PROSPECTUS --
April 30, 1996
CALVERT TAX-FREE RESERVES
Money Market Portfolio
Limited-Term Portfolio
Long-Term Portfolio
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
INVESTMENT OBJECTIVES
Calvert Tax-Free Reserves Money Market Portfolio 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 the Portfolio.
The Money Market Portfolio seeks to maintain a constant net
asset value of $1.00 per share. There can be no assurance that the
Portfolio will be successful in maintaining a constant net asset value
of $1.00 per share. An investment in the Portfolio is neither insured
nor guaranteed by the U.S. Government.
Calvert Tax-Free Reserves Limited-Term Portfolio seeks to earn
the highest level of interest income exempt from federal income taxes as
is consistent with prudent investment management, preservation of
capital, and the quality and maturity characteristics of the Portfolio.
The Limited-Term Portfolio invests in investment-grade
municipal obligations. Fixed rate investments have remaining maturities
of three years or less; variable rate investments may have longer
maturities. The Portfolio's net asset value per share fluctuates in
response to changes in the value of its investments. There can be no
assurance that the Portfolio will be successful in meeting its
investment objective.
Calvert Tax-Free Reserves Long-Term Portfolio seeks to earn the
highest level of interest income exempt from federal income taxes as is
consistent with prudent investment management, preservation of capital,
and the quality and maturity characteristics of the Portfolio.
The Long-Term Portfolio invests in long-term investment-grade
municipal obligations. Its average maturity is normally in excess of
twenty years. Because of its longer average maturity, its yield and net
asset value per share will generally fluctuate in response to changes in
interest rates and other market factors.
PURCHASE INFORMATION
The Money Market Portfolio offers two classes of shares, Class
O, described in and offered by this Prospectus, and Class MMP (CTFR MMP
Shares), offered by another Calvert Tax-Free Reserves Prospectus. Class
O and Class MMP are the same except that Class O has no Distribution
Plan expenses.
The Limited-Term and Long-Term Portfolios each offer two
classes of shares, with different expense levels and sales charges. You
may choose to purchase (i) Class A shares, with a sales charge imposed
at the time you purchase the shares ("front-end sales charge"); or (ii)
Class C shares which impose neither a front-end sales charge nor a
contingent deferred sales charge. Class C shares are not available
through all dealers. Class C shares have a higher level of expenses than
Class A shares, including higher Rule 12b-1 fees. These alternatives
permit you to choose the method of purchasing shares that is most
beneficial to you, depending on the amount of the purchase, the length
of time you expect to hold the shares, and other circumstances. See
"Alternative Sales Options" for further details.
TO OPEN AN ACCOUNT
Call your broker, or complete and return the enclosed Account
Application. Minimum initial investment is $2,000.
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 goals of a Portfolio match your own. Keep this
document for future reference.
A Statement of Additional Information (dated April 30, 1996)
for each Portfolio 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.
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. WHEN INVESTORS SELL SHARES
OF THE FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY
PAID.
<PAGE>
<TABLE>
<CAPTION>
FUND EXPENSES
Calvert Money Market Portfolio
A. Shareholder Transaction Costs Class O
<S> <C>
Sales Load on Purchases None
Sales Load on Reinvested
Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None
B. Annual Fund Operating Expenses -
Fiscal Year 1995
(as a percentage of average net assets)
Management Fees .45%
Rule 12b-1 Fees None
All Other Expenses .17%
Total Fund Operating Expenses<F2> .62%
<CAPTION>
Calvert Limited-Term
Portfolio
A. Shareholder Transaction Costs Class A Class C
<S> <C> <C>
Maximum Sales Charge on Purchases
(as a percentage of offering price) 2.00% None
Contingent Deferred Sales Charge None None
B. Annual Fund Operating
Expenses- Fiscal Year 1995
(as a percentage of average net assets)
Management Fees 0.60% 0.60%
Rule 12b-1 Service and
Distribution Fees None 0.55%
Other Expenses 0.11% 0.20%
Total Fund Operating Expenses<F2> 0.71% 1.35%
<CAPTION>
Calvert Long-Term
Portfolio
A. Shareholder Transaction Costs Class A Class C
<S> <C> <C>
Maximum Sales Charge on Purchases
(as a percentage of offering price) 3.75% None
Contingent Deferred Sales Charge None None
B. Annual Fund Operating
Expenses- Fiscal Year 1995
(as a percentage of average net assets)
Management Fees 0.61% 0.61%
Rule 12b-1 Service and
Distribution Fees 0.09% 1.00%
Other Expenses 0.17%% 0.58%
Total Fund Operating Expenses<F2> 0.87% % 2.19%
<FN>
<F2> Net Fund Operating Expenses after reduction for fees paid indirectly were:
Money Market Class O .61% Limited-Term Class A .70%
Long-Term Class A .85% Limited-Term Class C 1.34%
Long-Term Class C 2.17%
</FN>
</TABLE>
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 A, payment of maximum initial sales
charge at time of purchase:
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market
Class O $6 $20 $35 $77
Limited-Term
Class A $27 $42 $59 $106
Class C $14 $43 $74 $162
Long-Term
Class A $46 $64 $84 $141
Class C $22 $69 $117 $252
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.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the
Portfolios may bear directly (shareholder transaction costs) or
indirectly (annual fund operating expenses).
</TABLE>
A. Shareholder Transaction Costs are charges you pay when you
buy or sell shares of a Portfolio. If you request a wire redemption of
less than $1,000, you will be charged a $5 wire fee. See "Reduced Sales
Charges" at Exhibit A to see if you qualify for possible reductions in
the sales charge for the Limited- or Long-Term Portfolios.
B. Annual Fund Operating Expenses are based on historical
expenses. Management Fees are paid by the Fund to Calvert Asset
Management Company, Inc. ("Investment Advisor") for managing each
Portfolio's investments and business affairs, and include an
administrative service fee paid to Calvert Administrative Services
Company, Inc. Each Portfolio 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 share price for the Limited- and Long-Term Portfolios,
and in the yield for the Money Market Portfolio and are not charged
directly to individual shareholder accounts.
The Rule 12b-1 fees of the Limited- and Long-Term Portfolios
include an asset-based sales charge. Thus, long-term shareholders in
each Portfolio 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.
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables provide information about the financial history of
the Class O shares of the Money Market Portfolio and the Class A and C
shares of the Limited- and Long-Term Portfolios. They express the
information in terms of a single share outstanding for the respective
Portfolio throughout each period. The tables have been audited by those
independent accountants whose report is included in Calvert Tax-Free
Reserves Annual Report to Shareholders for each of the respective
periods presented. 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>
Class O Shares
Money Market Portfolio
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 .040 .028
Distributions from
Net investment income (.040) (.028)
Net asset value, end of year $1.000 $1.000
Total return<F1> 4.02% 2.81%
Ratio to average net assets:
Net investment income 3.93% 2.75%
Total expenses <F2> .62% --
Net expenses .61% .62%
Net assets, end of year (in thousands) $1,740,839 $1,344,595
Number of shares outstanding at end of
year (in thousands) 1,740,948 1,344,668
<FN>
<F1>Total return prior to 1989 is not audited.
<F2>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class O Shares
Money Market Portfolio 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 .024 .031
Distribution
Net investment income (.024) (.031)
Net asset value, end of year $1.000 $1.000
Total return<F1> 2.41% 3.18%
Ratio to average net assets:
Net investment income 2.37% 3.10%
Total expenses <F2> -- --
Net expenses .60% .59%
Net assets, end of year (in thousands) $1,500,614 $1,552,106
Number of shares outstanding at end of
year (in thousands) 1,500,557 1,552,061
<FN>
<F1>Total return prior to 1989 is not audited.
<F2>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class 0 Shares
Money Market Portfolio 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 .048 .059
Distributions from
Net investment income (.048) (.059)
Net asset value, end of year $1.000 $1.000
Total return<F1> 4.96% 6.04%
Ratio to average net assets:
Net investment income 4.79% 5.85%
Total expenses <F2> -- --
Net expenses .61% .63%
Net assets, end of year (in thousands) $1,382,330 $1,071,719
Number of shares outstanding at end of
year (in thousands) 1,382,288 1,071,678
<FN>
<F1>Total return prior to 1989 is not audited.
<F2>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class 0 Shares
Money Market Portfolio 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 .063 .052
Distributions from
Net investment income (.063) (.052)
Net asset value, end of year $1.000 $1.000
Total return<F1> 6.47% 5.31%
Ratio to average net assets:
Net investment income 6.22% 5.19%
Total expenses <F2> ------------ ------------
Net expenses .62% .62%
Net assets, end of year
(in thousands) $952,347 $823,759
Number of shares outstanding
at end of year (in thousands) 952,257 823,696
<FN>
<F1>Total return prior to 1989 is not audited.
<F2>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class 0 Shares
Money Market Portfolio Year Ended December 31,
1987 1986
===========================
===========================
<S> <C> <C>
Net asset value, beginning of year $1.000 $1.000
Income from investment operations
Net investment income .046 .048
Distributions from
Net investment income (.046) (.048)
Net asset value, end of year $1.000 $1.000
Total return <F1> 4.62% 4.77%
Ratio to average net assets:
Net investment income 4.56% 4.66%
Total expenses <F2> -- --
Net expenses .62% .67%
Net Assets, end of year
(in thousands) $688,967 $519,491
Number of shares outstanding at end
of year (in thousands) 688,986 519,399
<FN>
<F1>Total return prior to 1989 is not audited.
<F2>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Limited-Term Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $10.59 $10.72
Income from investment operations
Net investment income .45 .39
Net realized and unrealized gain (loss)
on investments .13 (.13)
Total from investment operations .58 .26
Distributions from
Net investment income (.45) (.39)
Total increase (decrease) in net asset value .13 (.13)
Net asset value, end of year $10.72 $10.59
Total return<F3> 5.55% 2.42%
Ratio to average net assets
Net investment income 4.21% 3.60%
Total expenses<F4> .71% --
Net expenses .70% .66%
Portfolio turnover 33% 27%
Net assets, end of year (in thousands) $457,707 $544,822
Number of shares outstanding at
end of year (in thousands) 42,690 51,424
<FN>
<F3> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F4> 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Limited-Term Portfolio Class A Shares Year Ended December
31,
1993
======================
<S> <C>
Net asset value, beginning of year $10.68
Income from investment operations
Net investment income .38
Net realized and unrealized gain (loss) on
investments .04
Total from investment operations .42
Distributions from
Net investment income (.38)
Total increase (decrease) in net asset value .04
Net asset value, end of year $10.72
Total return<F3> 4.02%
Ratio to average net assets:
Net investment income 3.59%
Total expenses <F4> --
Net expenses .67%
Portfolio turnover 14%
Net assets, end of year $663,305
Number of shares outstanding at
end of year (in thousands) 61,861
<FN>
<F3> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F4> 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Limited-Term Class A Shares Year Ended December 31,
1992 1991
========================
========================
<S> <C> <C>
Net asset value, beginning of year $10.65 $10.61
Income from investment operations
Net investment income .49 .64
Net realized and unrealized gain (loss) on
investments .03 .03
Total from investment operations .52 .67
Distributions from
Net investment income (.49) (.63)
Total increase (decrease) in net asset value .03 .04
Net asset value, end of year $10.68 $10.65
Total return<F3> 4.99% 6.46%
Ratio to average net assets:
Net investment income 4.58% 5.99%
Total expenses<F4> -- --
Net expenses .71% .73%
Portfolio turnover 5% 1%
Net assets, end of year $567,419 $294,308
Number of shares outstanding at end of year (in
thousands) 53,140 27,644
<FN>
<F3> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F4> 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Limited-Term Class A Shares Year Ended December 31,
1990 1989 1988
==========================
<S> <C> <C> <C>
Net asset value, beginning of year $10.61 $10.55 $10.45
Income from investment operations
Net investment income .67 .67 .60
Net realized and unrealized gain (loss) on
investments .00 .06 .10
Total from investment operations .67 .73 .70
Distributions from
Net investment income (.67) (.67) (.60)
Total increase (decrease) in net asset value .00 .06 .10
Net asset value, end of year $10.61 $10.61 $10.55
Total return<F3> 6.50% 7.12% 6.82%
Ratio to average net assets:
Net investment income 6.35% 6.35% 5.71%
Total expenses<F4> 6.50% 7.12% 6.50%
Net expenses .77% .78% .81%
Portfolio turnover 12% 21% 68%
Net assets, end of year (in thousands) $151,580 132,510 145,305
Number of shares outstanding at end of
year (in thousands) 14,286 12,487 13,771
<FN>
<F3> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F4> 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Limited-Term Class A Shares Year Ended December 31,
1987 1986
===========================
===========================
<S> <C> <C>
Net asset value, beginning of year $10.67 $10.48
Income from investment operations
Net investment income .59 .64
Net realized and unrealized gain (loss) on
investments (.22) .23
Total from investment operations .37 .87
Distributions from
Net investment income (.59) (.64)
Total increase (decrease) in net asset value (.22) .19
Net asset value, end of year $10.45 $10.67
Total return<F3> 3.54% 8.50%
Ratio to average net assets:
Net investment income 5.59% 6.00%
Total expenses<F4> -- --
Net expenses .76% .81%
Portfolio turnover 52% 67%
Net assets, end of year (in thousands) $147,742 189,354
Number of shares outstanding at end of year (in
thousands) 14,137 17,748
<FN>
<F3> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F4> 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From
Inception
Year Ended (March 1, 1994)
December 31, through Dec. 31,
Limited-Term Class C Shares 1995 1994
<S> <C> <C>
Net asset value, beginning $10.56 $10.70
Income from investment operations
Net investment income .38 .27
Net realized and unrealized gain (loss)
on investments .13 (.12)
Total from investment operations .51 .15
Distributions from
Net investment income (.39) (.29)
Total increase (decrease) in net asset value .12 (.14)
Net asset value, ending $10.68 $10.56
Total return<F3> 4.86% 1.43%
Ratio to average net assets
Net investment income 3.57% 3.05%(a)
Total expenses<F4> 1.35% --
Net expenses 1.34% 1.38%(a)
Portfolio turnover 33% 27%
Net assets, ending (in thousands) $30,057 $31,081
Number of shares outstanding,
ending (in thousands) 2,814 2,942
<FN>
<F3> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F4> 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.
