<PAGE>
SEC Registration Nos.
2-56809 and 811-2633
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 35 XX
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 35 XX
First Variable Rate Fund for Government Income
(Exact Name of Registrant as Specified in Charter)
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Address of Principal Executive Offices)
Registrant's Telephone Number: (301) 951-4800
William M. Tartikoff, Esq.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
Immediately upon filing XX on March 31, 1998
pursuant to paragraph (b) pursuant to paragraph (b)
60 days after filing on (date)
pursuant to paragraph (a) pursuant to paragraph (a)
of Rule 485.
<PAGE>
First Variable Rate Fund for Government Income
Form N-1A Cross Reference Sheet
Item number Prospectus Caption
1. Cover Page
2. Fund Expenses
3. Financial Highlights
Yield
4. Investment Objective and Policies
Management of the Fund
5. Management of the Fund
6. Alternative Sales Options
Management of the Fund
Dividends and Taxes
7. How to Buy Shares
Management of the Fund
Net Asset Value
When Your Account Will Be Credited
Exchanges
8. Alternative Sales Options
How to Sell Your Shares
9. *
Statement of Additional Information Captions
10. Cover Page
11. Table of Contents
General Information
13. Investment Objective and Strategies
Investment Restrictions
Portfolio Transactions
14. Trustees and Officers
15. Trustees and Officers
16. Investment Advisor
Transfer and Shareholder Servicing Agent
Independent Accountants and Custodians
17. Portfolio Transactions
18. General Information
19. Purchase and Redemption of Shares
Net Asset Value
Financial Statements
20. Tax Matters
21. *
22. Calculation of Yield
23. Financial Statements
* Inapplicable or negative answer
<PAGE>
1
PROSPECTUS --
March 31, 1998
FIRST VARIABLE RATE FUND:
CALVERT FIRST GOVERNMENT MONEY MARKET FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
- -------------------------------------------------------------------------------
INTRODUCTION TO THE FUND
CALVERT FIRST GOVERNMENT MONEY MARKET FUND (the "Fund") is a U.S.
Government-only money market fund that seeks to earn the highest possible yield
consistent with safety, liquidity, and preservation of capital. In pursuing its
objective, the Fund invests only in U.S. Government-backed obligations,
including such obligations subject to repurchase agreements with recognized
securities dealers and banks. The Fund seeks to maintain a constant net asset
value of $1.00 per share. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL
BE SUCCESSFUL IN MEETING ITS INVESTMENT OBJECTIVE OR MAINTAINING A CONSTANT NET
ASSET VALUE OF $1.00 PER SHARE.
TO OPEN AN ACCOUNT
Call your broker, or complete and return the enclosed Account Application.
Minimum investment is $2,000.
The Fund offers three classes of shares, each with different expense levels and
sales charges. You may choose to purchase (i) the original class, Class O
shares, which impose no sales charge either at the time you purchase the shares
("front-end sales charge") or at the time of redemption ("contingent deferred
sales charge," or "CDSC"); or (ii) Class B or C shares, which impose no
front-end sales charge, but may impose a CDSC depending on how long you have
owned the shares. Class B and C shares have a higher level of expenses than
Class O, including 12b-1 fees. Class B and C shares may be purchased only by
exchange from Class B or C shares, respectively, of another Calvert Group Fund.
See "Alternative Sales Options" for further details.
ABOUT THIS PROSPECTUS
Please read this Prospectus before investing. It is designed to provide you with
information you ought to know before investing and to help you decide if the
Fund's goals match your own. Keep this document for future reference.
A Statement of Additional Information ("SAI") for the Fund (dated March 31,
1998) has been filed with the Securities and Exchange Commission and is
incorporated by reference. This free Statement is available upon request from
the Fund: 800-368-2748.
The Commission maintains a website (http://www.sec.gov) that contains the SAI,
material incorporated by reference, and other information regarding registrants
that file electronically with the Commission.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE FEDERAL OR
ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY.
<TABLE>
<S> <C> <C>
TABLE OF Fund Expenses Net Asset Value
CONTENTS Financial Highlights When Your Account Will Be Credited
Investment Objectives and Policies Exchanges
Yield Other Calvert Group Services
Management of the Fund Selling Your Shares
SHAREHOLDER GUIDE: How to Sell Your Shares
How to Buy Shares Dividends and Taxes
</TABLE>
<PAGE>
2
FUND EXPENSES
A. Shareholder Transaction Costs
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Class O Class B Class C
<S> <C> <C> <C>
Sales Load on Purchases None None None
Sales Load on Reinvested Dividends None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption, as applicable) None 5.00%* 1.00%**
Redemption Fees None None None
Exchange Fees None None None
<CAPTION>
B. Annual Fund Operating Expenses - Fiscal Year 1997
(as a percentage of average net assets) Class O Class B Class C
<S> <C> <C> <C>
Management Fees 0.50% 0.50% 0.50%
Rule 12b-1 Service and Distribution Fees None 1.00% 1.00%
Other Expenses 0.32% 0.57% 0.32%
----- ----- -----
Total Fund Operating Expenses(1) 0.82% 2.07% 1.82%
----- ----- -----
----- ----- -----
</TABLE>
*A contingent deferred sales charge is imposed on the proceeds of Class B shares
according to the CDSC schedule of the Fund in which the Class B shares were
originally purchased. That charge is imposed as a percentage of net asset value
at the time of purchase or redemption, whichever is less. See "Calculation of
Contingent Deferred Sales Charge" below.
** A contingent deferred sales charge is imposed on the proceeds of Class C
shares redeemed within one year of the purchase of the Class C shares in the
original Fund. That charge is imposed as a percentage of net asset value at the
time of purchase or redemption, whichever is less. See "Calculation of
Contingent Deferred Sales Charge."
C. Example: You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return (2) redemption at the end of each
period, and (3) for Class B and C shares, payment of maximum
applicable contingent deferred sales charge.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS O $8 $26 $46 $101
CLASS B
Assuming a
complete redemption
at end of period $72 $108 $134 $208
Assuming no
redemption $21 $65 $111 $208
CLASS C
Assuming a
complete redemption
at end of period $29 $57 $99 $214
Assuming no
redemption $18 $57 $99 $214
</TABLE>
THE EXAMPLE, WHICH IS HYPOTHETICAL, SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
- -------------------------
(1)Net Fund Operating Expenses after reduction for fees paid indirectly were
0.80% (Class O).
<PAGE>
3
EXPLANATION OF TABLE: The purpose of the table is to assist you in understanding
the various costs and expenses that an investor in the Fund may bear directly
(shareholder transaction costs) or indirectly (annual fund operating expenses).
A. SHAREHOLDER TRANSACTION COSTS are charges you pay when you buy or sell shares
of the Fund. If you request a wire redemption of less than $1,000, you will be
charged a $5 wire fee.
B. ANNUAL FUND OPERATING EXPENSES are based on the Fund's historical expenses.
Management Fees are paid by the Fund to Calvert Asset Management Company, Inc.
("Investment Advisor") for managing the Fund's investments and business affairs.
The Fund incurs Other Expenses for maintaining shareholder records, furnishing
shareholder statements and reports, and other services. Management Fees and
Other Expenses have already been reflected in the Fund's yield or share price
and are not charged directly to individual shareholder accounts. Please refer to
"Management of the Fund" for further information.
The Class B and Class C Rule 12b-1 fees include an asset-based sales charge.
Thus, long-term Class B or Class C shareholders in the Fund may pay more in
total sales charges than the economic equivalent of the maximum front-end sales
charge permitted by rules of the National Association of Securities Dealers,
Inc. (the "NASD"). In addition to the compensation itemized above (sales charge
and Rule 12b-1 service and distribution fees), certain broker/dealer and/or
their salespersons may receive other compensation for the distribution of the
securities or for services to the Fund. See the Statement of Additional
Information, "Method of Distribution."
FINANCIAL HIGHLIGHTS
The following table provides information about the financial history of the
Fund's Class O shares. It expresses the information in terms of a single share
outstanding throughout each year. No Class B or C shares were outstanding during
the periods presented. The table has been audited by those independent
accountants whose report is included in the Annual Report to Shareholders of the
Fund. The tables should be read in conjunction with the financial statements and
their related notes. The current Annual Report to Shareholders is incorporated
by reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 1996
<S> <C> <C>
Net asset value, beginning of year $1.00 $1.00
----- -----
----- -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income .049 .047
----- -----
DISTRIBUTIONS FROM
Net investment income (.049) (.047)
----- -----
Net asset value, end of year $1.00 $1.00
----- -----
----- -----
Total return (1) 5.00% 4.79%
----- -----
----- -----
Ratio to average net assets
Net investment income 4.88% 4.69%
----- -----
----- -----
Total expenses (2) .82% .86%
----- -----
----- -----
Net expenses .80% .85%
----- -----
----- -----
Net assets, end of year (in thousands) $232,025 $239,420
-------- --------
-------- --------
Number of shares outstanding
ending in thousands 232,514 239,910
------- -------
------- -------
</TABLE>
- -------------------------
(1)Total return has not been audited prior to 1994.
(2)Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
<PAGE>
4
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 1994
<S> <C> <C>
Net asset value, beginning of year $1.000 $1.000
------ ------
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .051 .036
---- ----
DISTRIBUTIONS FROM
Net investment income (.051) (.036)
------ ------
Net asset value, end of year $1.000 $1.000
------ ------
------ ------
Total return (1) 5.22% 3.66%
----- -----
----- -----
Ratio to average net assets
Net investment income 5.04% 3.56%
----- -----
----- -----
Total expenses (2) .89% --
---- ----
---- ----
Net expenses .88% .81%
---- ----
---- ----
Net assets, end of year (in thousands) $241,150 $230,183
-------- --------
-------- --------
Number of shares outstanding at end
of year (in thousands) 241,685 230,618
-------- --------
-------- --------
<CAPTION>
YEAR ENDED DECEMBER 31, 1993 1992
<S> <C> <C>
Net asset value, beginning of year $1.000 $1.000
------ ------
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .027 .033
---- ----
DISTRIBUTIONS FROM
Net investment income (.027) (.033)
------ ------
Net asset value, end of year $1.000 $1.000
------ ------
------ ------
Total return (3) 2.70% 3.40%
----- -----
----- -----
Ratio to average net assets
Net investment income 2.66% 3.30%
----- -----
----- -----
Total expenses (4) -- --
-- --
-- --
Net expenses .81% .82%
---- ----
---- ----
Net assets, end of year (in thousands) $263,260 $314,999
-------- --------
-------- --------
Number of shares outstanding at end
of year (in thousands) 263,930 315,667
-------- --------
-------- --------
</TABLE>
- -------------------------
(1)Total return has not been audited prior to 1994.
(2)Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
(3)Total return has not been audited prior to 1994.
(4)Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
<PAGE>
5
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1991 1990
<S> <C> <C>
Net asset value, beginning of year $1.000 $1.000
------ ------
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .055 .073
---- ----
DISTRIBUTIONS FROM
Net investment income (.055) (.073)
------ ------
Net asset value, end of year $1.000 $1.000
------ ------
------ ------
Total return (1) 5.65% 7.61%
----- -----
----- -----
Ratio to average net assets
Net investment income 5.49% 7.36%
----- -----
----- -----
Total expenses (2) -- --
-- --
-- --
Net expenses .82% .83%
---- ----
---- ----
Net assets, end of year (in thousands) $353,339 $342,206
-------- --------
-------- --------
Number of shares outstanding at end
of year (in thousands) 353,851 342,527
------- -------
------- -------
<CAPTION>
YEAR ENDED DECEMBER 31, 1989 1988
<S> <C> <C>
Net asset value, beginning of year $1.000 $1.000
------ ------
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .082 .067
---- ----
DISTRIBUTIONS FROM
Net investment income (.082) (.067)
------ ------
------ ------
Net asset value, end of year $1.000 $1.000
------ ------
------ ------
Total return (3) 6.57% 6.91%
----- -----
----- -----
Ratio to average net assets
Net investment income 8.21% 6.65%
----- -----
----- -----
Total expenses (4) -- --
-- --
-- --
Net expenses .85% .92%
---- ----
---- ----
Net assets, end of year (in thousands) $359,274 $367,321
-------- --------
-------- --------
Number of shares outstanding at end
of year (in thousands) 359,654 367,725
------- -------
------- -------
</TABLE>
- -------------------------
(1)Total return has not been audited prior to 1994.
(2)Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
(3)Total return has not been audited prior to 1994.
(4)Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
<PAGE>
6
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to earn the highest possible yield consistent with safety,
liquidity, and preservation of capital. In pursuing its objective, the Fund
invests solely in debt obligations issued or guaranteed by the United States,
its agencies or instrumentalities, assignments of interest in such obligations,
and commitments to purchase such obligations ("U.S. Government-backed
obligations"). The Fund may invest in U.S. Government-backed obligations subject
to repurchase agreements with the recognized securities dealers and banks.
U.S. GOVERNMENT OBLIGATIONS
Obligations issued by the U.S. Treasury, such as U.S. Treasury bills, notes and
bonds, are supported by the full faith and credit of the U.S. Government.
Securities issued by the U.S. Government include a variety of Treasury
securities which differ only in their interest rates, maturities, and time of
issuance. In addition, numerous agencies (such as Government National Mortgage
Association, Farmers Home Administration, Federal Housing Administration, and
Small Business Administration) and instrumentalities (such as Federal Home Loan
Mortgage Corporation, Federal National Mortgage Association, Student Loan
Marketing Association and Federal Home Loan Bank) issue or guarantee
obligations. Some of these securities are supported by the full faith and credit
of the U.S. Treasury; others are supported by the right of the issuer to borrow
from the Treasury; still others are supported only by the credit of the
instrumentality.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. In a repurchase agreement, the
Fund buys a security subject to the right and obligation to sell it back at a
higher price. These transactions must be fully secured at all times, but they
involve some credit risk to the Fund if the other party defaults on its
obligation and the Fund is delayed or prevented from liquidating the collateral.
BANK CERTIFICATES OF DEPOSIT
The Fund may also invest in certificates of deposit ("CDs") and other debt
obligations of commercial banks, savings banks, and savings and loan
associations having assets of less than $1 billion, provided that the principal
amount of such certificate is insured in full by the Federal Deposit Insurance
Corporation ("FDIC"). The FDIC presently insures accounts up to $100,000;
interest earned above $100,000 is not insured by the FDIC.
VARIABLE RATE OBLIGATIONS
The Fund may invest in variable and floating rate obligations. Variable rate
obligations have a yield which is adjusted periodically based upon changes in
the level of prevailing interest rates. Floating rate obligations have an
interest rate fixed to a known lending rate, such as the prime rate, and are
automatically adjusted when that rate changes. Variable and floating rate
obligations lessen the capital fluctuations usually inherent in fixed income
investments, to diminish the risk of capital depreciation of investments and
shares; but this also means that should interest rates decline, the yield of
each class of the Fund will decline and the Fund would not have as many
opportunities for capital appreciation of Fund investments.
OTHER POLICIES
Investments in Government-backed securities are subject to certain market risks,
and there is, of course, no assurance that the Fund will be successful in
meeting its investment objective.
The Fund may temporarily borrow money from banks (and pledge its assets to
secure such borrowing) to meet redemption requests. Such borrowing may not
exceed 25% of the value of the Fund's total assets. The Fund has adopted certain
fundamental investment restrictions which are discussed in detail in the
Statement of Additional Information. Unless specifically noted otherwise, the
investment objective, policies and restrictions of the Fund are fundamental and
may not be changed without shareholder approval.
YIELD
YIELD REFERS TO INCOME GENERATED BY AN INVESTMENT OVER A PERIOD OF TIME.
The Fund may advertise "yield" and "effective yield" for each class. Yield
figures are based on historical earnings and are not intended to indicate future
performance. The "yield" of the Fund refers to the actual income generated by an
investment in the Fund over a particular base period, stated in the
advertisement. If the base period is less than one year, the yield will be
"annualized." That is, the amount of income generated by the investment during
the base period is assumed to be generated over a one-year period and is shown
as a percentage of the investment. The
<PAGE>
7
"effective yield" is calculated like yield, but assumes reinvestment of earned
income and accordingly produces a higher figure. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
MANAGEMENT OF THE FUND
THE BOARD OF TRUSTEES SUPERVISES THE ACTIVITIES AND REVIEWS ITS CONTRACTS WITH
COMPANIES THAT PROVIDE THE FUND WITH SERVICES.
Calvert First Government Money Market Fund is a series of First Variable Rate
Fund for Government Income, an open-end diversified management investment
company, organized as a Massachusetts business trust. Since September 1, 1991,
the series has been doing business as Calvert First Government Money Market
Fund.
The Fund is not required to hold annual shareholder meetings, but special
meetings may be called for certain purposes such as electing Trustees, changing
fundamental policies, or approving a management contract. As a shareholder, you
receive one vote for each share you own. Matters affecting classes differently,
such as Distribution Plans, will be voted on separately by the affected Class.
CALVERT GROUP IS ONE OF THE LARGEST INVESTMENT MANAGEMENT FIRMS IN THE
WASHINGTON, D.C. AREA.
Calvert Group, Ltd., parent of the Fund's investment advisor, shareholder
servicing agent, and distributor, is a subsidiary of Acacia Mutual Life
Insurance Company of Washington, D.C. Calvert Group is one of the largest
investment management firms in the Washington, D.C. area. Calvert Group, Ltd.
and its subsidiaries are located at 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814. As of December 31, 1997, Calvert Group managed and
administered assets in excess of $5.0 billion and more than 200,000 shareholder
and depositor accounts.
CALVERT ASSET MANAGEMENT SERVES AS ADVISOR TO THE FUND.
Calvert Asset Management Company, Inc. (the "Advisor") is the Fund's investment
advisor. The Advisor provides the Fund with investment supervision and
management, administrative services and office space; furnishes executive and
other personnel to the Fund; and pays the salaries and fees of all Trustees who
are affiliated persons of the Advisor. The Advisor may also assume and pay
certain advertising and promotional expenses of the Fund and reserves the right
to compensate broker-dealers in return for their promotional or administrative
services.
THE ADVISOR RECEIVES A FEE BASED ON A PERCENTAGE OF THE FUND'S ASSETS.
For its services during fiscal year 1997, the Advisor was entitled, pursuant to
the Investment Advisory Agreement to receive, and did receive 0.50% of the
Fund's average daily net assets as investment advisory fees.
CALVERT DISTRIBUTORS, INC. SERVES AS UNDERWRITER TO MARKET THE FUND'S SHARES.
Calvert Distributors, Inc. ("CDI") is the Fund's principal underwriter and
distributor. Under the terms of its underwriting agreement with the Fund, CDI
markets and distributes the Fund's shares and is responsible for preparing
advertising and sales literature, and printing and mailing prospectuses to
prospective investors.
THE TRANSFER AGENT KEEPS YOUR ACCOUNT RECORDS.
Calvert Shareholder Services, Inc. is the shareholder servicing agent for the
Fund. National Financial Data Services, Inc. ("NFDS"), 1004 Baltimore, Kansas
City, Missouri, 64105, is the transfer and dividend disbursing agent for the
Fund.
SHAREHOLDER GUIDE
OPENING AN ACCOUNT
YOU CAN BUY SHARES OF THE FUND IN SEVERAL WAYS WHICH ARE DESCRIBED HERE.
An account application accompanies this prospectus. A completed and signed
application is required for each new account you open, regardless of the method
you choose for making your initial investment. Additional forms may be required
from corporations, associations, and certain fiduciaries. If you have any
questions or need extra applications, call your broker, or Calvert Group at
800-368-2748.
To invest in any of Calvert's tax-deferred retirement plans, please call Calvert
Group at 800-368-2748 to receive information and the required separate
application.
<PAGE>
8
ALTERNATIVE SALES OPTIONS
The Fund offers three classes of shares:
CLASS O SHARES - NO FRONT-END OR BACK-END LOAD
Class O shares are sold at net asset value with no front-end sales charge at the
time of purchase and no back-end load when they are redeemed.
CLASS B SHARES - BACK-END LOAD OPTION
Class B shares may be purchased only by exchange from Class B shares of another
Calvert Group Fund. Class B shares are sold without a sales charge at the time
of purchase, but are subject to a deferred sales charge upon redemption. The
amount of the contingent deferred sales charge ("CDSC") and the number of years
a purchase is subject to the CDSC, as well as when the Class B shares will
automatically convert to Class A shares all depend on the Fund in which the
original purchase was made.
CLASS C SHARES - LEVEL LOAD OPTION
Class C shares may be purchased only by exchange from Class C shares of another
Calvert Group Fund. Class C shares are sold without a front-end sales charge at
the time of purchase. They are subject to a deferred sales charge if they are
redeemed within one year after purchase of the Class C shares in the original
Fund.
CLASS B AND C SHARES HAVE HIGHER EXPENSES.
Class B and C bear some of the costs of selling their respective shares under
Distribution Plans with respect to its Class B and C shares pursuant to Rule
12b-1 under the Investment Company Act of 1940. Class O has no Distribution Plan
expenses, while payments under the Class B and C Distribution Plan are 1.00%
annually of the average daily net asset attributable to their respective
classes.
CLASS O SHARES
Class O shares are sold with no front-end sales charge at the time of purchase
and no back-end load when they are redeemed. CDI does not receive any
compensation from the Fund with respect to Class O shares, although from its own
resources CDI may pay dealers services fees of up to 0.20% of the Class O
average daily net assets maintained by such dealers.
CLASS B SHARES
Class B shares are offered at net asset value, without a front-end sales charge.
With certain exceptions, the Fund will impose a deferred sales charge, according
to the schedule of the original Fund. If imposed, the deferred sales charge is
deducted from the redemption proceeds otherwise payable to you. The deferred
sales charge is retained by CDI. See "Calculation of Contingent Deferred Sales
Charges and Waiver of Sales Charges" below.
Class B shares will automatically convert to Class O shares, according to the
conversion schedule of the Class B shares of the original Fund. Class O shares
are subject to a lower Distribution Plan charge. The Class B shares so converted
will no longer be subject to the higher expenses borne by Class B shares.
Because the net asset value per share of the Class O shares may be higher or
lower than that of the Class B shares at the time of conversion, although the
dollar value will be the same, a shareholder may receive more or less Class O
shares than the number of Class B shares converted. Under current law, it is the
Advisor's opinion that such a conversion will not constitute a taxable event
under federal income tax law. In the event that this ceases to be the case, the
Board of Trustees will consider what action, if any, is appropriate and in the
best interests of the Class B shareholders.
CLASS B DISTRIBUTION PLAN
The Portfolio has adopted a Distribution Plan with respect to its Class B shares
(the "Class B Distribution Plan"), which provides for payments at an annual rate
of up to 1.00% of the average daily net asset value of Class B shares, to pay
expenses of the distribution of Class B shares. Amounts paid by the Fund under
the Class B Distribution Plan are used to pay a distribution fee of 0 .75% to
CDI; and to pay a service fee at an annual rate of 0.25% of the average daily
net asset value of shares sold.
CLASS C SHARES
Class C shares are offered at net asset value, without a front-end sales charge.
With certain exceptions, the Portfolio may impose a deferred sales charge of
1.00% on shares redeemed during the first year after purchase of the Class C
<PAGE>
9
shares in the original Fund. If imposed, the deferred sales charge is deducted
from the redemption proceeds otherwise payable to you. The deferred sales charge
is retained by CDI. See "Calculation of Contingent Deferred Sales Charges and
Waiver of Sales Charges" below.
CLASS C DISTRIBUTION PLAN
The Portfolio has adopted a Distribution Plan with respect to its Class C shares
(the "Class C Distribution Plan"), which provides for payments at an annual rate
of up to 1.00% of the average daily net asset value of Class C shares, to pay
expenses of the distribution and servicing of Class C shares. Amounts paid by
the Fund under the Class B Distribution Plan are used to pay a distribution fee
of 0.75% to CDI; and to pay a service fee at an annual rate of 0.25% of the
average daily net asset value of shares sold.
CALCULATION OF CONTINGENT DEFERRED SALES CHARGE AND WAIVER OF SALES CHARGES
Class B and Class C shares that are redeemed will not be subject to a contingent
deferred charge to the extent that the value of such shares represents (1)
reinvestment of dividends or capital gains distributions, or (2) capital
appreciation of shares redeemed. Any contingent deferred sales charge is imposed
on the net asset value of the shares at the time of redemption of the Fund
shares, or the net asset value of the Class B or Class C shares in the original
Fund at the time of their purchase, whichever is lower. Upon request for
redemption, shares not subject to the contingent deferred sales charge will be
redeemed first. Thereafter, shares held the longest will be the first to be
redeemed.
