PROSPECTUS
February 28, 1999
The Advisors Group Reserve Fund
a class of Calvert First Government Money Market Fund
and
The Advisors Group Tax-Free Reserves
a class of Calvert Tax-Free Reserves Money Market Portfolio
Table of Contents Page
About the Funds
Investment goals 1
Principal Investment Strategies 1
Risks of Investing 2
Performance Chart 3
Fees and Expenses 4
About the Advisor
Management 5
Year 2000 5
Shareholder Guide:
How to Buy Shares 6
Dividends, Capital Gains and Taxes 7
How to Sell Shares 8
These securities have not been approved or disapproved by the Securities and
Exchange Commission ("SEC") or any state securities commission nor has the
SEC or any state securities commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
Fundamental Goals - Investment Objectives
The Advisors Group Reserve Fund
The Advisors Group Reserve Fund (the "Reserve 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 Reserve Fund invests only in U.S.
Government-backed obligations, including such obligations subject to
repurchase agreements with recognized securities dealers and banks. The
Reserve Fund seeks to maintain a constant net asset value of $1.00 per share.
The Reserve Fund is offered in this prospectus to investors with brokerage
accounts at The Advisors Group, Inc.
The Advisors Group Tax-Free Reserves
The Advisors Group Tax-Free Reserves ("Tax-Free Reserves") seeks to earn the
highest interest income exempt from federal income taxes as is consistent
with prudent investment management, preservation of capital, and the quality
and maturity characteristics of Tax-Free Reserves. Tax-Free Reserves seeks
to maintain a constant net asset value of $1.00 per share.
Tax-Free Reserves is offered in this prospectus to investors with brokerage
accounts at The Advisors Group, Inc.
Principal Investment Strategies
Reserve Fund assets are invested only in short-term money market
instruments, such as:
obligations issued by the U.S. Treasury, such as U.S. Treasury bills,
notes and bonds, supported by the full faith and credit of the U.S.
Government;
Securities issued by the U.S. Government, its agencies and
instrumentalities;
repurchase agreements; and
variable-rate demand notes.
Tax-Free Reserves assets are invested primarily in a diversified portfolio
of municipal obligations whose interest is exempt from federal income tax.
Tax-Free Reserves invests in:
high quality variable and floating rate demand notes and/or municipal
obligations;
municipal bonds and notes and tax-exempt commercial paper; and
short-term fixed-rate obligations with remaining maturities of
thirteen months or less.
The Advisor looks for securities with strong credit quality that are
attractively priced. This may include investments with unusual features or
privately placed issues, that are not widely followed in the fixed income
marketplace. All investments must comply with the SEC money market fund
requirements.
<PAGE>
Risks of investing
The yield of the Reserve Fund and Tax-Free Reserves ("each Fund" or the
"Funds") will change daily, depending on market interest rates, and tends to
follow the same direction as the rates.
Dividends paid by each Fund will fluctuate as interest rates and net
investment income fluctuate.
Investments in obligations not guaranteed by the full faith and credit of
the U.S. Government are subject to the ability of the issuer to make payment
at maturity.
Many of the instruments held by Tax-Free Reserves are supported by letters
of credit issued by banks; thus, it has a wide exposure to the banking
industry.
Tax-Free Reserves may purchase securities that have not been rated by a
rating agency, so long as the Advisor determines they are of comparable
credit quality.
Unrated and privately placed securities may be less liquid than those that
are rated or have an active trading market.
The yield of each Fund will change in response to market interest rates. In
general, as market rates go up so will the Fund's yield, and vice versa.
Although the Fund tries to keep the value of its shares constant at $1.00
per share, extreme changes in market rates, and/or sudden credit
deterioration of a holding could cause the value to decrease. The Funds
limit the amount invested in any one issuer to try to lessen exposure.
An investment in the Funds is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Funds seek to preserve the value of your
investment at $1.00 per share, it is still possible to lose money by
investing in the Funds.
