Page 1 of ___
SEC Registration Nos.
2-69565 and 811-3101
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 42 XX
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 42 XX
Calvert Tax-Free Reserves
(Exact Name of Registrant as Specified in Charter)
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Address of Principal Executive Offices)
Registrant's Telephone Number: (301) 951-4800
William M. Tartikoff, Esq.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
__ Immediately upon filing XX on April 30, 1996
pursuant to paragraph (b) pursuant to paragraph (b)
__ 60 days after filing __ on (date)
pursuant to paragraph (a) pursuant to paragraph (a)
of Rule 485.
Pursuant to the provisions of Rule 24f-2 under the Investment Company
Act of 1940, an indefinite number of shares of beneficial interest is
being registered by this Registration Statement. On February 28, 1996,
Registrant filed a Rule 24f-2 Notice for its fiscal year ended December
31, 1995.
<PAGE>
Calvert Tax-Free Reserves
Form N-1A Cross Reference Sheet
Item number Prospectus Caption
1. Cover Page
2. Fund Expenses
3. Financial Highlights
Yield or Total Return
4. Investment Objective and Policies
Management of the Fund
5. Management of the Fund
6. Alternative Sales Options
Management of the Fund
Dividends and Taxes
7. How to Buy Shares
Management of the Fund
Net Asset Value
Reduced Sales Charge
When Your Account Will Be Credited
Exchanges
8. Alternative Sales Options
How to Sell Your Shares
9. *
Statement of Additional
Information Caption
10. Cover Page
11. Table of Contents
12. General Information
13. Investment Objective
Investment Policies
Investment Restrictions
Portfolio Transactions
14. Trustees and Officers
15. Trustees and Officers
16. Investment Advisor
Administrative Services
Independent Accountants and Custodians
Method of Distribution
17. Portfolio Transactions
18. General Information
19. Purchases and Redemptions of Shares
Valuation of Shares
20. Tax Matters
21. Administrative Services
22. Calculation of Yield
Calculation of Yield and Total Return
23. Financial Statements
* Inapplicable or negative answer
<PAGE>
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. 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>
PROSPECTUS --
April 30, 1996
CALVERT TAX-FREE RESERVES
CALIFORNIA MONEY MARKET PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
INVESTMENT OBJECTIVE AND POLICIES
Calvert Tax-Free Reserves California Money Market Portfolio seeks to
earn the highest interest income exempt from federal and California
state income taxes as is consistent with prudent investment management,
preservation of capital, and the quality and maturity characteristics of
the Portfolio. The 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.
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 Portfolio: 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
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON 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.
<PAGE>
<TABLE>
<CAPTION>
FUND EXPENSES
<S> <C>
A. Shareholder Transaction Costs
Sales Load on Purchases None
Sales Load on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
B. Annual Fund Operating Expenses - Fiscal Year 1995
(as a percentage of average net assets)
Management Fees 0.51%
Rule 12b-1 Service and Distribution Fees None
Other Expenses 0.25%
Total Fund Operating Expenses<F1> 0.76%
<FN>
<F1> Net Fund Operating Expenses after reduction for fees paid indirectly
were 0.75%.
</FN>
</TABLE>
C. Example: You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each period:
1 Year 3 Years 5 Years 10 Years
$8 $24 $42 $94
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
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. 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 Portfolio 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 yield and are not charged directly to
individual shareholder accounts. Please refer to "Management of the
Fund" for further information.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides information about the Portfolio's financial
history. It expresses the information in terms of a single share
outstanding throughout the period. The table has been audited by those
independent accountants whose report is included in the Annual Report to
Shareholders for the periods presented. The table should be read in
conjunction with the financial statements and their related notes. The
current Annual Report to Shareholders is incorporated by reference into
the Statement of Additional Information.
<TABLE>
<CAPTION>
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $1.000
$1.000
Income from investment operations
Net investment income .037 .026
Distributions from
Net investment income (.037)
(.026)
Net asset value, ending $1.000
$1.000
Total return<F3> 3.78% 2.62%
Ratio to average net assets
Net investment income 3.69% 2.55%
Total expenses<F4> .76% --
Net expenses .75% .69%
Expenses reimbursed -- --
Net assets, ending (in thousands) $300,351 $260,719
Number of shares outstanding, ending
(in thousands) 300,544 260,716
<FN>
<F3>Total return has not been audited prior to 1994.
<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>
Year Ended December 31, 1993 1992
<S> <C> <C>
Net asset value, beginning $1.000
Net asset value, beginning $1.000
$1.000
Income from investment operations
Net investment income .022 .030
Distributions from
Net investment income (.022)
(.030)
Net asset value, ending $1.000
$1.000
Total return<F5> 2.26% 3.08%
Ratio to average net assets
Net investment income 2.22% 3.01%
Total expenses<F6> -- --
Net expenses .69% .68%
Expenses reimbursed -- --
Net assets, ending (in thousands) $296,984 $323,928
Number of shares outstanding, ending
(in thousands) 296,984 323,928
<FN>
<F5>Total return has not been audited prior to 1994.