The contingent deferred sales charge on Class B Shares will be waived in the
following circumstances: (1) redemption upon the death or disability of the
shareholder, plan participant, or beneficiary ("disability" shall mean a total
disability as evidenced by a determination by the federal Social Security
Administration); (2) minimum required distributions from retirement plan
accounts for shareholders 70 1/2 and older (with the maximum amount subject to
this waiver being based only upon the shareholder's Calvert retirement
accounts); (3) return of an excess contribution or deferral amounts, pursuant to
sections 408(d)(4) or (5), 401(k)(8), or 402)(g)(2), or 401(m)(6) of the
Internal Revenue Code; (4) involuntary redemptions of accounts under procedures
set forth by the Fund's Board of Trustees; (5) a single annual withdrawal under
a systematic withdrawal plan of up to 10% per year of the shareholder's account
balance (minimum account balance $50,000 to establish).
ARRANGEMENTS WITH DEALERS AND OTHERS
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing registered
representatives who have sold or are expected to sell a minimum dollar amount of
shares of the Portfolio and/or shares of other Portfolios underwritten by CDI.
CDI may make expense reimbursements for special training of a dealer's
registered representatives, advertising or equipment, or to defray the expenses
of sales contests. Eligible marketing and distribution expenses may be paid
pursuant to the Class B and C Rule 12b-1 Distribution Plan and in compliance
with the rules of the NASD. Dealers and others may receive different levels of
compensation depending on which class of shares they sell.
NET ASSET VALUE
THE FUND'S CLASS O SHARES ARE SOLD WITHOUT A SALES CHARGE.
Net asset value, or "NAV", refers to the worth of one share. NAV is computed by
adding the value of a Fund's investments plus cash and other assets, deducting
liabilities and then dividing the result by the number of shares outstanding.
The NAV is calculated as of the close of the Fund's business day, which
coincides with the closing of the regular session of the New York Stock Exchange
(normally 4:00 p.m. Eastern time). The Fund is open for business each day the
New York Stock Exchange is open. The Fund securities are valued according to the
"amortized cost" method, which is intended to stabilize the NAV at $1.00 per
share.
All purchases of Fund shares will be confirmed and credited to your account in
full and fractional shares (rounded to the nearest 1/100 of a share). The Fund
may send monthly statements in lieu of immediate confirmations of purchases and
redemptions.
HOW TO BUY SHARES
<TABLE>
<CAPTION>
METHOD NEW ACCOUNTS ADDITIONAL INVESTMENTS
<S> <C> <C>
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the Fund payable to the Fund
<PAGE>
10
and mail it with your and mail it with your
application to: investment slip to:
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas City, MO Kansas City, MO
64141-6544 64141-6739
BY REGISTERED, CERTIFIED, OR OVERNIGHT MAIL:
Calvert Group Calvert Group
c/o NFDS, 6th Floor c/o NFDS, 6th Floor
1004 Baltimore 1004 Baltimore
Kansas City, MO Kansas City, MO
64105-1807 64105-1807
Through Your Broker $2,000 minimum $250 minimum
At the Calvert Visit the Calvert Office to make investments by check.
Office See back cover page for the address.
</TABLE>
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR FINANCIAL PROFESSIONAL, OR CALVERT GROUP
AT 800-368-2745
<TABLE>
<S> <C> <C>
By Exchange $2,000 minimum $250 minimum
</TABLE>
(From your account in another Calvert Group Fund)
When opening an account by exchange, your new account must be established with
the same name(s), address and taxpayer identification number as your existing
Calvert account.
<TABLE>
<S> <C> <C>
By Bank Wire $2,000 minimum $250 minimum
By Calvert Money Not Available for $50 minimum
Controller* Initial Investment
</TABLE>
*Please allow sufficient time for Calvert Group to process your initial request
for this service, normally 10 business days. The maximum transaction amount is
$300,000, and your purchase request must be received by 4:00 p.m. Eastern time.
WHEN YOUR ACCOUNT WILL BE CREDITED
BEFORE YOU BUY SHARES, PLEASE READ THE FOLLOWING INFORMATION TO MAKE SURE YOUR
INVESTMENT IS ACCEPTED AND CREDITED PROPERLY.
All of your purchases must be made in U.S. dollars and checks must be drawn on
U.S. banks. No cash will be accepted. The Fund reserves the right to suspend the
offering of shares for a period of time or to reject any specific purchase
order. If your check is not paid, your purchase will be canceled and you will be
charged a $10 fee plus costs incurred by the Fund. When you purchase by check or
with Calvert Money Controller, those funds will be on hold for up to 10 business
days from the date of receipt. During that period, redemptions against those
funds (including drafts) will not be honored. To avoid this collection period,
you can wire federal funds from your bank, which may charge you a fee.
Your purchase will be processed at the net asset value calculated after your
order is received and accepted. The Portfolio attempts to maintain a constant
net asset value of $1.00 per share. Except in the case of telephone orders,
investors whose payments are received in or converted into federal funds by
12:30 p.m. Eastern time by the custodian will receive the dividend declared that
day. If your wire purchase is received after 12:30 p.m. Eastern time, your
account will begin earning dividends on the next business day. A telephone order
placed to Calvert Institutional Marketing Services by 12:30 p.m. Eastern time
will become effective at the price determined at 5 p.m. Eastern time and the
shares purchased will receive the dividend declared on Fund shares that day if
federal funds are received by the custodian by 5 p.m. Eastern time. Exchanges
begin earning dividends the next business day after the exchange request is
received by mail or by telephone. Purchases received by check will begin earning
dividends the next business day after they are processed to the account. As a
convenience, check purchases can be received at Calvert's offices for overnight
mail delivery to the transfer agent and will be credited the next business day
or upon receipt. Any check purchase received without an investment slip may
cause delayed crediting.
<PAGE>
11
EXCHANGES
EACH EXCHANGE REPRESENTS THE SALE OF SHARES OF ONE FUND AND THE PURCHASE OF
SHARES OF ANOTHER. THEREFORE, YOU COULD REALIZE A TAXABLE GAIN OR LOSS ON THE
TRANSACTION.
If your investment goals change, the Calvert Group Funds has a variety of
investment alternatives that includes common stock funds, tax-exempt and
corporate bond funds, and money market funds. The exchange privilege is a
convenient way to buy shares in other Calvert Group Funds in order to respond to
changes in your goals or in market conditions. Before you make an exchange from
a Fund or Portfolio, please note the following:
- - Call your broker or a Calvert representative for information and a
prospectus for any of Calvert's other Funds registered in your state. Read
the prospectus of the Fund or Portfolio into which you want to exchange for
relevant information, including class offerings.
- - Complete and sign an application for an account in that Fund or Portfolio,
taking care to register your new account in the same name and taxpayer
identification number as your existing Calvert account(s). Exchange
instructions may then be given by telephone if telephone redemptions have
been authorized and the shares are not in certificate form.
- - Shares on which you have already paid a sales charge or shares acquired by
reinvestment of dividends or distributions at Calvert Group may be
exchanged into another Fund at no additional charge.
- - Shares may only be exchanged for shares of the same Class of another
Calvert Group Fund.
- - No CDSC is imposed on exchanges of shares subject to a CDSC at the time of
the exchange. The CDSC is imposed at the time the shares acquired by the
exchange are redeemed, applying the CDSC schedule of the original Fund.
The Fund reserves the right to terminate or modify the exchange privilege
with 60 days' written notice.
OTHER CALVERT GROUP SERVICES
CALVERT INFORMATION NETWORK
Calvert Group has around-the-clock telephone service and website at
http://www.calvertgroup.com that lets existing customers obtain prices,
performance information, account balances, and by telephone only, authorize
transactions.
CALVERT MONEY CONTROLLER
CALVERT MONEY CONTROLLER ELIMINATES THE DELAY OF MAILING A CHECK OR THE EXPENSE
OF WIRING FUNDS. YOU CAN REQUEST THIS FREE SERVICE ON YOUR APPLICATION.
This service allows you to authorize electronic transfers of money to purchase
or sell shares. You use Calvert Money Controller like an "electronic check" to
move money ($50 to $300,000) between your bank account and your Calvert Group
account with one phone call. Allow two business days after the call for the
transfer to take place; for money recently invested, allow normal check clearing
time (up to 10 business days) before redemption proceeds are sent to your bank.
You may also arrange systematic monthly or quarterly investments (minimum $50)
into your Calvert Group account. After you give us proper authorization, your
bank account will be debited to purchase Fund shares. A debit entry will appear
on your bank statement. If you would like to make arrangements for systematic
monthly or quarterly redemptions from your Calvert Group account, call your
broker or Calvert for more information.
TELEPHONE TRANSACTIONS
CALVERT MAY RECORD ALL TELEPHONE CALLS.
You may purchase, redeem, or exchange shares, wire funds and use Calvert Money
Controller by telephone if you have pre-authorized service instructions. You
automatically have telephone privileges unless you elect otherwise. The Fund,
the transfer agent, the shareholder servicing agent and their affiliates are not
liable for acting in good faith on telephone instructions relating to your
account, so long as they follow reasonable procedures to determine that the
telephone instructions are genuine. Such procedures may include recording the
telephone calls and requiring some form of personal identification. You should
verify the accuracy of telephone transactions immediately upon receipt of your
confirmation statement.
<PAGE>
12
OPTIONAL SERVICES
COMPLETE THE APPLICATION FOR THE EASIEST WAY TO ESTABLISH SERVICES.
The easiest way to establish optional services on your Calvert Group account is
to select the options you desire when you complete your account application. If
you wish to add other options later, you may have to provide us with additional
information and a signature guarantee. Please call your broker or Calvert
Investor Relations at 800-368-2745 for further assistance. For our mutual
protection, we may require a signature guarantee on certain written transaction
requests. A signature guarantee verifies the authenticity of your signature, and
may be obtained from any bank, savings and loan association, credit union, trust
company, broker-dealer firm or member of a domestic stock exchange. A signature
guarantee cannot be provided by a notary public.
HOUSEHOLDING OF GENERAL MAILINGS
HOUSEHOLDING REDUCES FUND EXPENSES WHILE SAVING PAPER AND POSTAGE EXPENSE.
If you have multiple accounts with Calvert, you may receive combined mailings of
some shareholder information, such as statements, confirmations, prospectuses,
semi-annual and annual reports. Please contact Calvert Investor Relations at
800-368-2745 to receive additional copies of information.
SPECIAL SERVICES AND CHARGES
The Fund pays for shareholder services but not for special services that are
required by a few shareholders, such as a request for a historical transcript of
an account. You may be required to pay a research fee for these special
services.
If you are purchasing shares of the Fund through a program of services offered
by a broker-dealer or financial institution, you should read the program
materials in conjunction with this Prospectus. Certain features may be modified
in these programs, and administrative charges may be imposed by the
broker-dealer or financial institution for the services rendered.
TAX-SAVING RETIREMENT PLANS
Contact Calvert Group for complete information kits discussing the plans, and
their benefits, provisions and fees.
Calvert Group can set up your new account under one of several tax-deferred
plans. These plans let you invest for retirement and shelter your investment
income from current taxes. Minimums may differ from those listed in the "How to
Buy Shares" chart.
- - Traditional and Roth individual retirement accounts (IRAs): available to
anyone who has earned income. You may also be able to make investments in
the name of your spouse, if your spouse has no earned income.
- - Qualified Profit-Sharing and Money Purchase Plans (including 401(k) Plans):
available to self-employed people and their partners, corporations and
their employees and certain tax-exempt organizations.
- - Simple IRA and Simplified Employee Pension Plan (SEP-IRA): available to
self-employed people and their partners, or to corporations.
- - 403(b)(7) Custodial Accounts: available to employees of most non-profit
organizations and public schools and universities.
SELLING YOUR SHARES
You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next net asset value calculated after your redemption
request is received (less any applicable CDSC). See below for specific
requirements necessary to make sure your redemption request is acceptable.
Remember that the Fund may hold payment on the redemption of your shares until
it is reasonably satisfied that investments made by check or by Calvert Money
Controller have been collected (normally up to 10 business days).
REDEMPTION REQUIREMENTS TO REMEMBER
TO ENSURE ACCEPTANCE OF YOUR REDEMPTION REQUEST, PLEASE FOLLOW THE PROCEDURES
DESCRIBED HERE AND BELOW.
Once your shares are redeemed, the proceeds will normally be sent to you on the
next business day, but if making immediate payment could adversely affect the
Fund, it may take up to seven (7) days. Calvert Money Controller
<PAGE>
13
redemptions generally will be credited to your bank account on the second
business day after your phone call. When the New York Stock Exchange is closed
(or when trading is restricted) for any reason other than its customary weekend
or holiday closings, or under any emergency circumstances as determined by the
Securities and Exchange Commission, redemptions may be suspended or payment
dates postponed.
If you sell shares by telephone or written request, you will receive dividends
through the date the request is received and processed. If you write a draft to
sell shares, the shares will earn dividends until the draft is presented to the
Fund to be paid.
MINIMUM ACCOUNT BALANCE IS $1,000.
Please maintain a balance in each of your fund accounts of at least $1,000. If
the balance in your money market account falls below the $1,000 minimum during a
month, a $3 fee will be charged to your account. This fee is paid to the
portfolio to offset the generally higher costs of small dollar accounts.
HOW TO SELL YOUR SHARES
DRAFTWRITING (NOT AVAILABLE FOR CLASS B AND C)
You may redeem shares in your account by writing a draft for at least $250. If
you complete and return a signature card for Draftwriting, the Fund will mail
bank drafts to you, printed with your name and address. Generally, there is no
charge to you for the maintenance of this service or the clearance of drafts,
but the Fund will charge a service fee for drafts returned for insufficient
funds. The Fund will charge $25 for any stop payments on drafts. As a service to
shareholders, shares may be automatically transferred between your Calvert
accounts to cover drafts you have written. The signature of only one authorized
signer is required to honor a draft.
BY MAIL TO:
CALVERT GROUP
P.O. BOX 419544
KANSAS CITY, MO
64179-6544
You may redeem available shares from your account at any time by sending a
letter of instruction, including your name, account and Fund number, the number
of shares or dollar amount, and where you want the money to be sent. Additional
requirements, below, may apply to your account. The letter of instruction must
be signed by all required authorized signers. If you want the money to be wired
to a bank not previously authorized, then a voided bank check must be enclosed
with your letter. To add instructions to wire to a destination not previously
established, or if you would like funds sent to a different address or another
person, YOUR LETTER MUST BE SIGNATURE GUARANTEED.
TYPE OF REQUIREMENTS
REGISTRATION
Corporations, Associations Letter of instruction and a corporate resolution,
signed by person(s) authorized to act on the
account, accompanied by signature guarantee(s).
Trusts Letter of instruction signed by the Trustee(s) (as
Trustee), with a signature guarantee. (If the
Trustee's name is not registered on your account,
provide a copy of the trust document, certified
within the last 60 days.)
BY TELEPHONE
Please call 800-368-2745. You may redeem shares from your account by telephone
and have your money mailed to your address of record or wired to a bank you have
previously authorized. A charge of $5 is imposed on wire transfers of less than
$1,000. See "Telephone Transactions."
CALVERT MONEY CONTROLLER
Please allow sufficient time for Calvert Group to process your initial request
for this service (normally 10 business days). You may also authorize automatic
fixed amount redemptions by Calvert Money Controller. All requests must be
received by 4:00 p.m. Eastern time. Accounts cannot be closed by this service.
Unless they otherwise qualify for a waiver, Class B or Class C shares redeemed
by Calvert Money Controller will be subject to the Contingent Deferred Sales
Charge.
<PAGE>
14
EXCHANGE TO ANOTHER CALVERT GROUP FUND
You must meet the minimum investment requirement of the other Calvert Group Fund
or Portfolio. You can only exchange between accounts with identical names,
addresses and taxpayer identification number, unless previously authorized with
a signature-guaranteed letter.
SYSTEMATIC CHECK REDEMPTIONS
If you maintain an account with a balance of $10,000 or more, you may have up to
two (2) redemption checks for a fixed amount sent to you on the 15th of each
month, simply by sending a letter with all information, including your account
number, and the dollar amount ($100 minimum). If you would like a regular check
mailed to another person or place, your letter must be signature guaranteed.
Unless they otherwise qualify for a waiver, Class B or Class C shares redeemed
by Systematic Check Redemption will be subject to the Contingent Deferred Sales
Charge.
THROUGH YOUR BROKER
If your account is held in your broker's name ("street name"), you should
contact your broker directly to transfer, exchange or redeem shares.
DIVIDENDS AND TAXES
EACH YEAR, THE FUND DISTRIBUTES SUBSTANTIALLY ALL OF ITS NET INVESTMENT INCOME
TO SHAREHOLDERS.
Dividends from the Fund's net investment income are declared daily and paid
monthly. Net investment income consists of interest income, net short-term
capital gains, if any, and dividends declared and paid on investments, less
expenses. Dividend and distribution payments will vary between classes; dividend
payments will generally be higher for Class O shares.
DIVIDEND PAYMENT OPTIONS
Dividends and any distributions are automatically reinvested in additional
shares of the Fund, unless you elect to have the dividends of $10 or more paid
in cash (by check or by Calvert Money Controller). Dividends and distributions
from the Fund may also be invested in shares of any other Calvert Group Fund or
Portfolio, at no additional charge. You must notify the Fund in writing to
change your payment options. If you elect to have dividends and/or distributions
paid in cash, and the U.S. Postal Service cannot deliver the check, or if it
remains uncashed for six months, it, as well as future dividends and
distributions, will be reinvested in additional shares. No dividends will accrue
on amounts represented by uncashed distribution or redemption checks.
FEDERAL TAXES
In January, the Fund will mail you Form 1099-DIV indicating the federal tax
status of dividends and any capital gain distributions paid to you by the Fund
during the past year. Dividends and distributions are taxable to you regardless
of whether they are taken in cash or reinvested. Dividends, including short-term
capital gains, are taxable as ordinary income. Distributions from long-term
capital gains are taxable as long-term capital gains, regardless of how long you
have owned Fund shares.
OTHER TAX INFORMATION
In addition to federal taxes, you may be subject to state or local taxes on your
investment, depending on the laws in your area. You will be notified to the
extent, if any, that dividends reflect interest received from U.S. government
securities. Such dividends may be exempt from certain state income taxes.
TAXPAYER IDENTIFICATION NUMBER
If we do not have your correct Social Security or Taxpayer Identification Number
("TIN") and a signed certified application or Form W-9, Federal law requires the
Fund to withhold 31% of your dividends. In addition, you may be subject to a
fine. You will also be prohibited from opening another account by exchange. If
this TIN information is not received within 60 days after your account is
established, your account may be redeemed at the current NAV on the date of
redemption. The Fund reserves the right to reject any new account or any
purchase order for failure to supply a certified TIN.
<PAGE>
15
TO OPEN AN ACCOUNT: Prospectus
800-368-2748 March 31, 1998
PERFORMANCE AND PRICES:
Calvert Information Network CALVERT FIRST GOVERNMENT
24 hours, 7 days a week MONEY MARKET FUND
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
CALVERT GROUP WEB-SITE
Address: http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
<PAGE>
FIRST VARIABLE RATE FUND:
CALVERT FIRST GOVERNMENT MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
MARCH 31, 1998
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICING AGENT TRANSFER AGENT
Calvert Shareholder Services, Inc. National Financial Data Services, Inc.
4550 Montgomery Avenue 1004 Baltimore
Suite 1000N 6th Floor
Bethesda, Maryland 20814 Kansas City, Missouri 64105
PRINCIPAL UNDERWRITER INDEPENDENT ACCOUNTANTS
Calvert Distributors, Inc. Coopers & Lybrand, L.L.P.
4550 Montgomery Avenue 250 West Pratt Street
Suite 1000N Baltimore, Maryland 21201
Bethesda, Maryland 20814
TABLE OF CONTENTS
<TABLE>
<S> <C>
Investment Objective and Strategy 1
Investment Restrictions 2
Dividends and Distributions 2
Tax Matters 2
Net Asset Value 3
Calculation of Yield 4
Advertising 4
Purchases and Redemption of Shares 5
Trustees and Officers 5
Investment Advisor 8
Transfer and Shareholder Servicing Agent 9
Portfolio Transactions 9
Independent Accountants and Custodians 9
Method of Distribution 10
General Information 10
Financial Statements 11
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION--March 31, 1998
FIRST VARIABLE RATE FUND:
CALVERT FIRST GOVERNMENT MONEY MARKET FUND
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814
- --------------------------------------------------------------------------------
New Account (800) 368-2748 Shareholder
Information: (301) 951-4820 Services: (800) 368-2745
- --------------------------------------------------------------------------------
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 Impaired: (800) 541-1524
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus. Investors
should read the Statement of Additional Information in conjunction with the
First Variable Rate Fund Calvert First Government Money Market Fund (the "Fund")
Prospectus, dated March 31, 1998, which may be obtained free of charge by
writing or calling the Fund at the telephone numbers listed above.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
- --------------------------------------------------------------------------------
In pursuing its objective of earning the highest possible yield consistent
with safety, liquidity, and preservation of capital, the Fund invests solely in
debt obligations issued or guaranteed by the United States, its agencies or
instrumentalities, assignments of interest in such obligations, and commitments
to purchase such obligations ("U.S. Government-backed obligations"). The Fund
may invest in U.S. Government-backed obligations subject to repurchase
agreements with recognized securities dealers and banks.
The Fund engages in repurchase Agreements in order to earn a higher rate of
return than it could earn simply by investing in the obligation which is the
subject of the repurchase agreement. Repurchase agreements are not, however,
without risk. If the seller were to become bankrupt, the Fund might realize a
loss if the value of the underlying security did not equal or exceed the
repurchase price. In order to minimize the risk of investing in repurchase
agreements, the Fund engages in such transactions only with recognized
securities dealers and banks and in all instances holds underlying securities
with a value equal to the total repurchase price such dealer or bank has agreed
to pay. Repurchase agreements are always for periods of less than one year and
no more than 10% of the Fund's assets may be invested in repurchase agreements
not terminable within seven days.
Although all the securities purchased by the Fund are Government-backed as
to principal or secured by such securities, some of the types of Government
securities the Fund buys may be sold at a premium which is not backed by a
Government guarantee. The premiums are amortized over the life of the security;
however, if a security should default or be prepaid, the Fund could realize as a
loss the unamortized portion of such premium.
In the Government-guaranteed loan market, most purchases of new issues are
made under firm (forward) commitment agreements. Purchases of long-term fixed
rate debt securities under such agreements can involve risk of loss due to
changes in the market rate of interest between the commitment date and the
settlement date. Forward commitment agreements for variable rate securities,
unlike such agreements for fixed rate securities, are stable in value; the
Fund's Advisor believes the risk of loss under forward commitment agreements
involving variable rate obligations to be insignificant.
All the Fund's investments maturing in more than one year will have a
variable rate feature under which the yield is adjusted periodically based upon
changes in money market rates such as prime. Such adjustments will be made at
least semi-annually. Variable rate securities minimize the wide fluctuations in
capital value that represent the traditional drawback to such long-term
investments; but this also means that should interest rates decline, the amount
of return paid by the Fund will decline and the Fund will forego the opportunity
of capital appreciation on its portfolio securities.
The foregoing objective and policies may not be altered without the prior
approval of the holders of a majority of the outstanding shares of the Fund.
There is, of course, no assurance that the Fund will be successful in meeting
the above investment objective.
<PAGE>
2
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment restrictions and fundamental
policies. These restrictions cannot be changed without the approval of the
holders of a majority of the outstanding shares of the Fund. The Fund may not:
(1) Purchase common stocks, preferred stocks, warrants,
other equity securities, corporate bonds or debentures,
state bonds, municipal bonds, or industrial revenue bonds;
(2) Borrow money, except from banks as a temporary measure
for emergency (not leveraging) purposes in an amount not
greater than 25% of the value of the Fund's total assets
(including the amount borrowed) at the time the borrowing is
made. Investment securities will not be purchased while
borrowings are outstanding. Borrowings will only be
undertaken to facilitate the meeting of redemption requests;
(3) Pledge its assets, except to secure borrowing for
temporary or emergency purposes and then only in an amount
up to 25% of its total assets. Although the Fund has the
right to pledge in excess of 10% of the value of its assets,
it will not do so as a matter of operating policy in order
to comply with certain state investment restrictions;
(4) Sell securities short;
(5) Write or purchase put or call options;
(6) Underwrite the securities of other issuers;
(7) Purchase a security which is subject to legal or
contractual restrictions on resale, i.e., restricted
securities;
(8) Purchase or sell real estate investment trust
securities, commodities, or oil and gas interests;
(9) Make loans to others, except for repurchase transactions
(the purchase of a portion of publicly distributed debt
securities is not considered the making of a loan);
(10) Invest in companies for the purpose of exercising
control; or invest in the securities of other investment
companies, except as they may be acquired as part of a
merger, consolidation or acquisition of assets, or in
connection with a trustee's deferred compensation plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
Dividends from the Fund's net investment income are declared daily and paid
monthly. Net investment income consists of the interest income earned on
investments (adjusted for amortization of original issue or market discount or
premium), less expenses. Realized and unrealized gains and losses are not
included in net investment income. Net short-term capital gains will be
distributed once each year, although the Fund may distribute them more
frequently if necessary in order to maintain the Fund's net asset value at $1.00
per share. Distributions of net capital gains, if any, are normally declared and
paid by the Fund once a year; however, the Fund does not intend to make any such
distributions from securities profits unless available loss carryovers, if any,
have been used or have expired. Dividends and distributions may differ among the
classes.