</FN>
(a) Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Long-Term Portfolio Class A Shares Year Ended December 31,
1995 1994
========================
<S> <C> <C>
Net asset value, beginning of year $15.83 $17.15
Income from investment operations
Net investment income .95 .93
Net realized and unrealized gains (loss)
on investments 1.53 (1.33)
Total from investment operations 2.48 (.40)
Distributions from
Net investment income (.91) (.92)
Net realized gains (.09) --
(1.00) (0.92)
Total distributions
Total increase (decrease) in net asset value (1.48) (1.32)
Net asset value, end of year $17.31 $15.83
Total return<F5> 16.05% (2.30)%
Ratio to average net assets:
Net investment income 5.71% 5.73%
Total expenses<F6> .87% --
Net expenses .85% .81%
Portfolio turnover 58% 98%
Expenses reimbursed -- --
Net assets, end of year (in thousands) $57,359 $47,267
Number of shares outstanding at end of year (in 3,314 2,985
thousands)
<FN>
<F5>Total return is not annualized and does not reflect deduction of
Class A front-end sales charges. Total return prior to 1989 is not
audited.
<F6>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Long-Term Portfolio Class A Shares Year Ended December
31,
1993
======================
<S> <C>
Net asset value, beginning of year $16.32
Income from investment operations
Net investment income .94
Net realized and unrealized gain (loss) on
investments .83
Total from investment operations 1.77
Distributions from
Net investment income (.94)
Net realized gains --
Total distributions (.94)
Total increase (decrease) in net asset value .83
Net asset value, end of year $17.15
Total return<F5> 11.12%
Ratio to average net assets:
Net investment income 5.59%
Total expenses<F6> --
Net expenses .78%
Portfolio turnover 97%
Expenses reimbursed --
Net assets, end of year ( in thousands) $55,204
Number of shares outstanding at end of year (in 3,219
thousands)
<FN>
<F5>Total return is not annualized and does not reflect deduction of
Class A front-end sales charges. Total return prior to 1989 is not
audited.
<F6>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Long-Term Portfolio Class A Shares Year Ended December 31,
1992 1991
==========================
==========================
<S> <C> <C>
Net asset value, beginning of year $16.11 $15.35
Income from investment operations
Net investment income .98 .97
Net realized and unrealized gain (loss) on
investments .20 .78
Total from investment operations 1.18 1.75
Distributions from
Net investment income (.97) (.99)
Net realized gains -- --
Total distributions (.97) (.99)
Total increase (decrease) in net asset value .21 .76
Net asset value, end of year $16.32 $16.11
Total return<F5> 7.60% 11.77%
Ratio to average net assets:
Net investment income 6.06% 6.39%
Total expenses<F6> -- --
Net expenses .82% .78%
Portfolio turnover 196% 276%
Expenses reimbursed -- --
Net assets, end of year (in thousands) $45,665 $43,774
Number of shares outstanding at end of year (in
thousands) 2,799 2,718
<FN>
<F5>Total return is not annualized and does not reflect deduction of
Class A front-end sales charges. Total return prior to 1989 is not
audited.
<F6>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Long-Term Portfolio Class A Shares Year Ended December 31,
1990 1989 1988
================================
<S> <C> <C> <C>
Net asset value, beginning of year $15.64 $15.20 $14.75
Income from investment operations
Net investment income .97 1.03 1.01
Net realized and unrealized gain (loss) on
investments (.27) .41 .46
Total from investment operations .70 1.44 1.47
Distributions from
Net investment income (.99) (1.00) (1.02)
Net realized gains -- -- --
Total distributions (.99) (1.00) (1.02)
Total increase (decrease) in net asset value (.29) .44 .45
Net asset value, end of year $15.35 $15.64 $15.20
Total return<F5> 4.74% 9.81% 10.27%
Ratio to average net assets:
Net investment income 6.60% 6.66% 6.78%
Total expenses<F6> -- -- --
Net expenses .82% .85% .85%
Portfolio turnover 264% 284% 553%
Expenses reimbursed -- -- .04%
Net assets, end of year (in thousands) $40,182 $46,402 $43,101
Number of shares outstanding at end of
year (in thousands) 2,618 2,967 2,835
<FN>
<F5>Total return is not annualized and does not reflect deduction of
Class A front-end sales charges. Total return prior to 1989 is not
audited.
<F6>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Long-Term Portfolio Class A Shares Year Ended December 31,
1987 1986
==========================
==========================
<S> <C> <C>
Net asset value, beginning of year $16.36 $15.80
Income from investment operations
Net investment income 1.15 1.22
Net realized and unrealized gain (loss) on
investments (1.63) 1.45
Total from investment operations (.48) 2.67
Distributions from
Net investment income (1.13) (1.24)
Net realized gains -- (.87)
Total distributions (1.13) (2.11)
Total increase (decrease) in net asset value (1.61) .56
Net asset value, end of year $14.75 $16.36
Total return<F5> (2.96)% 17.43%
Ratio to average net assets:
Net investment income 7.32% 7.34%
Total expenses<F6> -- --
Net expenses .83% .85%
Portfolio turnover 77% 146%
Expenses reimbursed -- --
Net assets, end of year (in thousands) $49,231 $81,824
Number of shares outstanding at end of year (in
thousands) 3,338 5,000
<FN>
<F5>Total return is not annualized and does not reflect deduction of
Class A front-end sales charges. Total return prior to 1989 is not
audited.
<F6>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From
Inception
Year Ended (March 1, 1994)
December 31 through Dec.31,
Long-Term Class C Shares 1995 1994
<S> <C> <C>
Net asset value, beginning $15.72 $16.86
Income from investment operations
Net investment income .78 .58
Net realized and unrealized gain (loss)
on investments 1.46 (1.04)
Total from investment operations 2.24 (.46)
Distributions from
Net investment income (.74) (.68)
Net realized gains (.09) --
Total distributions .83 (.68)
Total increase (decrease) in net asset value 1.41 (1.14)
Net asset value, ending $17.13 $15.72
Total return<F5> 14.51% (2.24%)
Ratio to average net assets
Net investment income 4.34% 3.57%(a)
Total expenses<F6> 2.19% --
Net expenses 2.17% 2.55%(a)
Expenses reimbursed -- 3.06%(a)
Portfolio turnover 58% 98%
Net assets, ending (in thousands) $1,678 $871
Number of shares outstanding,
ending (in thousands) 98 55
<FN>
<F5>Total return is not annualized and does not reflect deduction of
Class A front-end sales charges. Total return prior to 1989 is not
audited.
<F6>Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; previously such reductions
were included in the ratio.
</FN>
(a) Annualized
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
Money Market Portfolio
The Money Market Portfolio seeks to earn the highest level of interest
income exempt from federal income taxes as is consistent with prudent
investment management, preservation of capital, and the quality and
maturity characteristics of the Portfolio.
The Money Market Portfolio invests primarily in a diversified portfolio
of municipal obligations whose interest is exempt from federal income
tax. Municipal obligations in which the Portfolio invests are
short-term, fixed and variable rate instruments of minimal credit risk
and of high quality. The Portfolio invests in municipal bonds and notes
and tax-exempt commercial paper within the two highest credit ratings
categories or, if unrated, are determined by the Advisor to be of
comparable quality. Short-term obligations have remaining maturities of
one year or less. The Portfolio maintains an average weighted maturity
of 90 days or less.
Limited-Term Portfolio
The Limited-Term Portfolio seeks to earn the highest level of interest
income exempt from federal income taxes as is consistent with prudent
investment management, preservation of capital, and the quality and
maturity characteristics of the Portfolio.
The Limited-Term Portfolio invests primarily in a diversified portfolio
of municipal obligations with interest exempt from federal income tax.
Municipal obligations in which the Portfolio invests are fixed and
variable rate investment-grade (medium and higher) obligations. Fixed
rate investments are limited to obligations with remaining maturities of
3 years or less; variable rate investments may have longer maturities.
Long-Term Portfolio
The Long-Term Portfolio seeks to earn the highest level of interest
income exempt from federal income taxes as is consistent with prudent
investment management, preservation of capital, and the quality and
maturity characteristics of the Portfolio.
The Long-Term Portfolio invests primarily in a diversified portfolio of
long term, investment-grade municipal obligations, the interest of which
is exempt from federal income tax. Investments by the Portfolio are not
limited as to remaining maturities.
Municipal Obligations
Municipal obligations in which the Limited- and Long-Term Portfolios may
invest include, but are not limited to general obligation bonds and
notes of state and local issuers, revenue bonds of various
transportation, housing, utilities (e.g., water and sewer), hospital and
other state and local government authorities, tax and revenue
anticipation notes and bond anticipation notes, municipal leases, and
certificates of participation therein, and private activity bonds. See
further description below and the Statement of Additional Information.
Credit Quality
The credit quality of municipal obligations is determined by reference
to a commercial credit rating service, such as Moody's Investors
Service, Inc. or Standard & Poor's Corporation. If an instrument is not
rated, credit quality is determined by the Advisor under the supervision
of the Board of Trustees. Investment grade, as determined by a NRSRO, is
currently defined as the top four rating categories, i.e., AAA/Aaa, AA/Aa,
A, and BBB/Baa. Though still investment grade, securities rated BBB/Baa
possess certain speculative elements and are generally more susceptible
to changing market conditions. There is no limitation on the percentage of
each Portfolio's assets that may be invested in unrated obligations;
such obligations may be less liquid than rated obligations of comparable
quality. The ratings used by these services are described in the
Appendix to the Statement of Additional Information.
Variable Rate Obligations
Each Portfolio may invest in variable rate obligations. Variable rate
obligations have a yield that is adjusted periodically based on 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 the known rate changes.
Variable rate obligations lessen the capital fluctuations usually
inherent in fixed income investments. This diminishes the risk of
capital depreciation of investment securities in a Portfolio and,
consequently, of Portfolio shares. However, if interest rates decline,
the yield of the invested Portfolio will decline, causing the Portfolio
and its shareholders to forego the opportunity for capital appreciation
of the Portfolio's investments and of their shares.
<PAGE>
Demand Notes
Each Portfolio may invest in floating rate and variable rate demand
notes. Demand notes provide that the holder may demand payment of the
note at its par value plus accrued interest by giving notice to the
issuer. To ensure the ability of the issuer to make payment on demand,
the note may be supported by an unconditional bank letter of credit.
Interest-Rate Risk
All fixed income instruments are subject to interest-rate risk; that is,
if the market interest rates rise, the current principal value of a bond
will decline.
Municipal Leases - Money Market Portfolio
The Money Market Portfolio may invest in structured money market
instruments, where the underlying security is a municipal lease.