<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>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31, 1991 1990
<S> <C> <C>
Net asset value, beginning $1.000
$1.000
Income from investment operations
Net investment income .045 .059
Distributions from
Net investment income (.045)
(.059)
Net asset value, ending $1.000
$1.000
Total return<F7> 4.64% 6.04%
Ratio to average net assets
Net investment income 4.51% 5.83%
Total expenses<F8> -- --
Net expenses .60% .31%
Expenses reimbursed -- .02%
Net assets, ending (in thousands) $287,984 $240,469
Number of shares outstanding, ending
(in thousands) 287,984 240,468
<FN>
<F7>Total return has not been audited prior to 1994.
<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>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception (October 16, 1989) through December 31, 1989
<S> <C>
Net asset value, beginning $1.000
Net asset value, beginning of year $1.000
Income from investment operations
Net investment income .018
Distributions from
Net investment income (.018)
Net asset value, end of year $1.000
Total return<F9> 6.51%(a)
Ratio to average net assets
Net investment income 6.13%(a)
Total expenses<F10> --
Net expenses .12%(a)
Net assets, end of year (in thousands) $35,662
Number of shares outstanding at end
of year (in thousands) 35,661
<FN>
<F9>Total return has not been audited prior to 1994.
<F10>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>
(a) = Annualized
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The California Money Market Portfolio seeks to earn the highest level of
interest income exempt from federal and California state income taxes as
is consistent with prudent investment management, preservation of
capital, and the quality and maturity characteristics of the Portfolio.
The Portfolio invests primarily in a diversified portfolio of municipal
obligations whose interest is exempt from federal and California state
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. Short-term obligations have remaining maturities of
one year or less. The Portfolio maintains an average weighted maturity
of 90 days or less.
California Money Market Portfolio invests at least 80% of its assets in
debt obligations issued by or on behalf of the State of California.
Under normal market conditions, the California Money Market Portfolio
will invest at least 80% of its total assets in municipal obligations
whose interest is exempt from federal and California state income tax,
including those issued by or on behalf of the State of California and
its political subdivisions ("Municipal Obligations"). The Portfolio will
also attempt to invest the remaining 20% of its total assets in such
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 or in short-term taxable money market-type
instruments. See "Temporary Investments" below. Dividends paid by the
Portfolio which are derived from interest attributable to California
Municipal Obligations will be exempt from federal and California state
personal income taxes. Dividends derived from interest on tax-exempt
obligations of other governmental issuers will be exempt from federal
income tax, but will be subject to California state income taxes.
Credit Quality
The Portfolio invests in municipal bonds and notes and tax-exempt
commercial paper within the two highest credit ratings categories: for
example, AA and AAA (or Aa and Aaa) for municipal bonds, and A-l and A-2
(or P-l and P-2) for tax-exempt commercial paper. Municipal obligations
rated within these categories are judged to be of high quality by all
standards.
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. There is no
limitation on the percentage of the Portfolio's assets which 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 which 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, which automatically adjusts 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 portfolio investments and Portfolio shares; but this
also means that should interest rates decline, the yield of the
Portfolio will decline, causing the Portfolio and its shareholders to
forego the opportunity for capital appreciation of the portfolio
investments.
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 upon such
demand, the note may be supported by an unconditional bank letter of
credit.
<PAGE>
The 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
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.
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 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
For liquidity purposes or pending the investment of the proceeds of the
sale of its shares, the Portfolio 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.
Considerations for Investing in California
Since the Portfolio invests substantially all of its assets in Municipal
Obligations of its state, the performance of the Portfolio may be
affected by local economic conditions, more than other funds. If the
local economy 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 "Considerations for
Investing" in the Portfolio's Statement of Additional Information.
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
Yield refers to income generated by an investment over a period of time.
The Portfolio may advertise "yield" and "effective yield." Yield figures
are based on historical earnings and are not intended to indicate future
performance. The "yield" of a 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.
Taxable Equivalent Yield
The Portfolio may also advertise its "taxable equivalent yield." The
taxable equivalent yield is the yield you would have to obtain from
taxable investments to equal the Portfolio's yield, all or a portion of
which may be exempt from federal income taxes. The taxable equivalent
yield for the Portfolio is computed by taking the portion of the
Portfolio's 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 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.
MANAGEMENT OF THE FUND
The Board of Trustees supervises the activities and reviews its
contracts with companies that provide the Fund 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 series of the Fund include the
Money Market Portfolio, Limited-Term Portfolio, Long-Term Portfolio,
California Money Market Portfolio, and the Vermont Municipal Portfolio.