Purchasers of Fund shares begin receiving dividends from the date federal
funds are received by the Fund. Purchases by bank wire received by the Fund's
custodian prior to 12:30 p.m., Eastern time, represent immediately available
federal funds. Shareholders redeeming shares by telephone, electronic funds
transfer or written request will receive dividends through the date that the
redemption request is received; shareholders redeeming shares by draft will
receive dividends up to the date such draft is presented to the Fund for
payment.
- --------------------------------------------------------------------------------
TAX MATTERS
- --------------------------------------------------------------------------------
In 1997, the Fund did qualify and in 1998, the Fund intends to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code,
as amended. By so qualifying, the Fund will not be subject to federal income
taxes, nor to the federal excise tax imposed by the Tax Reform Act of 1986, to
the extent that it distributes its net investment income and net capital gains.
<PAGE>
3
Dividends of net investment income and distributions of net short-term
capital gains, whether taken in cash or reinvested in additional shares, are
taxable to shareholders as ordinary income and do not qualify for the dividends
received deduction for corporations. Net long-term capital gain distributions,
if any, will generally be includable as long-term capital gain in the gross
income of shareholders who are citizens or residents of the United States.
Whether such realized securities gains and losses are long-or short-term depends
on the period the securities are held by the Fund, not the period for which the
shareholder holds shares of the Fund.
The Fund is required to withhold 31% of any dividends (including long-term
capital gain dividends, if any) if: (a) the shareholder's social security number
or other taxpayer identification number ("TIN") is not provided or an obviously
incorrect TIN is provided; (b) the shareholder does not certify under penalties
of perjury that the TIN provided is the shareholder's correct TIN and that the
shareholder is not subject to backup withholding under section 3406(a)(1)(C) of
the Internal Revenue Code because of underreporting; or (c) the Fund is notified
by the Internal Revenue Service that the TIN provided by the shareholder is
incorrect or that there has been underreporting of interest or dividends by the
shareholder. Affected shareholders will receive statements at least annually
specifying the amount of dividends withheld.
Shareholders exempt from backup withholding include: corporations;
financial institutions, tax-exempt organizations; individual retirement plans;
the U.S., a state, the District of Columbia, a U.S. possession, a foreign
government, an international organization, or any political subdivision, agency
or instrumentality of any of the foregoing; U.S. registered commodities or
securities dealers; real estate investment trusts; registered investment
companies; bank common trust funds; certain charitable trusts; and foreign
central banks of issue. Non-resident aliens also are generally not subject to
backup withholding but, along with certain foreign partnerships and foreign
corporations, may instead be subject to withholding under section 1441 of the
Internal Revenue Code. Shareholders claiming exemption from backup withholding
should call or write the Fund for further information.
Many states do not tax the portion of the Fund's dividends which is derived
from interest on U.S. Government obligations. The law of the states varies
concerning the tax status of dividends derived from U.S. Government obligations.
Accordingly, shareholders should consult their tax advisors about the tax status
of dividends and distributions from the Fund in their respective jurisdictions.
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
The net asset value per share of the Fund, the price at which shares are
redeemed (less any applicable contingent deferred sales charge, "CDSC"), is
computed by dividing the value of the Fund's total assets, less its liabilities,
by the total number of shares outstanding. Net asset value is calculated
separately for each class. It is determined every business day at the close of
the New York Stock Exchange (generally, 4:00 p.m. Eastern time), and at such
other times as may be appropriate or necessary. The Fund does not determine net
asset value on certain national holidays or other days on which the New York
Stock Exchange is closed: New Year's Day, Martin Luther King Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
The Fund's assets, including securities subject to repurchase agreements,
are normally valued at their amortized cost which does not take into account
unrealized capital gains or losses. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price that would be received upon sale of the
instrument. During periods of declining interest rates, the daily yield on
shares of the Fund may tend to be higher than a like computation made by a fund
with identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio instruments.
Thus, if the use of amortized cost by the Fund resulted in a lower aggregate
portfolio value on a particular day, a prospective investor in the Fund would be
able to obtain a somewhat higher yield than would result from investment in a
fund utilizing solely market values, and existing investors in the Fund would
receive less investment income. The converse would apply in a period of rising
interest rates.
Rule 2a-7 under the Investment Company Act of 1940 permits the Fund to
value its assets at amortized cost if the Fund maintains a dollar-weighted
average maturity of 90 days or less and only purchases obligations
<PAGE>
4
having remaining maturities of 13 months or less. Rule 2a-7 further requires, as
a condition of its use, that the Fund invest only in obligations determined by
the Trustees to be of high quality with minimal credit risks and requires the
Trustees to establish procedures designed to stabilize, to the extent reasonably
possible, the Fund's price per share as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of the Fund's investment
holdings by the Trustees, at such intervals as they may deem appropriate, to
determine whether the Fund's net asset value calculated by using available
market quotations or equivalents deviates from $1.00 per share. If such
deviation exceeds l/2 of 1%, the Trustees will promptly consider what action, if
any, will be initiated. In the event the Trustees determine that a deviation
exists which may result in material dilution or other unfair results to
investors or existing shareholders, the Trustees will take such corrective
action as they regard as necessary and appropriate, including: the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; the withholding of dividends or payment of
distributions from capital or capital gains; redemptions of shares in kind; or
the establishment of a net asset value per share based upon available market
quotations.
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($232,024,778/232,513,728 shares) $1.00
-----
-----
- --------------------------------------------------------------------------------
CALCULATION OF YIELD
- --------------------------------------------------------------------------------
Yield is calculated separately by class by dividing the net change
exclusive of capital changes in the value of a share during a particular base
period by the net asset value per share at the beginning of such period and
annualizing the result. Capital changes excluded from the calculation of yield
are: (1) realized gains and losses from the sale of securities, and (2)
unrealized appreciation and depreciation. The Fund's effective yield for a
seven-day period is its annualized compounded average yield during the period,
calculated according to the following formula:
365/7
Effective yield = [(Base period return + 1) ] - 1
For the seven day period ended December 31, 1997, the Fund's Class O yield was
5.08% and effective yield was 5.21%.
The Fund's yield fluctuates in response to changes in interest rates and
general economic conditions, portfolio quality, portfolio maturity, and
operating expenses. Yield is not fixed or insured and therefore is not
comparable to a savings or other similar type account. Yield during any
particular time period should not be considered an indication of future yield.
It is, however, useful in evaluating the Fund's performance in meeting its
investment objective. No yield is presented for Class B or C shares because no
Class B or C Shares were outstanding as of the fiscal year ending December 31,
1997.
- --------------------------------------------------------------------------------
ADVERTISING
- --------------------------------------------------------------------------------
The Fund or its affiliates may provide information such as, but not limited
to, the economy, investment climate, investment principles, sociological
conditions and political ambiance. Discussion may include hypothetical scenarios
or lists of relevant factors designed to aid the investor in determining whether
the Fund is compatible with the investor's goals. The Fund may list portfolio
holdings or give examples or securities that may have been considered for
inclusion in the Fund, whether held or not.
The Fund or its affiliates may supply comparative performance data and
rankings from independent sources such as DONOGHUE'S MONEY FUND REPORT, BANK
RATE MONITOR, MONEY, FORBES, Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Wiesenberger Investment Companies Service, Russell
2000/Small Stock Index, MUTUAL FUND VALUES MORNINGSTAR RATINGS, MUTUAL FUND
FORECASTER, BARRON'S, THE WALL STREET JOURNAL, and Schabacker Investment
Management, Inc. Such averages generally do not reflect any front- or back-end
sales charges that may be charged by Funds in that grouping. The Fund may also
cite to any source, whether in print or on-line, such as Bloomberg, in order to
acknowledge origin of information. The Fund may compare itself or its portfolio
holdings to other investments, whether or not issued or regulated by the
securities industry, including, but
<PAGE>
5
not limited to, certificates of deposit and Treasury notes. The Fund, its
Advisor, and its affiliates reserve the right to update performance rankings as
new rankings become available.
Calvert Group is the nation's leading family of socially responsible mutual
funds, both in terms of socially responsible mutual fund assets under
management, and number of socially responsible mutual fund portfolios offered
(source: Social Investment Forum, November 30, 1997). Calvert Group was also the
first to offer a family of socially responsible mutual fund portfolios.
- --------------------------------------------------------------------------------
PURCHASES AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
Share certificates will not be issued unless requested in writing by the
investor. No charge will be made for share certificate requests. No certificates
will be issued for fractional shares (see Prospectus, "How to Sell Your
Shares"). Certain Class B and C Shares may be subject to a contingent deferred
sales charge which is subtracted from the redemption proceeds (See Prospectus,
"Calculation of Contingent Deferred Sales Charge").
Shareholders wishing to use the draft writing service should complete the
signature card enclosed with the Investment Application. The draft writing
service is not available for Class B and C Shares. The draft writing service
will be subject to the customary rules and regulations governing checking
accounts, and the Fund reserves the right to change or suspend the service.
Generally, there is no charge to you for the maintenance of this service or the
clearance of drafts, but the Fund reserves the right to charge a service fee for
drafts returned for uncollected or insufficient funds, and will charge $25 for
stop payments. As a service to shareholders, the Fund may automatically transfer
the dollar amount necessary to cover drafts you have written on the Fund to your
Fund account from any other of your identically registered accounts in Calvert
money market funds or Calvert Insured Plus. The Fund may charge a fee for this
service.
When a payable through draft is presented to the Custodian for payment, a
sufficient number of full and fractional shares from the shareholder's account
to cover the amount of the draft will be redeemed at the net asset value next
determined. If there are insufficient shares in the shareholder's account, the
draft may be returned. Drafts presented for payment which would require the
redemption of shares purchased by check or electronic funds transfer within the
previous 10 business days may not be honored.
Existing shareholders who at any time desire to arrange for the telephone
redemption procedure, or to change instructions already given, must send a
written notice to Calvert Group, P.O. Box 419544, Kansas City, MO 64141-6544,
with a voided copy of a check for the bank wiring instructions to be added. If a
voided check does not accompany the request, then the request must be signature
guaranteed by a commercial bank, savings and loan association, trust company,
member firm of any national securities exchange, or credit union. Further
documentation may be required from corporations, fiduciaries, and institutional
investors.
The right of redemption may be suspended or the date of payment postponed
for any period during which the New York Stock Exchange is closed (other than
customary weekend and holiday closings), when trading on the New York Stock
Exchange is restricted, or an emergency exists, as determined by the SEC, or if
the Commission has ordered such a suspension for the protection of shareholders.
Redemption proceeds are normally mailed or wired the next business day after a
proper redemption request has been received, unless redemptions have been
suspended or postponed as described above.
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice President for
the Family Health Council, Inc. in Pittsburgh, Pennsylvania, a non-profit
corporation which provides family planning services, nutrition, maternal/child
health care, and various health screening services. Mr. Baird is a
trustee/director of each of the investment companies in the Calvert Group of
Funds, except for Acacia Capital Corporation, Calvert New World Fund and Calvert
World Values Fund. DOB: 05/09/48. Address: 211 Overlook Drive, Pittsburgh,
Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in the law firm
of Snevily, Ely, Williams, Gurrieri & Blatz. He was formerly a partner with
Abrams, Blatz, Gran, Hendricks & Reina, P.A. DOB: 10/29/35. Address: 308 East
Broad Street, PO Box 2007, Westfield, New Jersey 07091.
<PAGE>
6
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist with Kaiser
Permanente. Prior to that, he was a radiologist at Bethlehem Medical Imaging in
Allentown, Pennsylvania. DOB: 07/23/49. Address: 2040 Nuuanu Avenue #1805,
Honolulu, Hawaii, 96817
*CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and Treasurer
Emeritus of the George Washington University, and has retired from University
Support Services, Inc. of Herndon, Virginia. He is also a Director of Acacia
Mutual Life Insurance Company. DOB: 10/13/22. Address: 1658 Quail Hollow Court,
McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices head and neck
reconstructive surgery in the Washington, D.C., metropolitan area. DOD:
05/23/48. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian was a principal of Gavian De Vaux
Associates, an investment banking firm. He continues to be President of with
Corporate Finance of Washington, Inc. DOB: 12/08/32. Address: 3005 Franklin Road
North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the Calvert Social
Investment Foundation, organizing director of the Community Capital Bank in
Brooklyn, New York, and a financial consultant to various organizations. In
addition, he is a Director of the Community Bankers Mutual Fund of Denver,
Colorado, and the Treasurer and Director of Silby, Guffey, and Co., Inc., a
venture capital firm. Mr. Guffey is a trustee/director of each of the other
investment companies in the Calvert Group of Funds, except for Acacia Capital
Corporation and Calvert New World Fund. DOB: 05/15/48. Address: 7205 Pomander
Lane, Chevy Chase, Maryland 20815.
*BARBARA J. KRUMSIEK, President and Trustee. Ms. Krumsiek serves as
President, Chief Executive Officer and Vice Chairman of Calvert Group, Ltd. and
as an officer and director of each of its affiliated companies. She is a
director of Calvert-Sloan Advisers, L.L.C., and a trustee/director of each of
the investment companies in the Calvert Group of Funds. Prior to joining Calvert
Group, Ms. Krumsiek served as Senior Vice President of Alliance Capital LP's
Mutual Fund Division. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President of Creative
Associates International, Inc., a firm that specializes in human resources
development, information management, public affairs and private enterprise
development. DOB: 12/08/45. Address: 5301 Wisconsin Avenue, N.W., Washington,
D.C. 20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of Acacia Federal
Savings Bank. DOB: 09/24/37. Address: 4823 Prestwick Drive, Fairfax, Virginia
22030.
*DAVID R. ROCHAT, Senior Vice President and Trustee. Mr. Rochat is
Executive Vice President of Calvert Asset Management Company, Inc., Director and
Secretary of Grady, Berwald and Co., Inc., and Director and President of Chelsea
Securities, Inc. DOB: 10/07/37. Address: Box 93, Chelsea, Vermont 05038.
*D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a trustee/director of each of
the investment companies in the Calvert Group of Funds, except for Acacia
Capital Corporation and Calvert New World Fund. Mr. Silby is Executive Chairman
of GroupServe, an internet company focused on community building collaborative
tools, and an officer, director and shareholder of Silby, Guffey & Company,
Inc., which serves as general partner of Calvert Social Venture Partners
("CSVP"). CSVP is a venture capital firm investing in socially responsible small
companies. He is also a Director of Acacia Mutual Life Insurance Company. DOB:
07/20/48. Address: 1715 18th Street, N.W., Washington, D.C. 20009.
RENO J. MARTINI, Senior Vice President. Mr. Martini is a director and
Senior Vice President of Calvert Group, Ltd., and Senior Vice President and
Chief Investment Officer of Calvert Asset Management Company, Inc. Mr. Martini
is also a director and President of Calvert-Sloan Advisers, L.L.C., and a
director and officer of Calvert New World Fund. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior Vice
President and Controller of Calvert Group, Ltd. and its subsidiaries and an
officer of each of the other investment companies in the Calvert Group of Funds.
Mr. Wolfsheimer is Vice President and Treasurer of Calvert-Sloan Advisers,
L.L.C., and a director of Calvert Distributors, Inc. DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant Secretary. Mr.
Tartikoff is an officer of each of the investment companies in the Calvert Group
of Funds, and is Senior Vice President, Secretary, and General Counsel of
Calvert Group, Ltd., and each of its subsidiaries. Mr. Tartikoff is also Vice
President and
<PAGE>
7
Secretary of Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company. DOB:
08/12/47.
DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President of Calvert
Asset Management Company, Inc., and is an officer of each of the other
investment companies in the Calvert Group of Funds, except for Calvert New World
Fund, Inc. DOB: 09/09/50.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is Associate
General Counsel of Calvert Group, Ltd. and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of each
of the other investment companies in the Calvert Group of Funds. DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is Associate
General Counsel of Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the other
investment companies in the Calvert Group of Funds. DOB: 10/21/56.
LISA CROSSLEY NEWTON, Esq., Assistant Secretary and Compliance Officer. Ms.
Newton is Associate General Counsel of Calvert Group and an officer of each of
its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of
each of the other investment companies in the Calvert Group of Funds. DOB:
12/31/61.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Assistant Counsel
of Calvert Group and an officer of each of its subsidiaries and Calvert-Sloan
Advisers, L.L.C. She is also an officer of each of the other investment
companies in the Calvert Group of Funds. Prior to working at Calvert Group, Ms.
Duke was an Associate in the Investment Management Group of the Business and
Finance Department at Drinker Biddle & Reath. DOB: 09/07/68.
The address of Trustees and Officers, unless otherwise noted, is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Trustees and Officers
as a group own less than 1% of the Portfolio's outstanding shares. Trustees
marked with an *, above, are "interested persons" of the Fund, under the
Investment Company Act of 1940.
Each of the above named trustees and officers is a trustee or officer of
each of the investment companies in the Calvert Group of Funds with the
exception of Calvert Social Investment Fund, of which only Messrs. Baird, Guffey
and Silby and Ms. Krumsiek are among the Trustees, Acacia Capital Corporation,
of which only Messrs. Blatz, Diehl and Pugh and Ms. Krumsiek are among the
Directors, Calvert World Values Fund, Inc., of which only Messrs. Guffey and
Silby and Ms. Krumsiek are among the Directors, and Calvert New World Fund,
Inc., of which only and Ms. Krumsiek and Mr. Martini are among the Directors.
The Board's Audit Committee is composed of Messrs. Baird, Blatz, Feldman,
Guffey and Pugh. The Investment Policy Committee is composed of Messrs. Borts,
Diehl, Gavian, Rochat and Silby.
During fiscal 1997, trustees of the Fund not affiliated with the Fund's
Advisor were paid $32,992. Trustees of the Fund not affiliated with the Advisor
presently receive an annual fee of $20,500 for service as a member of the Board
of Trustees of the Calvert Group of Funds, and a fee of $750 to $1500 for each
regular Board or Committee meeting attended; such fees are allocated among the
respective Funds on the basis of net assets.
Trustees of the Fund not affiliated with the Fund's Advisor may elect to
defer receipt of all or a percentage of their fees and invest them in any fund
in the Calvert Family of Funds through the Trustees Deferred Compensation Plan
(shown as "Pension or Retirement Benefits Accrued as part of Fund Expenses,"
below). Deferral of the fees is designed to maintain the parties in the same
position as if the fees were paid on a current basis. Management believes this
will have a negligible effect on the Fund's assets, liabilities, net assets, and
net income per share, and will ensure that there is no duplication of advisory
fees.
<PAGE>
8
Trustee Compensation Table
<TABLE>
<CAPTION>
Fiscal Year 1997 Aggregate Compensation Pension or Retirement Total Compensation from
(unaudited numbers) from Registrant for Service Benefits Accrued as part Registrant and Fund
as Trustee of Registrant Expenses* Complex paid to
Name of Trustee Trustee**
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard L. Baird, Jr. $2,418 $0 $34,450
Frank H. Blatz, Jr. $3,076 $3,076 $46,000
Frederick T. Borts $2,323 $0 $32,500
Charles E. Diehl $2,968 $2,968 $44,500
Douglas E. Feldman $2,318 $0 $32,500
Peter W. Gavian $1,488 $1,259 $38,500
John G. Guffey, Jr. $3,019 $0 $61,615
M. Charito Kruvant $2,588 $0 $36,250
Arthur J. Pugh $3,129 $104 $48,250
D. Wayne Silby $2,480 $0 $62,830
</TABLE>
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion of their
compensation. As of December 31, 1997, total deferred compensation, including
dividends and capital appreciation, was $555,901.79, $545,259.10, $137,436.70
and $187,735.55, for each trustee, respectively.
**As of December 31, 1997. The Fund Complex consists of nine (9) registered
investment companies.
- --------------------------------------------------------------------------------
INVESTMENT ADVISOR
- --------------------------------------------------------------------------------
The Fund's Investment Advisor is Calvert Asset Management Company, Inc.,
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814, a subsidiary of
Calvert Group, Ltd., which is a subsidiary of Acacia Mutual Life Insurance
Company of Washington, D.C.
The Advisory Contract (the "Contract") between the Fund and the Advisor
will remain in effect indefinitely, provided continuance is approved at least
annually by the vote of the holders of a majority of the outstanding shares of
the Fund or by the Board of Trustees of the Fund; and further provided that such
continuance is also approved annually by the vote of a majority of the Trustees
of the Fund who are not parties to the Contract, interested persons of parties
to the Contract, or interested persons of such parties, cast in person at a
meeting called for the purpose of voting on such approval. The Contract may be
terminated without penalty by either party upon 60 days' prior written notice;
it automatically terminates in the event of its assignment.
Under the Contract, the Advisor provides investment advice to the fund and
oversees its day-to-day operations, subject to direction and control by the
Fund's Board of Trustees. For its services, the Advisor receives a fee of 0.50%
of the first $500 million of the average daily net assets of the Fund, 0.45% of
the next $400 million of such assets, 0.40% of the next $400 million of such
assets, 0.35% of the next $700 million of such assets, and 0.30% on all assets
in excess of $2 billion. Such fee is payable monthly.
The Advisor provides the Fund with investment advice and research, office
space, administrative services, furnishes executive and other personnel to the
Fund, pays the salaries and fees of all trustees who are affiliated persons of
the Advisor, and pays all Fund advertising and promotional expenses. The Advisor
reserves the right to compensate broker-dealers in consideration of their
promotional or administrative services for Class O shares. The Fund pays all
other operating expenses, including custodial and transfer agency fees, federal
and state securities registration fees, legal and audit fees, and brokerage
commissions and other costs associated with the purchase and sale of portfolio
securities. However, the Advisor has agreed to reimburse the Fund for all
expenses (excluding brokerage, taxes, interest, and extraordinary items)
exceeding, on a pro rata basis, 1% of the Fund's average daily net assets.
<PAGE>
9
The advisory fees paid to the Advisor under the Advisory Contract for the
1995, 1996, and 1997 fiscal years were $1,182,171, $1,238,849 and $1,206,618,
respectively. No expense reimbursements have been required under the Contract.
- --------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER SERVICING AGENT
- --------------------------------------------------------------------------------
National Financial Data Services, Inc. ("NFDS"), a subsidiary of State
Street Bank & Trust, has been retained by the Fund to act as transfer agent and
dividend disbursing agent. These responsibilities include: responding to certain
shareholder inquiries and instructions, crediting and debiting shareholder
accounts for purchases and redemptions of Fund shares and confirming such
transactions, and daily updating of shareholder accounts to reflect declaration
and payment of dividends.
Calvert Shareholder Services, Inc. ("CSSI"), a subsidiary of Calvert Group,
Ltd., and Acacia Mutual, has been retained by the Fund to act as shareholder
servicing agent. Shareholder servicing responsibilities include responding to
shareholder inquiries and instructions concerning their accounts, entering any
telephoned purchases or redemptions into the NFDS system, maintenance of
broker-dealer data, and preparing and distributing statements to shareholders
regarding their accounts. Calvert Shareholder Services, Inc. was the sole
transfer agent prior to January 1, 1998.
For its fiscal years ended December 31, 1995, 1996, and 1997, the Fund paid
Calvert Shareholder Services, Inc. fees of $556,450, $561,279 and $447,044,
respectively.
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Portfolio transactions are undertaken on the basis of their desirability
from an investment standpoint. Investment decisions and choice of brokers and
dealers are made by the Fund's Advisor under the direction and supervision of
the Fund's Board of Trustees.
It is intended that all securities maturing in more than one year will be
held to maturity. Sales of securities to facilitate the redemption of Fund
shares is contemplated, but such sales will be primarily from the short-term
instruments in the Fund's portfolio on which brokerage charges, if any, are
minimal. The Fund anticipates that its portfolio turnover rate with respect to
securities with maturities in excess of one year will be no more than 5%.