Generally, such instruments are structured as tax-exempt commercial
paper or variable rate demand notes, and are typically secured by an
unconditional letter of credit. In the unlikely event that the letter of
credit is not honored, the lease would present special risks, such as
the chance that the municipality might not appropriate funding for the
lease payments. Thus, the Advisor considers risk of cancellation in its
investment analysis. Certain leases may be considered illiquid. In all
cases, the Money Market Portfolio invests only in high-quality
instruments (rated in one of the two highest rating categories, or if
unrated, of comparable credit quality) that meet the requirements of SEC
Rule 2a-7 regarding credit quality and maturity. See the Statement of
Additional Information.
Municipal Leases - Limited-Term and Long-Term Portfolios
The Limited-Term and Long-Term Portfolios may invest in municipal
leases. A municipal lease is an obligation of a government or
governmental authority, not subject to voter approval, used to finance
capital projects or equipment acquisitions and payable through periodic
rental payments. There are additional risks inherent in investing in
this type of municipal security. Unlike municipal notes and bonds, where
a municipality is obligated by law to make interest and principal
payments when due, funding for lease payments needs to be appropriated
each fiscal year in the budget. It is possible that a municipality will
not appropriate funds for lease payments. The Advisor considers risk of
cancellation in its investment analysis. The Portfolio may purchase
unrated municipal leases. The Advisor, under supervision of the Board of
Trustees, is responsible for determining the credit quality of such
leases, on an ongoing basis. The Limited- and Long-Term Portfolios will
invest only in municipal leases that meet its credit quality
restrictions. Certain municipal leases may be considered illiquid and
subject to the Portfolios' limit on illiquid investments. The Board of
Trustees has established guidelines for determining whether a lease is
illiquid. See the Statement of Additional Information for the factors
considered by the Board in determining liquidity and valuation of leases.
When-Issued Purchases
New issues of municipal obligations are offered on a when-issued basis;
that is, delivery and payment for the securities normally take place 15
to 45 days after the date of the transaction. The payment obligation and
the yield that will be received on the securities are each fixed at the
time the buyer enters into the commitment. The Portfolios will only make
commitments to purchase these securities with the intention of actually
acquiring them, but may sell these securities before the
settlement date if it is deemed advisable as a matter of investment
strategy.
Temporary Investments
For liquidity purposes or pending the investment of the proceeds of the
sale of its shares, the Portfolios may invest in and derive up to 20% of
its income from taxable short-term money market type investments.
Interest earned from such taxable investments will be taxable to you as
ordinary income unless you are otherwise exempt from taxation.
Financial Futures, Options, and Other Investment Techniques
The Long-Term Portfolio can use various techniques to increase or
decrease its exposure to changing security prices, interest rates, or
other factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts and leveraged notes, entering into swap agreements, and
purchasing indexed securities. The Portfolio can use these practices
either as substitution or as protection against an adverse move in the
Long-Term Portfolio to adjust the risk and return characteristics of the
Portfolio. If the Advisor judges market conditions incorrectly or
employs a strategy that does not correlate well with the Portfolio's
investments, or if the counterparty to the transaction does not perform
as promised, these techniques could result in a loss. These techniques
may increase the volatility of a fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. Any instruments
determined to be illiquid are subject to the Long-Term Portfolio's 10%
restriction on illiquid securities. See below and the Statement of
Additional Information for more details about these strategies.
<PAGE>
The Long-Term Portfolio buys certain financial futures contracts to
hedge its investments in municipal bonds.
Under certain circumstances, the Long-Term Portfolio may purchase and
sell certain financial futures contracts and certain options on futures
contracts. A financial futures contract obligates the seller of a
contract to deliver -- and the purchaser of a contract to take delivery
of -- the type of financial instrument covered by the contract. In the
case of index-based futures contracts, the obligation is in the form of
a cash settlement at a specific time for a specific price.
The Long-Term Portfolio may only engage in futures transactions for the
purpose of hedging its investments in municipal bonds against declines
in value and to hedge against increases in the cost of securities it
intends to purchase. A sale of financial futures contracts may provide a
hedge against a decline in the value of portfolio securities because
such depreciation may be offset, in whole or in part, by an increase in
the value of the position in the futures contracts. Similarly, a
purchase of financial futures contracts may provide a hedge against an
increase in the cost of securities intended to be purchased, because
such appreciation may be offset, in whole or in part, by an increase in
the value of the position in the futures contracts.
Types of futures contracts purchased
The Long-Term Portfolio intends to deal in futures contracts based upon
The Bond Buyer Municipal Bond Index, a price-weighted measure of the
market value of 40 large, recently-issued tax-exempt bonds, and to
engage in transactions in exchange-listed futures contracts on U.S.
Treasury securities. The Long-Term Portfolio may also engage in
transactions in other futures contracts, such as futures contracts on
other municipal bond indexes that become available, if the investment
advisor believes such contracts would be appropriate for hedging its
investments in municipal bonds.
When the Long-Term Portfolio purchases a futures contract, it will
maintain an amount of cash, cash equivalents (for example, commercial
paper and daily tender adjustable notes) or short-term high grade fixed
income securities in a segregated account with its custodian, so that
the segregated amount plus the amount of initial and variation margin
held in the account of its broker equals the market value of the futures
contract, thereby ensuring that the use of such futures contract is
unleveraged. It is not anticipated that transactions in futures will
have the effect of increasing portfolio turnover.
Closing out a futures position - Risks
The Long-Term Portfolio may close out its position in a futures contract
or an option on a futures contract only by entering into an offsetting
transaction on the exchange on which the position was established and
only if there is a liquid secondary market for the futures contract. If
it is not possible to close a futures position entered into by the
Long-Term Portfolio, it could be required to make continuing daily cash
payments of variation margin in the event of adverse price movements. In
such situations, if the Long-Term Portfolio has insufficient cash, it
may have to sell portfolio securities to meet daily variation margin
requirements at a time when it would be disadvantageous to do so. The
inability to close futures or options positions could have an adverse
effect on the Long-Term Portfolio's ability to hedge effectively. There
is also risk of loss by the Portfolio of margin deposits in the event of
bankruptcy of a broker with whom the Long-Term Portfolio has an open
position in a futures contract. The success of a hedging strategy
depends on the Advisor's ability to predict the direction of interest
rates and other economic factors. The correlation is imperfect between
movements in the prices of futures or options contracts, and the
movements of prices of the securities which are subject to the hedge. If
the Long-Term Portfolio used a futures or options contract to hedge
against a decline in the market, and the market later advances (or
vice-versa), the Portfolio may suffer a greater loss than if it had not
hedged.
Please refer to the Long-Term Portfolio's Statement of Additional
Information for further information on financial futures contracts.
Other Policies - Money Market, Limited- and Long-Term Portfolios
Each Portfolio may temporarily borrow money from banks to meet
redemption requests, but such borrowing may not exceed 10% of the value
of its total assets. Each Portfolio has adopted certain fundamental
investment restrictions which are discussed in detail in its Statement
of Additional Information. Unless specifically noted otherwise, the
investment objective, policies and restrictions of each Portfolio are
fundamental and may not be changed without shareholder approval.
<PAGE>
YIELD AND TOTAL RETURN
Yield refers to income generated by an investment over a period of time
for each class
The Money Market Portfolio may advertise "yield" and "effective yield"
for each class (see "Management of the Fund"). Yield figures are based
on historical earnings and are not intended to indicate future
performance. The "yield" of the Money Market Portfolio refers to the
actual income generated by an investment in the Portfolio 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 "effective yield" is calculated like
yield, but assumes reinvestment of earned income. The effective yield
will be slightly higher than the yield because of the compounding effect
of this assumed reinvestment.
Limited- and Long-Term Portfolios
Yield measures the current investment performance for each class; that
is, the rate of income on a Portfolio's investments divided by the share
price. Yield is computed by annualizing the result of dividing the net
investment income per share over a 30 day period by the maximum offering
price per share on the last day of that period. Yields are calculated
according to accounting methods that are standardized for all stock and
bond funds.
Taxable Equivalent Yield - Money Market, Limited- and Long-Term
Portfolios
Each Portfolio may advertise its "taxable equivalent yield" for each
class. The taxable equivalent yield is the yield that you would be
required to obtain from taxable investments to equal the yield of the
class, all or a portion of which may be exempt from federal income
taxes. The taxable equivalent yield is computed by taking the portion of
the yield exempt from regular federal income tax and multiplying the
exempt yield by a factor based on a stated income tax rate, then adding
the portion of the yield that is not exempt from regular federal income
tax. The factor that is used to calculate the taxable equivalent yield
is the reciprocal of the difference between one and the applicable
income tax rate, which will be stated in the advertisement.
The Limited- and Long-Term Portfolios may advertise total return for
each class. Total return is based on historical results and is not
intended to indicate future performance.
Total return is calculated separately for each class. It includes not
only the effect of income dividends but also any change in net asset
value, or principal amount, during the stated period. The total return
for each class shows its overall change in value, including changes in
share price and assuming all of the dividends and capital gain
distributions are reinvested. A cumulative total return reflects the
performance over a stated period of time. An average annual total return
("return with maximum load" reflects the hypothetical annual compounded
return that would have produced the same cumulative total return if the
performance had been constant over the entire period. Because average
annual returns tend to smooth out variations in the returns, you should
recognize that they are not the same as actual year-by-year results.
Both types of total return for Class A shares usually will include the
effect of paying the front-end sales charge. Of course, total returns
will be higher if sales charges are not taken into account. Quotations
of "return without maximum load" do not reflect deduction of the sales
charge. You should consider these return figures only if you qualify for
a reduced sales charge, or for purposes of comparison with comparable
figures which also do not reflect sales charges, such as mutual fund
averages compiled by Lipper Analytical Services, Inc. Further
information about the Portfolio's performance is contained in its Annual
Report to Shareholders, which may be obtained without charge.
MANAGEMENT OF THE FUND
The Board of Trustees supervises Portfolio activities and reviews its
contracts with companies that provide it with services.
The Portfolios are series of Calvert Tax-Free Reserves (the "Fund"), an
open-end management investment company, organized as a
Massachusetts business trust on October 20, 1980. The series of the Fund
include the Money Market Portfolio, Limited-Term Portfolio, Long-Term
Portfolio, California Money Market Portfolio, and the Vermont Municipal
Portfolio.
The Money Market Portfolio offers two classes of shares, Class O,
described in and offered by this Prospectus, and Class MMP (CTFR MMP
Shares), offered by the Calvert Tax-Free Reserves Money Market Class MMP
Prospectus. The two classes represent interests in the same portfolio of
investments and are identical in all respects, except: (a) the
Distribution Plan expenses are payable only by the Class MMP shares; (b)
the classes may have different transfer agency fees; (c) postage and
delivery, printing and stationery expenses will be separately allocated;
(d) the classes will have different dividend rates due solely to the
effects of (a) through (c) above; and (e) only the Class MMP shares may
vote on matters which pertain to the Distribution Plan. Class MMP Shares
are offered primarily to clients of broker-dealers.
The Fund is not required to hold annual shareholder meetings for any of
the Portfolios, but special meetings may be called for such purposes as
electing Trustees, changing fundamental policies, and approving
management contracts. As a shareholder, you receive one vote for each
share of a Portfolio you own, except that matters affecting Portfolios
or classes differently, such as Distribution Plans, will be voted on
separately by the affected Portfolio(s) or class(es).
<PAGE>
Portfolio Managers
Investment selections for the Limited- and Long-Term Portfolios are made
by David R. Rochat and Reno J. Martini. Mr. Rochat is a Director and
Senior Vice President of Calvert Asset Management Company, Inc. He is a
Trustee/Director and Senior Vice President of First Variable Rate Fund,
Calvert Tax-Free Reserves, Money Management Plus, The Calvert Fund, and
Calvert Municipal Fund, Inc., and is primarily responsible for setting
the investment strategy of the trading department, utilizing over 20
years' experience in the securities and investment community. Mr. Rochat
joined Calvert Group in 1981 after establishing and managing the
municipal bond department at Donaldson, Lufkin, & Jenrette Securities
Corporation. Mr. Martini, a Director of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset Management
Company, Inc., oversees management of all Calvert Group portfolios. He
has extensive experience in evaluating and purchasing municipal
securities.
Calvert Group is one of the largest investment management firms in
Washington, D.C. area.
Calvert Group, Ltd., parent of the Fund's investment advisor, transfer
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, 1995, Calvert Group
managed and administered assets in excess of $4.8 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. For its services during fiscal year 1995, the Advisor was
entitled to receive, pursuant to the Investment Advisory Agreement, and
did receive, a fee equal to 0.45% of the Money Market Portfolio's
average net assets, 0.59% of the Limited-Term Portfolio's average net
assets, and 0.60% of the Long-Term Portfolio's average net assets.