<PAGE>
The Fund is not required to hold annual shareholder meetings, but
special meetings may be called for certain purposes such as electing
Trustees, changing fundamental policies, or approving a management
contract. As a shareholder, you receive one vote for the share of a
Portfolio you own. For matters affecting only one Portfolio, only shares
of that Portfolio are entitled to vote.
Calvert Group is one of the largest investment management firms in the
Washington, D.C. area.
Calvert Group, Ltd., parent of the Portfolio'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.
Calvert Asset Management Company, Inc. (the "Advisor") is the
Portfolio's investment advisor. The Advisor provides the Portfolio with
investment supervision and management; administrative services and
office space; furnishes executive and other personnel to the Portfolio;
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 Portfolio and reserves the
right to compensate broker-dealers in return for their promotional or
administrative services. For fiscal year 1995, pursuant to the
Investment Advisory Agreement, the Advisor was entitled to, and did
receive, a fee of 0.50% of the Portfolio's average daily 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 the Fund 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 the Fund of
$200,000 per year, allocated among the Portfolios based on assets.
Calvert Distributors, Inc. serves as underwriter to market the
Portfolio's shares.
Calvert Distributors, Inc. ("CDI") is the Fund's principal underwriter
and distributor. Under the terms of its underwriting agreement with the
Portfolio, CDI markets and distributes the Portfolio's shares and is
responsible for payment of commissions and service fees to
broker-dealers, banks, and financial services firms, preparing
advertising and sales literature, and printing and mailing prospectuses
to prospective investors.
CDI currently compensates broker-dealer firms at rates up to 0.20% of
the average daily net assets maintained in Portfolio accounts
administered by the respective firms. CDI may also pay additional
concessions, including non-cash promotional incentives such as
merchandise or trips, to dealers employing registered representatives
who 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
and equipment, or to defray the expenses of sales contests.
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 which are described
here and in the chart on the next page.
An account application accompanies this prospectus. A completed and
signed application is required for the 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.
Net Asset Value
The Portfolio's shares are sold without a sales charge.
<PAGE>
Net asset value ("NAV") refers to the worth of one share. NAV is
computed by adding the value of a Portfolio's investments plus cash and
other assets, deducting liabilities and then dividing the result by the
number of shares outstanding. The NAV 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 are valued according to the
"amortized cost" method, which is intended to stabilize the NAV at $1.00
per share.
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). The Portfolio may send monthly statements in lieu of immediate
confirmations of purchases and redemptions.
<PAGE>
HOW TO BUY SHARES
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.
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.
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 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 (including drafts) will not be honored. To avoid this collection
period, you can wire federal funds from your bank, which may charge you
a fee.
Your purchase will be processed at the net asset value calculated after
your order is received and accepted. The Portfolio attempts to maintain
a constant net asset value of $1.00 per share. Except in the case of
telephone orders, investors whose payments are received in or converted
into federal funds by 12:30 p.m. Eastern time by the custodian will
receive the dividend declared that day. If your wire purchase is
received after 12:30 p.m. Eastern time, your account will begin earning
dividends on the next business day. A telephone order placed to Calvert
Institutional Marketing Services by 12:30 p.m. Eastern time will become
effective at the price determined at 5 p.m. Eastern time and the shares
<PAGE>
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.
EXCHANGES
You may exchange shares of the Portfolio for shares 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:
The exchange represents the sale of shares of one Fund and the purchase
of shares of another.
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 There is no additional charge for exchanges. However, because
shares of the Portfolios are sold without a sales charge, exchange
purchases into another Calvert Group Fund or Portfolio will be subject
to any applicable sales charge on the shares of the Fund being
purchased. Shares acquired by reinvestment of dividends or distributions
may be exchanged into another Fund at no additional charge.
o Shares on which you have already paid a sales charge at Calvert
Group may be exchanged into another Fund at no additional charge.
The Fund reserves the right to terminate or modify the exchange
privilege with 60 days' written notice.
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour performance 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. If you would
like to make arrangements for systematic monthly or quarterly
redemptions from your Calvert Group account, call your broker or Calvert
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 us with additional information and a signature
guarantee. Please call your broker or Calvert Investor Relations at
800-368-2745 for further assistance. For our mutual protection, we may
require a signature guarantee on certain written transaction requests. A
signature guarantee verifies the authenticity of your signature, and may
be obtained from any bank, savings and loan association, credit union,
trust company, broker-dealer firm or member of a domestic stock
exchange. A signature guarantee cannot be provided by a notary public.
Householding of General Mailings
Householding reduces Fund expenses 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 broker-dealer or financial institution, you should
read the program materials in conjunction with this Prospectus. Certain
features may be modified in these programs, and administrative charges
may be imposed by the broker-dealer or financial institution for the
services rendered.
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 the Fund may hold payment on the redemption of
your shares until it is reasonably satisfied that investments made by
check or by Calvert Money Controller have been collected (normally up to
10 business days).
Redemption Requirements To Remember
To ensure acceptance of your redemption request, please follow the
procedures described here and below.