Broker-dealers who execute portfolio transactions on behalf of the Fund are
selected on the basis of their professional capability and the value and quality
of their services. The Advisor reserves the right to place orders for the
purchase of sale of portfolio securities with dealers who provide it with
statistical, research, or other information and services. Although any
statistical, research, or other information and services provided by dealers may
be useful to the Advisor, the dollar value of such information is generally
indeterminable, and its availability or receipt does not serve to materially
reduce the Advisor's normal research activities or expenses. No brokerage
commissions have been paid to any broker-dealer that provided the Fund's Advisor
with research or other services.
The Advisor may also execute portfolio transactions with or through
broker-dealers who have sold shares of the Fund. However, such sales will not be
a qualifying or disqualifying factor in a broker-dealer's selection nor will the
selection of any broker-dealer be based on the volume of Fund shares sold. The
Advisor may compensate, at its expense, such broker-dealers in consideration of
their promotional and administrative services.
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
- --------------------------------------------------------------------------------
Coopers & Lybrand, L.L.P., has been selected by the Board of Trustees to
serve as independent accountants for fiscal year 1998. State Street Bank & Trust
Company, N.A., 225 Franklin Street, Boston, Massachusetts 02110, currently
serves as custodian of the Portfolio's investments. First National Bank of
Maryland, 25 South Charles Street, Baltimore, Maryland 21203 also serves as
custodian of certain of the Portfolio's cash assets. Neither custodian has any
part in deciding the Portfolio's investment policies or the choice of securities
that are to be purchased or sold for the Portfolio.
<PAGE>
10
- --------------------------------------------------------------------------------
METHOD OF DISTRIBUTION
- --------------------------------------------------------------------------------
The Fund has entered into an agreement with Calvert Distributors, Inc.
("CDI") whereby CDI, acting as principal underwriter for the Fund, makes a
continuous offering of the Fund's securities on a "best efforts" basis. Under
the terms of the agreement, CDI is entitled to receive a distribution fee from
the Fund paid through the Distribution Plans of Class B and C. Class O has no
Distribution Plan. For Class B and Class C shares, CDI receives any CDSC paid.
Pursuant to Rule 12b-1 under the 1940 Act, Class B and Class C have adopted
Distribution Plans (the "Plans") which permit them to pay certain expenses
associated with the distribution and servicing of its shares. Such expenses may
not exceed, on an annual basis, 1.00% of the average daily net assets of Class B
and Class C, respectively.
The Distribution Plans were approved by the Board of Trustees, including
the Trustees who are not "interested persons" of the Fund (as that term is
defined in the 1940 Act) and who have no direct or indirect financial interest
in the operation of the Plans or in any agreements related to the Plans. The
selection and nomination of the Trustees who are not interested persons of the
Fund is committed to the discretion of such disinterested Trustees. In
establishing the Plans, the Trustees considered various factors including the
amount of the distribution expenses. The Trustees determined that there is a
reasonable likelihood that the Plans will benefit the affected Class and its
shareholders.
The Plans may be terminated by vote of a majority of the non-interested
Trustees who have no direct or indirect financial interest in the Plans, or by
vote of a majority of the outstanding shares of the affected class or Portfolio.
Any change in the Plans that would materially increase the cost to the affected
Class of Portfolio requires approval of the shareholders of that class;
otherwise, the Plans may be amended by the Trustees, including a majority of the
non-interested Trustees as described above. The Plans will continue in effect
for successive one-year terms provided that such continuance is specifically
approved by (i) the vote of a majority of the Trustees who are not parties to
the Plans or interested persons of any such party and who have no direct or
indirect financial interest in the Plans, and (ii) the vote of a majority of the
entire Board of Trustees.
Apart from the Plans, the Advisor and CDI, at their own expense, may incur
costs and pay expenses associated with the distribution of shares of the
Portfolio.
Certain broker-dealers, and/or other persons may receive compensation from
the investment advisor, underwriter, or their affiliates for the sale and
distribution of the securities or for services to the Portfolio. Such
compensation may include additional compensation based on assets held through
that firm beyond the regularly scheduled rates, and finder's fees payments to
firms whose representatives are responsible for soliciting a new account where
the accountholder does not choose to purchase through that firm.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Fund is organized as a Massachusetts business trust, and has one
series, the Calvert First Government Money Market Fund which was known as First
Variable Rate Fund prior to September 1, 1991. The Fund's Declaration of Trust
contains an express disclaimer of shareholder liability for acts or obligations
of the Fund. The shareholders of Massachusetts business trust might, however,
under certain circumstances, be held personally liable as partners for its
obligations. The Declaration of Trust provides for indemnification and
reimbursement of expenses out of Fund assets for any shareholder held personally
liable for obligations of the Fund. The Declaration of Trust provides that the
Fund shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any judgment
thereon. The Declaration of Trust further provides that the Fund may maintain
appropriate insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Fund, its shareholders, trustees, officers,
employees and agents to cover possible tort and other liabilities. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which both inadequate insurance exists
and the Fund itself is unable to meet its obligations.
The Fund offers three separate classes of shares: Class O, Class B and
Class C. Each class represents interests in the same portfolio of investments
but, as further described in the prospectus, each class may be subject to
differing sales charges and expenses, which will result in different dividends
and distributions. Upon any
<PAGE>
11
liquidation of the Fund. Shareholders of each class are entitled to share pro
rata in the Fund's net assets available for distribution.
The Fund will send its shareholders periodic transaction statements and
unaudited semi-annual and audited annual financial statements of the Fund's
investment securities, assets and liabilities, income and expenses, and changes
in net assets.
The Prospectus and this Statement of Additional Information do not contain
all the information in the Fund's registration statement. The registration
statement is on file with the Securities and Exchange Commission and is
available to the public.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements included in the Fund's Annual Report to
Shareholders dated December 31, 1997 are expressly incorporated by reference and
made a part of this Statement of Additional Information. A copy of the Annual
Report may be obtained free of charge by writing or calling the Fund.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements
Financial statements incorporated by reference to:
Registrant's audited Annual Report to Shareholders of Calvert First
Government Money Market Fund, dated December 31, 1997, and filed
March 9, 1998.
Schedules II-VII, inclusive, for which provision is made in the
applicable accounting regulation of the Securities and Exchange Commission, are
omitted because they are not required under the related instructions, or they
are inapplicable, or the required information is presented in the financial
statements or notes thereto.
(b) Exhibits:
1. Declaration of Trust (incorporated by reference to Registrant's
Post-Effective Amendment No. 11, May 1, 1984).
2. By-Laws (incorporated by reference to Registrant's
Post-Effective Amendment No. 11, May 1, 1984).
4. Specimen Stock Certificate, (incorporated by reference to
Registrant's Post-Effective Amendment No. 19, April 30, 1992).
5. Advisory Contract (incorporated by reference to Registrant's
Post-Effective Amendment No. 11, May 1, 1984).
6. Underwriting and Dealer Agreement, filed herewith.
7. Trustees' Deferred Compensation Agreement, (incorporated by
reference to Registrant's Post-Effective Amendment No. 19, April
30, 1992).
8. Custodial Contract, filed herewith.
9. Transfer Agency Contract, filed herewith.
10. Opinion and Consent of Counsel as to Legality of
Shares Being Registered.
11. Consent of Independent Accountants to Use of Report.
12. Retirement Plans Calvert First Government Money Market
Fund only (incorporated by reference to Registrant's Post-Effective
Amendment No. 19, April 30, 1992, and incorporated by reference
to Registrant's Post-Effective Amendment No.16, April 28, 1989).
15. Plan of Distribution, filed herewith for the Calvert First
<PAGE>
Government Money Market Fund, and, for the Florida Municipal
Intermediate Fund only, incorporated by reference to the Registrant's
Post-Effective Amendment No. 33, April 29, 1996.
16. Schedule for Computation of Performance Quotation (incorporated
by reference to Registrant's Post-Effective Amendment No. 15, April
30, 1988).
17. Financial Data Schedules.
18. Multiple-class Plan under the Investment Company Act of 1940
Rule 18f-3, filed herewith.
Exhibits 3, 13 and 14 are omitted because they are inapplicable.
Item 25. Persons Controlled By or Under Common Control With Registrant
Item 26. Number of Holders of Securities
As of February 28, 1998, there were 12,845 holders of record of
Registrant's Class A shares of beneficial interest for Calvert First Government
Money Market Fund.
As of February 28, 1998, there were 75 holders of record of
Registrant's Class A shares of beneficial interest for Calvert Florida Municipal
Intermediate Fund.
Item 27. Indemnification
Registrant's Declaration of Trust, which Declaration is Exhibit
1 of this Registration Statement, provides, in summary, that officers,
trustees, employees, and agents shall be indemnified by Registrant
against liabilities and expenses incurred by such persons in connection
with actions, suits, or proceedings arising out of their offices or
duties of employment, except that no indemnification can be made to such
a person if he has been adjudged liable of willful misfeasance, bad
faith, gross negligence, or reckless disregard of his duties. In the
absence of such an adjudication, the determination of eligibility for
indemnification shall be made by independent counsel in a written
opinion or by the vote of a majority of a quorum of trustees who are
neither "interested persons" of Registrant, as that term is defined in
Section 2(a)(19) of the Investment Company Act of 1940, nor parties to
the proceeding.
<PAGE>
Registrant's Declaration of Trust also provides that Registrant
may purchase and maintain liability insurance on behalf of any officer,
trustee, employee or agent against any liabilities arising from such
status. In this regard, Registrant maintains a Directors & Officers
(Partners) Liability Insurance Policy with Chubb Group of Insurance
Companies, 15 Mountain View Road, Warren, New Jersey 07061, providing
Registrant with $5 million in directors and officers liability coverage,
plus $3 million in excess directors and officers liability coverage for
the independent trustees/directors only. Registrant also maintains an
$8 million Investment Company Blanket Bond issued by ICI Mutual
Insurance Company, P.O. Box 730, Burlington, Vermont, 05402.
Item 28. Business and Other Connections of Investment Adviser
<TABLE>
<CAPTION>
Name of Company, Principal
Name Business and Address Capacity
<S> <C> <C>
Barbara J. Krumsiek Acacia Capital Corporation Officer
Calvert Municipal Fund, Inc. and
Calvert World Values Fund, Inc. Director
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Social Investment Fund
Calvert Cash Reserves
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
----------------
Calvert Group, Ltd. Officer
Holding Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company and
<PAGE>
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Officer
Broker-Dealer and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Alliance Capital Mgmt. L.P. Sr. Vice President
Mutual Fund Division Director
1345 Avenue of the Americas
New York, NY 10105
--------------
Ronald M. Wolfsheimer First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
<PAGE>
---------------
Calvert Administrative Services Co. Officer
Service Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
David R. Rochat First Variable Rate Fund Officer
for Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Cash Reserves
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Municipal Fund, Inc. Officer
Investment Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Chelsea Securities, Inc. Officer
Securities Firm and
Post Office Box 93 Director
Chelsea, Vermont 05038
---------------
Grady, Berwald & Co. Officer
Holding Company and
43A South Finley Avenue Director
Basking Ridge, NJ 07920
---------------
Reno J. Martini Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
<PAGE>
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Charles T. Nason Acacia Mutual Life Insurance Officer
Acacia National Life Insurance and Director
Insurance Companies
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Financial Corporation Officer
Holding Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Director
Tax Return Preparation Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
Acacia Federal Savings Bank Director
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
<PAGE>
Enterprise Resources, Inc. Director
Business Support Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Director
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Social Investment Fund Trustee
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
-----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Robert-John H. Acacia National Life Insurance Officer
Sands Insurance Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
----------------
Acacia Mutual Life Insurance Officer
Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
<PAGE>
Acacia Financial Corporation Officer
Holding Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
----------------
Acacia Federal Savings Bank Officer
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Realty Corporation Officer
Real Estate Investments
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Officer
Tax Return and
Preparation Services Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Director
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management, Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Director
<PAGE>
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
William M. Tartikoff Acacia National Life Insurance Officer
Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co. Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
<PAGE>
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Susan Walker Bender Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Katherine Stoner Calvert Group, Ltd. Officer
Holding Company
<PAGE>
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Lisa Crossley Newton Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
<PAGE>
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Ivy Wafford Duke Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
<PAGE>
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Daniel K. Hayes Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Steve Van Order Calvert Asset Management Officer
Company, Inc.
<PAGE>
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Annette Krakovitz Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
John Nichols Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
David Leach Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Matthew D. Gelfand Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Strategic Investment Management Officer
Investment Advisor
1001 19th Street North
Arlington, Virginia 20009
------------------
</TABLE>
Item 29. Principal Underwriters
(a) Registrant's principal underwriter also underwrites shares
of Calvert Tax-Free Reserves, Calvert Social Investment Fund, Calvert Cash
Reserves, The Calvert Fund, Calvert Municipal Fund, Inc., Calvert World
Values Fund, Inc., Calvert New World Fund, Inc., and Acacia Capital
Corporation.
(b) Positions of Underwriter's Officers and Directors
<TABLE>
<CAPTION>
Name and Principal Position(s) with Position(s) with
Business Address Underwriter Registrant
<PAGE>
<S> <C> <C>
Barbara J. Krumsiek Director and President President and Trustee
Ronald M. Wolfsheimer Director, Senior Vice Treasurer
President and Chief Financial Officer
William M. Tartikoff Director, Senior Vice Vice President and
President and Secretary Secretary
Craig Cloyed Senior Vice President None
Karen Becker Vice President, Operations None
Steve Cohen Vice President None
Geoffrey Ashton Regional Vice President None
Martin Brown Regional Vice President None
Janet Haley Regional Vice President None
Ben Ogbogu Regional Vice President None
Susan Walker Bender Assistant Secretary Assistant Secretary
Katherine Stoner Assistant Secretary Assistant Secretary
Lisa Crossley Newton Assistant Secretary Assistant Secretary
and Compliance Officer
Ivy Wafford Duke Assistant Secretary Assistant Secretary
</TABLE>
(c) Inapplicable.
Item 30. Location of Accounts and Records
Ronald M. Wolfsheimer, Treasurer
and
William M. Tartikoff, Assistant Secretary
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a) Not Applicable
<PAGE>
(b) Not Applicable
(c) The Registrant undertakes to furnish to each person
to whom a Prospectus is delivered, a copy of the
Registrant's latest Annual Report to Shareholders,
upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it
meets all of the requirements for effectiveness of this registration
statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this registration statement to be signed on its behalf
by the undersigned, thereto duly authorized in the City of Bethesda, and
State of Maryland, on the 27th day of March, 1998.
FIRST VARIABLE RATE FUND
By:
**
---------------------------------
Barbara J. Krumsiek
President and Trustee
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons in the capacities indicated.
Signature Title Date
** President and 3/27/98
- ------------------------- Trustee (Principal Executive Officer)
Barbara J. Krumsiek
** Principal Accounting 3/27/98
- ------------------------- Officer
Ronald M. Wolfsheimer
** Trustee 3/27/98
- -------------------------
Richard L. Baird, Jr.
** Trustee 3/27/98
- -------------------------
Frank H. Blatz, Jr., Esq.
<PAGE>
** Trustee 3/27/98
- -------------------------
Frederick T. Borts, M.D.
** Trustee 3/27/98
- -------------------------
Charles E. Diehl
** Trustee 3/27/98
- -------------------------
Douglas E. Feldman
** Trustee 3/27/98
- -------------------------
Peter W. Gavian
** Trustee 3/27/98
- -------------------------
John G. Guffey, Jr.
** Trustee 3/27/98
- -------------------------
M. Charito Kruvant
** Trustee 3/27/98
- -------------------------
Arthur J. Pugh
** Trustee 3/27/98
- -------------------------
David R. Rochat
** Trustee 3/27/98
- -------------------------
D. Wayne Silby
**By Ivy Wafford Duke as Attorney-in-fact, pursuant to Power of Attorney Forms
on file.
<PAGE>
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, dated as of February 25, 1998 by and between
EACH CALVERT FUND LISTED IN THE SCHEDULE OF FUNDS ATTACHED HERETO AS SCHEDULE I
(each a "Fund" and together the "Funds"), as such schedule may, from time to
time be amended, and CALVERT DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").
WHEREAS, each Fund is registered as an open-end investment company under
the Investment Company Act of 1940 (the "1940 Act") and has registered its
shares, including shares of its series portfolios (the "Series"), for sale to
the public under the Securities Act of 1933 (the "1933 Act") and various state
securities laws;
WHEREAS, each Fund wishes to retain the Distributor as the principal
underwriter in connection with the offer and sale of shares of the Series (the
"Shares") and to furnish certain other services to the Series as specified in
this Agreement;
WHEREAS, this contract has been approved by the Trustees/Directors of each
Fund in anticipation of the Distributor's transfer of its rights to receive the
Class B Distribution Fees ( as defined in the Distribution Plan for Class B and
C Shares (the "Distribution Plan")) and/or Class B contingent deferred sales
charges to a financing party in order to raise funds to cover distribution
expenditures; and
WHEREAS, the Distributor is willing to act as principal underwriter and to
furnish such services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. Each Fund hereby appoints the Distributor as principal underwriter in
connection with the offer and sale of its Shares. The Distributor shall, as
agent for each Fund, subject to applicable federal and state law and the
Declaration of Trust or Articles of Incorporation, and By-laws of the applicable
Fund and in accordance with the representations in the applicable Fund's
Registration Statement and Prospectus, as such documents may be amended from
time to time: (a) promote the Series; (b) enter into appropriate dealer
agreements with other registered broker-dealers to further distribution of the
Shares; (c) solicit orders for the purchase of the Shares subject to such terms
and conditions as the applicable Fund may specify; (d) transmit promptly orders
and payments for the purchase of Shares and orders for redemption of Shares to
the applicable Fund's transfer agent; and (e) provide services agreed upon by
the applicable Fund to Series shareholders; provided, however, that the
Distributor may sell no Shares pursuant to this Agreement until the Distributor
is notified that a Fund's Registration Statement under the 1933 Act, authorizing
the sale of such Shares through the Distributor, has become effective. The
Distributor shall comply with all applicable federal and state laws and offer
the Shares on an agency or "best efforts" basis under which a Fund shall only
issue such Shares as are actually sold.
2. The public offering price of the Shares shall be the net asset value
("NAV") per share (as determined by the applicable Fund) of the outstanding
Shares of the Series, plus the applicable sales charge, if any, as set forth in
the Fund's then current Prospectus. Each Fund shall furnish the Distributor with
a statement of each computation of NAV and of the details entering into such
computation.
3. COMPENSATION.
a. DISTRIBUTION FEE.
i. CLASS A. In consideration of the Distributor's services as distributor
for the Class A Shares of a Fund, each Fund may pay to the Distributor the
Distribution Fee as set forth in Schedule II to this Agreement that is payable
pursuant to the Fund's Distribution Plan.
-1-
<PAGE>
ii. CLASS B. In consideration of the Distributor's services as distributor
for the Class B Shares of a Fund, each Fund shall pay to the Distributor (or its
designee or transferee) the Distributor's Allocable Portion of the Distribution
Fee; (as set forth in Schedule II to this Agreement) that is payable pursuant to
the Fund's Distribution Plan in respect of the Class B Shares of a Fund. For
purposes of this Agreement, the Distributor's "Allocable Portion" of the
Distribution Fee shall be 100% of such Distribution Fee unless or until the Fund
uses a principal underwriter other than the Distributor and thereafter the
Allocable Portion shall be the portion of the Distribution Fee attributable to
(i) Class B Shares of a Fund sold by the Distributor ("Commission Shares"), (ii)
Class B Shares of the Fund issued in connection with the exchange of Commission
Shares of another Fund, and (iii) Class B Shares of the Fund issued in
connection with the reinvestment of dividends and capital gains.
The Distributor's Allocable Portion of the Distribution Fee and the
contingent deferred sales charges arising in respect of Class B Shares taken
into account in computing the Distributor's Allocable Portion shall be limited
under Rule 2830 of the Conduct Rules or other applicable regulations of the NASD
as if the Class B Shares taken into account in computing the Distributor's
Allocable Portion themselves constituted a separate class of shares of a Fund.
The services rendered by the Distributor for which the Distributor is
entitled to receive the Distributor's Allocable Portion of the Distribution Fee
shall be deemed to have been completed at the time of the initial purchase of
the Commission Shares (whether of the Fund or another Fund in the Calvert Group
of Funds) taken into account in computing the Distributor's Allocable Portion.
Notwithstanding anything to the contrary in this Agreement, the Distributor
shall be paid its Allocable Portion of the Distribution Fee notwithstanding the
Distributor's termination as principal underwriter of the Class B Shares of a
Fund, or any termination of this Agreement other than in connection with a
Complete Termination (as defined in the Distribution Plan) of the Class B
Distribution Plan as in effect on the date of this Agreement. Except as provided
in the preceding sentence, a Fund's obligation to pay the Distribution Fee to
the Distributor shall be absolute and unconditional and shall not be subject to
any dispute, offset, counterclaim or defense whatsoever, (it being understood
that nothing in this sentence shall be deemed a waiver by a Fund of its right
separately to pursue any claims it may have against the Distributor and to
enforce such claims against any assets (other than its rights to be paid its
Allocable Portion of the Distribution Fee and to be paid the contingent deferred
sales charges) of the Distributor.
iii. CLASS C. In consideration of the Distributor's services as distributor
for the Class C Shares of a Fund, each Fund shall pay to the Distributor the
Distribution Fee as set forth in Schedule II to this Agreement that is payable
pursuant to the Fund's Distribution Plan.
b. SERVICE FEE. As additional compensation, for Class A, Class B and
Class C Shares of each Series, applicable Funds shall pay the Distributor a
service fee (as that term is defined by the National Association of Securities
Dealers, Inc. ("NASD")) as set forth in Schedule III to this Agreement that is
payable pursuant to the Fund's Distribution Plan.
c. FRONT-END SALES CHARGES. As additional compensation for the services
performed and the expenses assumed by the Distributor under this Agreement, the
Distributor may, in conformity with the terms and conditions set forth in the
then current Prospectus of each Fund, impose and retain for its own account the
amount of the front-end sales charge, if any, and may reallow a portion of any
front-end sales charge to other broker-dealers, all in accordance with NASD
rules.
d. CONTINGENT DEFERRED SALES CHARGE. Each Fund will pay to the
Distributor (or its designee or transferee) in addition to the fees set forth in
Section 3 hereof any contingent deferred sales charge imposed on redemptions of
that Fund's Class B and Class C Shares upon the terms and conditions set forth
in the then current Prospectus of that Fund. Notwithstanding anything to the
contrary in this Agreement, the Distributor shall be paid such contingent
deferred sales charges in respect of Class B Shares taken into account in
computing the Distributor's Allocable Portion of the Distribution Fee
notwithstanding the Distributor's termination as principal underwriter of the
Class B shares of a Fund or any termination of this Agreement other than in
connection with a Complete Termination of the Class B Distribution Plan as in
effect on the date of this Agreement. Except as provided in the preceding
sentence, a Fund's obligation to remit such contingent deferred sales charges to
the Distributor shall not
-2-
<PAGE>
be subject to any dispute, offset, counterclaim or defense whatsoever, it being
understood that nothing in this sentence shall be deemed a waiver by a Fund of
its right separately to pursue any claims it may have against the Distributor
and to enforce such claims against any assets (other than the Distributor's
right to be paid its Allocable Portion of the Distribution Fee and to be paid
the contingent deferred sales charges) of the Distributor. No Fund will waive
any contingent deferred sales charge except under the circumstances set forth in
the Fund's current Prospectus without the consent of the Distributor (or, if
rights to payment have been transferred, the transferee), which consent shall
not be unreasonably withheld.
4. PAYMENTS TO DISTRIBUTOR'S TRANSFEREES. The Distributor may transfer
the right to payments hereunder (but not its obligations hereunder) in order to
raise funds to cover distribution expenditures, and any such transfer shall be
effective upon written notice from the Distributor to the Fund. In connection
with the foregoing, the Fund is authorized to pay all or a part of the
Distribution Fee and/or contingent deferred sales charges in respect of Class B
Shares directly to such transferee as directed by the Distributor.
5. CHANGES IN COMPUTATION OF FEE, ETC. As long as the Class B
Distribution Plan is in effect, a Fund shall not change the manner in which the
Class B Distribution Fee is computed (except as may be required by a change in
applicable law or a change in accounting policy adopted by the Investment
Companies Committee of the AICPA and approved by FASB that results in a
determination by a Fund's independent accountants that any of the sales charges
in respect of such Fund, which are not contingent deferred sales charges and
which are not yet due and payable, must be accounted for by such Fund as a
liability in accordance with GAAP).