Calvert Administrative Services Company provides administrative services
for the Fund.
Calvert Administrative Services Company ("CASC"), an affiliate of the
Advisor, has been retained by Calvert Tax-Free Reserves to provide
certain administrative services necessary to the conduct of its affairs,
including the preparation of regulatory filings and shareholder reports,
the daily determination of its net asset value per share and dividends,
and the maintenance of its portfolio and general accounting records. For
providing such services, CASC receives a total fee from Calvert Tax-Free
Reserves of $200,000 per year, allocated among the Portfolios based on
assets.
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 preparation of advertising and sales literature, and printing and
mailing of prospectuses to prospective investors.
The transfer agent keeps your account records.
Calvert Shareholder Services, Inc. is the Fund's transfer, dividend
disbursing and shareholder servicing agent.
<PAGE>
SHAREHOLDER GUIDE
Opening An Account
You can buy shares of the Portfolios in several ways which are described
here and in the chart on page __.
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. Be sure to specify which
class you wish to purchase.
Limited-Term and Long-Term Portfolios
Alternative Sales Options
The Limited-Term and Long-Term Portfolios each offer two classes of
shares:
Class A Shares - Front End Load Option
Class A shares are sold with a front-end sales charge at the time of
purchase. Class A shares are not subject to a sales charge when they are
redeemed.
Class C shares - Level Load Option
Class C shares are sold without a sales charge at the time of purchase
or redemption.
Class C shares have higher expenses
Each Portfolio bears some of the costs of selling its shares under
Distribution Plans adopted with respect to its Class C shares pursuant
to Rule 12b-1 under the 1940 Act. The Class C Distribution Plan provides
for the payment of an annual distribution fee to CDI of up to 0.30% for
the Limited-Term Portfolio and up to 0.75% for the Long-Term Portfolio,
plus a service fee of up to 0.25%, for a total of 0.55% and 1.00%,
respectively, of the average daily net assets.
Considerations for deciding which class of shares to buy
Income distributions for Class A shares will probably be higher than
those for Class C shares, as a result of the distribution expenses
described above. (See also "Yield and Total Return.") The Class A Shares
of the Limited-Term Portfolio have not adopted a Distribution Plan. You
should consider Class A shares if you qualify for a reduced sales charge
under Class A or if you plan to hold the shares for several years. The
Portfolios will not normally accept any purchase of Class C shares in
the amount of $1,000,000 or more.
Class A Shares - Limited-Term Portfolio
Class A shares are offered at net asset value plus a front-end sales
charge as follows:
<TABLE>
<CAPTION>
Amount of Allowed to
Investment As a % of As a % of Dealers as of
offering net amount a % of offering
price invested price
<S> <C> <C> <C>
Less than $50,000 2.00% 2.04% 1.50%
$50,000 but less
than $100,000 1.50% 1.52% 1.1125%
$100,000 but less
than $250,000 1.1125% 1.14% 0.90%
$250,000 but less
than $500,000 1.00% 1.01% 0.80%
$500,000 but less
than $1,000,000 0.80% 0.81% 0.70%
$1,000,000 and over 0.00% 0.00% 0.25%*
Class A Shares - Long-Term Portfolio
Class A shares are offered at net asset value plus a front-end sales
charge as follows:
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Amount of As a % of As a % of Allowed to
Investment offering net amount Dealers as a %
price invested of offering price
<S> <C> <C> <C>
Less than $50,000 3.75% 3.90% 3.00%
$50,000 but less
than $100,000 3.00% 3.09% 2.25%
$100,000 but less
than $250,000 2.25% 2.30% 1.75%
$250,000 but less
than $500,000 1.75% 1.78% 1.25%
$500,000 but less
than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
**For new investments (new purchases but not exchanges) of $1 million or
more a broker-dealer will have the choice of being paid a finder's fee
by CDI in one of the following methods: (1) CDI may pay broker-dealers,
on a monthly basis for 12 months, an annual rate of up to 0.30%.
Payments will be made less redemptions; or (2) CDI may pay
broker-dealers 0.25% of the amount of the purchase; however, CDI
reserves the right to recoup any portion of the amount paid to the
dealer if the investor redeems some or all of the shares from the Funds
within thirteen months of the time of purchase. For either choice,
quarterly trailing compensation will begin in the thirteenth month.
</TABLE>
Sales charges on Class A shares may be reduced or eliminated in certain
cases. See Exhibit A to this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a
portion to your broker-dealer. Upon written notice to dealers with whom
it has dealer agreements, CDI may reallow up to the full applicable
sales charge. Dealers to whom 90% or more of the entire sales charge is
reallowed may be deemed to be underwriters under the Securities Act of
1933.
In addition to any sales charge reallowance, your broker-dealer, or
other financial service firm through which your account is held,
currently will be paid periodic service fees at an annual rate of up to
0.15% for the Limited-Term Portfolio and, for the Long-Term Portfolio,
up to 0.25% of the average daily net asset value of Class A shares held
in accounts maintained by that firm.
Class A Distribution Plan
The Long-Term Portfolio has adopted a Distribution Plan with respect to
its Class A shares (the "Class A Distribution Plan"), which provides for
payments, which are currently limited to 0.25% annually of the average
daily net asset value of Class A shares, to pay expenses associated with
the distribution and servicing of Class A shares. Amounts paid by the
Fund to CDI under the Class A Distribution Plan are used to pay to
dealers and others, including CDI salespersons who service accounts,
service fees at an annual rate of up to 0.25% of the average daily net
asset value of Class A shares, and to pay CDI for its marketing and
distribution expenses, including, but not limited to, preparation of
advertising and sales literature and the printing and mailing of
prospectuses to prospective investors. During the 1995 fiscal year, the
Long-Term Portfolio paid Class A Distribution Plan expenses of 0.17% of
average net assets.
Class C Shares - Limited-Term and Long-Term Portfolios
Class C shares are not available through all dealers. Class C shares are
offered at net asset value, without a front-end sales charge or a
contingent deferred sales charge. Class C expenses are higher than those
of Class A.
Class C Distribution Plan
The Limited-Term and Long-Term Portfolios have adopted a Distribution
Plan with respect to their Class C shares (the "Class C Distribution
Plan"), which provides for payments at an annual rate of up to 0.55% for
the Limited-Term Portfolio, and, for the Long-Term Portfolio, 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 C Distribution Plan are currently used
by CDI to pay dealers and other selling firms dealer-paid quarterly
compensation at an annual rate of up to 0.55% for the Limited-Term
Portfolio, and, for the Long-Term Portfolio, up to 1.00%, which may
include a service fee as described above under "Class A Distribution
Plan" of up to 0.25% of the average daily net asset value of the accounts
maintained by that firm. For the 1995 fiscal year, the Class C
Distribution Plan expenses for the Limited-Term and Long-Term Portfolios
were 0.55% and 1.00% of average net assets, respectively.
Arrangements with Broker-Dealers and Others (all classes)
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 Fund and/or shares of other Funds
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 Fund's
Rule 12b-1 Distribution Plan.
Dealers or others may receive different levels of compensation depending
on which class of shares they sell. Payments pursuant to a Distribution
Plan are included in the operating expenses of the class.
Each of the Distribution Plans may be terminated at any time by a vote
of the Independent Trustees or by vote of a majority of the outstanding
voting shares of the respective class.
<PAGE>
HOW TO BUY SHARES
BE SURE TO SPECIFY WHICH CLASS YOU ARE BUYING
Method New Accounts Additional Investments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the appropriate payable to the appropriate
Portfolio and mail it with Portfolio and mail it with
your application to: your 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 Branch Office to
make investments by check.
Branch Office See back cover page for the address.
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR BROKER, OR CALVERT GROUP AT
800-368-2745
By Exchange $2,000 minimum $250 minimum
(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.
By Bank Wire $2,000 minimum $250 minimum
By Calvert Money Not Available for $50 minimum
Controller* Initial Investment
*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.
<PAGE>
NET ASSET VALUE
Net asset value per share ("NAV") refers to the worth of one share. NAV
is calculated at the close of each 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 Portfolios are open for business
each day the New York Stock Exchange is open. All purchases of Portfolio
shares will be confirmed and credited to your account in full and
fractional shares (rounded to the nearest 1/100 of a share for the Money
Market Portfolio and to 1/1000 of a share for the Limited- and Long-Term
Portfolios). The Money Market Portfolio may send monthly statements in
lieu of immediate confirmations of purchases and redemptions.
The Money Market Portfolio shares are sold without a sales charge.
Money Market Portfolio: NAV is computed by adding the value of the Money
Market Portfolio's investments plus cash and other assets, deducting
liabilities and then dividing the result by the number of shares
outstanding. The Portfolio's securities are valued according to the
"amortized cost" method, which is intended to stabilize the NAV at $1.00
per share.
Limited-Term and Long-Term Portfolios: NAV is computed by adding the
value of all portfolio holdings, plus other assets, deducting
liabilities and then dividing the result by the number of shares
outstanding. Portfolio securities and other assets are valued based on
market quotations, except that securities maturing within 60 days are
valued at amortized cost. If quotations are not available, securities
are valued by a method that the Board of Trustees believes accurately
reflects fair value.
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 does not clear, your
purchase will be canceled and you will be charged a $10 fee plus costs
incurred by the Portfolio. 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, the proceeds of
redemptions against those funds will be held until the transfer agent is
reasonably satisfied that the purchase payment has been collected.
Drafts written on the Money Market Portfolio against such funds will be
returned for uncollected funds. To avoid this collection period, you can
wire federal funds from your bank, which may charge you a fee.
Money Market Portfolio
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. If the purchase is
by check and is received by 4 p.m. Eastern time, it will begin earning
dividends the next business day. Check purchases received at the branch
location will be credited the next business day. Any check purchase
received without an investment slip may cause delayed crediting.
Limited-Term and Long-Term Portfolios
Your purchase will be processed at the next offering price based on the
next net asset value calculated for each class after your order is
received and accepted. If your purchase is made by wire or exchange and
is received by 4:00 p.m. Eastern time, your account will be credited
on the day of receipt. If your purchase is received after 4:00 p.m.
Eastern time, it will be credited the next business day. Check purchases
received at the branch location will be credited the next business day.
Any check purchase received without an investment slip may cause delayed
crediting.
Certain financial institutions or broker-dealers that have entered into
a sales agreement with the Distributor may enter confirmed purchase
orders on behalf of customers by phone, with payment to follow within a
number of days of the order as specified by the program. If payment is
not received in the time specified, the financial institution could be
held liable for resulting fees or losses.
EXCHANGES
You may exchange shares of Portfolio for shares of the same class of
other Calvert Group Funds.
If your investment goals change, the Calvert Group Family of 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:
Each exchange represents the sale of shares of one Fund and the purchase
of shares of another. Thus, you could realize a taxable gain or loss.
o 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.
o 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.
o Shares on which you have already paid a sales charge at Calvert
Group and shares acquired by reinvestment of dividends and distributions
may be exchanged into another Fund at no additional charge.
o Limited-Term and Long-Term Portfolios: To protect performance
and to minimize costs, Calvert Group discourages frequent exchanges and
may prohibit additional purchases of Portfolio shares by persons engaged
in too many short-term trades. Shareholders (and those managing multiple
accounts) who make two purchases and two exchange redemptions of shares
of the same Fund or Portfolio during any 6-month period will be given
written notice that they may be prohibited from making additional
investments. These policies do not prohibit you from redeeming shares of
the Funds and do not apply to trades solely among money market funds.
For purposes of the exchange privilege, effective July 31, 1996, the
Fund is related to Summit Cash Reserves Fund by investment and investor
services. Each Portfolio reserves the right to terminate or modify the
exchange privilege in the future with 60 days' written notice.
<PAGE>
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour yield and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers use a push button phone to obtain prices, yields, performance
information, account balances, and authorize certain 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 Portfolio
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 account, call your broker or Calvert for a
Money Controller Application.
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 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.
Optional Services
Complete the account 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
Householding reduces Fund expenses and saves paper and trees for the
environment.
If you have multiple accounts with Calvert, you may receive combined
mailings of some shareholder information, such as 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 Portfolios pay 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 a Portfolio through a program of services
offered by a securities 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.
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 and accepted. See below for specific
requirements necessary to make sure your redemption request is
acceptable. Remember that your Portfolio 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 a Portfolio, it may take up to seven (7) days. Calvert
Money Controller 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.