Bar Charts and Performance Tables
The bar charts and tables below show the annual returns and its long-term
performance by calendar year for Class O of each of the Funds, shown as
Calvert First Government for the Reserve Fund and CTFR Money Market for the
Tax-Free Reserves Fund. The charts shows how the performance has varied from
year to year. The tables compare Class O returns over time to the Lipper
U.S. Government Money Market Funds Index for the Reserve Fund, and the
Lipper Tax-Exempt Money Market Funds Index for Tax-Free Reserves. Each index
is a composite index of the annual return of mutual funds that have similar
investment goals. Each Fund's past performance does not necessarily indicate
how it will perform in the future. Please note that performance for the
Reserve Fund and Tax-Free Reserves is not shown since it was not available
for either Fund during the time periods shown.
<PAGE>
Bar Chart - Class O
1989 8.56% 1994 3.65%
1990 7.61% 1995 5.22%
1991 5.65% 1996 4.79%
1992 3.39% 1997 5.00%
1993 2.70% 1998 4.93%
Best Quarter (of periods shown) Q2 '89 2.22%
Worst Quarter (of periods shown) Q2 '93 0.66%
Average annual total returns for the periods ended December 31, 1998
1 year 5 years 10 years
Calvert First Government Class O 4.93% 4.72% 5.13%
Lipper U.S. Government Money
Market Funds Index 4.95% 4.79% 5.19%
Bar Chart - Class O
1989 6.47% 1994 2.81%
1990 6.04% 1995 4.02%
1991 4.96% 1996 3.33%
1992 3.17% 1997 3.38%
1993 2.41% 1998 3.22%
Best Quarter (of periods shown) Q2 '89 1.67%
Worst Quarter (of periods shown) Q1 '93 0.56%
Average annual total returns for the periods ended December 31, 1998
1 year 5 years 10 years
CTFR Money Market Class O 3.23% 3.35% 3.97%
Lipper Tax-Exempt Money
Market Funds Index 3.04% 3.06% 3.58%
For current yield information, call 1-800-777-1500.
<PAGE>
Fees and Expenses of the Funds
These tables describe the fees and expenses you may pay if you buy and hold
shares of each Fund.
A. Shareholder Fees
(fees paid directly from your investment)
Reserve Tax-Free
Fund Reserves
Maximum Sales Load on Purchases None None
Maximum Deferred Sales Load None None
Maximum Sales Load on Reinvested Dividends None None
Redemption Fees None None
Exchange Fee None None
B. Estimated Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Reserve Tax-Free
Fund Reserves
Management Fees 0.50% 0.46%
Distribution and service (12b-1) fees 0.25% 0.25%
Other Expenses 0.19% 0.14%
Total Annual Fund Operating Expenses 0.94% 0.85%
C. Example:
This example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds. The example assumes that:
You invest $10,000 in a Fund for the time periods indicated;
You redeem all shares at the end of the periods;
Your investment has a 5% return each year; and
The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, under these
assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Reserve Fund $87 $271 $471 $1,049
Tax-Free Reserves $96 $300 $520 $1,155
<PAGE>
Management and Advisory Fees
Calvert Asset Management Company, Inc. ("CAMCO") is the investment advisor
for each Fund. CAMCO has been managing mutual funds since 1976, and is a
subsidiary of Calvert Group, Ltd. CAMCO currently advises 25 Calvert funds,
including the first and largest family of socially screened funds. CAMCO is
located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. As
of December 31, 1998, it had over $6 billion in assets under management.
CAMCO provides the Funds with investment supervision and management;
administrative services and office space; and furnishes executive and other
personnel to the Funds. CAMCO also pays the salaries and fees of all
Trustees who are affiliated persons. CAMCO may pay certain advertising and
promotional expenses of the Funds. Pursuant to the Investment Advisory
Agreement, CAMCO is entitled to an annual advisory fee of 0.25% of the
average daily net assets of the Reserve Fund. The Tax-Free Reserves
Investment Advisory Agreement entitles CAMCO to receive an annual advisory
fee of 0.25% of the first $500 million of average daily net assets, 0.20% of
the next $500 million, and 0.15% on assets of $1 billion or more. CAMCO may
voluntarily waive a portion of its advisory fee.
