736
Reinvestment of distributions:
Class A Shares 2,140,638 2,067,569
Class C Shares - 2,459
Shares redeemed:
Class A Shares (3,915,350) (12,829,618)
Class C Shares - (1,393,740)
Total capital share transactions 682,702 (8,331,003)
Total Increase (Decrease)
in Net Assets 335,642 (6,507,669)
Net Assets
Beginning of period 39,302,110 45,809,779
End of period (including undistributed
net investment
income of $164 and $0, respectively) $39,637,752 $39,302,110
Capital Share Activity
Shares sold:
Class A Shares 142,785 228,602
Class C Shares - 291
Reinvestment of distributions:
Class A Shares 125,757 123,607
Class C Shares - 151
Shares redeemed:
Class A Shares (227,098) (764,324)
Class C Shares - (85,584)
Total capital share activity 41,444 (497,257)
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note A - Significant Accounting Policies
General: The Calvert Income Fund (the "Fund"), a series of The Calvert Fund,
is registered under the Investment Company Act of 1940 as a non-diversified,
open-end management investment company. The operations of each series are
accounted for separately. 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.
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.
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. However, because of
the inherent uncertainty of valuation, those estimated values may differ
significantly form the values that would have been used had a ready market of
the investments existed, and the differences could be material.
At March 31, 1998, $786,000 or 2.0% of net assets, were valued by 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. 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 options 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.
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.
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% annually of the Fund's average daily net assets.
The Distributor received $9,198 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 year, purchases and sales of investments, other than short-term
securities, were $691,995,644 and $677,839,686, respectively. The cost of
investments owned at March 31, 1998 was substantially the same for federal
income tax and financial reporting purposes. Net unrealized depreciation
aggregated $643,431, of which $99,197 related to appreciated securities and
$742,628 related to depreciated securities.
Note D - Line of Credit
Effective July 1, 1997, 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 March 31, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS
Periods Ended
March. 31, Sept. 30, Sept. 30,
Class A Shares 1998 1997 1996
Net asset value, beginning $17.20 $16.47 $16.82
Income from investment operations
Net investment income .48 1.02 1.01
Net realized and unrealized
gain (loss) .48 .74 (.32)
Total from investment operations .96 1.76 .69
Distributions from
Net investment income (.48) (1.02) (1.01)
Net realized gain (.65) (.01) -
In excess of net realized gain - - (.03)
Total distributions (1.13) (1.03) (1.04)
Total increase (decrease) in net
asset value (.17) .73 (.35)
Net asset value, ending $17.03 $17.20 $16.47
Total return* 5.69% 11.03% 4.21%
Ratios to average net assets:
Net investment income 5.55%(a) 6.04% 6.02%
Total expenses+ 1.47%(a) 1.33% 1.26%
Net expenses 1.35%(a) 1.26% 1.23%
Portfolio turnover 2,008% 2,961% 153%
Net assets, ending (in thousands) 39,638 $39,302 $44,431
Number of shares outstanding,
ending (in thousands) 2,327 2,285 2,698
Years Ended
Sept. 30, Sept. 30, Sept. 30,
Class A Shares 1995 1994 1993
Net asset value, beginning $15.68 $18.41 $17.50
Income from investment operations
Net investment income 1.11 1.16 1.23
Net realized and unrealized
gain (loss) 1.14 (2.42) .91
Total from investment operations 2.25 (1.26) 2.14
Distributions from
Net investment income (1.11) (1.16) (1.23)
Net realized gain - (.31) -
Total distributions (1.11) (1.47) (1.23)
Total increase (decrease) in net
asset value 1.14 (2.73) .91
Net asset value, ending $16.82 $15.68 $18.41
Total return* 14.90% (6.94%) 12.74%
Ratios to average net assets:
Net investment income 6.89% 6.86% 6.93%
Total expenses+ 1.26% N/A N/A
Net expenses 1.23% 1.07% 1.00%
Portfolio turnover 135% 34% 25%
Net assets, ending (in thousands) $42,637 $45,936 $53,134
Number of shares outstanding,
ending (in thousands) 2,535 2,929 2,886
<PAGE>
FINANCIAL HIGHLIGHTS
Periods Ended
Oct. 29, Sept. 30,
Class C Shares 1996 1996
Net asset value, beginning $16.19 $16.56
Income from investment operations
Net investment income .01 .74
Net realized and unrealized
gain (loss) .31 (.42)
Total from investment operations .32 .32
Distributions from
Net investment income (.04) (.66)
In excess of net realized gain - (.03)
Total distributions (.04) (.69)
Total increase (decrease) in net
asset value .28 (.37)
Net asset value, ending $16.47 $16.19
Total return* 2.01% 1.96%
Ratios to average net assets:
Net investment income 3.65%(a) 3.96%
Total expenses+ 3.29%(a) 3.37%
Net expenses 3.26%(a) 3.34%
Expenses reimbursed .63%(a) -
Portfolio turnover 2% 153%
Net assets, ending (in thousands) $1,064 $1,379
Number of shares outstanding,
ending (in thousands) 65 85
Years Ended Sept. 30, Sept. 30,
Class C Shares 1995 1994^
Net asset value, beginning $15.63 $17.35
Income from investment operations
Net investment income .81 .57
Net realized and unrealized
gain (loss) 1.09 (1.67)
Total from investment operations 1.90 (1.10)
Distributions from
Net investment income (.97) (.62)
In excess of net realized gain - -
Total distributions (.97) (.62)
Total increase (decrease) in net
asset value .93 (1.72)
Net asset value, ending $16.56 $15.63
Total return* 12.58% (5.47%)
Ratios to average net assets:
Net investment income 4.71% 5.62%(a)
Total expenses+ 3.37% N/A
Net expenses 3.34% 2.65%(a)
Expenses reimbursed .69% 7.29%(a)
Portfolio turnover 135% 34%
Net assets, ending (in thousands) $766 $413
Number of shares outstanding,
ending (in thousands) 46 26
(a) Annualized
* Total retufn is not annualized and does not reflect deduction of any front-
end load sales charge.
+ Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
^ From March 1, 1994 inception
N/A Disclosure not applicable to prior periods.