Minimum account balance is $1,000.
Please maintain a balance in your account of at least $1,000 per
Portfolio, per class. If, due to redemptions, the account falls below
$1,000, or you fail to invest at least $1,000, your account may be
closed and the proceeds mailed to you at the address of record. You will
be given notice that your account will be closed after 30 days unless
you make an additional investment to increase your account balance to
the $1,000 minimum.
<PAGE>
HOW TO SELL YOUR SHARES
Draftwriting
(Money Market Portfolio only)
You may redeem shares in your Money Market Portfolio account by writing
a draft for at least $250. If you complete and return the signature card
for Draftwriting, the Portfolio 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
reserves the right to charge a service fee for drafts returned for
uncollected or insufficient funds. The Fund will charge $25 for any stop
payments on drafts. As a service to shareholders, the Portfolio may
automatically transfer the dollar amount necessary to cover drafts you
have written on the Portfolio to your Portfolio 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.
By Mail To:
Calvert Group
P.O. Box 419544
Kansas City, MO
64141-6544
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. If you do
not have a voided check 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 Letter of instruction and a corporate
Associations 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 an address or bank you have previously authorized. A charge of $5 is
imposed on wire transfers of less than $1,000. See "Telephone
Transactions" on page __.
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.
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.
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.
<PAGE>
DIVIDENDS AND TAXES
Each year, the Portfolio distributes substantially all of its net
investment income to shareholders.
Dividends from the Money Market Portfolio'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.
Dividends from the Limited- and Long-Term Portfolios' net investment
income are 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. Each year, the Portfolios distribute substantially all of
their net investment income to shareholders. Dividend and distribution
payments will vary between classes; dividend payments are anticipated to
generally be higher for Class A shares.
Dividend payment options
Dividends and any distributions are automatically reinvested in the same
Portfolio at net asset value (no sales charge), unless you elect to have
the dividends of $10 or more paid in cash (by check or by Calvert Money
Controller). Dividends and distributions may be automatically invested
in an identically registered account with the same account number in any
other Calvert Group Fund or Portfolio at net asset value. If reinvested
in the same Fund account, new shares will be purchased at net asset
value on the reinvestment date, which is generally 1 to 3 days prior to
the payment date. You must be a shareholder on the record date to
receive dividends. You must notify the Fund in writing prior to the
record date 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.
"Buying a Dividend"
At the time of purchase, the share price of the Limited- or Long-Term
Portfolios may reflect undistributed income, capital gains or unrealized
appreciation of securities. Any capital gains from these amounts which
are later distributed to you are fully taxable. On the record date for a
distribution, a Portfolio's share value is reduced by the amount of the
distribution. If you buy shares just before the record date ("buying a
dividend") you will pay the full price for the shares and then receive a
portion of the price back as a taxable distribution.
Federal Taxes
Dividends derived from interest on municipal obligations constitute
exempt-interest dividends, on which you are not subject to federal
income tax. However, dividends which are from taxable interest and any
distributions of short-term capital gain are taxable to you as ordinary
income. If the Portfolio makes any distributions of long-term capital
gains, then these are taxable to you as long-term capital gains,
regardless of how long you held your shares of the Portfolio. Dividends
attributable to interest on certain private activity bonds must be
included in federal alternative minimum tax for individuals and for
corporations.
If any taxable income or gains are paid, in January, the Portfolio will
mail you Form 1099-DIV indicating the federal tax status of dividends
paid to you by the Portfolio during the past year.
You may realize a capital gain or loss when you redeem (sell) or
exchange shares of the Limited-Term or Long-Term Portfolios.
If you sell or exchange your Limited-Term or Long-Term Portfolio shares
you will have a short or long-term capital gain or loss, depending on
how long you owned the shares which were sold. In January, the Fund will
mail you Form 1099-B indicating the proceeds from all sales, including
exchanges. You should keep your annual year-end account statements to
determine the cost (basis) of the shares to report on your tax returns.
Other Tax Information
You may be subject to state or local taxes on your investment, depending
on the laws in your area. A letter will be mailed to you in January
detailing the percentage invested in your state the previous tax year.
Such dividends may be exempt from certain state income taxes.
Taxpayer Identification Number
Federal law requires that you provide your correct Social Security or
Taxpayer Identification Number ("TIN") on a signed certified application
or Form W-9. If not provided, the Portfolios may be required to withhold
31% of any dividends or redemptions, and 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 Portfolios reserve the right to reject any new
account or any purchase order for failure to supply a certified TIN.
<PAGE>
EXHIBIT A - LIMITED-TERM AND LONG-TERM PORTFOLIOS
==========================================================================
You may qualify for a reduced sales charge through several purchase
plans available. You must notify the Fund at the time of purchase to
take advantage of the reduced sales charge.
Right of Accumulation
The sales charge is calculated by taking into account not only the
dollar amount of a new purchase of shares, but also the higher of cost
or current value of shares previously purchased in Calvert Group Funds
that impose sales charges. This automatically applies to your account
for each new purchase.
Letter of Intent
If you plan to purchase $50,000 or more of Fund shares over the next 13
months, your sales charge may be reduced through a "Letter of Intent."
You pay the lower sales charge applicable to the total amount you plan
to invest over the 13-month period, excluding any money market fund
purchases. Part of your shares will be held in escrow, so that if you do
not invest the amount indicated, you will have to pay the sales charge
applicable to the smaller investment actually made. For more
information, see the Statement of Additional Information.
Group Purchases
If you are a member of a qualified group, you may purchase shares of the
Fund at the reduced sales charge applicable to the group taken as a
whole. The sales charge is calculated by taking into account not only
the dollar amount of the shares you purchase, but also the higher of
cost or current value of shares previously purchased and currently held
by other members of your group.
A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Fund shares at a
discount, and (iii) satisfies uniform criteria which enable CDI and
dealers offering Fund shares to realize economies of scale in
distributing such shares. A qualified group must have more than 10
members, must be available to arrange for group meetings between
representatives of CDI or dealers distributing the Fund's shares, must
agree to include sales and other materials related to the Fund in its
publications and mailings to members at reduced or no cost to CDI or
dealers, and must seek to arrange for payroll deduction or other bulk
transmission of investments to the Fund. Members of a group are not
eligible for a Letter of Intent.
Other Circumstances
There is no sales charge on shares of any fund (portfolio or series) of
the Calvert Group of Funds sold to:
(1) current and retired members of the Board of Trustees/Directors of
the Calvert Group of Funds, (and the Advisory Council of the Calvert
Social Investment Fund); (2) directors, officers and employees of the
Advisor, Distributor, and their affiliated companies; (3) directors,
officers and registered representatives of brokers distributing the
Fund's shares; and immediate family members of persons listed in (1),
(2), or (3) above; (4) dealers, brokers, or registered investment
advisors that have entered into an agreement with CDI providing
specifically for the use of shares of the Fund (Portfolio or Series) in
particular investment programs or products (where such program or
product already has a fee charged therein) made available to the clients
of such dealer, broker, or registered investment advisor; (5) trust
departments of banks or savings institutions for trust clients of such
bank or savings institution; and (6) purchases placed through a broker
maintaining an omnibus account with the Fund (Portfolio or Series) and
the purchases are made by (a) investment advisors or financial planners
placing trades for their own accounts (or the accounts of their clients)
and who charge a management, consulting, or other fee for their
services; or (b) clients of such investment advisors or financial
planners who place trades for their own accounts if such accounts are
linked to the master account of such investment advisor or financial
planner on the books and records of the broker or agent; or (c)
retirement and deferred compensation plans and trusts, including, but
not limited to, those defined in Section 401(a) or Section 403(b) of the
I.R.C., and "rabbi trusts."
Established Accounts
Shares of the Long-Term Portfolio may be sold at net asset value to you
if your account was established on or before September 15, 1987, or
April 30, 1988 for the Limited-Term Portfolio.
Dividends and Capital Gain Distributions from other Calvert Group Funds
You may prearrange to have your dividends and capital gain distributions
from another Calvert Group Fund with a sales charge automatically
invested in another account with no additional sales charge. Except for
money market funds, if you make a purchase at NAV, you may exchange
that amount to another fund at no additional sales charge.
Reinstatement Privilege
If you redeem Fund shares and then within 30 days decide to reinvest in
the same Fund, you may do so at the net asset value next computed after
the reinvestment order is received, without a sales charge. You may use
the reinstatement privilege only once. The Fund reserves the right to
modify or eliminate this privilege.
<PAGE>
TABLE OF Fund Expenses Alternative Sales Options
CONTENTS Financial Highlights When Your Account Will Be Credited
Investment Objectives Exchanges
and Policies
Yield and Total Return Other Calvert Group Services
Management of the Fund Selling Your Shares
SHAREHOLDER GUIDE: How to Sell Your Shares
How to Buy Shares Dividends, Capital Gains and Taxes
Net Asset Value Exhibit A - Reduced Sales Charges
To Open an Account:
800-368-2748 Prospectus
April 30, 1996
CALVERT TAX-FREE RESERVES
MONEY MARKET PORTFOLIO
LIMITED-TERM PORTFOLIO
LONG-TERM PORTFOLIO
Performance and Prices:
Calvert Information Network
24 hours, 7 days a week
800-368-2745
Service for Existing Accounts:
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>
CALVERT TAX-FREE RESERVES
VERMONT MUNICIPAL PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
INVESTMENT OBJECTIVE
Calvert Tax-Free Reserves Vermont Municipal Portfolio (the "Portfolio")
seeks to earn the highest level of interest income exempt from federal
and Vermont state income taxes as is consistent with prudent investment
management, preservation of capital, and its stated quality and maturity
characteristics.
Calvert Tax-Free Reserves (the "Fund") is an open-end investment company
that consists of several portfolios, each of which has distinct
investment objectives and programs. The Vermont Municipal Portfolio is
nondiversified, and invests in investment grade municipal obligations
with durations generally averaging between four and nine years, though
the Portfolio's holdings may at any time have longer or shorter
durations. There can be, of course, no assurance that the Portfolio will
be successful in meeting its investment objective.
PURCHASE INFORMATION
The Portfolio offers two classes of shares, each with different expense
levels and sales charges. You may choose to purchase (i) Class A shares,
with a sales charge imposed at the time you purchase the shares
("front-end sales charge"); or (ii) Class C shares which impose neither
a front-end sales charge nor a contingent deferred sales charge. Class C
shares are not available through all dealers. Class C shares have a
higher level of expenses than Class A shares, including Rule 12b-1 fees.
These alternatives permit you to choose the method of purchasing shares
that is most beneficial to you, depending on the amount of the purchase,
the length of time you expect to hold the shares, and other
circumstances. See "Alternative Sales Options" for further details.
TO OPEN AN ACCOUNT
Call your broker, or complete and return the enclosed Account
Application. Minimum initial investment is $2,000.
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 Portfolio's goals match your own. Keep this document for
future reference.
A Statement of Additional Information (dated April 30, 1996) for the
Portfolio 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.
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. WHEN INVESTORS SELL SHARES
OF THE FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY
PAID.
<PAGE>
<TABLE>
<CAPTION>
FUND EXPENSES
A. Shareholder Transaction Costs Class A Class C
==========================================================================
<S> <C> <C>
Maximum Sales Charge on
Purchases (as a percentage of 3.75% None
offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses -
Fiscal year 1995 (as a percentage of average net assets)
Management Fees 0.61% 0.61%
Rule 12b-1 Service and Distribution Fees 0.00% 1.00%
Other Expenses 0.15% 0.86%
Total Fund Operating Expenses<F1> 0.76% 2.47%
<FN>
<F1>Net Fund Operating Expenses after reduction for fees paid indirectly
for Class A and Class C were 0.75% and 2.46%, respectively.
</FN>
</TABLE>
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 A, payment of maximum initial sales charge at time of
purchase:
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
==========================================================================
<S> <C> <C> <C> <C>
Class A $45 $61 $78 $128
Class C $25 $77 $132 $281
</TABLE>
The example, which is hypothetical, should not be considered a representation
of past or future expenses. Actual expenses and return may be higher or
lower than those shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the
Portfolio 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 Portfolio. See "Reduced Sales Charges" at Exhibit
A to see if you qualify for possible reductions in the sales charge. 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 Portfolio's
historical expenses. Management Fees are paid by the Fund to Calvert
Asset Management Company, Inc. ("Investment Advisor") for managing the
Portfolio's investments and business affairs, and include an
administrative service fee paid to Calvert Administrative Services
Company, Inc. The Portfolio 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 Portfolio's share price and are not charged directly to
individual shareholder accounts.