A Word About the Year 2000 (Y2K) and Our Computer Systems
Like other mutual funds, CAMCO and its service providers use computer
systems for all aspects of our business -- processing shareholder and fund
transactions, fund accounting, executing trades, and pricing securities just
to name a few. Many current software programs cannot distinguish between the
year 2000 and the year 1900. This can cause problems with retirement plan
distributions, dividend payment software, transaction software, and numerous
other areas that could impact the Funds. Calvert Group has been reviewing
all of its computer systems for Y2K compliance. Although, at this time,
there can be no assurance that there will be no negative impact on the
Funds, the Advisor, the underwriter, transfer agent and custodian have
advised the Funds that they have been actively working on any necessary
changes to their computer systems to prepare for Y2K and expect that their
systems, and those of their outside service providers, will be adapted in
time for that event.
<PAGE>
- ------------------------------------------------------------------------------
SHAREHOLDER GUIDE
- ------------------------------------------------------------------------------
HOW TO BUY SHARES
Please contact your local office of The Advisors Group, Inc. to open your
money market account. All transactions will be processed electronically
through the National Financial Proprietary Money Market Sweep Program on
behalf of The Advisors Group, Inc.
There is no minimum for initial investments and no minimum for subsequent
investments, provided you have a brokerage account with The Advisors Group,
Inc.
Because you are purchasing shares through a program of services offered by
The Advisors Group, Inc., a registered broker/dealer and investment advisor,
you should read program materials together with this Prospectus. Certain
account features have been modified for this program, and The Advisors
Group, Inc. may impose charges for their services.
Important - How Shares are Priced
The price of shares is based on each Fund's net asset value ("NAV"). NAV is
determined according to the "amortized cost" method. It is computed per
class by adding the value of a Fund's holdings plus other assets,
subtracting liabilities, and then dividing the result by the number of
shares outstanding.
The NAV is calculated as of the close of each business day, which coincides
with the closing of the regular session of the New York Stock Exchange
("NYSE") (normally 4 p.m. ET). Each Fund is open for business each day the
NYSE is open. Please note that there are some federal holidays, such as
Columbus Day and Veterans Day, when the NYSE is open and each Fund is open,
but no purchases may be made due to the closure of the banking system.
When Your Account Will Be Credited
Your purchase will be processed at the NAV next calculated after your order
is received. Electronic sweeps into an account begin earning dividends the
next business day.
Each Fund reserves the right to suspend the offering of shares for a period
of time or to reject any specific purchase order.
<PAGE>
DIVIDENDS, CAPITAL GAINS AND TAXES
Each Fund accrues dividends daily from its net investment income, and pays
the dividends monthly. Net investment income consists of interest income,
net short-term capital gains, if any, and dividends declared and paid on
investments, less expenses. Distributions of net short-term capital gains
(treated as dividends for tax purposes) and net long-term capital gains, if
any, are normally paid once a year; however, the Funds do not anticipate
making any such distributions unless available capital loss carryovers have
been used or have expired.
Dividend payment options
Dividends and any distributions are automatically reinvested in the same
Fund at NAV, unless you elect to have amounts of $10 or more paid in cash
(by check).
Federal Taxes
In January, The Advisors Group, Inc. will mail Form 1099-DIV, indicating
taxable dividends and any capital gain distributions paid to you during the
past year. Generally, dividends and distributions are taxable in the year
they are paid. However, any dividends and distributions paid in January but
declared during the prior three months are taxable in the year declared.
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 shares.
Other Tax Information
In addition to federal taxes for the Reserve Fund, 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 US 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 us to withhold 31% of your reportable dividends, and possibly 31%
of certain redemptions. In addition, you may be subject to a fine by the
Internal Revenue Service.
<PAGE>
HOW TO SELL SHARES
You may redeem all or a portion of your shares on any day the Funds are open
for business, provided the amount requested is not on hold. Your shares will
be redeemed at the next NAV calculated after your redemption request is
received. You will receive dividends through the date the request is
received and processed. The proceeds will normally be sent to you on the
next business day, but if making immediate payment could adversely affect
your Fund, it may take up to seven (7) days to make payment. The Funds have
the right to redeem shares in assets other than cash for redemption amounts
exceeding, in any 90-day period, $250,000 or 1% of the net asset value of
the Fund, whichever is less. When the NYSE 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. Please note that there are some federal holidays such as
Columbus Day and Veterans Day, when the NYSE is open and each Fund is open,
but redemptions cannot be made due to the closure of the banking system.