6. As used in this Agreement, the term "Registration Statement" shall
mean the registration statement most recently filed by a Fund with the
Securities and Exchange Commission and effective under the 1933 Act, as such
Registration Statement is amended by any amendments thereto at the time in
effect, and the term "Prospectus" shall mean the form of prospectus filed by a
Fund as part of the Registration Statement.
7. The Distributor shall print and distribute to prospective investors
Prospectuses, and may print and distribute such other sales literature, reports,
forms, and advertisements in connection with the sale of the Shares as comply
with the applicable provisions of federal and state law. In connection with such
sales and offers of sale, the Distributor shall give only such information and
make only such statements or representations, and require broker-dealers with
whom it enters into dealer agreements to give only such information and make
only such statements or representations, as are contained in the Prospectus or
in information furnished in writing to the Distributor by a Fund. The Funds
shall not be responsible in any way for any other information, statements or
representations given or made by the Distributor, other broker-dealers, or the
representatives or agents of the Distributor or such broker-dealers. Except as
specifically permitted under the Distribution Plan under Rule 12b-1 under the
1940 Act, as provided in paragraph 3 of this Agreement, the Funds shall bear
none of the expenses of the Distributor in connection with its offer and sale of
the Shares.
8. Each Fund agrees at its own expense to register the Shares with the
Securities and Exchange Commission, state and other regulatory bodies, and to
prepare and file from time to time such Prospectuses, amendments, reports and
other documents as may be necessary to maintain the Registration Statement. Each
Fund shall bear all expenses related to preparing and typesetting its
Prospectus(es) and other materials required by law and such other expenses,
including printing and mailing expenses related to the Fund's communications
with persons who are shareholders of such Fund.
9. Each Fund agrees to indemnify, defend and hold the Distributor, its
several officers and directors, and any person who controls the Distributor
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Distributor, its
officers or directors, or any such controlling person may incur, under the 1933
Act or under common law or otherwise, arising out of or based upon any alleged
untrue statement of a material fact contained in its Registration Statement or
Prospectus or arising out of or based upon any alleged omission to state a
material fact required to be stated in either thereof or necessary to make the
statements in either thereof not misleading, provided that in no event shall
anything contained in this Agreement be construed so as to protect the
Distributor against any
-3-
<PAGE>
liability to a Fund or its shareholders to which the Distributor would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence, in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
10. The Distributor agrees to indemnify, defend and hold each Fund, their
several officers and directors, and any person who controls a Fund within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which a Fund, its officers or directors,
or any such controlling person may incur, under the 1933 Act or under common law
or otherwise, arising out of or based upon any alleged untrue statement or a
material fact contained in information furnished in writing by the Distributor
to the Funds for use in the Registration Statement or Prospectus(es) or arising
out of or based upon any alleged omission to state a material fact in connection
with such information required to be stated in the Registration Statement or
Prospectus(es) or necessary to make such information not misleading.
11. Each Fund reserves the right at any time to withdraw all offerings of
the Shares by written notice to the Distributor at its principal office.
12. The Distributor is an independent contractor and shall be agent for a
Fund only in respect to the offer, sale and redemption of that Fund's Shares.
13. The services of the Distributor to a Fund under this Agreement are not
to be deemed exclusive, and the Distributor shall be free to render similar
services or other services to others so long as its services hereunder are not
impaired thereby.
14. The Distributor acknowledges that it has received notice of and
accepts the limitations upon the liability of any Fund organized as a business
trust set forth in such Fund's Declaration of Trust. The Distributor agrees that
the obligations of such Funds hereunder in any case shall be limited to such
Funds and to their assets and that the Distributor shall not seek satisfaction
of any such obligation from the shareholders of such a Fund nor from any
Trustee, officer, employee or agent of such Fund.
15. The Funds shall not use the name of the Distributor in any Prospectus,
sales literature or other material relating to the Funds in any manner not
approved prior thereto by the Distributor; provided, however, that the
Distributor shall approve all uses of its name which merely refer in accurate
terms to its appointment hereunder or which are required by the Securities and
Exchange Commission or a State Securities Commission; and, provided further,
that in no event shall such approval be unreasonably withheld. The Distributor
shall not use the name of any Fund in any material relating to the Distributor
in any manner not approved prior thereto by the Fund; provided, however that the
Funds shall approve all uses of their names which merely refer in accurate terms
to the appointment of the Distributor hereunder or which are required by the
Securities and Exchange Commission or a State Securities Commission; and,
provided further, that in no event shall such approval be unreasonably withheld.
16. The Distributor shall prepare written reports for the Board of
Trustees/Directors of each Fund on a quarterly basis showing information
concerning services provided and expenses incurred which are related to this
Agreement and such other information as from time to time shall be reasonably
requested by a Fund's Board of Trustees/Directors.
17. As used in this Agreement, the terms "assignment," "interested
person," and "majority of the outstanding voting securities" shall have the
meaning given to them by Section 2(a) of the 1940 Act, subject to such
exemptions as may be granted by the Securities and Exchange Commission by any
rule, regulation or order; provided, however that, in order to obtain financing,
the Distributor may assign to a lending institution the payments due to the
Distributor under this Agreement without it constituting an assignment of the
Agreement.
18. Subject to the provisions of sections 19 and 20 below, this Agreement
will remain in effect for two years from the date of is execution and from year
to year thereafter, provided that the Distributor does not notify a Fund in
writing at least sixty (60) days prior to the expiration date in any year that
it does not wish
-4-
<PAGE>
continuance of the Agreement as to such Fund for an additional year.
19. TERMINATION. As to any particular Fund (or Series thereof), this
Agreement shall automatically terminate in the event of its assignment and may
be terminated at any time without the payment of any penalty by a Fund or by the
Distributor on sixty (60) days' written notice to the other party. A Fund may
effect such termination by a vote of (i) a majority of the Board of
Trustees/Directors of the Fund, (ii) a majority of the Trustees/Directors who
are not interested persons of the Fund, who are not parties to this Agreement or
interested persons of such parties, and who have no direct or indirect financial
interest in the operation of the Distribution Plan, in this Agreement or in any
agreement related to such Fund's Distribution Plan (the "Rule 12b-1
Trustees/Directors"), or (iii) a majority of the outstanding voting securities
of the relevant Series.
20. This Agreement shall be submitted for renewal to the Board of
Trustees/Directors of each Fund at least annually and shall continue in effect
only so long as specifically approved at least annually (i) by a majority vote
of the Fund's Board of Trustees/Directors, and (ii) by the vote of the majority
of the Rule 12b-1 Trustees/Directors of the Fund, cast in person at a meeting
called for the purpose of voting on such approval.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first above written by their officers thereunto duly
authorized.
Attest: EACH FUND LISTED IN THE
ATTACHED SCHEDULE I
By: /s/ Edwidge Saint-Felix By: /s/ William M. Tartikoff
Vice President
Attest: CALVERT DISTRIBUTORS, INC.
By: /s/ Edwidge Saint-Felix By: /s/ Ronald M. Wolfsheimer
Senior Vice President
-5-
<PAGE>
SCHEDULE I
The Calvert Fund
Calvert Tax-Free Reserves
Calvert Municipal Fund
Calvert Social Investment Fund
Calvert World Values Fund
Calvert New World Fund
First Variable Rate Fund
-6-
<PAGE>
SCHEDULE II
Fees are expressed as a percentage of average annual daily net assets, and are
payable monthly.
DISTRIBUTION FEE
<TABLE>
<CAPTION>
Class A* Class B Class C Class I
<S> <C> <C> <C> <C>
The Calvert Fund
New Vision Small Cap Fund N/A 0.75 0.75 N/A
Calvert Income Fund 0.25 0.75 0.75 N/A
Calvert Tax-Free Reserves
Money Market Portfolio N/A N/A N/A N/A
Limited-Term Portfolio N/A N/A N/A N/A
Long-Term Portfolio 0.10 0.75 0.75 N/A
California Money Market Port. N/A N/A N/A N/A
Vermont Municipal N/A 0.75 0.75 N/A
Calvert Municipal Fund
National Intermediate Fund N/A 0.75 N/A N/A
California Intermediate Fund N/A 0.75 N/A N/A
Maryland Intermediate Fund N/A 0.75 N/A N/A
Virginia Intermediate Fund N/A 0.75 N/A N/A
Calvert Social Investment Fund
Managed Growth Portfolio 0.10 0.75 0.75 N/A
Equity Portfolio 0.10 0.75 0.75 N/A
Bond Portfolio 0.10 0.75 0.75 N/A
Managed Index Portfolio N/A 0.75 0.75 N/A
Money Market Portfolio N/A N/A N/A N/A
Calvert World Values Fund
Capital Accumulation Fund 0.10 0.75 0.75 N/A
International Equity Fund 0.10 0.75 0.75 N/A
Calvert New World Fund
Calvert New Africa Fund N/A 0.75 0.75 N/A
First Variable Rate Fund
Calvert First Gov't Money Mkt N/A 0.75 N/A N/A
</TABLE>
*Distributor reserves the right to waive all or a portion of the distribution
fee from time to time.
DATED: February 1998
-7-
<PAGE>
SCHEDULE III
Fees are expressed as a percentage of average annual daily net assets and are
payable monthly.
SERVICE FEE
<TABLE>
<CAPTION>
Class A* Class B Class C Class I
<S> <C> <C> <C> <C>
The Calvert Fund
New Vision Small Cap Fund 0.25 0.25 0.25 N/A
Calvert Income Fund 0.25 0.25 0.25 N/A
Calvert Tax-Free Reserves
Money Market Portfolio N/A N/A N/A N/A
Limited-Term Portfolio N/A N/A N/A N/A
Long-Term Portfolio 0.25 0.25 0.25 N/A
California Money Market Port. N/A N/A N/A N/A
Vermont Municipal N/A 0.25 0.25 N/A
Calvert Municipal Fund
National Intermediate Fund 0.25 0.25 N/A N/A
California Intermediate Fund 0.25 0.25 N/A N/A
Maryland Intermediate Fund 0.25 0.25 N/A N/A
Virginia Intermediate Fund 0.25 0.25 N/A N/A
Calvert Social Investment Fund
Managed Growth Portfolio 0.25 (+) 0.25 0.25 N/A
Equity Portfolio 0.25 0.25 0.25 N/A
Bond Portfolio 0.25 0.25 0.25 N/A
Managed Index Portfolio 0.25 0.25 0.25 N/A
Money Market Portfolio 0.25 N/A N/A N/A
Calvert World Values Fund
Capital Accumulation Fund 0.25 0.25 0.25 N/A
International Equity Fund 0.25 0.25 0.25 N/A
Calvert New World Fund
Calvert New Africa Fund 0.25 0.25 0.25 N/A
First Variable Rate Fund
Calvert First Gov't Money Mkt N/A 0.25 N/A N/A
</TABLE>
DATED: February 1998
- ------------------------------
* Distributor reserves the right to waive all or a portion of the service fees
from time to time. For money market portfolios, Class A shall refer to Class O,
or if the portfolio does not have multiple classes, then to the portfolio
itself.
+ Distributor charges the service fee only on assets in excess of $30 million.
-8-
<PAGE>
EXHIBIT 10
March 27, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Exhibit 10, Form N-1A
First Variable Rate Fund for Government Income
File numbers 2-56809 and 811-2633
Ladies and Gentlemen:
As counsel to Calvert Group, Ltd., it is my opinion that the
securities being registered by this Post-Effective Amendment No. 35 will
be legally issued, fully paid and non-assessable when sold. My opinion
is based on an examination of documents related to First Variable Rate
Fund for Government Income (the "Trust"), including its Declaration of
Trust, its By-Laws, other original or photostatic copies of Trust
records, certificates of public officials, documents, papers, statutes,
and authorities as I deemed necessary to form the basis of this opinion.
I therefore consent to filing this opinion of counsel with the
Securities and Exchange Commission as an Exhibit to the Trust's
Post-Effective Amendment No. 35 to its Registration Statement.
Sincerely,
/s/
Susan Walker Bender
Associate General Counsel
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of First Variable Rate Fund for Government Income
We consent to the incorporation by reference in Post-Effective Amendment No. 35
to the Registration Statement of First Variable Rate Fund for Government Income
on Form N-1A (File Numbers 2-56809 and 811-2633) of our report dated February 6,
1998, on our audits of the financial statements and financial highlights of
Calvert First Government Money Market Fund, which report is included in the
Annual Report to Shareholders for the year ended December 31, 1997, which is
incorporated by reference in the Registration Statement. We also consent to the
reference to our Firm under the caption "Independent Accountants and Custodians"
in the Statement of Additional Information.
COOPERS & LYBRAND, L.L.P.
/s/Coopers & Lybrand, L.L.P.
Baltimore, Maryland
March 20, 1998
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix Barbara Krumsiek
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix Richard L. Baird, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Charles E. Diehl Frank H. Blatz, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix Douglas E. Feldman
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Frank H. Blatz, Jr. Charles E. Diehl
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix Peter W. Gavian
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
M. Charito Kruvant John G. Guffey, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix M. Charito Kruvant
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Charles E. Diehl Arthur J. Pugh
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Katherine Stoner David R. Rochat
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix D. Wayne Silby
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert
Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"), hereby
constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed by the
Funds with any federal or state agency, and to do all such things in my name and
behalf necessary for registering and maintaining registration or exemptions from
registration of the Funds with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
January 16, 1998
Date /Signature/
Roger Wilkins Frederick Borts, MD
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned officer of Calvert Social Investment Fund, Calvert World
Values Fund, Acacia Capital Corporation, Calvert New World Fund, First Variable
Rate Fund, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert Fund
and Calvert Municipal Fund (each, respectively, the "Fund"), hereby constitute
William M. Tartikoff, Susan Walker Bender, Katherine Stoner, Lisa Crossley, and
Ivy Wafford Duke my true and lawful attorneys, with full power to each of them,
to sign for me and in my name in the appropriate capacities, all registration
statements and amendments filed by the Fund with any federal or state agency,
and to do all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my name
and behalf to comply with the provisions of all federal, state and foreign laws,
regulations, and policy pronouncements affecting the Funds, including, but not
limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940, and all
state laws regulating the securities industry.
The same persons are further authorized to sign my name to any document
needed to maintain the lawful operation of the Funds in connection with any
transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any document in
connection with maintaining the lawful operation of the Funds, the signing is
automatically ratified and confirmed by me by virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
December 16, 1997
Date /Signature/
William M. Tartikoff Ronald M. Wolfsheimer
Witness Name of Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000205355
<NAME> FIRST VARIABLE RATE FUND FOR GOVERNMENT INCOME
<SERIES>
<NUMBER> 345
<NAME> CALVERT FIRST GOVERNMENT MONEY MARKET FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 228799
<INVESTMENTS-AT-VALUE> 228799
<RECEIVABLES> 2876
<ASSETS-OTHER> 678
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 232353
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 323
<TOTAL-LIABILITIES> 323
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 232267
<SHARES-COMMON-STOCK> 232514
<SHARES-COMMON-PRIOR> 239910
<ACCUMULATED-NII-CURRENT> 18
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (260)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 232025
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13715
<OTHER-INCOME> 0
<EXPENSES-NET> 1934
<NET-INVESTMENT-INCOME> 11781
<REALIZED-GAINS-CURRENT> 11
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 11792
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (11790)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 390048
<NUMBER-OF-SHARES-REDEEMED> (408958)
<SHARES-REINVESTED> 11513
<NET-CHANGE-IN-ASSETS> (7395)
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> (271)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1200
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1969
<AVERAGE-NET-ASSETS> 241324
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.049
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.049)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
CUSTODIAN AGREEMENT
This Agreement, dated as of March 5, 1992 (and restated as of December 31,
1993), is between State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110 ("State Street" or the "Custodian"), and First Variable
Rate Fund for Government Income, a Massachusetts business trust (the "Fund"),
having its principal place of business at 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland, 20814. In consideration of the mutual covenants and
agreements contained in this Agreement, the parties agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs State Street as the custodian of assets, including
securities, of the Fund's portfolios ("Portfolios"). The Portfolios agree to
deliver to the Custodian all securities and cash now or hereafter owned or
acquired, and all payments of income, principal or capital distributions
received by them on securities owned at any given time, and the cash
consideration received for shares of the Portfolios. The Custodian will not be
responsible for any property held or received by any Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (as defined in Section 4), the Custodian
will employ one or more subcustodians located in the United States, but only in
accordance with an applicable vote by the Board of Trustees of the Fund, and
provided that the Custodian will have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any subcustodian
so employed than any such subcustodian has to the Custodian, and further
provided that the Custodian will not release the subcustodian from any
responsibility or liability unless mutually agreed on by the parties in writing.
All duties undertaken by the Custodian will be performed in a timely manner.
What constitutes timeliness in connection with a particular action will be
determined by the standards of the industry as they apply to the specific type
of transaction in question and taking into account relevant facts.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND
2.1 HOLDING SECURITIES. The Custodian will hold and physically segregate for the
account of each Portfolio all non-cash property other than (a) securities
maintained in a clearing agency acting as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury
(collectively referred to as "Securities System;" see Section 2.10), and (b)
commercial paper of an issuer for which the Custodian acts as issuing and paying
agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian (see Section 2.11).
2.2 DELIVERY OF SECURITIES. The Custodian will release and deliver Portfolio
securities held by the Custodian or in a Securities System account of the
Custodian or in the Custodian's Direct Paper book entry system account ("Direct
Paper System Account") only upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by mutual agreement of the
parties, and only in the following cases:
1) Sale. Upon the sale of and receipt of payment for a Portfolio's securities;
2) Repurchase Agreements. Upon receipt of payment in connection with any
repurchase agreement entered into by the Fund related to the securities being
held;
3) Securities System. In the case of a sale effected through a Securities
System, in accordance with the provisions of Section 2.10;
4) Tender Offer. To the depository agent or other receiving agent in connection
with tender or other similar offers for a Portfolio's securities;
<PAGE>
5) Redemption by issuer. To the issuer or its agent when a Portfolio's
securities are called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be delivered to
the Custodian;
6) Transfer to Issuer, Nominee; Exchange. To the issuer or its agent for
transfer into the name of a Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of any agent
appointed pursuant to this Agreement or into the name or nominee name of any
subcustodian appointed pursuant to Section 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same aggregate
face amount or number of units and bearing the same interest rate, maturity date
and call provisions, if any; provided that, in any such case, the new securities
are to be delivered to the Custodian;
7) Sale to Broker or Dealer. Upon the sale of a Portfolio's securities to the
broker or its clearing agent or dealer, against a receipt, for examination in
accordance with "street delivery" custom; provided that the Custodian will have
no responsibility or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except as may arise
from the Custodian's failure to act in accordance with its duties as set forth
in this Agreement.
8) Exchange or Conversion. For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization, split-up of shares,
change of par value or readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement provided that, in any such
case, the new securities and cash, if any, are to be delivered to the Custodian;
9) Warrants, Rights. In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;
10) Loans of Securities. For delivery in connection with any loans of securities
made by a Portfolio, made only against receipt of adequate collateral as agreed
on from time to time by the Custodian and the Fund on behalf of the Portfolio.
Loans may be in the form of cash, obligations issued by the United States
government, its agencies or instrumentalities, or such other property as
mutually agreed by the parties, except that in connection with any loans for
which collateral is to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the Custodian will not
be held liable or responsible for the delivery of securities owned by the
Portfolio prior to the receipt of such collateral, unless the Custodian fails to
act in accordance with its duties set forth in this Agreement;
11) Borrowings. For delivery as security in connection with any borrowings by a
Portfolio requiring a pledge of assets by the Portfolio, made only against
receipt of amounts borrowed; except, where additional collateral is required to
secure a borrowing already made, further securities may be released for that
purpose, subject to Proper Instructions;
12) Options. For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation, any registered
national securities exchange, any similar organization or organizations, or the
Investment Company Act of 1940, regarding escrow or other arrangements in
connection with transactions by the Fund;
13) Futures. For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission merchant registered
under the Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract Market, any similar
organization or organizations, or the Investment Company Act of 1940, regarding
account deposits in connection with transactions by the Fund;
<PAGE>
14) In-Kind Distributions. Upon receipt of instructions from the Fund's transfer
agent, for delivery to the transfer agent or to the holders of shares in
connection with distributions in kind, as may be described from time to time in
the Portfolio's currently effective prospectus and statement of additional
information, in satisfaction of shareholder requests for repurchase or
redemption;
15) Miscellaneous. For any other proper corporate purpose, made only upon
receipt of, in addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, specifying the securities to be delivered,
setting forth the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or persons to
whom delivery of the securities will be made.
In all cases, payments to the Portfolio will be made in cash, by a certified
check or a treasurer's or cashier's check of a bank, by effective bank wire
transfer through the Federal Reserve Wire System or, if appropriate, outside of
the Federal Reserve Wire System and subsequent credit to the Fund's Custodial
account, or, in case of delivery through a stock clearing company, by book-entry
credit by the stock clearing company in accordance with the then current street
custom, or such other form of payment as may be mutually agreed on by the
parties, in all such cases collected funds to be promptly credited to the Fund.
2.3 REGISTRATION OF SECURITIES. Securities held by the Custodian (other than
bearer securities) will be registered (a) in the name of the Portfolio or (b) in
the name of any nominee of the Portfolio or of any nominee of the Custodian
assigned exclusively to the Portfolio, unless the Fund has authorized in writing
the appointment of a nominee to be used in common with other registered
investment companies having the same investment adviser as any of the
Portfolios, or in the name or nominee name of any agent appointed pursuant to
Section 2.9 or in the name or nominee name of any subcustodian appointed
pursuant to Section 1. All securities accepted by the Custodian on behalf of a
Portfolio under the terms of this Agreement will be in "street name" or other
good delivery form.
2.4 BANK ACCOUNTS. The Custodian will open and maintain a separate bank account
or accounts in the name of each Portfolio, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement. The Custodian will
hold in the account(s), in accordance with the provisions of this Agreement, all
cash received by it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds held by the Custodian
for a Portfolio may be deposited for the Portfolio's credit in the bank
affiliate of the Custodian or in such other banks or trust companies as the
Custodian may in its discretion deem necessary or desirable; provided, however,
that every such bank or trust company must be qualified to act as a custodian
under the Investment Company Act of 1940. Funds will be deposited by the
Custodian in its capacity as Custodian and will be withdrawable by the Custodian
only in that capacity.
2.5 SALE OF SHARES AND AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund and the Custodian, the Custodian will, upon the receipt of
Proper Instructions, make federal funds available to the Portfolios as of
specified times agreed upon from time to time by the Fund and the Custodian in
the amount of checks received in payment for shares of the Portfolio which are
deposited into the Portfolio's account.
2.6 COLLECTION OF INCOME, DIVIDENDS. The Custodian will collect on a timely
basis all income and other payments with respect to registered securities held
to which the Portfolios are entitled either by law or pursuant to custom in the
securities business. The Custodian will also collect on a timely basis all
income and other payments with respect to bearer securities if, on the date of
payment by the issuer, the securities are held by the Custodian or its agent.
The Custodian will credit a Portfolio's account with all income or other
payments on securities held in a domestic depository, on the contractual payment
date, in Clearinghouse Funds or Federal Funds as the case may be, regardless of
whether the Custodian succeeds in collecting the item on a timely basis. This
credit is subject to the Custodian's right to reverse the credit in the event of
a default in the issuer's payment of such income. Without limiting the
generality of the foregoing, the Custodian will detach and present for payment
all coupons and other income items requiring presentation as and when they
become due and will collect interest when due on securities held pursuant to
this Agreement. The Custodian will also receive and collect all stock dividends,
rights and other items of like nature as and when they become due or payable.
Income due the Portfolio on securities loaned
<PAGE>
pursuant to the provisions of Section 2.2(10) will be the responsibility of the
Portfolio; the Custodian will have no duty or responsibility in connection with
loaned securities other than to provide the Portfolio with such information or
data as may be necessary to assist the Portfolio in arranging for the timely
delivery to the Custodian of the income to which the Fund is properly entitled.
