8 C A L V E R T F U N D S w w w . c a l v e r t . c o m
With money market yields at historically low levels,1 and an
eventual rise in interest rates on the horizon, now may be an
opportune time to consider the potential benefits of short-term
bond funds. They can be a smart way to increase your return
potential over cash, although they do entail additional credit
risk, specifically the risk of issuer default and credit downgrades.
Historically, short-term bond funds have a relatively low return
correlation with longer-term bond funds, as well as stock funds.
So adding those to an investment mix of stocks and longer-
dated bond fund allocations can help diversify a portfolio,
potentially reducing overall risk and volatility.
Calvert manages two high-quality, short-term diversified bond
funds, both of which have competitive long-term track records:
Calvert	Ultra-Short	Income	Fund and Calvert	Short	Duration
Income	Fund. We turned to Cathy Roy, Calvert Chief Investment
Officer, Fixed-Income, to learn more about the Funds’ invest-
ment strategies and their potential role in investors’ portfolios.
Cathy,	tell	us	more	about	how	these	Funds	are
Calvert uses a relative-value approach—a hallmark of our
in-house fixed-income management team—to manage both
Funds. That strategy entails continually monitoring the market
to “comparison shop” for solid, well-priced bonds with strong
potential for price appreciation and incremental income.
To that end, rigorous credit analysis is essential. Our seasoned
team of credit analysts scrutinizes the financial condition of
the issuer of each security so that our portfolio managers can
evaluate the potential risk and reward of each bond.
In 2009, we took advantage of the high yields offered by
corporate bonds and invested selectively in that sector for both
Funds. Later in the year, as corporates continued to rally, we
began to gradually and selectively trim our positions.
In	view	of	their	shared	relative-value	approach,
what	are	the	main	differ