Once your shares are redeemed, the proceeds will normally be sent to you
on the next business day, but if making immediate payment could
adversely affect 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.
If you sell shares by telephone or written request, you will receive
dividends through the date the request is received and processed. If you
write a draft to sell shares, the shares will earn dividends until the
draft is presented to the Portfolio to be paid.
<PAGE>
Minimum account balance is $1,000.
Please maintain a balance in your account of at least $1,000. If, due to
redemptions, the account falls below $1,000, or you fail to invest at
least $1,000, it 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.
HOW TO SELL YOUR SHARES
Draftwriting
You may redeem shares in your account by writing a draft for at least
$250. If you complete and return the enclosed signature card for
Draftwriting, your 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
Portfolio reserves the right to charge a service fee for drafts returned
for uncollected or insufficient funds. The Portfolio 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 your Portfolio to your Portfolio account from any
other of your identically registered accounts in Calvert money market
funds or Calvert Insured Plus. The Portfolio may charge a fee for this
service.
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
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.
<PAGE>
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 the 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.
DIVIDENDS AND TAXES
Each year, the Portfolio distributes substantially all of its net
investment income to shareholders.
Dividends from the 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.
Dividend payment options
Dividends and any distributions are automatically reinvested in
additional shares of your Portfolio, unless you elect to have the
dividends of $10 or more paid in cash (by check or by Calvert Money
Controller). Dividends and distributions from your Portfolio may also be
invested in shares of any other Calvert Group Fund or Portfolio, and
will not be subject to the applicable sales charge. You must notify the
Fund in writing to change your payment options. If you elect to have
dividends and/or distributions paid in cash, and the U.S. Postal Service
cannot deliver the check, or if it remains uncashed for six months, it,
as well as future dividends and distributions, will be reinvested in
additional shares.
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.
Other Tax Information
To the extent that exempt-interest dividends are derived from earnings
attributable to California Municipal Obligations, they will also be
exempt from state and local personal income tax in California. The
dividends may be subject to California franchise taxes and corporate
income taxes if received by a corporation subject to such taxes. A
letter will be mailed to you in January detailing the percentage
invested in California the previous tax year.
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 your Portfolio to withhold 31% of your
dividends. In addition, you may be subject to a fine. You will also be
prohibited from opening another account by exchange. If this TIN
information is not received within 60 days after your account is
established, your account may be redeemed at the current NAV on the date
of redemption. The Portfolio reserves the right to reject any new
account or any purchase order for failure to supply a certified TIN.
<PAGE>
TABLE OF Fund Expenses How to Buy Shares
CONTENTS Financial Highlights When Your Account Will Be
Investment Objective and Policies Credited
Yield Exchanges
Management of the Fund Other Calvert Group
SHAREHOLDER GUIDE: Services
Net Asset Value Selling Your Shares
How to Sell Your Shares
Dividends and Taxes
<PAGE>
To Open an Account: Prospectus
800-368-2748 April 30, 1996
Performance and Prices:
Calvert Information Network CALVERT TAX-FREE RESERVES
CALIFORNIA PORTFOLIO
MONEY MARKET
24 hours, 7 days a week
800-368-2745
Service for Existing Account:
Shareholders 800-368-2745
Brokers 800-368-2746
TDD for Hearing Impaired:
800-541-1524
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>
PROSPECTUS
April 30, 1996
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. 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
<PAGE>
PROSPECTUS -- April 30, 1996
CALVERT TAX-FREE RESERVES
CALVERT TAX-FREE RESERVES MONEY MARKET PORTFOLIO CLASS MMP SHARES
4550 Montgomery Avenue, Bethesda, Maryland 20814
- --------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
Calvert Tax-Free Reserves (the "Fund") Money Market Portfolio (the
"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.
PURCHASE INFORMATION
The Money Market Portfolio offers two classes of shares, Class O,
described in and offered by another Calvert Tax-Free Prospectus, and
Class MMP, offered by this Prospectus.
TO OPEN AN ACCOUNT
Call your broker, or complete and return the enclosed Account
Application. Minimum 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 UPON 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.
<PAGE>
<TABLE>
<CAPTION>
FUND EXPENSES
A. Shareholder Transaction Expenses Class MMP
===============================================================================
<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 0.45%
Rule 12b-1 Fees 0.35%
Other Expenses 0.55%
Total Fund Operating Expenses<F2> 1.35%
<FN>
<F2>Net Fund Operating Expenses after reduction for fees paid indirectly
were 1.34%.
</FN>
</TABLE>
C. Example: You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of each
period:
1 Year 3 Years 5 Years 10 Years
===============================================================================
Class MMP $14 $43 $74 $162
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
Fund may bear directly (shareholder transaction costs) or indirectly
(annual fund operating expenses).
A. Shareholder Transaction Expenses are charges you pay when you
buy or sell shares of the Portfolio. If you request a wire redemption of
less than $1,000, you will be charged a $5 wire fee.