2.7 PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by mutual agreement of the
parties, the Custodian will pay out monies of a Portfolio in the following cases
only:
1) Purchases. Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities, or evidence of title to such
options, futures contracts or options on futures contracts, to the Custodian (or
any bank, banking firm or trust company doing business in the United States or
abroad which is qualified under the Investment Company Act of 1940, as amended,
to act as a custodian and has been designated by the Custodian as its agent for
this purpose in accordance with Section 2.9 of this Agreement) registered in the
name of the Portfolio or in the name of a nominee of the Portfolio or of the
Custodian referred to in Section 2.3 of this Agreement, or in other proper form
for transfer; (b) in the case of a purchase effected through a Securities
System, in accordance with the conditions set forth in Section 2.10 of this
Agreement; (c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; or (d) in the case of
repurchase agreements entered into between the Fund and the Custodian, or
another bank, or a broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Fund of securities
owned by the Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Fund. All coupon bonds accepted
by the Custodian must have the coupons attached or must be accompanied by a due
bill or a check payable on coupon payable date for the interest due on that
date. Payment may be made for purchases in advance of receipt of securities when
the Custodian receives authorization to do so on a case-by-case basis; however,
the Custodian will be absolutely liable to the Portfolio for such payment in the
absence of specific written instructions to make the payment.
2) Exchanges. In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
3) Redemptions. For the redemption or repurchase of shares issued by the Fund as
set forth in this Agreement;
4) Expense and Liability. For the payment of any expense or liability incurred
by the Fund, including but not limited to the following payments for the account
of the Fund: interest, taxes, management, accounting, transfer agent and legal
fees, and operating expenses of the Fund whether or not such expenses are to be
in whole or part capitalized or treated as deferred expenses;
5) Dividends. For the payment of any dividends or other distributions to
shareholders declared by the Fund;
6) Short Sale Dividend. For payment of the amount of dividends received in
respect of securities sold short;
7) Loan. For repayment of a loan upon redelivery of pledged securities and upon
surrender of the note(s), if any, evidencing the loan;
8) Miscellaneous. For any other proper purpose upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of Trustees
signed by an officer of the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be made.
2.8 APPOINTMENT OF AGENTS. At its discretion, the Custodian may at any time
appoint (and may at any time remove) any other bank or trust company qualified
to act as a custodian under the Investment Company Act of 1940 as its
<PAGE>
agent to carry out such of the provisions of this Section 2 as the Custodian may
from time to time direct; provided, however, that the appointment of any agent
will not relieve the Custodian of its responsibilities or liabilities under this
Agreement.
2.9 DEPOSIT OF SECURITIES IN SECURITIES SYSTEMS. The Custodian may deposit
and/or maintain a Portfolio's securities in a Securities System in accordance
with applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
1) Account of Custodian. The Custodian may keep a Portfolio's securities in a
Securities System provided that such securities are represented in an account of
the Custodian in the Securities System that does not include any assets of the
Custodian other than assets held as a fiduciary, custodian or otherwise for
customers;
2) Records. The Custodian's records, with respect to a Portfolio's securities
maintained in a Securities System, must identify by book entry those securities
belonging to the Portfolio;
3) Payment/Delivery.
(a) Subject to Section 2.7 (Payment of Fund Monies), the Custodian will pay for
a Portfolio's securities upon (i) receipt of advice from the Securities System
that such securities have been transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to reflect such payment and transfer
for the account of the Portfolio;
(b) Subject to Section 2.2 (Delivery of Securities), the Custodian will transfer
a Portfolio's securities upon (i) receipt of advice from the Securities System
that payment for such securities has been transferred to the Custodian's
account, and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Portfolio;
(c) Copies of all advices from the Securities System of transfers of a
Portfolio's securities will identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Portfolio at its request. The
Custodian will furnish daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the Portfolio.
4) Reports. The Custodian will provide the Portfolio with any report obtained by
the Custodian on the Securities System's accounting system, internal accounting
control and procedures for safeguarding securities deposited in the Securities
System, and further agrees to provide the Portfolio with copies of any
documentation it has relating to its arrangements with the Securities Systems as
set forth in this Agreement or as otherwise required by the Securities and
Exchange Commission or any other regulatory agency or organization;
5) Liability. Anything to the contrary in this Agreement notwithstanding, the
Custodian will be liable to the Portfolio for any loss or expense, which may
include reasonable attorneys fees, or damage to the Portfolio resulting from use
of the Securities System by reason of any negligence, misfeasance or misconduct
of the Custodian, its agents, or any employee or agent of the Custodian or
agent, or from failure of the Custodian or any such agent to enforce effectively
such rights as it may have against the Securities System. At the election of the
Portfolio, it will be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other person that
the Custodian may have as a consequence of any such loss, expense or damage if
and to the extent that the Portfolio has not been made whole for any such loss,
expense or damage.
2.10 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The Custodian may
deposit and/or maintain securities owned by a Portfolio in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will be
effected in the absence of Proper Instructions;
<PAGE>
2) The Custodian may keep securities of a Portfolio in the Direct Paper System
only if such securities are represented in an account of the Custodian in the
Direct Paper System that does not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian, with respect to securities of a Portfolio, that
are maintained in the Direct Paper System will identify by book entry those
securities belonging to the Portfolio;
4) The Custodian will pay for securities purchased for the account of a
Portfolio upon the making of an entry on the records of the Custodian to reflect
such payment and transfer of securities to the account of the Portfolio. The
Custodian will transfer securities sold for the account of the Fund upon the
making of an entry on the records of the Custodian to reflect such transfer and
receipt of payment for the account of the Fund;
5) The Custodian will furnish each Portfolio confirmation of every transfer to
or from its account, in the form of a written advice or notice, of Direct Paper
on the next business day following such transfer and will furnish to the
Portfolio copies of daily transaction sheets reflecting each day's transaction
in the Securities System for its account;
6) The Custodian will provide each Portfolio with any report on its system of
internal accounting control as the Portfolio may reasonably request from time to
time.
2.11 SEGREGATED ACCOUNT. The Custodian will, upon receipt of Proper
Instructions, establish and maintain a segregated account or accounts for and on
behalf of each Portfolio, into which may be transferred cash and/or securities,
including securities maintained in an account by the Custodian pursuant to
Section 2.9 of this Agreement: (i) in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance with the
rules of the Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by a
Portfolio, (ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by a Portfolio or commodity
futures contracts or options purchased or sold by the Portfolio, (iii) for the
purposes of compliance by the Fund with the procedures required by Investment
Company Act Release No. 10666, or any subsequent release, rule or policy of the
Securities and Exchange Commission relating to the maintenance of segregated
accounts by registered investment companies and (iv) for other proper corporate
purposes, but only in the case of clause (iv) upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of Trustees
setting forth the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian will execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments for a
Portfolio's securities and in connection with transfers of such securities.
2.13 PROXIES. If the securities are registered other than in the name of a
Portfolio or a nominee of the Portfolio, the Custodian will cause all proxies
promptly to be executed by the registered holder of such securities, without
indication of the manner in which such proxies are to be voted, and will
promptly deliver to the Portfolio all proxy soliciting materials and all notices
relating to such securities.
2.14 COMMUNICATIONS RELATING TO FUND SECURITIES. The Custodian will transmit
promptly to each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise of call
and put options written by the Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the Custodian from issuers of
the Portfolio's securities by the Custodian, an agent appointed under Section
2.9, or subcustodian appointed under Section 1. With respect to tender or
exchange offers, the Custodian will transmit promptly to the Portfolio all
written information received by the Custodian, an agent appointed under Section
2.9, or subcustodian appointed under Section 1 from issuers of the securities
whose tender or exchange is sought and from the party (or its agents) making the
tender or exchange offer. If a Portfolio desires to take action with respect to
any tender offer, exchange
<PAGE>
offer or any other similar transaction, the Portfolio will notify the Custodian
of such desired action at least three business days prior to the time such
action must be taken under the terms of the tender, exchange offer, or other
similar transaction, and it will be the responsibility of the Custodian to
timely transmit to the appropriate person(s) the Portfolio's notice. Where the
Portfolio does not notify the Custodian of its desired action within the three
business day period, the Custodian will use its best efforts to timely transmit
the Portfolio's notice to the appropriate person.
2.15 REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. At the request of the
Fund, the Custodian will provide the Fund, for the benefit of each of its
Portfolios, with audited annual reports. The Custodian will further provide the
Fund, at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian under
this Contract. Such reports will be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies existing or arising since the prior
examination would be disclosed by such examination. The reports must describe
any material inadequacies disclosed and, if there are no such inadequacies, the
reports will so state.
3. PAYMENTS FOR REDEMPTIONS OF SHARES OF A PORTFOLIO
From such funds as may be available for the purpose but subject to the
limitations of the Governing Documents of the Fund and any applicable votes of
the Board of Trustees of the Fund pursuant to those Documents, the Custodian
will, upon receipt of instructions from the Transfer Agent, make funds available
for payment to holders of shares who have delivered to the Transfer Agent a
request for redemption of their shares. In connection with the redemption of
shares of a Portfolio, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial bank designated
by the redeeming shareholder.
The Custodian will receive payments for a Portfolio's shares issued or sold from
the distributor for the Portfolio's shares or from the Transfer Agent of the
Portfolio and deposit as received into the Portfolio's account such payments as
are received for shares of the Portfolio issued or sold from time to time by the
Portfolio. The Custodian will provide timely notification to the Portfolio and
the Transfer Agent of any receipt by it of payments for shares of the Portfolio.
4. PROPER INSTRUCTIONS
"Proper Instructions" means a writing signed or initialed by one or more persons
authorized by the Board of Trustees. Each such writing must set forth the
specific transaction or type of transaction involved, including a statement of
the purpose for which such action is requested, and may be a blanket instruction
authorizing specific transactions of a routine nature or occurring repeatedly.
Oral instructions will be considered Proper Instructions if the Custodian
reasonably believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Fund will cause all
oral instructions to be confirmed in writing. Upon receipt of a certificate of
the Secretary or an Assistant Secretary as to the authorization by the Board of
Trustees of the Fund, accompanied by a detailed description of procedures
approved by the Board of Trustees, Proper Instructions may include
communications effected directly between electromechanical or electronic devices
provided that the Board of Trustees and the Custodian are satisfied that such
procedures afford adequate safeguards for the Fund's assets.
5. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
In its discretion the Custodian may, without express authority from the Fund:
1) surrender securities in temporary form for securities in definitive form;
2) endorse for collection, in the name of a Portfolio, checks, drafts and other
negotiable instruments on the same day as received: and
<PAGE>
3) in general, attend to all nondiscretionary details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of a Portfolio except as otherwise directed by the Board
of Trustees of the Fund.
6. EVIDENCE OF AUTHORITY, RELIANCE ON DOCUMENTS
The Custodian will not be liable for actions taken pursuant to instructions,
notice, request, consent, certificate or other instrument or paper reasonably
and in good faith believed by it to be genuine and to have been properly
executed by or on behalf of the Fund or a Portfolio in accordance with Proper
Instructions as defined in Section 4 of this Agreement. The Custodian may
receive and accept a certified copy of a vote of the Board of Trustees of the
Fund as conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination or of any action by the
Board of Trustees pursuant to the Governing Documents of the Fund as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary. So long as and to
the extent that it is in the exercise of the standard of care set forth in
Section 10 of this Agreement, the Custodian will not be responsible for the
title, validity or genuineness of any property or evidence of title received by
it or delivered by it pursuant to this Agreement and will be held harmless in
acting upon any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed by the proper party or
parties.
7. RECORDS, INVENTORY
The Custodian will create and maintain all records relating to its activities
and obligations under this Agreement in such manner as will meet the obligations
of the Fund under the Investment Company Act of 1940, with particular attention
to Section 31 and Rules 31a-1 and 31a-2 thereunder. All such records will be the
property of the Fund and will at all times during the regular business hours of
the Custodian be open for inspection and audit by duly authorized officers,
employees or agents of the Fund and employees and agents of the Securities and
Exchange Commission, and, in the event of termination of this Agreement, will be
delivered in accordance with Section 12 of this Agreement. The Custodian will,
at the Fund's request, supply the Fund with a tabulation of securities owned by
any Portfolio and held by the Custodian and will, when requested to do so by the
Fund and for such compensation as is agreed on by the Portfolio and the
Custodian, include certificate numbers in such tabulations. The Custodian will
conduct a periodic inventory of all securities and other property subject to
this Agreement and provide to the Fund a periodic reconciliation of the vaulted
position of each Portfolio to the appraised position of the Portfolio. The
Custodian will promptly report to the Fund the results of the reconciliation,
indicating any shortages or discrepancies uncovered thereby, and take
appropriate action to remedy any such shortages or discrepancies.
8. OPINION OF THE FUND'S INDEPENDENT ACCOUNTANT
The Custodian will cooperate with the Fund's independent public accountants in
connection with the annual and other audits of the books and records of the Fund
and take all reasonable action, as the Fund may from time to time request, to
provide the necessary information to such accountants for the expression of
their opinion without any qualification as to the scope of their examination,
including but not limited to, any opinion in connection with the preparation of
the Fund's Form N-1A, and Form N-SAR or other reports to the Securities and
Exchange Commission or state regulatory agency and with respect to any other
legal requirements.
9. COMPENSATION OF CUSTODIAN
The Custodian will be entitled to reasonable compensation for its services and
expenses as Custodian, as detailed in the attached Addendum.
<PAGE>
10. RESPONSIBILITY OF CUSTODIAN - INDEMNIFICATION
Reasonable Care - Notwithstanding anything to the contrary in this Agreement,
the Custodian will be held to the exercise of reasonable care in carrying out
the provisions of this Agreement, but will be kept indemnified by and will be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence.
Notice to Fund - in order for the indemnification provision contained in this
Section to apply, it is understood that if in any case the Fund may be asked to
indemnify or hold the Custodian harmless, the Fund will be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Custodian will use all reasonable care to identify
and notify the Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Fund.
Defense of Custodian - The Fund will have the option to defend the Custodian
against any claim which may he the subject of this indemnification, and in the
event that the Fund so elects, it will so notify the Custodian, and thereupon
the Fund will take over complete defense of the claim and the Custodian will in
such situation initiate no further legal or other expenses for which it will
seek indemnification under this Section. The Custodian will in no case confess
any claim or make any compromise in any case in which the Fund will be asked to
indemnify the Custodian except with the Fund's prior written consent. Nothing in
this Section will be construed to limit any right or cause of action on the part
of the Custodian under this Agreement which is independent of any right or cause
of action on the part of the Fund. The Custodian will be entitled to rely on and
may act upon advice of counsel (who may be counsel for the Fund or such other
counsel as may be agreed to by the parties) on all matters, and will be without
liability for any action reasonably taken or omitted pursuant to such advice.
If the Fund requires the Custodian to take any action with respect to securities
that involves the payment of money, or that may, in the opinion of the
Custodian, result in the Custodian or its nominee assigned to the Fund being
liable for the payment of money or incurring liability of some other form, the
Fund, as a prerequisite to requiring the Custodian to take such action, will
indemnify the Custodian in an amount and form satisfactory to it.
If a Portfolio requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee incurs or is assessed
any taxes, charges, expenses, assessments, claims or liabilities in connection
with the performance of this Agreement, except as may arise from the Custodian's
or its agent's negligent action or omission, or willful misconduct, any property
held for the account of the Portfolio will serve as security. If the Portfolio
fails to repay the Custodian promptly, the Custodian will be entitled to use
available cash and to dispose of the Portfolio's assets to the extent necessary
for reimbursement. If the Custodian exercises this option, it must give the
Portfolio reasonable notice so as to enable the Portfolio to repay the cash or
securities advanced. Such notice will not preclude the Custodian from asserting
any lien under this provision.
11. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Agreement will become effective as of its execution, provided that the
Custodian will have received proof of initial approval of a particular
Securities System pursuant to Rule 17f-4 under the Investment Company Act of
1940 (see Section 2.9 of this Agreement) or of the Direct Paper System (see
Section 2.10 of this Agreement). The Portfolio will provide proof of annual
approval to the Custodian. This Agreement will continue in force until
terminated as provided in this Section. It may be amended at any time by mutual
agreement of the parties, and may be terminated by either party with 60 days
written notice. The Fund may, by action of the Fund's Board of Trustees,
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
a like event at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
In the event the Agreement terminates, the Fund will pay the Custodian whatever
compensation is due as of the date of the termination, and will reimburse the
Custodian for costs, expenses and disbursements incurred in connection with
termination, but only to the extent the Fund gives prior approval for the
expenditures. Approval will not be unreasonably withheld.
<PAGE>
12. SUCCESSOR CUSTODIAN
If a successor Custodian is appointed by the Board of Trustees of the Fund, the
Custodian will, upon termination, deliver to the successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities, funds and other properties then held by it pursuant to this
Agreement, and will transfer to an account of the successor custodian all of
each Portfolio's securities held in a Securities System. The Custodian will
cooperate in assisting the successor Custodian so that it may continue any
subcustodian agreement entered into by the Custodian and any subcustodian on
behalf of the Fund.
If no successor is to be appointed, the Custodian will make the securities,
funds and other properties available as above to the Fund upon receipt of a
certified copy of a vote of the Board of Trustees of the Fund.
If no written order designating a successor Custodian or certified copy of a
vote of the Board of Trustees is delivered to the Custodian on or before the
effective date of the termination, the Custodian will have the right to make
delivery to a bank (as defined in the Investment Company Act of 1940) or trust
company of its own selection having aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than $50,000,000,
which will become the successor custodian under this Agreement.
In the event the securities, funds and other properties remain in the possession
of the Custodian after the termination date due to failure by the Fund to
procure the certified copy of the appropriate vote of the Board of Trustees, the
Custodian will be entitled to fair compensation for its services during the
period during which it retains possession of the property, and the provisions of
this Agreement relating to the duties and obligations of the Custodian will
remain in full force.
If during the term of this Agreement any Portfolio is liquidated pursuant to
law, the Custodian will distribute the remaining assets of the Portfolio after
satisfying all expenses and liabilities of that Portfolio. Such distributions
will be pro rata among the Portfolio's shareholders as certified by the Transfer
Agent, and will be in cash or, if the Portfolio so orders, in portfolio
securities. Section 10 (Responsibility of Custodian - Indemnification) will
survive any termination of this Agreement.
13. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and the Fund
may from time to time agree on such provisions interpretive of or in addition to
the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions will be in a writing signed by both parties and will be annexed to
this Agreement. No interpretive or additional provisions will contravene any
applicable federal or state regulations or any provision of the Governing
Documents of the Fund, nor will they be deemed amendments to this Agreement.
14. NOTICE
Notice will be considered sufficient if sent by registered or certified mail, or
by such other means as the parties agree, to the other party at the address set
forth above or at any other address specified in writing and delivered to the
other party.
15. BOND
The Custodian will, at all times, maintain a bond issued by a reputable fidelity
insurance company authorized to do business in the place where the bond is
issued. The bond will be issued against larceny and embezzlement, and will cover
each officer and employee of the Custodian who may, singly or jointly with
others, have access to securities or funds of the Fund, either directly or
through authority to receive and carry out any certificate instruction, order
request, note or other instrument required or permitted by this Agreement. The
Custodian agrees that it will not cancel, terminate or modify the bond so as to
affect adversely the Fund, except after written notice to the Fund not less than
10 days prior to the effective date of such cancellation, termination or
modification. At the request of the Fund, the Custodian will furnish to the Fund
a copy of each such bond and each amendment thereto.
<PAGE>
16. CONFIDENTIALITY
The Custodian agrees to treat all records and other information relative to the
Portfolios and their prior, present or future shareholders as confidential, and
the Custodian, on behalf of itself and its employees, agrees to keep
confidential all such information except when requested to divulge such
information by duly constituted authorities, or when so requested by the Fund.
If requested to divulge confidential information to anyone other than persons
normally authorized by the Fund to receive information, such as the Fund's
auditors or attorneys, the Custodian will not release the information until it
notifies the Fund in writing and receives approval in writing from the Fund,
unless required by law to do otherwise. Approval by the Fund will not be
unreasonably withheld and may not be withheld where the Custodian may be exposed
to civil or criminal contempt proceedings for failure to comply.
17. EXEMPTION FROM LIENS
Except as provided in Section 10 of this Agreement, the securities and other
assets held by the Custodian for a Portfolio will be subject to no lien or
charge of any kind in favor of the Custodian or any person claiming through the
Custodian. but nothing herein will be deemed to deprive the Custodian of its
right to invoke any and all remedies available at law or equity to collect
amounts due it under this Agreement. Neither the Custodian nor any subcustodian
appointed pursuant to Section 1 of this Agreement will have any power or
authority to assign, hypothecate, pledge or otherwise dispose of any securities
held by it for the Portfolio, except upon the direction of the Fund, duly given
as herein provided, and only for the account of the Portfolio.
18. MASSACHUSETTS LAW TO APPLY
This Agreement will be construed and the provisions thereof interpreted under
and in accordance with laws of the Commonwealth of Massachusetts.
19. GOVERNING DOCUMENTS
The term "Governing Documents" refers to the Fund's Articles of Incorporation,
Bylaws and Registration Statement filed under the Securities Act of 1933, as
amended from time to time.
20. TRUSTEES AND SHAREHOLDERS
Neither the holders of shares in the Portfolios nor any Trustees of the Fund
will be personally liable under this Agreement.
21. SUCCESSORS OF PARTIES
This Contract will he binding on and will inure to the benefit of the Fund and
the Custodian and their respective successors.
22. INTEGRATION CLAUSE
The parties agree that all aspects of their agreement are contained in this
document, its Addendum, supplemental agreements and all amendments thereto, and
that any disputes arising in connection with this Agreement will be decided with
reference to those documents.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be affixed hereunder as of the dates indicated below.
FIRST VARIABLE RATE FUND FOR GOVERNMENT INCOME
By: /s/ William M. Tartikoff
Date: 3/7/94
Attest:/s/ Beth-ann Roth
Date: 3/7/94
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
Date: 3/16/94
Attest: /s/ R.G. Loring
Date: 3/16/94
<PAGE>
LETTER AGREEMENT BETWEEN
FIRST VARIABLE RATE FUND FOR GOVERNMENT INCOME AND
STATE STREET BANK AND TRUST COMPANY
SUPPLEMENTING THE CUSTODIAN AGREEMENT
DATED AS OF MARCH 5, 1992
The following items supplement the Custodian Agreement ("Agreement")
dated March 5, 1992, and are considered part of the Agreement:
1. The initial Addendum to the Agreement, dated as of March 5, 1992, will
remain in effect for a minimum of three years; that is, until at least March 5,
1995, unless mutually agreed by the parties.
2. The Fund is entitled to pay fees to the Custodian by analysis on collected
funds, which will earn the rate stated in the Addendum to the Agreement.
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
CALVERT SHAREHOLDER SERVICES, INC.
and
STATE STREET BANK AND TRUST COMPANY
-1-
<PAGE>
TABLE OF CONTENTS
1. Duties of the Bank. . . . . . . . . . . . . . . . . . . . . . . 1
2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 3
3 Wire Transfer Operating Guidelines. . . . . . . . . . . . . . . 4
4. Data Access and Proprietary Information . . . . . . . . . . . . 5
5. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 6
6. Standard of Care. . . . . . . . . . . . . . . . . . . . . . . . 8
7. Covenants of the Transfer Agent and the Bank. . . . . . . . . . 8
8. Representations and Warranties of the Bank. . . . . . . . . . . 9
9. Representations and Warranties of the Transfer Agent. . . . . . 9
10. Termination of Agreement. . . . . . . . . . . . . . . . . . . .10
11 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . .10
12. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . .10
13. Massachusetts Law to Apply. . . . . . . . . . . . . . . . . . .10
14. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . .11
15. Consequential Damages . . . . . . . . . . . . . . . . . . . . .11
16. Limitation of Shareholder Liability . . . . . . . . . . . . . .11
17. Merger of Agreement . . . . . . . . . . . . . . . . . . . . . .11
18. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
19. Severability. . . . . . . . . . . . . . . . . . . . . . . . . .11
20. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . .12
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SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 15th day of August, 1996, by and between,
Calvert Shareholder Services, Inc. a corporation, having its principal office
and place of business at 4550 Montgomery Ave. Suite 1000N, Bethesda,
Maryland, 20814 (the "Transfer Agent"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company having its principal office and place
of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank");
WHEREAS, the Transfer Agent has been appointed by each of the investment
companies (including each series thereof) listed on Schedule A (the
"Fund(s)"), each an open-end management investment company registered under
the Investment Company Act of 1940, as amended, as transfer agent, dividend
disbursing agent and shareholder servicing agent in connection with certain
activities, and the Transfer Agent has accepted each such appointment;
WHEREAS, the Transfer Agent has entered into a Transfer Agency and
Service Agreement with each of the Funds (including each series thereof)
listed on Schedule A pursuant to which the Transfer Agent is responsible for
certain transfer agency and dividend disbursing functions for each Fund's
authorized and issued shares of common stock or shares of beneficial interest
as the case may be ("Shares") and each Fund's shareholders ("Shareholders")
and the Transfer Agent is authorized to subcontract for the performance of
its obligations and duties thereunder in whole or in part with the Bank;
WHEREAS, the Transfer Agent desires to appoint the Bank as its
sub-transfer agent, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenant herein
contained, the parties hereto agree as follows:
1. DUTIES OF THE BANK
1.1 Subject to the terms and conditions set forth in this Agreement, the
Bank shall act as the Transfer Agent's sub-transfer agent for Shares in
connection with any accumulation plan, open account, dividend reinvestment
plan, retirement plan or similar plan provided to Shareholders and set out in
each Fund's currently effective prospectus and statement of additional
information ("Prospectus"), including without limitation any periodic
investment plan or periodic withdrawal program. As used herein the term
'"Shares" means the authorized and issued shares of common stock, or shares
of beneficial interest, as the case may be, for each Fund listed in Schedule
A. In accordance with procedures established from time to time by agreement
between the Transfer Agent and the Bank, the Bank shall provide the services
listed in this Section 1.