BY TELEPHONE
You may redeem shares from your account by telephone and have your money
sent by check, electronically transferred, or wired to a bank you have
previously authorized by contacting your local office of The Advisors Group,
Inc.
CHECKWRITING
Checkwriting will be offered through The Advisors Group, Inc. The
checkwriting features vary, depending on what you choose when you open the
money market sweep account with The Advisors Group, Inc. Please see The
Advisors Group, Inc. program materials for information.
- ------------------------------------------------------------------------------
To Open an Account:
800-777-1500
Performance and Prices:
800-777-1500
Service for Existing Accounts:
800-777-1500
Registered, Certified or
Overnight Mail:
The Advisors Group, Inc.
7315 Wisconsin Avenue
Bethesda, Maryland 20814
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
<PAGE>
Outside Back Cover Page
Statements of Additional Information ("SAIs") (dated February 28, 1999) for
the Funds have been filed with the Securities and Exchange Commission and is
incorporated by reference. Additional information about each Fund's
investments is available in each Fund's annual and semi-annual reports to
shareholders. The SAIs and each Fund's annual and semi-annual reports are
available, without charge and upon request, from the Funds at 800-777-1500.
Information about the Funds (including the SAIs) can be reviewed at the
Commission's Public Reference Room in Washington, D.C. Information on the
operation of the public reference room may be obtained by calling the
Commission at 1-800-SEC-0330. Reports and other information about the Funds
are available on the Commission's internet site at http://www.sec.gov.
Copies of this information may be obtained, by payment of a duplicating fee,
by writing the Public Reference Section of the Commission, Washington, D.C.
20549-6009.
811-2633 First Variable Rate Fund
811-3101 Calvert Tax-Free Reserves
<PAGE>
First Variable Rate Fund:
Calvert First Government Money Market Fund
Statement of Additional Information
February 28, 1999
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE
Calvert Shareholder Services, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
TRANSFER AGENT
National Financial Data Services, Inc.
1004 Baltimore
6th Floor
Kansas City, Missouri 64105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers
250 West Pratt Street
Baltimore, Maryland 21201
TABLE OF CONTENTS
Investment Objective and Strategy 2
Investment Restrictions 3
Dividends and Distributions 4
Tax Matters 4
Net Asset Value 4
Calculation of Yield 5
Advertising 6
Purchases and Redemption of Shares 6
Trustees and Officers 7
Investment Advisor 9
Administrative Services 10
Transfer and Shareholder Servicing Agent 10
Portfolio Transactions 10
Independent Accountants and Custodians 11
Method of Distribution 11
General Information 12
Control Persons and Principal Holders of Securities 12
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-February 28, 1999
FIRST VARIABLE RATE FUND:
CALVERT FIRST GOVERNMENT MONEY MARKET FUND
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814
New Account Information
(800) 368-2748
(301) 951-4820
Shareholder Services
(800) 368-2745
Broker Services
(800) 368-2746
(301) 951-4850
TDD for the Hearing- 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 February 28, 1999 for Class T, March 31, 1998
for Classes O, B, and C, and September 15, 1998 for the Institutional Class,
which may be obtained free of charge by writing or calling the Fund at the
telephone numbers listed above.
The audited financial statements included in the Fund's Annual Report
to Shareholders dated December 31, 1998 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.
- ------------------------------------------------------------------------------
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.
The Fund does not intend to concentrate 25% or more of the value of
its total assets in any one industry, except that the Fund reserves the
freedom of action to concentrate its investments in government securities
and certain bank instruments as detailed above.
- ------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- ------------------------------------------------------------------------------
Fundamental Investment Restrictions
The Fund has adopted the following fundamental investment
restrictions. These restrictions cannot be changed without the approval of
the holders of a majority of the outstanding shares of the Fund.
(1) The Fund may not make any investment inconsistent with
its classification as a diversified investment company
under the 1940 Act.
(2) The Fund may not concentrate its investments in the
securities of issuers primarily engaged in any particular
industry (other than securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities
and repurchase agreements secured thereby), or domestic
bank money market instruments.