B. Annual Fund Operating Expenses. Management Fees are paid by the
Fund to Calvert Asset Management Company, Inc. ("Investment Adviso")
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 Class MMP shares Rule 12b-1 fees include an asset-based
sales charge. It is possible in theory that long-term shareholders of
the Class could pay more than the economic equivalent of the maximum
front-end sales charge permitted by rules of the National Association of
Securities Dealers, Inc.; however, this is unlikely because the Class
has no front-end sales charge.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides information about the financial history of
the Class MMP shares of the Money Market Portfolio. The table expresses
information in terms of a single share outstanding for the Portfolio
from inception (October 2, 1995) through December 31, 1995. The table
has been audited by those independent accountants whose reports are
included in the respective Annual Reports to Shareholders for the
respective period presented. The table 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 MMP
From Inception
(Oct.2, 1995)
Through
December 31,
1995
<S> <C>
Net asset value, beginning of period $1.00
Income from investment operations
Net investment income .008
Distributions from
Net investment income (.008)
Net asset value, end of period $1.00
Total return .79%
Ratios to average net assets:
Net investment income 3.19%(a)
Total expenses<F1> 1.35%(a)
Net expenses 1.34%(a)
Net assets, end of period (in thousands) $41,736
Number of shares outstanding at end
of period (in thousands) 41,732
<FN>
<F1>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
Calvert Tax-Free Reserves Money Market Portfolio
The 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 Portfolio invests in fixed and variable rate municipal obligations
whose interest is exempt from federal income tax and which are of high
quality. See "Dividends and Taxes" below for information concerning the
federal alternative minimum tax for particular classes of investors. Its
investments must be rated within the two highest credit ratings
categories or, if unrated, are determined by the Advisor to be of
comparable quality. The quality may be determined by a commercial credit
rating service, such as Moody's Investors Service, Inc., or Standard &
Poor's Corporation or, in the case of any instrument that is not rated,
of comparable quality as determined by the Advisor. There is no
limitation on the percentage of the Portfolio's assets which may be
invested in unrated obligations; such obligations, because they lack
ratings, may be less liquid than rated obligations of comparable
quality. For more information on ratings, see the Statement of
Additional Information.
U.S. Government Obligations
Securities issued by the U.S. Government include a variety of Treasury
securities, supported by the full faith and credit of the U.S.
Government, which differ only in their interest rates, maturities, and
time of issuance. In addition, numerous agencies (such as Government
National Mortgage Association, Farmers Home Administration, Federal
Housing Administration, and Small Business Administration) and
instrumentalities (such as Federal Home Loan Mortgage Corporation,
Federal National Mortgage Association, Student Loan Marketing
Association and Federal Home Loan Bank) issue or guarantee obligations.
Some of these securities are supported by the full faith and credit of
the U.S. Treasury; others are supported by the right of the issuer to
borrow from the Treasury; still others are supported only by the credit
of the instrumentality.
Repurchase Agreements
The Portfolio may enter into repurchase agreements. In a repurchase
agreement, the Portfolio buys a security subject to the right and
obligation to sell it back at a higher price. These transactions must be
fully secured at all times, but they involve some credit risk to the
Fund if the other party defaults on its obligation and the Portfolio is
delayed or prevented from liquidating the collateral.
When-Issued Purchases
Purchasing obligations for future delivery or on a "when-issued" basis
may increase a Portfolio's overall investment exposure and involves a
risk of loss if the value of the securities declines prior to the
settlement date. The transactions are fully secured at all times.
Variable Rate Obligations
The Portfolio may invest in variable and floating rate obligations.
Variable rate obligations have a yield which is adjusted periodically
based upon changes in the level of prevailing interest rates. Floating
rate obligations have an interest rate fixed to a known lending rate,
such as the prime rate, and are automatically adjusted when that rate
changes. Variable and floating rate obligations lessen the capital
fluctuations usually inherent in fixed income investments, to diminish
the risk of capital depreciation of Portfolio investments and Portfolio
shares; but this also means that should interest rates decline, the
yield of the Portfolio will decline and the Portfolio would not have as
many opportunities for capital appreciation of Portfolio investments.
Demand Notes and Temporary Investments
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 upon such
demand, the note may be supported by an unconditional bank letter of
credit.
The Portfolio may invest in structured money market instruments. In all
cases, it 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.
Temporary Taxable Investments
From time to time for liquidity purposes or pending the investment of
the proceeds of the sale of its shares, the Portfolio 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.
Other Policies
The Portfolio has adopted certain fundamental investment restrictions
which are discussed in detail in the Statement of Additional
Information. Unless specifically noted otherwise, the investment
objective, policies and restrictions of the Portfolio are fundamental
and may not be changed without shareholder approval. There can be no
assurance that the Portfolio will be successful in meeting its
investment objective.
YIELD
Yield refers to income generated by an investment over a period of time
for each class.