The Portfolio's Rule 12b-1 fees include an asset-based sales
charge. Thus, it is possible that long-term shareholders in the
Portfolio 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.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides information about the financial history of
the Portfolio's Class A and C shares. It expresses the information in
terms of a single share outstanding for the Portfolio throughout each
period. The table has been audited by those independent accountants
whose report is included in the Calvert Tax-Free Reserves Annual Report
to Shareholders of the Fund for each of the respective periods
presented. The table should be read in conjunction with the financial
statements and their related notes. The current Annual Report is
incorporated by reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $15.34 $16.66
Income from investment operations
Net investment income .87 .87
Net realized and unrealized gain (loss)
on investments 1.35 (1.35)
Total from investment operations 2.22 (.48)
Distributions from
Net investment income (.85) (.84)
Net realized gains (.09) --
Total distributions (.94) (.84)
Total increase (decrease) in net asset value 1.28 (1.32)
Net asset value, ending $16.62 $15.34
Total return<F2> 14.86% (2.88%)
Ratio to average net assets
Net investment income 5.35% 5.47%
Total expenses<F3> .76% --
Net expenses .75% .73%
Expenses reimbursed -- --
Portfolio turnover 12% 11%
Net assets, ending (in thousands) $60,203 $64,215
Number of shares outstanding
ending (in thousands) 3,621 4,185
<FN>
<F2>
<F3>Total return does not reflect deduction of Class A front-end sales
charge.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Shares
Year Ended December 31, 1993 1992
<S> <C> <C>
Net asset value, beginning $15.83 $15.58
Income from investment operations
Net investment income .86 .84
Net realized and unrealized gain (loss)
on investments .82 .31
Total from investment operations 1.68 1.15
Distributions from
Net investment income (.85) (.84)
Net realized gains -- (.06)
Total distributions (.85) (.90)
Total increase (decrease) in net asset value .83 .25
Net asset value, end of year $16.66 $15.83
Total return<F3> 10.84% 4.99%
Ratio to average net assets
Net investment income 5.25% 5.41%
Total expenses<F4> -- --
Net expenses .72% .62%
Expenses reimbursed -- --
Portfolio turnover 5% 11%
Net assets, end of year (in thousands) $67,634 $53,179
Number of shares outstanding at
end of year (in thousands) 4,060 3,359
<FN>
<F3>Total return does not reflect deduction of Class A front-end sales
charge.
<F4>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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception
(April 1, 1991)
through Dec. 31,
Class A Shares 1991
<S> <C>
Net asset value, beginning $15.00
Income from investment operations
Net investment income .68
Net realized and unrealized gain (loss)
on investments .58
Total from investment operations 1.26
Distributions from
Net investment income (.66)
Net realized gains (.02)
Total distributions (.68)
Total increase (decrease) in net asset value .58
Net asset value, ending $15.58
Total return<F5> 11.43%(a)
Ratio to average net assets
Net investment income 5.97%(a)
Total expenses<F6> --
Net expenses .28%(a)
Expenses reimbursed .06%(a)
Portfolio turnover 8%
Net assets, ending (in thousands) $38,828
Number of shares outstanding,
ending (in thousands) 2,492
<FN>
<F5>Total return does not reflect deduction of Class A front-end sales
charge.
<F6>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.
</FN>
(a) Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception
Class C Shares Year Ended (March 1, 1994)
December 31, through Dec. 31,
1995 1994
<S> <C> <C>
Net asset value, beginning $15.26 $16.40
Income from investment operations
Net investment income .58 .51
Net realized and unrealized gain (loss)
on investments 1.35 (1.06)
Total from investment operations 1.93 (.55)
Distributions from
Net investment income (.68) (.59)
Net realized gains (.09) --
Total distributions (.77) (.59)
Total increase (decrease) in net asset value 1.16 (1.14)
Net asset value, end of year $16.42 $15.26
Total return<F7> 12.88% (2.94%)
Ratio to average net assets
Net investment income 3.61% 3.87%(a)
Total expenses<F8> 2.47% --
Net expenses 2.46% 2.41%(a)
Expenses reimbursed -- 1.85%(a)
Portfolio turnover 12% 11%
Net assets, end of year (in thousands) $394 $223
Number of shares outstanding at
end of year (in thousands) 24 15
<FN>
<F7>Total return does not reflect deduction of Class A front-end sales
charge.
<F8>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.
</FN>
(a) Annualized
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective
The Portfolio seeks to earn the highest level of interest income exempt
from Vermont and federal income taxes as is consistent with prudent
investment management, preservation of capital, and the quality
characteristics of the Portfolio. The Portfolio invests primarily in
tax-exempt investment-grade municipal obligations of the State of
Vermont and its political subdivisions ("Vermont Municipal
Obligations"). The Portfolio has no duration restrictions, but the
average portfolio duration is expected to be between four and nine
years, although it may vary significantly.
Under normal market conditions, the Portfolio attempts to invest at
least 65% of the value of its assets in Vermont Municipal Obligations.
The Portfolio will also attempt to invest the remaining 35% of its total
assets in these obligations, but may invest it in municipal obligations
of other states, territories, and possessions of the United States, the
District of Columbia, and their respective authorities, agencies,
instrumentalities, and political subdivisions. Dividends you receive
from the Portfolio that are derived from interest on tax-exempt
obligations of other governmental issuers will be exempt from federal
tax, but may be subject to Vermont state income taxes.
Nondiversified
There may be risks associated with the Portfolio being nondiversified.
Specifically, since a relatively high percentage of the assets of the
Portfolio may be invested in the obligations of a limited number of
issuers, the value of the shares of the Portfolio may be more
susceptible to any single economic, political or regulatory event than
the shares of a diversified fund.
Municipal Obligations
Municipal obligations in which the Portfolio may invest include, but are
not limited to general obligation bonds and notes of state and local
issuers, revenue bonds of various transportation, housing, utilities
(e.g., water and sewer), hospital and other state and local government
authorities, tax and revenue anticipation notes and bond anticipation
notes, municipal leases, and certificates of participation therein, and
private activity bonds. See further description below and the Statement
of Additional Information.
Credit Quality
The credit quality of municipal obligations is determined by reference
to a commercial credit rating service, such as Moody's Investors
Service, Inc. or Standard & Poor's Corporation. In the case of any
instrument that is not rated, credit quality is determined by the
Advisor under the supervision of the Board of Trustees. Investment
grade, as determined by a NRSRO, currently defined as the top four
rating categories, i.e., AAA, AA, A and BBB. Though still investment
grade, securities rated BBB/Baa possess certain speculative elements and
are generally more susceptible to changing market conditions. There is
no limitation on the percentage of the Portfolio's assets that may be
invested in unrated obligations. Such obligations may be less liquid
than rated obligations of comparable quality. Please refer to the
Appendix in the Statement of Additional Information for a description of
the ratings used by these services.
Variable Rate Obligations
The Portfolio may invest in variable rate obligations. Variable rate
obligations have a yield that is adjusted periodically based on 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 the known rate changes.
Variable rate obligations lessen the capital fluctuations usually
inherent in fixed income investments, which diminishes the risk of
capital depreciation of investment securities in the Portfolio and
Portfolio shares. However, should interest rates decline, the yield of
the Portfolio will decline and the Portfolio and its shareholders will
forego the opportunity for capital appreciation of its portfolio
investments and of their shares.
<PAGE>
Demand Notes
The Portfolio may invest in floating rate and variable rate demand
notes. Demand notes provide that the holder may demand payment of the
note at its par value plus accrued interest by giving notice to the
issuer. To ensure the ability of the issuer to make payment on demand,
the note may be supported by an unconditional bank letter of credit.
Interest-Rate Risk
All fixed income instruments are subject to interest-rate risk; that is,
if the market interest rates rise, the current principal value of a bond
will decline. In general, the longer the maturity of the bond, the
greater the decline in value. Because the Portfolio's average duration
is between 4 and 9 years, it would be expected to be more affected by a
rise in market interest rates than a short-term money market fund, but
less adversely affected by a rise in market interest rates than a fund
which invests in longer-term bonds.
Municipal Leases
The Portfolio may invest in municipal leases. A municipal lease is an
obligation of a government or governmental authority, not subject to
voter approval, used to finance capital projects or equipment
acquisitions and payable through periodic rental payments. There are
additional risks inherent in investing in this type of municipal
security. Unlike municipal notes and bonds, where a municipality is
obligated by law to make interest and principal payments when due,
funding for lease payments needs to be appropriated each fiscal year in
the budget. It is possible that a municipality will not appropriate
funds for lease payments. The Advisor considers risk of cancellation in
its investment analysis. The Portfolio may purchase unrated municipal
leases. The Fund's Advisor, under supervision of the Board of
Trustees/Directors, is responsible for determining the credit quality of
such leases on an ongoing basis. The Fund will invest only in municipal
leases that meet its credit quality restrictions. Certain municipal
leases may be considered illiquid and subject to the Fund's limit on
illiquid investments. The Board of Trustees/Directors has established
guidelines for determining whether a lease is illiquid. See the
Statement of Additional Information for the factors considered by the
Board in determining liquidity and valuation of leases.
When-Issued Purchases
New issues of municipal obligations are offered on a when-issued basis;
that is, delivery and payment for the securities normally take place 15
to 45 days after the date of the transaction. The payment obligation and
the yield that will be received on the securities are each fixed at the
time the buyer enters into the commitment. The Portfolio will only make
commitments to purchase such securities with the intention of actually
acquiring the securities, but the Portfolio may sell these securities
before the settlement date if it is deemed advisable as a matter of
investment strategy.
Temporary Investments
From time to time for liquidity purposes or pending the investment of
the proceeds of the sale of Portfolio shares, the Portfolio may invest
in and derive up to 20% of its income from taxable short-term
obligations of the U.S. Government, its agencies and instrumentalities.
Interest earned from such taxable investments will be taxable as
ordinary income unless you are otherwise exempt from taxation.
To minimize taxable income, the Portfolio may also hold cash which is
not earning income. It is a fundamental policy of the Portfolio that
during normal market conditions the Portfolio's assets will be invested
so that at least 80% of the Portfolio's annual income will be federally
tax-exempt.
<PAGE>
Considerations for Investing in Vermont
Since the Portfolio attempts to invest at least 65 percent of its assets
in Vermont Municipal Obligations, the performance of the Portfolio may
be affected by local economic conditions, more than other funds. If the
local economy in Vermont suffers a downturn, the Portfolio is limited in
its alternative investment choices. As with any state, you should be
aware that certain proposed state or local constitutional amendments,
legislative measures, executive orders, administrative regulations or
voter initiatives, in addition to local economic conditions, could
result in adverse consequences affecting the ability of the State or its
municipalities to meet their obligations in a timely manner, which, in
turn, could affect the Portfolio's performance.
See the Statement of Additional Information for more detail on economic
conditions in Vermont, which may help you assess the risks of investing
in Vermont.
Financial Futures, Options, and Other Investment Techniques
The Portfolio can use various techniques to increase or decrease its
exposure to changing security prices, interest rates, or other factors
that affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts
and leveraged notes, entering into swap agreements, and purchasing
indexed securities. The Portfolio can use these practices either as
substitution or as protection against an adverse move in the Portfolio
to adjust the risk and return characteristics of the Portfolio. If the
Advisor judges market conditions incorrectly or employs a strategy that
does not correlate well with the Portfolio's investments, or if the
counterparty to the transaction does not perform as promised, these
techniques could result in a loss. These techniques may increase the
volatility of a fund and may involve a small investment of cash relative
to the magnitude of the risk assumed. Any instruments determined to be
illiquid are subject to the Portfolio's 10% restriction on illiquid
securities. See below and the Statement of Additional Information for
more details about these strategies.
The Portfolio may buy certain financial futures contracts to hedge its
investments in municipal bonds.
Under certain circumstances, the Portfolio may purchase and sell certain
financial futures contracts and certain options on futures contracts. A
financial futures contract obligates the seller of a contract to deliver
- -- and the purchaser of a contract to take delivery of -- the type of
financial instrument covered by the contract. In the case of index-based
futures contracts, the obligation is in the form of a cash settlement at
a specific time for a specific price.