(a) The Bank shall:
(i) receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof to the
Custodian of each
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Fund authorized pursuant to the Articles of Incorporation or
organization of each Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(iii) receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to the
Custodian;
(iv) in respect to the transactions in items (i), (ii) and
(iii) above, the Bank shall execute transactions directly with
broker-dealers authorized by each Fund;
(v) at the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or cause
to be paid over in the appropriate manner such monies as instructed
by the redeeming Shareholders;
(vi) effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) prepare and transmit payments for dividends and distributions
declared by each Fund;
(viii) issue replacement certificates for those certificates alleged
to have been lost, stolen or destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and protecting the Bank and
each Fund, and the Bank at its option, may issue replacement
certificates in place of mutilated stock certificates upon
presentation thereof and without such indemnity;
(ix) maintain records of account for and advise the Transfer Agent
and its Shareholders as to the foregoing; and
(x) Record the issuance of Shares of each Fund and maintain
pursuant to Rule 17Ad-10(e) of the Securities Exchange Act of 1934 as
amended (the "Exchange Act of 1934") a record of the total number of
Shares of each Fund which are authorized, based upon data provided to
it by each Fund or the Transfer Agent, and issued and outstanding.
The Bank shall also provide each Fund on a regular basis with the
total number of Shares which are authorized and issued and outstanding
and shall have no obligation, when recording the issuance of Shares,
to monitor the issuance of such Shares or to take cognizance of any
laws relating to the issue or sale of such Shares, which functions
shall be the sole responsibility of each Fund or the Transfer Agent.
1.2 (a) For reports, the Bank shall:
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(i) maintain all Shareholder accounts, prepare meeting, proxy,
and mailing lists, withhold taxes on US resident and non-resident
alien accounts, prepare and file US Treasury Department reports
required with respect to interest, dividends and distributions by
federal authorities for all Shareholders, prepare confirmation forms
and statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in
Shareholder account information.
(b) For blue sky reporting the Bank shall provide a system that will
enable each Fund or the Transfer Agent to monitor the total number of
Shares sold in each State, and each Fund or the Transfer Agent shall:
(i) identify to the Bank in writing those transactions and assets
to be treated as exempt from blue sky reporting for each State; and
(ii) verify the establishment of transactions for each State on the
System prior to the activity for each State, the responsibility of
the Bank for each Fund's blue sky state registration status is solely
limited to the initial establishment of transactions subject to blue
sky compliance by the Fund or the Transfer Agent and the reporting of
such transactions to the Fund as provided above.
1.3 Per the attached service responsibility schedule procedures as to who
shall provide certain of these services in Section 1 may be established from
time to time by agreement between the Transfer Agent and the Bank. The Bank
may at times perform only a portion of these services and the Transfer Agent
may perform these services on each Fund's behalf.
1.4 The Bank shall provide additional services on behalf of the Transfer
Agent (i.e., escheat services) that may be agreed upon in writing between the
Bank and the Transfer Agent.
2. FEES AND EXPENSES
2.1 For the performance by the Bank pursuant to this Agreement, the Transfer
Agent agrees to pay the Bank an annual maintenance fee for each Shareholder
account as set out in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.2 below may be
changed from time to time subject to mutual written agreement between the
Transfer Agent and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Transfer Agent
agrees to reimburse the Bank for out-of-pocket expenses, including, but not
limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition,
any other expenses incurred by the Bank at the request or with the consent of
the Transfer Agent, will be reimbursed by the Transfer Agent.
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<PAGE>
2.3 The Transfer Agent agrees to pay all fees and reimbursable expenses
within fifteen days following the receipt of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and other mailings to
all shareholder accounts shall be advanced to the Bank by the Transfer Agent
at least seven (7) days prior to the mailing date of such materials.
3. WIRE TRANSFER OPERATING GUIDELINES/ARTICLES 4A OF THE UNIFORM COMMERCIAL
CODE
3.1 The Bank is authorized to promptly debit the appropriate Transfer Agent
account(s) upon the receipt of a payment order in compliance with the
selected security procedure (the "Security Procedure") chosen for funds
transfer and in the amount of money that the Bank has been instructed to
transfer. The Bank shall execute payment orders in compliance with the
Security Procedure and with the Transfer Agent's instructions on the
execution date provided that such payment order is received by the customary
deadline for processing such a request, unless the payment order specifies a
later time. All payment orders and communications received after this time
frame will be deemed to have been received the next business day.
3.2 The Transfer Agent acknowledges that the Security Procedure it has
designated on the Transfer Agent Selection Form was selected by the Transfer
Agent from security procedures offered by the Bank. The Transfer Agent shall
restrict access to confidential information relating to the Security
Procedure to authorized persons as communicated to the Bank in writing. The
Transfer Agent must notify the Bank immediately if it has reason to believe
unauthorized persons may have obtained access to such information or of any
change in the Transfer Agent's authorized personnel. The Bank shall verify
the authenticity of all such instructions according to the Security Procedure.
3.3 The Bank shall process all payment orders on the basis of the account
number contained in the payment order. In the event of a discrepancy between
any name indicated on the payment order and the account number, the account
number shall take precedence and govern.
3.4 When a Transfer Agent initiates or receives Automated Clearing House
("ACH") credit and debit entries pursuant to these guidelines and the rules
of the National Automated Clearing House Association and the New England
Clearing House Association, the Bank will act as an Originating Depository
Financial Institution and/or receiving Depository Financial Institution, as
the case may be, with respect to such entries. Credits given by the Bank with
respect to an ACH credit entry are provisional until the Bank receives final
settlement for such entry from the Federal Reserve Bank. If the Bank does not
receive such final settlement, the Transfer Agent agrees that the Bank shall
receive a refund of the amount credited to the Transfer Agent in connection
with such entry, and the party making payment to the Transfer Agent via such
entry shall not be deemed to have paid the amount of the entry.
3.5 The Bank reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance
in the account to be charged at the time of the Bank's receipt of such
payment order, or (b) if the Bank, in good faith, is unable to satisfy itself
that the transaction has been properly authorized.
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<PAGE>
3.6 The Bank shall use reasonable efforts to act on all authorized requests
to cancel or amend payment orders received if requests are received in a
timely manner affording the Bank reasonable opportunity to act. However, the
Bank assumes no liability if the request for amendment or cancellation cannot
be satisfied.
3.7 The Bank shall assume no responsibility for failure to detect any
erroneous payment order provided that the Bank complies with the payment
order instructions as received and the Bank complies with the Security
Procedure. The Security Procedure is established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
3.8 The Bank shall assume no responsibility for lost interest with respect
to the retransfer Agentable amount of any unauthorized payment order unless
the Bank is notified of the unauthorized payment order within thirty (30)
days of notification by the Bank of the acceptance of such payment order. In
no event (including failure to execute a payment order) shall the Bank be
liable for special, indirect or consequential damages, even if advised of the
possibility of such damages.
3.9 Confirmation of Bank's execution of payment orders shall ordinarily be
provided within 24 hours notice of which may be delivered through the Bank's
proprietary information systems, or by facsimile or call-back. Client must
report any objections to the execution of an order within 30 days.
4. DATA ACCESS AND PROPRIETARY INFORMATION
The Transfer Agent acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and other information
furnished to the Transfer Agent by the Bank are provided solely in connection
with the services rendered under this Agreement and constitute copyrighted trade
secrets or proprietary information of substantial value to the Bank. Such
databases, programs, formats, designs, techniques and other information are
collectively referred to below as "Proprietary Information". The Transfer Agent
agrees that it shall treat all Proprietary Information as proprietary to the
Bank and further agrees that it shall not divulge any Proprietary Information to
any person or organization except as expressly permitted hereunder. The Transfer
Agent agrees for itself and its employees and Agents:
(a) to use such programs and databases (i) solely on the Transfer Agent's
computers, or (ii) solely from equipment at the locations agreed to between
the Transfer Agent and the Bank and (iii) in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way (other than in the
normal course of performing processing on the Transfer Agent's computers)
any part of any Proprietary Information;
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<PAGE>
(c) to refrain from obtaining unauthorized access to any programs, data or
other information not owned by the Transfer Agent, and if such access is
accidentally obtained, to respect and safeguard the same Proprietary
Information;
(d) to refrain from causing or allowing proprietary information
transmitted from the Bank's computer to the Transfer Agent's terminal to be
retransmitted to any other computer terminal or other device except as
expressly permitted by the Bank, such permission not to be unreasonably
withheld;
(e) that the Transfer Agent shall have access only to those authorized
transactions as agreed to between the Transfer Agent and the Bank; and
(f) to honor reasonable written requests made by the Bank to protect at
the Bank's expense the rights of the Bank in Proprietary Information at
common law and under applicable statutes.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 4.
5. INDEMNIFICATION
5.1 Except as provided in Section 6, herein, the Bank shall not be
responsible for, and the Transfer Agent shall indemnify and hold the Bank
harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) all actions of the Bank or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct;
(b) the Transfer Agent's lack of good faith, negligence or willful
misconduct;
(c) the reliance on or use by the Bank or its agents or subcontractors of
information, records, documents or services which (i) are given to the
Bank or its agents or subcontractors, and (ii) have been prepared,
maintained or performed by the Transfer Agent or any other person or firm
on behalf of the Transfer Agent including but not limited to any previous
transfer agent or registrar excluding the Bank;
(d) the reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Transfer Agent; and
(e) the offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination
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<PAGE>
or ruling by any federal agency or any state with respect to the offer or
sale of such Shares in such state.
5.2 At any time the Bank may apply to any officer of the Transfer Agent for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under
this Agreement, and the Bank and its Agents or subcontractors shall not be
liable and shall be indemnified by the Transfer Agent for any action taken or
omitted by it in reliance upon such instructions or upon the opinion of such
counsel.
The Bank, its agents and subcontractors shall be protected and indemnified in
acting upon any paper or document furnished by or on behalf of the Transfer
Agent, reasonably believed by the Batik as being in good order and to have been
signed by the proper person or persons, or upon any instruction, information,
data, records or documents provided the Bank or its Agents or subcontractors by
machine readable input, telex, CRT data entry or other similar means authorized
by the Transfer Agent, and shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof from the
Transfer Agent. The Bank, its agents and subcontractors shall also be protected
and indemnified in recognizing stock certificates which are reasonably believed
to bear the proper manual or facsimile signatures of the officers of the
Transfer Agent, and the proper countersignature of the Transfer Agent or any
former transfer agent or former registrar, or of a co-transfer agent or
co-registrar.
5.3 In order that the indemnification provisions contained in this Section 5
shall apply, upon the assertion of a claim for which the Transfer Agent may
be required to indemnify the Bank, the Bank shall promptly notify the
Transfer Agent of such assertion, and shall keep the Transfer Agent advised
with respect to all developments concerning such claim. The Transfer Agent
shall have the option to participate with the Bank in the defense of such
claim or to defend against said claim in its own name or in the name of the
Bank. The Bank shall in no case confess any claim or make any compromise in
any case in which the Transfer Agent may be required to indemnify the Bank
except with the Transfer Agent's prior written consent.
6. STANDARD OF CARE
6.1 The Bank shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not
be liable for loss or damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct or that of its employees.
6.2 The Bank shall work with the Transfer Agent to ensure that a Fund is
made whole by the responsible party for any material losses or damages
resulting from errors, material unreconciled items, carelessness, negligence,
bad faith, or willful misconduct by the Bank or its agents or subcontractors,
or that of their employees. Neither the Bank, its agents or subcontractors,
nor the Transfer Agent may waive full liability for losses or damages based
on the above.
6.3 Errors identified as caused by the sub-transfer agent will not be
charged to the Funds in the monthly billing.
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7. COVENANTS OF THE TRANSFER AGENT AND THE BANK
7.1 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Transfer Agent for safekeeping of
stock certificates, check forms and facsimile signature imprinting devices,
if any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
7.2 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Transfer Agent and will be preserved,
maintained and made available in accordance with such Section and Rules, and
will be surrendered promptly to the Transfer Agent on and in accordance with
its request.
7.3 The Bank and the Transfer Agent agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed
to any other person, except as may be required by law.
7.4 In case of any requests or demands for the inspection of the Shareholder
records of the Transfer Agent, the Bank will endeavor to notify the Transfer
Agent and to secure instructions from an authorized officer of the Transfer
Agent as to such inspection. The Bank reserves the right, however, to exhibit
the Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder records
to such person.
8. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Transfer Agent that:
(a) it is a trust company duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts;
(b) it is duly qualified to carry on its business in The Commonwealth of
Massachusetts;
(c) it is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement;
(d) all requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement;
(e) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement; and
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<PAGE>
(f) it is registered as a transfer agent undo Section 17A(c)(2) of the
Exchange Act.
9. REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
The Transfer Agent represents and warrants to the Bank that:
(a) it is a corporation duly organized and existing and in good standing
under the laws of the State of Delaware;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) all corporate proceedings required by said Articles of Incorporation
and By-Laws have been taken to authorize it to enter into and perform
this Agreement.
(d) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
10. TERMINATION OF AGREEMENT
10.1 This Agreement shall continue for a period of five years (the "Initial
Term") and be renewed or terminated as stated below.
10.2 This Agreement shall terminate upon the termination of the Transfer
Agency Agreement between the Funds and the Transfer Agent.
10.3 This Agreement may be terminated or renewed after the Initial Term by
either party upon ninety (90) days written notice to the other.
10.4 Should the Transfer Agent exercise its right to terminate, all
reasonable out-of-pocket expenses associated with the movement of records and
material will be borne by the Transfer Agent. Additionally, the Bank reserves
the right to charge for any other reasonable expenses associated with such
termination and/or a charge equivalent to the average of three (3) months'
fees.
11. ASSIGNMENT
11.1 Except as provided in Section 11.3 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
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<PAGE>
11.3 The Bank will, without further consent on the part of the Transfer
Agent, subcontract for the performance hereof with National Financial Data
Services, Inc., a subsidiary of BFDS duly registered as a transfer agent
pursuant to Section 17A(c)(2) provided, however, that the Bank shall be as
fully responsible to the Transfer Agent for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
12. AMENDMENT
This Agreement may be amended or modified by a written agreement executed by
both parties.
13. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted under
and in accordance with the laws of The Commonwealth of Massachusetts.
14. FORCE MAJEURE
In the event either party is unable to perform its obligations under the terms
of this Agreement because of acts of God, strikes, equipment or transmission
failure or damage reasonably beyond its control, or other causes reasonably
beyond its control, such party shall not be liable for damages to the other for
any damages resulting from such failure to perform or otherwise from such
causes.
15. CONSEQUENTIAL DAMAGES
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
16. LIMITATIONS OF SHAREHOLDER LIABILITY
Each party hereby expressly acknowledges that recourse against the Funds shall
be subject to those limitations provided by governing law and the Declaration of
Trust or Articles of Incorporation of the Funds, as applicable, and agrees that
obligations assumed by the Funds pursuant to the Transfer Agency Agreement shall
be limited in all cases to the Funds and their respective assets. Each party
shall not seek satisfaction from the Shareholders or any individual Shareholder
of the Funds, nor shall any party seek satisfaction of any obligations from the
Directors\Trustees or any individual Director\Trustee of the Funds.
17. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto and
supersedes any prior agreement with respect to the subject matter hereof whether
oral or written.
18. SURVIVAL
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All provisions regarding indemnification, warranty, liability, and limits
thereon, and confidentiality and/or protection of proprietary rights and trade
secrets shall survive the termination of this Agreement.
19. SEVERABILITY
If any provision or provisions of this Agreement shall be held invalid,
unlawful, or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired.
20. COUNTERPARTS
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day first written above.
CALVERT SHAREHOLDER SERVICES, INC.
BY: /s/ Karen Becker
TITLE: Vice President
ATTEST: Katherine Stoner
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
TITLE: Executive Vice President
ATTEST: Francine Hayes
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AMENDMENT TO SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
CALVERT SHAREHOLDER SERVICES, INC.
AND
STATE STREET BANK AND TRUST COMPANY
GENERAL BACKGROUND:
Calvert Shareholder Services, Inc. ("CSSI"), and State Street Bank and Trust
Company ("State Street") entered into a sub-transfer agency and service
agreement ("Agreement") dated August 15, 1996.
For accounting reasons, CSSI desires to amend the Agreement by assigning the
contract for the transfer agent functions (except for shareholder servicing) to
each Calvert Group Fund. CSSI will continue to be responsible for the
shareholder servicing and for any responsibilities currently shown as Transfer
Agent responsibilities in Fund Service Responsibilities attachment to the
Agreement.
The Agreement must be assigned to the Calvert Group Funds for accounting
purposes.
CSSI and State Street must each consent to this assignment.
CHANGES CAUSED BY THIS ASSIGNMENT:
The current subtransfer agent, National Financial Data Services, Inc. ("NFDS"),
will bill each Calvert Group Fund, rather than CSSI, and each Calvert Group Fund
shall pay State Street or its billing agent, NFDS, all fees and expenses
incurred under the Agreement on behalf of each respective Calvert Group Fund.
NFDS will be shown in each Calvert Group Fund prospectus and statement of
additional information as the Transfer Agent, while CSSI will be shown as the
shareholder servicing agent.
State Street (NFDS) will continue to perform those functions shown in the
Agreement as Bank responsibilities.
CSSI will continue to perform the Transfer Agent responsibilities, as shown in
the Fund Service Responsibilities attachment to the Agreement.
THE ASSIGNMENT:
THIS AMENDMENT, dated as of the first day of January, 1998, by and among CSSI
and State Street:
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NOW, THEREFORE, CSSI and State Street each hereby agree that the Agreement will
be between each Calvert Group Fund and State Street, and each hereby agrees that
the Agreement is so assigned.
IN WITNESS WHEREOF, CSSI and State Street have caused this Amendment to be
executed by their duly authorized officers, effective as of January 1, 1998.
Calvert Shareholder Services, Inc. State Street Bank and Trust Company
By: /s/ By: /s/
Name: Karen Becker Name: Ronald E. Logue
Title: Vice President, Operations Title: Executive Vice President
Date: February 18, 1998 Date: February 20, 1998
Acacia Capital Corporation
First Variable Rate Fund
Calvert Tax-Free Reserves
Calvert Social Investment Fund
Calvert Cash Reserves
The Calvert Fund By: /s/
Calvert Municipal Fund, Inc. Name: William M. Tartikoff
Calvert World Values Fund, Inc. Title: Senior Vice President
Calvert New World Fund, Inc. and Secretary
Date: February 18, 1998
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SERVICING AGREEMENT
This Agency Agreement, effective January 1, 1998, by and between Calvert
Shareholder Services, Inc., a Delaware corporation having its principal place of
business in Bethesda, Maryland ("CSS"), and registered investment companies
sponsored by Calvert Group, Ltd. and its subsidiaries and set forth on Schedule
A ("Calvert Group Funds" or "Funds"). The Funds have entered into a transfer
agency and service agreement with the State Street Bank and Trust of Boston,
Massachusetts ("State Street") ("State Street Agreement").
1. APPOINTMENTS. The Funds hereby appoints CSS as servicing agent, agent
and shareholder servicing agent for the Funds, and CSS hereby accepts such
appointment and agrees to perform those duties in accordance with the terms and
conditions set forth in this Agreement.
2. DOCUMENTATION. The Funds will furnish CSS with all documents,
certificates, contracts, forms, and opinions which CSS, in its discretion, deems
necessary or appropriate in connection with the proper performance of its duties
under this Agreement.
3. SERVICES TO BE PERFORMED. CSS will be responsible for telephone
servicing functions, system interface with State Street and oversight of State
Street's administering and performing their duties pursuant to the State Street
Agreement. The details of the operating standards and procedures to be followed
will be determined from time to time by agreement between CSS and the Funds.
4. RECORDKEEPING AND OTHER INFORMATION. CSS will, commencing on the
effective date of this Agreement, to the extent necessary create and maintain
all necessary shareholder accounting records in accordance with all applicable
laws, rules and regulations, including but not limited to records required by
Section 31(a) of the Investment Company Act of 1940, as amended (the "1940
Act"), and the rules thereunder, as amended from time to time. All such records
will be the property of the Fund and will be available for inspection and use by
such Fund.
5. AUDIT, INSPECTION AND VISITATION. CSS will make available during
regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the SEC, a
Fund or any person retained by a Fund.
6. COMPENSATION. The Funds will compensate CSS on a monthly basis for the
services performed pursuant to this Agreement, at the rate of compensation set
forth in Schedule A. Out of pocket expenses incurred by CSS and not included in
Schedule A will be reimbursed to CSS by the Fund, as appropriate; such expenses
may include, but are not limited to, special forms and postage for mailing the
forms. These charges will be payable in full upon receipt of a billing invoice.
In lieu of reimbursing CSS for these expenses, any Fund may, in its discretion,
directly pay the expenses.
7. USE OF NAMES. No Fund will not use the name of CSS in any prospectus,
sales literature or other material relating to the Fund in any manner without
prior approval by CSS; provided, however, that CSS will approve all uses of its
name that merely refer in accurate terms to its appointment under this Agreement
or that are required by the SEC or a State Securities Commission; and, provided,
further, that in no event will approval be unreasonably withheld.
8. SECURITY. CSS represents and warrants that, to the best of its
knowledge, the various procedures and systems that CSS proposes to implement
with regard to safeguarding from loss or damage attributable to fire, theft or
any other cause (including provision for twenty-four hour a day restricted
access) the Fund's, records and other data and CSS's records, data, equipment,
facilities and other property used in the performance of its obligations under
this Agreement are adequate and that it will implement them in the manner
proposed and make such changes from time to time as in its judgment are required
for the secure performance of obligations under this Agreement.
9. LIMITATION OF LIABILITY. Each Fund will indemnify and hold CSS
harmless against any losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand, action
or suit brought by any person (including a shareholder naming such Fund as a
party) other than such Fund not resulting from CSS's bad faith, willful
misfeasance, reckless disregard of its obligations and duties, or negligence
arising out of, or in connection with, CSS's performance of its obligations
under this Agreement.
To the extent CSS has not acted with bad faith, willful misfeasance,
reckless disregard of its obligations and duties, or gross negligence, each Fund
will also indemnify and hold CSS harmless against any losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand, action or suit resulting from the negligence
of such Fund, or CSS's acting upon any instructions reasonably believed by it to
have been executed or communicated by any person duly authorized by such Fund,
or
-1-
<PAGE>
as a result of CSS's acting in reliance upon advice reasonably believed by CSS
to have been given by counsel for the Fund, or as a result of CSS's acting in
reliance upon any instrument reasonably believed by it to have been genuine and
signed, countersigned or executed by the proper person.
CSS's liability for any and all claims of any kind, including negligence,
for any loss or damage arising out of, connected with, or resulting from this
Agreement, or from the performance or breach thereof, or from the design,
development, lease, repair, maintenance, operation or use of data processing
systems and the maintenance of a Funds' shareholder account records as provided
for by this Agreement will in the aggregate not exceed the total of CSS's
compensation hereunder for the six months immediately preceding the discovery of
the circumstances giving rise to such liability.
In no event will CSS be liable for indirect, special, or consequential
damages (even if CSS has been advised of the possibility of such damages)
arising from the obligations assumed hereunder and the services provided for by
this Agreement, including but not limited to lost profits, loss of use of the
shareholder accounting system, cost of capital, cost of substitute facilities,
programs or services, downtime costs, or claims of shareholders for such damage.
10. LIMITATION OF LIABILITY OF THE FUND. CSS acknowledges that it accepts
the limitations upon the liability of the Funds. CSS agrees that each Fund's
obligations under this Agreement in any case will be limited to such Fund and to
its assets and that CSS will not seek satisfaction of any obligation from the
shareholders of the Fund nor from any director, trustee, officer, employee or
agent of such Fund.