From time to time, the Money Market Portfolio Class MMP shares may
advertise "yield" and "effective yield." Yield figures are based on
historical earnings and are not intended to indicate future performance.
The "yield" of the Class refers to the actual income generated by an
investment in Class MMP 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 similarly, but, when annualized, the
income earned by an investment in Class MMP shares is assumed to be
reinvested. The "effective yield" will be slightly higher than the
"yield" because of the compounding effect of this assumed reinvestment.
"Tax Equivalent Yield"
Money Market Portfolio Class MMP shares may also advertise its "tax
equivalent yield." The tax equivalent yield is the yield an investor
would be required to obtain from taxable investments to equal the yield,
all or a portion of which may be exempt from federal income taxes. The
tax equivalent yield is computed by taking the portion of the
Portfolio's effective yield by a factor based upon a stated income tax
rate, then adding the portion of the yield that is not exempt from
regular federal income tax. The factor which is used to calculate the
tax equivalent yield is the reciprocal of the difference between 1 and
the applicable income tax rate, which will be stated in the
advertisement.
MANAGEMENT OF THE FUND
The Board of Trustees supervises the activities and reviews its
contracts with companies that provide the Fund with services.
Calvert Tax-Free Reserves Money Market Portfolio Class MMP shares are a
class of Calvert Tax-Free Reserves Money Market Fund ("CTFRMM"), a
series of Calvert Tax-Free Reserves, a Massachusetts business trust
organized on October 20, 1980. The original class of CTFRMM (Class O)
and the CTFRMM Class MMP shares 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 Portfolio is an open-end diversified management investment company.
The Portfolio is not required to hold annual shareholder meetings, but
special meetings may be called for certain purposes such as electing
Trustees, changing fundamental policies, or approving a management
contract. As a shareholder, you receive one vote for each share of the
Portfolio you own. For matters affecting only one Portfolio, only shares
of that Portfolio are entitled to vote. For matters affecting only one
class, only shares of that class are entitled to vote.
Calvert Group is one of the largest investment management firms in the
Washington, D.C. area.
Calvert Group, Ltd., parent of the Portfolio'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 Portfolio.
Calvert Asset Management Company, Inc. (the "Advisor") is the
Portfolio's investment advisor. The Advisor provides the Portfolio with
investment supervision and management; administrative services and
office space; furnishes executive and other personnel to the Portfolio;
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 Portfolio and reserves the
right to compensate broker-dealers in return for their promotional or
administrative services. The Advisor has agreed to limit the Portfolio's
expenses to the most restrictive state limitation in effect.
The Advisor receives a fee based on a percentage of the Portfolio's
assets.
The Advisor is entitled, pursuant to the Investment Advisory Agreement,
and during 1995 did receive an annual advisory fee of 0.45% of the
average daily net assets.
Calvert Administrative Services Company provides administrative services
for the Portfolio.
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.
CASC receives a total fee from Calvert Tax-Free Reserves of $200,000 per
year for providing such services, allocated among the Portfolios of the
Fund based on their relative net assets.
Calvert Distributors, Inc. serves as underwriter to market the Money
Market Portfolio's shares.
Calvert Distributors, Inc. ("CDI") is the Portfolio's principal
underwriter and distributor. Under the terms of its underwriting
agreement with the Portfolio, CDI markets and distributes the
Portfolio's shares and is responsible for payment of compensation 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 Money Market Portfolio Class MMP shares may pay distribution and
servicing expenses pursuant to a Distribution Plan.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Class MMP shares of the Portfolio have adopted a Distribution Plan which
permits the Class to pay certain expenses associated with the
distribution of its shares. Amounts paid by the Class to the Distributor
under the Distribution Plan are used to pay dealers and other selling
firms dealer-paid quarterly compensation at an annual rate of up to
0.40% of the average daily net assets of accounts the respective firms
maintain in the Class. They are also used to pay dealers and others,
including the Distributor's salespersons who service accounts, service
fees at an annual rate of up to 0.25% of such assets, and to pay CDI for
its marketing and distribution expenses, preparation of advertising and
sales literature, printing and mailing of prospectuses to prospective
investors. The Distribution Plan expenses may not annually exceed 0.35%
of the average daily net assets of the Class. During 1995, Class MMP
shares paid Distribution Plan expenses of 0.35%.
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing
registered representatives who 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. CDI may receive reimbursement of eligible marketing and
distribution expenses from the Class MMP shares Rule 12b-1 Distribution
Plan. Salespersons or any other person entitled to receive compensation
for selling shares may receive different compensation with respect to
one particular class of shares over another.
The Distribution Plan may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting
shares of the Class MMP shares.
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 which are described
here and in the chart on the next 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.
NET ASSET VALUE
Share Price
The Portfolio's shares are sold without a sales charge.