The Portfolio may only engage in futures transactions for the purpose of
hedging its investments in municipal bonds against declines in value and
to hedge against increases in the cost of securities the Portfolio
intends to purchase. A sale of financial futures contracts may provide a
hedge against a decline in the value of portfolio securities because
such depreciation may be offset, in whole or in part, by an increase in
the value of the position in the futures contracts. Similarly, a
purchase of financial futures contracts may provide a hedge against an
increase in the cost of securities intended to be purchased, because
such appreciation may be offset, in whole or in part, by an increase in
the value of the position in the futures contracts.
Types of futures contracts purchased.
The Portfolio intends to deal in futures contracts based upon The Bond
Buyer Municipal Bond Index, a price-weighted measure of the market value
of 40 large, recently-issued tax-exempt bonds, and to engage in
transactions in exchange-listed futures contracts on U.S. Treasury
securities. The Portfolio may also engage in transactions in other
futures contracts, such as futures contracts on other municipal bond
indexes that become available, if the investment advisor believes such
contracts would be appropriate for hedging the Portfolio's investments
in municipal bonds.
When the Portfolio purchases a futures contract, it will maintain an
amount of cash, cash equivalents (for example, commercial paper and
daily tender adjustable notes) or short-term high grade fixed income
securities in a segregated account with the Portfolio's custodian, so
that the segregated amount plus the amount of initial and variation
margin held in the account of its broker equals the market value of the
futures contract, thereby ensuring that the use of such futures contract
is unleveraged. It is not anticipated that transactions in futures will
have the effect of increasing portfolio turnover.
<PAGE>
Closing out a futures position -- Risks
The Portfolio may close out its position in a futures contract or an
option on a futures contract only by entering into an offsetting
transaction on the exchange on which the position was established and
only if there is a liquid secondary market for the futures contract. If
it is not possible to close a futures position entered into by the
Portfolio, the Portfolio could be required to make continuing daily cash
payments of variation margin in the event of adverse price movements. In
such situations, if the Portfolio has insufficient cash, it may have to
sell portfolio securities to meet daily variation margin requirements at
a time when it would be disadvantageous to do so. The inability to close
futures or options positions could have an adverse effect on the
Portfolio's ability to hedge effectively. There is also risk of loss by
the Portfolio of margin deposits in the event of bankruptcy of a broker
with whom the Portfolio has an open position in a futures contract. The
success of a hedging strategy depends on the Advisor's ability to
predict the direction of interest rates and other economic factors. The
correlation is imperfect between movements in the prices of futures or
options contracts, and the movements of prices of the securities which
are subject to the hedge. If the Portfolio used a futures or options
contract to hedge against a decline in the market, and the market later
advances (or vice-versa), the Portfolio may suffer a greater loss than
if it had not hedged.
Other Policies
The Portfolio may temporarily borrow money from banks to meet redemption
requests, but such borrowing may not exceed 10% of the value of the
Portfolio's total assets. The Portfolio has adopted certain fundamental
investment restrictions which are discussed in detail in the Statement
of Additional Information.
YIELD AND TOTAL RETURN
Yield refers to income generated by an investment over a period of time
for each class.
Yield measures the current investment performance for each class; that
is, the rate of income on the Portfolio's investments divided by the
share price. Yield is computed by annualizing the result of dividing the
net investment income per share over a 30 day period by the maximum
offering price per share on the last day of that period. Yields are
calculated according to accounting methods that are standardized for all
stock and bond funds.
Taxable Equivalent Yield
The Portfolio may advertise its "taxable equivalent yield" for each
class. The taxable equivalent yield is the yield that you would be
required to obtain from taxable investments to equal the yield of the
class, all or a portion of which may be exempt from federal income
taxes. The taxable equivalent yield is computed by taking the portion of
the yield exempt from regular federal income tax and multiplying the
exempt yield by a factor based on a stated income tax rate, then adding
the portion of the yield that is not exempt from regular federal income
tax. The factor that is used to calculate the taxable equivalent yield
is the reciprocal of the difference between one and the applicable
income tax rate, which will be stated in the advertisement.
The Portfolio may advertise its total return for each class. Total
return is based on historical results and is not intended to indicate
future performance.
Total return is calculated separately for each class. It includes not
only the effect of income dividends but also any change in net asset
value, or principal amount, during the stated period. The total return
for each class shows its overall change in value, including changes in
share price and assuming all of the dividends and capital gain
distributions are reinvested. A cumulative total return reflects the
performance over a stated period of time. An average annual total return
reflects the hypothetical annual compounded return that would have
produced the same cumulative total return if the performance had been
constant over the entire period. Because average annual returns tend to
smooth out variations in the returns, you should recognize that they are
not the same as actual year-by-year results. Both types of total return
for Class A shares usually will include the effect of paying the
front-end sales charge. Of course, total returns will be higher if sales
charges are not taken into account. Quotations of "return wihout maximum
load" do not reflect deduction of the sales charge. You should consider
return without maximum load figures only if you qualify for a reduced sales
charge, or for purposes of comparison with comparable figures which also
do not reflect sales charges, such as mutual fund averages compiled
by Lipper Analytical Services, Inc. Further information about the
Portfolio's performance is contained in its Annual Report to Shareholders,
which may be obtained without charge.
<PAGE>
MANAGEMENT OF THE FUND
The Board of Trustees supervises the Portfolio's activities and reviews
its contracts with companies that provide it with services.
The Portfolio is a series of Calvert Tax-Free Reserves (the "Fund"), an
open-end management investment company, organized as a
Massachusetts business trust on October 20, 1980. The other series of
the Fund include the Money Market Portfolio, Limited-Term Portfolio,
Long-Term Portfolio, and the California Money Market Portfolio.
The Fund is not required to hold annual shareholder meetings for the
Portfolio, but special meetings may be called for such purposes as
electing Trustees, changing fundamental policies, and approving
management contracts. As a shareholder, you receive one vote for each
share of the Portfolio you own, except that matters affecting classes
differently, such as Distribution Plans, will be voted on separately by
the affected class(es).
Portfolio Managers
Investment selections for the Portfolio are made by David R. Rochat and
Reno J. Martini. Mr. Rochat is a Director and Senior Vice President of
Calvert Asset Management Company, Inc. He is a Trustee/Director and
Senior Vice President of First Variable Rate Fund, Calvert Tax-Free
Reserves, Money Management Plus, The Calvert Fund, and Calvert Municipal
Fund, Inc., and is primarily responsible for setting the investment
strategy of the trading department, utilizing over 20 years' experience
in the securities and investment community. Mr. Rochat joined Calvert
Group in 1981 after establishing and managing the municipal bond
department at Donaldson, Lufkin, & Jenrette Securities Corporation. Mr.
Martini, a Director of Calvert Group, Ltd., and Senior Vice President
and Chief Investment Officer of Calvert Asset Management Company, Inc.,
oversees management of all Calvert Group portfolios. He has extensive
experience in evaluating and purchasing municipal securities.
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, transfer
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, 1995, Calvert Group
managed and administered assets in excess of $4.8 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. For its services during fiscal year 1995, the Advisor was
entitled to and did receive, pursuant to the Investment Advisory
Agreement, a fee equal to 0.60% of the Portfolio's average net assets.
<PAGE>
Calvert Administrative Services Company provides administrative services
for the Fund.
Calvert Administrative Services Company ("CASC"), an affiliate of the
Advisor, has been retained by Calvert Tax-Free Reserves to provide
certain administrative services necessary to the conduct of its affairs,
including the preparation of regulatory filings and shareholder reports,
the daily determination of its net asset value per share and dividends,
and the maintenance of its portfolio and general accounting records. For
providing such services, CASC receives a total fee from Calvert Tax-Free
Reserves of $200,000 per year, allocated among the Portfolios based on
assets.
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 payment of commissions and service fees to broker-dealers, banks,
and financial services firms, preparation of advertising and sales
literature, and printing and mailing of prospectuses to prospective
investors.
The transfer agent keeps your account records.
Calvert Shareholder Services, Inc. is the Fund's transfer, dividend
disbursing and shareholder servicing agent.
SHAREHOLDER GUIDE
Opening An Account
You can buy shares of the Portfolio in several ways.
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. Be sure to specify which
class of shares you wish to purchase.
Alternative Sales Options
The Portfolio offers two classes of shares:
Class A Shares - Front End Load Option
Class A shares are sold with a front-end sales charge at the time of
purchase. Class A shares are not subject to a sales charge when they are
redeemed.
Class C shares - Level Load Option
Class C shares are sold without a sales charge at the time of purchase
or redemption.
Class C shares have higher expenses
The Portfolio bears some of the costs of selling its shares under
Distribution Plans adopted with respect to its Class C shares pursuant
to Rule 12b-1 under the 1940 Act. Class A has not adopted a Distribution
Plan. The Class C Distribution Plan provides for the payment of an
annual distribution fee to CDI of up to 0.75%, plus a service fee of up
to 0.25%, for a total of 1.00% of the average daily net assets.
Considerations for deciding which class of shares to buy
Income distributions for Class A shares will probably be higher than
those for Class C shares, as a result of the distribution expenses
described above. (See also "Yield and Total Return.") You should
consider Class A shares if you qualify for a reduced sales charge under
Class A or if you plan to hold the shares for several years. The
Portfolio will not normally accept any purchase of Class C shares in the
amount of $1,000,000 or more.
Class A Shares
Class A shares are offered at net asset value plus a front-end sales
charge as follows:
<TABLE>
<CAPTION>
Amount of As a % of As a % of Allowed to Dealers
Investment offering net amount as a % of offering
price invested price
<S> <C> <C> <C>
Less than $50,000 3.75% 3.90% 3.00%
$50,000 but less
than $100,000 3.00% 3.09% 2.25%
$100,000 but less
than $250,000 2.25% 2.30% 1.75%
$250,000 but less
than $500,000 1.75% 1.78% 1.25%
$500,000 but less
than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
**For new investments (new purchases but not exchanges) of $1 million or
more a broker-dealer will have the choice of being paid a finder's fee
by CDI in one of the following methods: (1) CDI may pay broker-dealers,
on a monthly basis for 12 months, an annual rate of up to 0.30%.
Payments will be made less redemptions; or (2) CDI may pay
broker-dealers 0.25% of the amount of the purchase; however, CDI
reserves the right to recoup any portion of the amount paid to the
dealer if the investor redeems some or all of the shares from the Funds
within thirteen months of the time of purchase. For either choice,
quarterly trailing compensation will begin in the thirteenth month.
</TABLE>
<PAGE>
Sales charges on Class A shares may be reduced or eliminated in certain
cases. See Exhibit A to this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a
portion to your broker-dealer. Upon written notice to dealers with whom
it has dealer agreements, CDI may reallow up to the full applicable
sales charge. Dealers to whom 90% or more of the entire sales charge is
reallowed may be deemed to be underwriters under the Securities Act of
1933.
In addition to any sales charge reallowance, your broker-dealer, or
other financial service firm through which your account is held,
currently will be paid periodic service fees at an annual rate of up to
0.15% of the average daily net asset value of Class A shares held in
accounts maintained by that firm.
Class C Shares
Class C shares are not available through all dealers. Class C shares are
offered at net asset value, without a front-end sales charge or a
contingent deferred sales charge. Class C expenses are higher than those
of Class A.
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 C Distribution
Plan are currently used by CDI to pay dealers and other selling firms
dealer-paid quarterly compensation at an annual rate of up to 1.00%,
which may include a service fee at an annual rate of up to 0.25%, of the
average daily net asset value of the accounts maintained by that firm.
For the 1995 fiscal year, the Class C Distribution Plan expenses for the
Portfolio were 1.00%.
Arrangements with Broker-Dealers and Others (all classes)
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 Fund and/or shares of other Funds
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
Portfolio's Rule 12b-1 Distribution Plan.
Dealers or others may receive different levels of compensation depending
on which class of shares they sell. Payments pursuant to a Distribution
Plan are included in the operating expenses of the class.
The Distribution Plan may be terminated at any time by a vote of the
Independent Trustees or by vote of a majority of the outstanding voting
shares of the respective class.
<PAGE>
HOW TO BUY SHARES
BE SURE TO SPECIFY WHICH CLASS YOU ARE BUYING
Method New Accounts Additional Investments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the Portfolio payable to the Portfolio
and mail it with your and mail it with your
investment slip to: application to:
Calvert Group Calvert Group
P.O. Box 419739 P.O. Box 419544
Kansas City, MO Kansas City, MO
64141-6739 64141-6544
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 Branch Office to
make investments by check.
Branch Office See back cover page for the address.
<PAGE>
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR BROKER, OR CALVERT GROUP AT
800-368-2745
By Exchange $2,000 minimum $250 minimum
(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.
By Bank Wire $2,000 minimum $250 minimum
By Calvert Money Not Available for $50 minimum
Controller* Initial Investment
*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.