11. FORCE MAJEURE. CSS will not be liable for delays or errors occurring
by reason of circumstances beyond its control, including but not limited to acts
of civil or military authority, national emergencies, work stoppages, fire,
flood, catastrophe, acts of God, insurrection, war, riot, or failure of
communication or power supply. In the event of equipment breakdowns beyond its
control, CSS will take reasonable steps to minimize service interruptions but
will have no liability with respect thereto.
12. AMENDMENTS. CSS and each Fund will regularly consult with each other
regarding CSS's performance of its obligations under this Agreement. Any change
in a Fund's registration statements under the Securities Act of 1933, as
amended, or the 1940 Act or in the forms relating to any plan, program or
service offered by the current prospectus which would require a change in CSS's
obligations under this Agreement will be subject to CSS's approval, which will
not be unreasonably withheld. Neither this Agreement nor any of its provisions
may be changed, waived, discharged, or terminated orally, but only by written
instrument which will make specific reference to this Agreement and which will
be signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.
13. TERMINATION. This Agreement will continue in effect until January 1,
1999, and thereafter as the parties may mutually agree; provided, however, that
this Agreement may be terminated at any time by either party upon at least sixty
days' prior written notice to the other party; and provided further that this
Agreement may be terminated immediately at any time for cause either by any Fund
or CSS in the event that such cause remains unremedied for no less than ninety
days after receipt of written specification of such cause. Any such termination
will not affect the rights and obligations of the parties under Paragraphs 9 and
10 hereof. In the event that a Fund designates a successor to any of CSS's
obligations hereunder, CSS will, at the expense and direction of such Fund,
transfer to such successor all relevant books, records and other data of such
Fund established or maintained by CSS under this Agreement.
15. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes of
this Agreement. This Agreement will be construed and enforced in accordance with
and governed by the laws of the State of Maryland. The captions in this
Agreement are included for convenience only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
CALVERT GROUP FUNDS
By:/s/ William M. Tartikoff
CALVERT SHAREHOLDER SERVICES, INC.
By:/s/ Ronald M. Wolfsheimer
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<PAGE>
SERVICING AGREEMENT
SCHEDULE A
For its services under this Servicing Agreement, Calvert Shareholder
Services, Inc., is entitled to receive from the Calvert Funds (Except Acacia
Capital Corporation) fees as set forth below:
<TABLE>
<CAPTION>
Annual Transaction
Fund and Portfolio Account Fee * Fee
<S> <C> <C>
FIRST VARIABLE RATE FUND
First Variable Rate Fund (d/b/a Calvert First $11.59 $.84
Government Money Market)
Calvert Florida Municipal Intermediate Fund 2.23 .26
CALVERT TAX-FREE RESERVES
Money Market 13.35 .97
Limited-Term 3.37 .42
Long-Term 2.67 .31
California Money Market 12.74 .93
Vermont Municipal 3.40 .39
CALVERT MUNICIPAL FUND, INC
California Intermediate 3.48 .40
National Intermediate 3.31 .38
Maryland Intermediate 4.64 .53
Michigan Intermediate 3.88 .44
New York Intermediate 4.23 .48
Virginia Intermediate 3.35 .38
Arizona Intermediate 2.10 .24
Pennsylvania Intermediate 2.82 .32
THE CALVERT FUND
Income 4.22 .48
New Vision Small Cap 5.90 .67
CALVERT SOCIAL INVESTMENT FUND
Money Market 11.92 .87
Bond 4.85 .55
Managed Growth 4.63 .72
Equity 5.24 .60
CALVERT WORLD VALUES FUND, INC.
International Equity 5.36 .61
Capital Accumulation 6.26 .72
CALVERT NEW WORLD FUND
New Africa Fund 3.91 .45
</TABLE>
ACACIA CAPITAL CORPORATION FEE IS AS FOLLOWS:
.03% (three basis points) on the first $500 million of average net assets
and .02% (two basis points) over $500 million of average net assets, minus the
fees paid by Acacia Capital Corporation to State Street Bank and Trust pursuant
to the State Street Agreement (except for out of pocket expenses).
- ----------------
* Account fees are charged monthly based on the highest number of non-zero
balance accounts outstanding during the month.
-3-
<PAGE>
THE CALVERT GROUP OF FUNDS
CLASS B AND CLASS C DISTRIBUTION PLAN
As approved by the Boards in November 1993
Amended and restated February 1998 Pursuant to Rule 12b-1
Under the Investment Company Act of 1940
This Distribution Plan applies to Class B and Class C in each portfolio of
the Calvert Funds listed in Schedule A (each a "Fund" and together, the "Funds")
and to any future class for which this Distribution Plan has been approved in
accordance with paragraph 2(a) below. For purposes of this Distribution Plan
each series portfolio of a Fund is referred to herein as a "Series" and
together, as the "Series".
As permitted by Rule 12b-1 under the Investment Company Act of 1940 and in
accordance with the terms and conditions of this Plan, as hereinafter set forth,
a Fund may incur certain expenditures to promote itself and further the
distribution of its shares.
1. PAYMENT OF FEE
(a) As compensation for certain services performed and expenses assumed by
each Fund's distributor and principal underwriter ("Distributor") each Fund may
pay the Distributor a distribution fee (the "Distribution Fee"). The
Distribution Fee is intended to compensate the Distributor for its marketing
efforts, which include, but are not limited to the following costs: commissions
and other payments advanced to sales personnel and third parties and related
interest costs as permitted by the rules of the National Association of
Securities Dealers, Inc. ("NASD"), printing and mailing prospectuses, sales
literature and other relevant material to other than current shareholders,
advertising and public relations, telemarketing, marketing-related overhead
expenses and other distribution costs. Such Distribution Fee is in addition to
any NASD service fee that may be paid hereunder and as described at Section 3(b)
of the Distribution Agreement between the respective Funds and the Distributor,
or any front-end or deferred sales charges the Distributor receives from a Fund
with respect to sales or redemption of Fund shares. Total fees paid pursuant to
this Plan, including the Distribution Fee described above, and the NASD service
fee, shall not exceed the rate set forth in the attached Schedule B to this
Plan. All agreements with any person relating to the implementation of this
Plan shall be in writing, and such agreements shall be subject to termination,
without penalty, pursuant to the provisions of paragraph 2(c) of this Plan.
(b) A Fund will pay each person which has acted as principal underwriter
of its Class B shares its Allocable Portion (as such term is defined in the
Distribution Agreement pursuant to which such person acts or acted as principal
underwriter of the Class B Shares (the "Applicable Distribution Agreement")) of
the Distribution Fee in respect of Class B Shares of the Fund. Such person
shall be paid its Allocable Portion of such Distribution Fees notwithstanding
such person's termination as Distributor of the Class B Shares of the Fund, such
payments to be changed or terminated only: (i) as required by a change in
applicable law or a change in accounting policy adopted by the Investment
Companies Committee of the AICPA and approved by FASB that results in a
determination by the Fund's independent accountants that any asset based sales
charges (as that term is defined by the NASD) in respect of such Fund, and which
are not yet due and payable, must be accounted for by such Fund as a liability
in accordance with GAAP, each after the effective date of this restated
Distribution Plan; (ii) if in the sole discretion of the Board of
Trustees/Directors, after due consideration of the relevant factors considered
when adopting and/or amending this Distribution Plan including the transactions
contemplated in that certain Purchase and Sale Agreement entered into between a
Fund's Distributor and the commission financing entity, the Board of
Trustees/Directors determines, subject to its fiduciary duty, that this
Distribution Plan and the payments thereunder must be changed or terminated,
notwithstanding the effect this action might have on the Fund's ability to offer
and sell Class B shares; or (iii) in connection with a Complete Termination of
this Distribution Plan, it being understood that for this purpose a Complete
Termination of this Distribution Plan occurs only if, as to a Fund or Series,
this Distribution Plan is terminated and the Fund has not adopted any other
distribution plan with respect to its Class B or other substantially similar
class of shares. The services rendered by a Distributor for which that
Distributor is entitled to receive its Allocable Portion of the Distribution Fee
shall be deemed to have been completed at the time
-1-
<PAGE>
of the initial purchase of the Commission Shares (as defined in the Distribution
Agreement) taken into account in computing that Distributor's Allocable Portion
of the Distribution Fee.
The obligation of a Fund to pay the Distribution Fee shall terminate upon
the termination of this Distribution Plan as to such Fund in accordance with the
terms hereof. Except as provided in the preceding paragraph, a Fund's
obligation to pay the Distribution Fee to a Distributor of the Class B Shares of
the Fund shall be absolute and unconditional and shall not be subject to any
dispute, offset, counterclaim or defense whatsoever (it being understood that
nothing in this sentence shall be deemed a waiver by a Fund of its right
separately to pursue any claims it may have against such Distributor and enforce
such claims against any assets (other than its right to be paid its Allocable
Portion of the Distribution Fee and to be paid the contingent deferred sales
charges) of such Distributor).
The right of a Distributor to receive the Distribution Fee, but not the
relevant Distribution Agreement or that Distributor's obligations thereunder,
may be transferred by that Distributor in order to raise funds which may be
useful or necessary to perform its duties as principal underwriter, and any such
transfer shall be effective upon written notice from that Distributor to the
Fund. In connection with the foregoing, each Fund is authorized to pay all or
part of the Distribution Fee directly to such transferee as directed by that
Distributor.
(c) Nothing in this Distribution Plan shall operate or be construed to
limit the extent to which the Fund's Investment Advisor or any other person,
other than the Fund, at its expense apart from the Distribution Plan, may incur
costs and pay expenses associated with the distribution of Fund shares.
2. EFFECTIVE DATE AND TERM
(a) This Distribution Plan shall become effective as to any Class of any
Series upon approval by majority votes of (i) the Board of the Fund and the
members thereof who are not interested persons within the meaning of Section
2(a)(19) of the Investment Company Act of 1940 and have no direct or indirect
financial interest in the operation of the Distribution Plan or in any
agreements related to the Distribution Plan ("Qualified Trustees/Directors"),
cast in person at a meeting called for the purpose of voting on this
Distribution Plan, and (ii) the outstanding voting securities of the Fund.
(b) This Distribution Plan shall remain in effect for one year from its
adoption date and may continue in effect thereafter if this Distribution Plan is
approved at least annually by a majority vote of the Board of the Fund,
including a majority of the Qualified Trustees/Directors, cast in person at a
meeting called for the purpose of voting on the Distribution Plan.
(c) Subject to paragraph 1(b) above, this Distribution Plan may be
terminated at any time without payment of any penalty by a majority vote of the
Qualified Trustees/Directors or by vote of a majority of the outstanding voting
securities of the Fund, or, with respect to the termination of this Distribution
Plan as to a particular Class of a Portfolio, by a vote of a majority of the
outstanding voting securities of that Class.
(d) The provisions of this Distribution Plan are severable for each Series
or Class, and whenever action is to be taken with respect to this Distribution
Plan, that action must be taken separately for each Series or Class affected by
the matter.
3. REPORTS
The person authorized to direct the disposition of monies paid or
payable by the Fund pursuant to the Distribution Plan shall provide, on at least
a quarterly basis, a written report to each Fund's Board of the amounts expended
pursuant to this Distribution Plan or any related agreements and the purposes
for which such expenditures were made.
4. SELECTION OF DISINTERESTED TRUSTEES/DIRECTORS
-2-
<PAGE>
While this Distribution Plan is in effect, the selection and
nomination of those Trustees/Directors who are not interested persons of a Fund
within the meaning of Section 2(a)(19) of the Investment Company Act of 1940
shall be committed to the discretion of the Trustees/Directors then in office
who are not interested persons of the Fund.
5. EFFECT OF PLAN
This Distribution Plan shall not obligate the Fund or any other party
to enter into an agreement with any particular person.
6. AMENDMENT
This Distribution Plan may not be amended to increase materially the
amount authorized in paragraph 1 hereof to be spent by a Fund for distribution
without approval by a vote of the majority of the outstanding shares of such
Fund, except that if the amendment relates only to a particular Class of a Fund,
such approval need only be by a vote of the majority of the outstanding shares
of that Class. All material amendments to this Distribution Plan must be
approved by a majority vote of the Board of the Fund, and of the Qualified
Trustees/Directors, cast in person at a meeting called for the purpose of voting
thereon.
-3-
<PAGE>
SCHEDULE A
The Calvert Fund
Calvert Tax-Free Reserves
Calvert Municipal Fund
Calvert Social Investment Fund
Calvert World Values Fund
Calvert New World Fund
First Variable Rate Fund
-4-
<PAGE>
SCHEDULE B
The total fees paid by the respective Class of each Series of a Fund
pursuant to this Distribution Plan shall not exceed the rate, as a percentage of
that Class' average annual net assets, set forth below:
<TABLE>
<CAPTION>
FUND/SERIES CLASS B CLASS C
Distribution Service Distribution Service
Fee Fee Fee Fee
<S> <C> <C> <C> <C>
The Calvert Fund
Calvert New Vision
Small Cap Fund 0.75 0.25 0.75 0.25
Calvert Income Fund 0.75 0.25 0.75 0.25
Calvert Tax-Free Reserves
Long-Term 0.75 0.25 0.75 0.25
Vermont Municipal 0.75 0.25 0.75 0.25
Calvert Municipal Fund
National 0.75 0.25 N/A N/A
California 0.75 0.25 N/A N/A
Maryland 0.75 0.25 N/A N/A
Virginia 0.75 0.25 N/A N/A
Calvert Social Investment Fund
Managed Growth 0.75 0.25 0.75 0.25
Equity 0.75 0.25 0.75 0.25
Bond 0.75 0.25 0.75 0.25
Managed Index 0.75 0.25 0.75 0.25
Calvert World Values Fund
International Equity 0.75 0.25 0.75 0.25
Capital Accumulation 0.75 0.25 0.75 0.25
Calvert World Values Fund
Calvert New Africa 0.75 0.25 0.75 0.25
First Variable Rate Fund
Calvert First Gov.
Money Market 0.75 0.25 N/A N/A
</TABLE>
Restated Feb. 1998
-5-
<PAGE>
THE CALVERT GROUP OF FUNDS
RULE 18f-3 MULTIPLE CLASS PLAN
Approved by the Boards in January 1996
Amended and restated February 1998 Pursuant to Rule 18f-3
Under the Investment Company Act of 1940
Rule 18f-3 under the Investment Company Act of 1940, as amended (the "1940
Act"), requires that an investment company desiring to offer multiple classes of
shares pursuant to the Rule adopt a plan setting forth the differences among the
classes with respect to shareholder services, distribution arrangements, expense
allocations and any related conversion features or exchange privileges. Any
material amendment to the plan must be approved by the investment company's
Board of Trustees/Directors, including a majority of the disinterested Board
members, who must find that the plan is in the best interests of each class
individually and the investment company as a whole.
This Rule 18f-3 Multiple Class Plan ("Plan") shall apply to those funds in
the Calvert Group of Funds listed in Exhibit I (each a "Fund" and collectively,
"Funds") and to any future fund for which this Plan has been approved in
accordance with the above paragraph.
The provisions of this Plan are severable for each Fund or Series thereof
("Series") or Class, and whenever action is to be taken with respect to this
Plan, that action must be taken separately for each Fund, Series or Class
affected by the matter.
1. CLASS DESIGNATION. A Fund may offer shares designated Class A, Class
B, Class C , Class I, and for certain money market portfolios, Class O.
2. DIFFERENCES IN AVAILABILITY. Class A, Class B, Class C, and Class O
shares shall each be available through the same distribution channels, except
that (a) Class B shares may not be available through some dealers and are not
available for purchases of $500,000 or more, (b) Class B shares of Calvert First
Government Money Market Fund are available only through exchange from Class B or
Class C shares of another Calvert Fund, and (c) Class C shares may not be
available through some dealers and are not available for purchases of $1 million
or more. Class I shares are generally available only directly from Calvert Group
and not through dealers, and each Class I shareholder must maintain a $1 million
minimum account balance.
3. DIFFERENCES IN SERVICES. The services offered to shareholders of each
Class shall be substantially the same, except that the Rights of Accumulation,
Letters of Intent and Reinvestment Privileges shall be available only to holders
of Class A shares. Class I purchases and redemptions may only be made by bank
wire.
4. DIFFERENCES IN DISTRIBUTION ARRANGEMENTS. Class A shares shall be
offered with a front-end sales charge, as such term is defined in Rule 2830 of
the Conduct Rules of the National Association of Securities Dealers, Inc. The
amount of the sales charge on Class A shares is set forth at Exhibit II. Class
A shares shall be subject to a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The amount of the Distribution Plan expenses for Class A
shares, as set forth at Exhibit II, are used to pay the Fund's principal
underwriter for distributing and or providing services to the Fund's Class A
shares. This amount includes a service fee at the annual rate of .25 of 1% of
the value of the average daily net assets of Class A.
Class B shares shall be offered with a contingent deferred sales charge
("CDSC") and no front-end sales charge. The amount of the CDSC on Class B shares
is set forth at Exhibit II. Class B shares shall be subject to a Distribution
Plan adopted pursuant to Rule 12b-1 under the 1940 Act. The amount of the
Distribution Plan expenses for Class B shares, as set forth at Exhibit II, are
used to pay each Fund's principal underwriter for distributing and or providing
services to the Fund's Class B shares. This amount includes a service fee at the
annual rate of .25 of 1% of the value of the average daily net assets of Class
B.
Class C shares shall not be subject to a front-end sales charge, but shall
be subject to a 1.00% CDSC if the
-1-
<PAGE>
shares are redeemed within one year of purchase. Class C shares shall be subject
to a Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act. The
amount of the Distribution Plan expenses for Class C shares are set forth at
Exhibit II. The Class C Distribution Plan pays each applicable Fund's principal
underwriter for distributing and or providing services to such Fund's Class C
shares. This amount includes a service fee at the annual rate of .25 of 1% of
the value of the average daily net assets of Class C.
Class I and Class O shares shall be subject to neither a front-end sales
charge, nor a CDSC, nor are they subject to a Distribution Plan adopted pursuant
to Rule 12b-1 under the 1940 Act.
5. EXPENSE ALLOCATION. The following expenses shall be allocated, to the
extent practicable, on a Class-by-Class basis: (a) Distribution Plan fees; (b)
transfer agent fees; (c) administrative service fees; (d) printing and postage
expenses payable by a Fund relating to preparing and distributing materials,
such as proxies, reports and prospectuses to current shareholders of a specific
class; (e) class specific state notification fees; (f) class specific litigation
or other legal expenses; (g) certain class specific reimbursement from the
Advisor; and (h) certain class specific contract services (e.g., proxy
solicitation).
6. CONVERSION FEATURES. Class B shares shall be subject to an automatic
conversion feature into Class A shares after they have been held for that number
of years set forth in Exhibit II. Class A, Class C ,Class I, and Class O are not
subject to automatic conversion.
7. EXCHANGE PRIVILEGES. Class A shares shall be exchangeable only for:
(a) Class A shares of other funds managed or administered by the Calvert Group;
(b) shares of funds managed or administered by the Calvert Group which do not
have separate share classes; and (c) shares of certain other funds specified
from time to time.
Class B shares shall be exchangeable only for: (a) Class B shares of other
funds managed or administered by the Calvert Group; (b) Class A shares of other
funds managed or administered by the Calvert Group, if the front-end load on the
Class A shares is paid at the time of the exchange; and (c) shares of certain
other funds specified from time to time.
Class C shares shall be exchangeable only for: (a) Class C shares of other
funds managed or administered by the Calvert Group and Class B shares of Calvert
First Government Money Market Fund; (b) Class A shares of other funds managed or
administered by the Calvert Group, if the front-end load on the Class A shares
is paid at the time of the exchange; and (c) shares of certain other funds
specified from time to time.
Class I shares shall be exchangeable only for: (a) Class I shares of other
funds managed or administered by the Calvert Group; (b) Class A shares of other
funds managed or administered by the Calvert Group, if the front-end load on the
Class A shares is paid at the time of the exchange; and (c) shares of certain
other funds specified from time to time.
-2-
<PAGE>
Exhibit I
The Calvert Fund
Calvert Tax-Free Reserves
Calvert Municipal Fund
Calvert Social Investment Fund
Calvert World Values Fund
Calvert New World Fund
First Variable Rate Fund
-3-
<PAGE>
Exhibit II
CALVERT SOCIAL INVESTMENT FUND (CSIF)
<TABLE>
<CAPTION>
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
<S> <C> <C> <C>
CSIF Managed Growth 4.75% 0.35% 1.00%
CSIF Equity 4.75% 0.35% 1.00%
CSIF Managed Index 4.75% 0.25% 1.00%
CSIF Bond 3.75% 0.35% 1.00%
</TABLE>
<TABLE>
<CAPTION>
Class B
Managed Growth,
Equity, and Maximum
Contingent Deferred Sales Charge Managed Index Bond 12b-1 Fee
<S> <C> <C> <C>
Shares held less than one year after purchase 5% 4% 1.00%
More than one year but less than two 4% 3%
More than two years but less than three 4% 2%
More than three years but less than four 3% 1%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs. 6yrs.
</TABLE>
-4-
<PAGE>
Exhibit II
CALVERT TAX-FREE RESERVES (CTFR)
<TABLE>
<CAPTION>
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
<S> <C> <C> <C>
CTFR Long-Term 3.75% 0.35% 1.00%
CTFR Vermont 3.75% N/A 1.00%
<CAPTION>
Class B
Long-Term and Maximum
Contingent Deferred Sales Charge Vermont 12b-1 Fee
<S> <C> <C>
Shares held less than one year after purchase 4% 1.00%
More than one year but less than two 3%
More than two years but less than three 2%
More than three years but less than four 1%
Converts to Class A after 6yrs.
</TABLE>
-5-
<PAGE>
Exhibit II
CALVERT MUNICIPAL FUND
<TABLE>
<CAPTION>
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
<S> <C> <C> <C>
National Intermediate 2.75% 0.25% N/A
California Intermediate 2.75% 0.25% N/A
Maryland Intermediate 2.75% 0.25% N/A
Virginia Intermediate 2.75% 0.25% N/A
<CAPTION>
Class B
Maximum
Contingent Deferred Sales Charge CMF 12b-1 Fee
<S> <C> <C>
Shares held less than one year after purchase 3% 1.00%
More than one year but less than two 2%
More than two years but less than three 2%
More than three years but less than four 1%
Converts to Class A after 4 yrs.
</TABLE>
-6-
<PAGE>
Exhibit II
THE CALVERT FUND
<TABLE>
<CAPTION>
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
<S> <C> <C> <C>
New Vision Small Cap 4.75% 0.25% 1.00%
Calvert Income Fund 3.75% 0.50% 1.00%
<CAPTION>
Class B
Maximum
Contingent Deferred Sales Charge New Vision Income 12b-1 Fee
<S> <C> <C> <C>
Shares held less than one year 5% 4% 1.00%
More than one year but less than two 4% 3%
More than two years but less than three 4% 2%
More than three years but less than four 3% 1%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs. 6 yrs.
</TABLE>
-7-
<PAGE>
Exhibit II
CALVERT WORLD VALUES FUND
<TABLE>
<CAPTION>
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
<S> <C> <C> <C>
International Equity 4.75% 0.35% 1.00%
Capital Accumulation 4.75% 0.35% 1.00%
<CAPTION>
Class B
Maximum
Contingent Deferred Sales Charge CWVF 12b-1 Fee
<S> <C> <C>
Shares held less than one year after purchase 5% 1.00%
More than one year but less than two 4%
More than two years but less than three 4%
More than three years but less than four 3%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs.
</TABLE>
February 1998
Lgl Shr/Agreements/New UW/Rule 18f-3 Plan
-8-
<PAGE>
Exhibit II
CALVERT NEW WORLD FUND
<TABLE>
<CAPTION>
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
<S> <C> <C> <C>
Calvert New Africa 4.75% 0.25% 1.00%
<CAPTION>
Class B
Maximum
Contingent Deferred Sales Charge New Africa 12b-1 Fee
<S> <C> <C>
Shares held less than one year after purchase 5% 1.00%
More than one year but less than two 4%
More than two years but less than three 4%
More than three years but less than four 3%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs.
</TABLE>
-9-
<PAGE>
Exhibit II
FIRST VARIABLE RATE FUND
<TABLE>
<CAPTION>
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
<S> <C> <C> <C>
First Gov. Money Market N/A N/A N/A
<CAPTION>
Class B
Maximum
Contingent Deferred Sales Charge 12b-1 Fee
<S> <C>
CDSC of original Class B Fund purchased is applied upon
redemption from Class B of First Government Money Market 1.00%
</TABLE>
Conversion period of original Class B Fund purchased is applied.
-10-