(3) The Fund may not issue senior securities or borrow
money, except from banks for temporary or emergency
purposes and then only in an amount up to 33 1/3% of the
value of its total assets or as permitted by law and
except by engaging in reverse repurchase agreements, where
allowed. In order to secure any permitted borrowings and
reverse repurchase agreements under this section, the Fund
may pledge, mortgage or hypothecate its assets.
(4) The Fund may not underwrite the securities of other
issuers, except as allowed by law or to the extent that
the purchase of obligations in accordance with the Fund's
investment objective and policies, either directly from
the issuer, or from an underwriter for an issuer, may be
deemed an underwriting.
(5) The Fund may not invest directly in commodities or
real estate, although it may invest in securities which
are secured by real estate or real estate mortgages and
securities of issuers which invest or deal in commodities,
commodity futures, real estate or real estate mortgages.
(6) The Fund may not make loans, other than through the
purchase of money market instruments and repurchase
agreements or by the purchase of bonds, debentures or
other debt securities, or as permitted by law. The
purchase of all or a portion of an issue of publicly or
privately distributed debt obligations in accordance with
the Fund's investment objective, policies and
restrictions, shall not constitute the making of a loan.
Nonfundamental Investment Restrictions
The Board of Trustees has adopted the following nonfundamental
investment restrictions. A nonfundamental investment restriction can be
changed by the Board at any time without a shareholder vote.
(1) The Fund may not purchase common stocks, preferred stocks,
warrants, or other equity securities.
(2) The Fund does not intend to make any purchases of securities if
borrowing exceeds 5% of total assets.
(3) The Fund may not sell securities short.
(4) The Fund may not write or purchase put or call options.
- ------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------
The Fund intends to continue to qualify as regulated investment
companies under Subchapter M of the Internal Revenue Code. If for any reason
it should fail to qualify, it would be taxed as a corporation at the Fund
level, rather than passing through its income and gains to shareholders.
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 (and, for Class B or C, 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 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, December 31, 1998
($246,018,576/246,534,740 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:
Effective yield = [(Base period return + 1)365/7] - 1
For the seven day period ended December 31, 1998, the Fund's yield and
effective yield were as follows:
Yield Effective Yield
Class O 2.56% 2.59%
Class B 1.87% 1.89%
Class C 1.80% 1.82%
Class I 2.83% 2.87%
Class T N/A N/A
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 T because it was not offered as of the fiscal year ending December 31,
1998.
- ------------------------------------------------------------------------------
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 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, December 31, 1998).
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").
Class O 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, C, I, or T 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, other than Class T, 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. Class T
shareholders should contact their broker, The Advisors Group, Ltd.
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 Calvert Variable Series, Inc., Calvert New World
Fund, Inc. and Calvert World Values Fund, Inc. 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 & Blatz. He was formerly a partner with
Abrams, Blatz, Gran, Hendricks & Reina, P.A. He is also a director of
Calvert Variable Series, Inc. DOB: 10/29/35. Address: 308 East Broad Street,
Westfield, New Jersey 07091.
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: 16 Iliahi
Street, Honolulu, Hawaii, 96817.
CHARLES E. DIEHL, Trustee. Mr. Diehl is a self-employed consultant
and is Vice President and Treasurer Emeritus of the George Washington
University. He has retired from University Support Services, Inc. of
Herndon, Virginia. Formerly, he was a Director of Acacia Mutual Life
Insurance Company, and is currently a Director of Servus Financial
Corporation. DOB: 10/13/22. Address: 1658 Quail Hollow Court, McLean,
Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman is managing partner
of Feldman Otolaryngology, Head and Neck Surgery in Washington, D.C. A
graduate of Harvard Medical School, he is Associate Professor of
Otolaryngology, Head and Neck Surgery at Georgetown University and George
Washington University Medical School, and past Chairman of the Department of
Otolaryngology, Head and Neck Surgery at the Washington Hospital Center. He
is included in The Best Doctors in America. DOB: 05/23/48. Address: 7536
Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of Corporate
Finance of Washington, Inc. Formerly, he was a principal of Gavian De Vaux
Associates, an investment banking firm. He is also a Chartered Financial
Analyst and an accredited senior business appraiser. 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, a director of Ariel Funds, 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 Calvert Variable Series, Inc. and Calvert
New World Fund, Inc.