The price of one share is its "net asset value," or NAV. NAV is computed
by adding the value of a Portfolio's investments plus cash and other
assets, deducting liabilities and then dividing the result by the number
of shares outstanding. The NAV 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. The Portfolio's securities are valued according
to the "amortized cost" method, which is intended to stabilize the NAV
at $1.00 per share.
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). The Portfolio may send monthly statements in lieu of immediate
confirmations of purchases and redemptions.
HOW TO BUY SHARES
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
application to: investment slip to:
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas City, MO Kansas City, MO
64141-6544 64141-6739
By Registered, Certified, or Overnight Mail:
Calvert Group Calvert Group
c/o NFDS, 6th Floor c/o NFDS, 6th Floor
1004 Baltimore 1004 Baltimore
Kansas City, MO Kansas City, MO
64105-1807 64105-1807
Through Your
Broker $2,000 minimum $250 minimum
At the Calvert Visit the Calvert 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.
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 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 (including drafts) will not be honored. To avoid this collection
period, you can wire federal funds from your bank, which may charge you
a fee.
Your purchase will be processed at the net asset value calculated after
your order is received and accepted. The Portfolio attempts to maintain
a constant net asset value of $1.00 per share. Except in the case of
telephone orders, investors whose payments are received in or converted
into federal funds by 12:30 p.m. Eastern time by the custodian will
receive the dividend declared that day. If your wire purchase is
received after 12:30 p.m. Eastern time, your account will begin earning
dividends on the next business day. A telephone order placed to Calvert
Institutional Marketing Services by 12:30 p.m. Eastern time will become
effective at the price determined at 5 p.m. Eastern time and the shares
purchased will receive the dividend declared on Fund shares that day if
federal funds are received by the custodian by 5 p.m. Eastern time.
Exchanges begin earning dividends the next business day after the
exchange request is received by mail or by telephone. 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.
EXCHANGES
You may exchange shares of the Portfolio for shares 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.
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 or shares
acquired by reinvestment of dividends or distributions at Calvert Group
may be exchanged into another Fund at no additional charge.
The Fund reserves the right to terminate or modify the exchange
privilege with 60 days' written notice.
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour performance 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. If you would
like to make arrangements for systematic monthly or quarterly
redemptions from your Calvert Group 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.
Complete the application for the easiest way to establish services.
The easiest way to establish optional services on your Calvert Group
account is to select the options you desire when you complete your
account application. If you wish to add other options later, you may
have to provide us with additional information and a signature
guarantee. Please call your broker or Calvert Investor Relations at
800-368-2745 for further assistance. For our mutual protection, we may
require a signature guarantee on certain written transaction requests. A
signature guarantee verifies the authenticity of your signature, and may
be obtained from any bank, savings and loan association, credit union,
trust company, broker-dealer firm or member of a domestic stock
exchange. A signature guarantee cannot be provided by a notary public.
Householding of General Mailings
Householding reduces Fund expenses 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 Fund pays for shareholder services but not for special services that
are required by a few shareholders, such as a request for a historical
transcript of an account. You may be required to pay a research fee for
these special services.
If you are purchasing shares of the Fund through a program of services
offered by a securities dealer or financial institution, you should read
the program materials in conjunction with this Prospectus. Certain
features of the Fund may be modified in these programs, and
administrative charges may be imposed by the broker-dealer for the
services rendered.
Consolidated Asset Account ("CAA")
Certain brokerage firms may offer their customers CAA, a special cash
management service linked to Class MMP shares. CAA customers may have
free-credit cash balances at their brokerage firm account automatically
invested in Portfolio shares on a daily basis. Participating brokerage
firms will charge their customers a fee for the CAA program and may
establish a higher minimum balance. Details of CAA, including the fee
charged, are available from participating brokerage firms. This
Prospectus should be read together with such firm's materials regarding
these fees and services.
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 the chart below
for specific requirements necessary to make sure your redemption request
is acceptable. Remember that the Fund may hold payment on the redemption
of your shares until it is reasonably satisfied that investments made by
check or by Calvert Money Controller have been collected (normally up to
10 business days).
Redemption Requirements To Remember
To ensure acceptance of your redemption request, please follow the
procedures described here and below.
Once your shares are redeemed, the proceeds will normally be sent to you
on the next business day, but if making immediate payment could
adversely affect the 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.
If you sell shares by telephone or written request, you will receive
dividends through the date the request is received and processed. If you
write a draft to sell shares, the shares will earn dividends until the
draft is presented to the Portfolio to be paid.
Minimum account balance is $1,000
Please maintain a balance in your account of at least $1,000. If, due to
redemptions, the account falls below $1,000, or you fail to invest at
least $1,000, it 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.
HOW TO SELL YOUR SHARES
Draftwriting
You may redeem shares in your account by writing a draft for at least
$250. If you complete and return a signature card for Draftwriting, the
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 Portfolio reserves the
right to charge a service fee for drafts returned for uncollected or
insufficient funds. The Portfolio 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 corporateresolution,
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.