NET ASSET VALUE
Net asset value per share ("NAV") refers to the worth of one share. NAV
is computed separately for each class by adding the value of all
portfolio holdings, plus other assets, deducting liabilities and then
dividing the result by the number of shares outstanding. This value is
calculated at the close of the Portfolio'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 Portfolio is open for business
each day the New York Stock Exchange is open.
Portfolio securities and other assets are valued based on market
quotations, except that securities maturing within 60 days are valued at
amortized cost. If quotations are not available, securities are valued
by a method that the Board of Trustees believes accurately reflects fair
value.
All purchases of Portfolio shares will be confirmed and credited to your
account in full and fractional shares (rounded to the nearest 1/1000 of
a share).
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.
Your purchase will be processed at the offering price based on the next
net asset value calculated after your order is received and accepted. If
your purchase is received by 4:00 p.m. Eastern time, your account will
be credited on the day of receipt. If your purchase is received after
4:00 p.m. Eastern time, it will be credited the next business day.
Check purchases received at the branch location will be credited the next
business day. Any check purchase received without an investment slip may
cause delayed crediting. Your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks. No cash will be accepted. The Portfolio
reserves the right to suspend the offering of shares for a period of
time or to reject any specific purchase order. If your check does not
clear, your purchase will be canceled and you will be charged a $10 fee
plus costs incurred by the Portfolio. 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 will not be honored. To avoid this collection
period, you can wire federal funds from your bank, which may charge you a fee.
Certain financial institutions or broker-dealers which have entered into
a sales agreement with the Distributor may enter confirmed purchase
orders on behalf of customers by phone, with payment to follow within a
number of days of the order as specified by the program. If payment is
not received in the time specified, the financial institution could be
held liable for resulting fees or losses.
EXCHANGES
You may exchange shares of the Portfolio for shares of the same class of
other Calvert Group Funds.
If your investment goals change, the Calvert Group Family of 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. However, the Portfolio is intended as a long-term investment
and not for frequent short-term trades. To protect performance and to
minimize costs, Calvert Group discourages frequent exchanges and may
prohibit additional purchases of Portfolio shares by persons engaged in
too many short-term trades. Shareholders (and those managing multiple
accounts) who make two purchases and two exchange redemptions of shares
of the same Fund or Portfolio during any 6-month period will be given
written notice that they may be prohibited from making additional
investments. These policies do not prohibit you from redeeming shares of
the Funds and do not apply to trades solely among money market funds.
Before you make an exchange from a Fund or Portfolio, please note the
following:
Each exchange represents the sale of shares of one Fund or Portfolio and
the purchase of shares of another. Therefore, you could realize a
taxable gain or loss on the transaction.
<PAGE>
o 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.
o 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.
o Shares on which you have already paid a sales charge at Calvert
Group and shares acquired by reinvestment of dividends and distributions
may be exchanged into another Fund at no additional charge.
For purposes of the exchange privilege, effective July 31, 1996, the
Portfolio is related to Summit Cash Reserves Fund by investment and
investor services. The Portfolio reserves the right to terminate or
modify the exchange privilege in the future upon 60 days' written notice.
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour total return quotations and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers use a push button phone to obtain prices, performance
information, account balances, and authorize certain 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. Share
purchases made through Calvert Money Controller will be subject to the
applicable sales charge. If you would like to make arrangements for
systematic monthly or quarterly redemptions from your Calvert Group
account, call your broker or Calvert Group for a Money Controller
Application.
<PAGE>
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 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.
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 Calvert Group with additional information and a
signature guarantee. Please call 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, trust company, savings and loan association,
credit union, 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 and saves paper and trees for the
environment.
If you have multiple accounts with Calvert, you may receive combined
mailings of some shareholder information, such as 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 Portfolio 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 Portfolio through a program of
services offered by a securities dealer or financial institution, you
should read the program materials in conjunction with this Prospectus.
Certain features of the Portfolio may be modified in these programs, and
administrative charges may be imposed by the broker-dealer or financial
institution for the services rendered.
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 and accepted. See below for specific
requirements necessary to make sure your redemption request is accepted.
Remember that the Portfolio 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).
<PAGE>
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 Portfolio, it may take up to seven (7) days.
Calvert Money Controller 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.
Minimum account balance is $1,000 per Portfolio.
Please maintain a balance in your account of at least $1,000 per
Portfolio, per class. If, due to redemptions, the account falls below
$1,000, or you fail to invest at least $1,000, your account may be
closed and the proceeds mailed to you at the address of record. You will
be given notice that your account will be closed after 30 days unless
you make an additional investment to increase your account balance to
the $1,000 minimum per Portfolio.
HOW TO SELL YOUR SHARES
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. If you do
not have a voided check 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 Letter of instruction and a corporate resolution,
Associations 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 an address or bank you have previously authorized. A charge of $5 is
imposed on wire transfers of less than $1,000. See "Telephone
Transactions" on page ___.
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.
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.
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.
<PAGE>
DIVIDENDS, CAPITAL GAINS AND TAXES
Dividends from the Portfolio's net investment income are declared and
paid monthly.
Net investment income consists of the interest income, net short-term
capital gains, if any, and dividends declared and paid on investments,
less expenses. Distributions of the Portfolio's net short-term capital
gains (treated as dividends for tax purposes) and its net long-term
capital gains, if any, are normally declared and paid by the Fund once a
year; however, the Portfolio does not anticipate making any such
distributions unless available capital loss carryovers have been used or
have expired. Dividend and distribution payments will vary between
classes; dividend payments will generally be higher for Class A shares.
Dividend Options
Dividends and any distributions are automatically reinvested in the same
Portfolio at net asset value (no sales charge), unless you elect to have
the dividends of $10 or more paid in cash (by check or by Calvert Money
Controller). Dividends and distributions may be automatically invested
in an identically registered account with the same account number in any
other Calvert Group Fund or Portfolio at net asset value. If reinvested
in the same Fund account, new shares will be purchased at net asset
value on the reinvestment date, which is generally 1 to 3 days prior to
the payment date. You must be a shareholder on the record date to
receive dividends. You must notify the Fund in writing prior to the
record date 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.
"Buying a Dividend"
At the time of purchase, the share price of the Portfolio may reflect
undistributed income, capital gains or unrealized appreciation of
securities. Any capital gains from these amounts which are later
distributed to you are fully taxable. On the record date for a
distribution, the Portfolio's share value is reduced by the amount of
the distribution. If you buy shares just before the record date ("buying
a dividend") you will pay the full price for the shares and then receive
a portion of the price back as a taxable distribution.
Federal Taxes
Dividends derived from interest on municipal obligations constitute
exempt-interest dividends, on which you are not subject to federal
income tax. However, dividends which are from taxable interest and any
distributions of short-term capital gain are taxable to you as ordinary
income. If the Portfolio makes any distributions of long-term capital
gains, then these are taxable to you as long-term capital gains,
regardless of how long you held your shares of the Portfolio. Dividends
attributable to interest on certain private activity bonds must be
included in federal alternative minimum tax for individuals and for
corporations.
If any taxable income or gains are paid, in January, the Portfolio will
mail you Form 1099-DIV indicating the federal tax status of dividends
paid to you by the Portfolio during the past year.
You may realize a capital gain or loss when you redeem (sell) or
exchange shares.
If you sell or exchange your Fund shares you will have a short or
long-term capital gain or loss, depending on how long you owned the
shares which were sold. In January, the Fund will mail you Form 1099-B
indicating the proceeds from all sales, including exchanges. You should
keep your annual year-end account statements to determine the cost
(basis) of the shares to report on your tax returns.
State and Local Taxes
Dividends derived from interest on Vermont state or local obligations
are exempt from Vermont personal income tax, as are dividends from
obligations issued by certain territories, such as Puerto Rico. The
Portfolio will advise you each January of the percent of dividends
qualifying for this exemption. You should consult your tax advisor with
regard to how certain dividends affect you.
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 may require the Portfolio to withhold 31% of your
dividends and certain redemptions. 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 Portfolio reserves the right to
reject any new account or any purchase order for failure to supply a
certified TIN.
<PAGE>
EXHIBIT A
==========================================================================
REDUCED SALES CHARGES (CLASS A ONLY)
You may qualify for a reduced sales charge through several purchase
plans available. You must notify the Fund at the time of purchase to
take advantage of the reduced sales charge.
Right of Accumulation
The sales charge is calculated by taking into account not only the
dollar amount of a new purchase of shares, but also the higher of cost
or current value of shares previously purchased in Calvert Group Funds
that impose sales charges. This automatically applies to your account
for each new purchase.
Letter of Intent
If you plan to purchase $50,000 or more of Fund shares over the next 13
months, your sales charge may be reduced through a "Letter of Intent."
You pay the lower sales charge applicable to the total amount you plan
to invest over the 13-month period, excluding any money market fund
purchases. Part of your shares will be held in escrow, so that if you do
not invest the amount indicated, you will have to pay the sales charge
applicable to the smaller investment actually made. For more
information, see the Statement of Additional Information.
Group Purchases
If you are a member of a qualified group, you may purchase shares of the
Fund at the reduced sales charge applicable to the group taken as a
whole. The sales charge is calculated by taking into account not only
the dollar amount of the shares you purchase, but also the higher of
cost or current value of shares previously purchased and currently held
by other members of your group.
A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Fund shares at a
discount, and (iii) satisfies uniform criteria which enable CDI and
dealers offering Fund shares to realize economies of scale in
distributing such shares. A qualified group must have more than 10
members, must be available to arrange for group meetings between
representatives of CDI or dealers distributing the Fund's shares, must
agree to include sales and other materials related to the Fund in its
publications and mailings to members at reduced or no cost to CDI or
dealers, and must seek to arrange for payroll deduction or other bulk
transmission of investments to the Fund. Members of a group are not
eligible for a Letter of Intent.
Other Circumstances
There is no sales charge on shares of any fund (portfolio or series) of
the Calvert Group of Funds sold to: (1) current and retired members of
the Board of Trustees/Directors of the Calvert Group of Funds, (and the
Advisory Council of the Calvert Social Investment Fund); (2) directors,
officers and employees of the Advisor, Distributor, and their affiliated
companies; (3) directors, officers and registered representatives of
brokers distributing the Fund's shares; and immediate family members of
persons listed in (1), (2), or (3) above; (4) dealers, brokers, or
registered investment advisors that have entered into an agreement with
CDI providing specifically for the use of shares of the Fund (Portfolio
or Series) in particular investment programs or products (where such
program or product already has a fee charged therein) made available to
the clients of such dealer, broker, or registered investment advisor;
(5) trust departments of banks or savings institutions for trust clients
of such bank or savings institution; and (6) purchases placed through a
broker maintaining an omnibus account with the Fund (Portfolio or
Series) and the purchases are made by (a) investment advisors or
financial planners placing trades for their own accounts (or the
accounts of their clients) and who charge a management, consulting, or
other fee for their services; or (b) clients of such investment advisors
or financial planners who place trades for their own accounts if such
accounts are linked to the master account of such investment advisor or
financial planner on the books and records of the broker or agent; or
(c) retirement and deferred compensation plans and trusts, including,
but not limited to, those defined in Section 401(a) or Section 403(b) of
the I.R.C., and "rabbi trusts."
Dividends and Capital Gain Distributions from other Calvert Group Funds
You may prearrange to have your dividends and capital gain distributions
from another Calvert Group Fund automatically invested in another
account with no additional sales charge.
Reinstatement Privilege
If you redeem Fund shares and then within 30 days decide to reinvest in
the same Fund, you may do so at the net asset value next computed after
the reinvestment order is received, without a sales charge. You may use
the reinstatement privilege only once. The Fund reserves the right to
modify or eliminate this privilege.
<PAGE>
TABLE OF Fund Expenses Alternative Sales Options
CONTENTS Financial Highlights When Your Account
Investment Objective and Policies Will Be Credited
Yield and Total Return Exchanges
Management of the Fund Other Calvert Group
SHAREHOLDER GUIDE: Services
How to Buy Shares Selling Your Shares
Net Asset Value How to Sell Your
Shares Dividends, Capital
Gains and Taxes
Exhibit A - Reduced
Sales Charges
To Open an Account: Prospectus
800-368-2748 April 30, 1996
CALVERT TAX-FREE
RESERVES VERMONT MUNICIPAL
PORTFOLIO
Performance and Prices:
Calvert Information Network
24 hours, 7 days a week
800-368-2745
Service for Existing Accounts:
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