Mr. Guffey has been advised that the Securities and Exchange
Commission ("SEC") has entered an order against him relating to his former
service as a director of Community Bankers Mutual Fund, Inc. This fund is
not connected with any Calvert Fund or the Calvert Group and ceased
operations in September, 1994. Mr. Guffey consented to the entry of the
order without admitting or denying the findings in the order. The order
contains findings (1) that the Community Bankers Mutual Fund's prospectus
and statement of additional information were materially false and misleading
because they misstated or failed to state material facts concerning the
pricing of fund shares and the percentage of illiquid securities in the
fund's portfolio and that Mr. Guffey, as a member of the fund's board,
should have known of these misstatements and therefore violated the
Securities Act of 1933; (2) that the price of the fund's shares sold to the
public was not based on the current net asset value of the shares, in
violation of the Investment Company Act of 1940 (the "Investment Company
Act"); and (3) that the board of the fund, including Mr. Guffey, violated
the Investment Company Act by directing the filing of a materially false
registration statement. The order directed Mr. Guffey to cease and desist
from committing or causing future violations and to pay a civil penalty of
$5,000. The SEC placed no restrictions on Mr. Guffey's continuing to serve
as a Trustee or Director of mutual funds. DOB: 05/15/48. Address: 388 Calli
Calina, Santa Fe, New Mexico 87501.
*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. Ms. Krumsiek is
the President of each of the investment companies, except for Calvert Social
Investment Fund, of which she is the Senior Vice President. Prior to joining
Calvert Group, Ms. Krumsiek served as a Managing Director of Alliance Fund
Distributors, Inc. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and CEO of
Creative Associates International, Inc., a firm that specializes in human
resources development, information management, public affairs and private
enterprise development. She is also a director of Acacia Federal Savings
Bank. DOB: 12/08/45. Address: 5301 Wisconsin Avenue, N.W., Washington, D.C.
20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert Variable
Series, Inc., and 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. He is the Senior Vice President of First Variable
Rate Fund, Calvert Tax-Free Reserves, Calvert Municipal Fund, Inc., Calvert
Cash Reserves, and The Calvert Fund. 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
Calvert Variable Series, Inc. and Calvert New World Fund. Mr. Silby is
Executive Chairman of Group Serve, Inc., 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 Chief Financial Officer 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 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 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.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke 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 and Secretary and
provides counsel to the Calvert Social Investment Foundation. 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, Calvert
Variable Series, Inc., 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 and Ms. Kruvant. The Investment Policy Committee is
composed of Messrs. Borts, Diehl, Gavian, Rochat and Silby and Ms. Krumsiek.
During fiscal 1998, trustees of the Fund not affiliated with the
Fund's Advisor were paid $30,434. 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 $1,500 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.
Trustee Compensation Table
Fiscal Year 1998 Aggregate Pension or Total Compensation
Compensation Retirement from Benefits
(unaudited numbers) from Registrant Accrued as Registrant and Fund
for Service part of Complex paid to
as Trustee of Registrant Trustee**
Expenses*
Name of Trustee
Richard L. Baird, Jr. $2,444 $0 $39,550
Frank H. Blatz, Jr. $2,556 $2,556 $42,100
Frederick T. Borts $2,333 $0 $33,250
Charles E. Diehl $2,557 $2,557 $41,500
Douglas E. Feldman $2,556 $0 $36,250
Peter W. Gavian $2,556 $1,278 $36,250
John G. Guffey, Jr. $2,456 $0 $62,665
M. Charito Kruvant $2,556 $1,534 $36,250
Arthur J. Pugh $2,556 $0 $41,500
D. Wayne Silby $2,445 $0 $67,780
*Messrs. Blatz, Diehl, Gavian and Pugh and Ms. Kruvant have chosen to defer
a portion of their compensation. As of December 31, 1998, total deferred
compensation, including dividends and capital appreciation, was $644,247.37,
$672,374.09, $172,445.85, $216,322.53, and $23,295.55, for each trustee,
respectively.
**As of December 31, 1998. 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 controlled subsidiary of
Ameritas Acacia Mutual Holding Company of Lincoln, Nebraska.
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, effective with
the commencement of the Institutional Class (September 1998), the Advisor
receives a fee of 0.25% of the first $500 million of the average daily net
assets of the Fund, 0.225% of the next $400 million of such assets, 0.20% of
the next $400 million of such assets, 0.175% of the next $700 million of
such assets, and 0.15% on all assets in excess of $2 billion. Such fee is
payable monthly.
The Advisor provides the Fund with investment advice and research,
pays the salaries and fees of all Trustees and executive officers of the
Fund who are principals of the Advisor, and pays certain Fund advertising
and promotional expenses. The Fund pays all other administrative and
operating expenses, including: custodial fees; shareholder servicing,
dividend disbursing and transfer agency fees; administrative service fees;
federal and state securities registration fees; insurance premiums; trade
association dues; interest, taxes and other business 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.
The advisory fees paid to the Advisor under the Advisory Contract
for the 1996, 1997, and 1998 fiscal years were $1,238,849, $1,206,618, and
$1,037,947, respectively. No expense reimbursements have been required under
the Contract.
- ------------------------------------------------------------------------------
ADMINISTRATIVE SERVICES
- ------------------------------------------------------------------------------
Calvert Administrative Services Company ("CASC"), a wholly-owned
subsidiary of Calvert Group, Ltd., has been retained by the Fund to provide
certain administrative services necessary to the conduct of the Fund's
affairs. Such services include the preparation of corporate and regulatory
reports and filings, portfolio accounting, and the daily determination of
net investment income and net asset value per share. Effective with the
commencement of the Institutional Class (September 1998), Classes O, B, and
C pay an annual rate of 0.25%, while the Institutional Class pays an annual
rate of 0.05%, based on average daily net assets. Class T pays an annual
rate of 0.25%. There were no administrative services fees paid by the Fund
in the 1997 fiscal year. During fiscal year 1998, the Fund paid $208,596 in
administrative fees.
- ------------------------------------------------------------------------------
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, 1996, 1997 and 1998, the
Fund paid fees of $561,279, $447,044, and $503,037, 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
- ------------------------------------------------------------------------------
PricewaterhouseCoopers LLP has been selected by the Board of
Trustees to serve as independent accountants for fiscal year 1999. 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.
- ------------------------------------------------------------------------------
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, C, and T. Class O and the Institutional Class have no Distribution Plans.
For Class B and Class C shares, CDI receives any CDSC paid.
Pursuant to Rule 12b-1 under the 1940 Act, Class B, C, and T 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 C, respectively, and 0.25% of Class T.
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 five separate classes of shares: Class O, Class B,
Class C, offered in one prospectus; the Institutional Class, offered in a
separate prospectus, and Class T, also offered by a separate prospectus.
Class T is also known as The Advisors Group Reserves Fund. The classes
represent interests in the same portfolio of investments but, as further
described in the prospectuses, each class may be subject to differing sales
charges and expenses, which will result in different dividends and
distributions. Upon any liquidation of the Fund, shareholders of each class
are entitled to share pro rata in the 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 Prospectuses 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.
- ------------------------------------------------------------------------------
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- ------------------------------------------------------------------------------
As of February 25, 1999, the following shareholders owned of record
5% or more of the Class of Calvert First Government Money Market Fund shown:
Name and Address % of Ownership
Saul Maluth
Hicksville, New York 39.96%, Class B
Craig Miller
Bend, Oregon 27.92%, Class B
Hillel Gray
Jerusalem, Israel 9.86%, Class B
Sharon Simes
Seattle, Washington 8.65%, Class B
Ginger Carney
Chicago, Illinois 6.26%, Class B
Laurie Davidson
Renton, Washington 18.92%, Class C
S. Davis
Thomas Fugate Co. Ttee.
Burlington, Vermont 11.80%, Class C
Lionel Weisman
Lake Oswego, Oregon 9.88%, Class C
Painewebber FBO
D. Solnit 6.72%, Class C
Community of Hospitality
Decatur, Georgia 5.91%, Class C
A. Short & A. Connor
Covington, Georgia 5.85%, Class C
Maryland State Treasurer
Annapolis, Maryland 52.85%, Class I
Working Assets Funding
San Francisco, California 17.80%, Class I
Montgomery County Government
Rockville, Maryland 11.80%, Class I