DIVIDENDS AND TAXES
Each year, the Portfolio distributes substantially all of its net
investment income to shareholders.
Dividends from the 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.
Dividend payment options
Dividends and any distributions are automatically reinvested in
additional shares of the same Portfolio, unless you elect to have the
dividends of $10 or more paid in cash (by check or by Calvert Money
Controller). Dividends and distributions from the Portfolio may also be
invested in shares of any other Calvert Group Fund or Portfolio, at no
additional sales charge. You must notify the Fund in writing to change
your payment options. If you elect to have dividends and/or
distributions paid in cash, and the U.S. Postal Service cannot deliver
the check, or if it remains uncashed for six months, it, as well as
future dividends and distributions, will be reinvested in additional
shares.
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.
Other Tax Information
In addition to federal taxes, you may be subject to state or local taxes
on your investment, depending on the laws in your area. You will be
notified to the extent, if any, that dividends reflect interest received
from U.S. government securities. Such dividends may be exempt from
certain state income taxes.
Taxpayer Identification Number
If we do not have your correct Social Security or Taxpayer
Identification Number ("TIN") and a signed certified application or Form
W-9, Federal law requires the Portfolio to withhold 31% of your
reportable dividends. In addition, you may be subject to a fine. You
will also be prohibited from opening another account by exchange. If
this TIN information is not received within 60 days after your account
is established, your account may be redeemed at the current NAV on the
date of redemption. The Portfolio reserves the right to reject any new
account or any purchase order for failure to supply a certified TIN.
<PAGE>
To Open an Account: Prospectus
800-368-2748 April 30, 1996
Performance and Prices:
Calvert Information Network Calver tTax-Free Reserves
24 hours, 7 days a week Money Market Portfolio
800-368-2745 Class MMP
Service for Existing Account:
Shareholders 800-368-2745
Brokers 800-368-2746
TDD for Hearing Impaired:
800-541-1524
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>
Table of Contents
Fund Expenses
Financial Highlights
Investment Objective and Policies
Yield
Management of the Fund
SHAREHOLDER GUIDE:
Net Asset Value
How to Buy Shares
When Your Account Will Be Credited
Exchanges
Other Calvert Group Services
Selling Your Shares
How to Sell Your Shares
Dividends and Taxes
<PAGE>
Calvert Tax-Free Reserves
Money Market Portfolio
Limited-Term Portfolio
Statement of Additional Information
April 30, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 2
Purchases and Redemptions of Shares 3
Reduced Sales Charges (Class A) 4
Dividends and Distributions 4
Tax Matters 4
Valuation of Shares 5
Calculation of Yield and Total Return 6
Advertising 8
Trustees and Officers 8
Investment Advisor 10
Administrative Services 10
Independent Accountants and Custodians 11
Method of Distribution 11
Portfoli0 Transactions 11
General Information 12
Financial Statements 12
Appendix 13
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1996
CALVERT TAX-FREE RESERVES
Money Market Portfolio
Limited-Term Portfolio
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
==========================================================================
New Account (800) 368-2748 Shareholder (800) 368-2745
Information: (301) 951-4820 Services: (301) 951-4810
==========================================================================
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 Impaired: (800) 541-1524
==========================================================================
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in
conjunction with the Calvert Tax-Free Reserves Prospectus, dated April
30, 1996, which may be obtained free of charge by writing the Fund at
the above address or calling the telephone numbers listed above.
==========================================================================
INVESTMENT OBJECTIVE
==========================================================================
The Money Market and Limited-Term Portfolios (the "Portfolios")
are series of Calvert Tax-Free Reserves (the "Fund"), and are designed
to provide individual and institutional investors in higher tax brackets
with 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 prescribed for
each Portfolio. The Money Market Portfolio further seeks to maintain a
constant net asset value of $1.00 per share. There is, of course, no
assurance that the Portfolios will be successful in meeting their
investment objectives or maintaining the Money Market Portfolio's net
asset value constant at $1.00 per share because there are inherent risks
in the ownership of any investment.
Dividends paid by the Portfolios will fluctuate with income
earned on investments. In addition, the dividends and distributions paid
and the value of each share will vary by class of shares; the value of
the Limited-Term Portfolio's shares will fluctuate to reflect changes in
the market value of the Portfolio's investments. The Portfolios will
attempt, through careful management and diversification, to reduce these
risks and enhance the opportunities for higher income and greater price
stability.
==========================================================================
INVESTMENT POLICIES
==========================================================================
The Money Market Portfolio and Limited-Term Portfolio each
invest primarily in a diversified portfolio of municipal obligations
whose interest is exempt from federal income tax. The Portfolios differ
in their anticipated income yields, quality, length of average weighted
maturity, and capital value volatility. A complete explanation of
municipal obligations and municipal bond and note ratings is set forth
in the Appendix.
The credit rating of each Portfolio's assets as of its most
recent fiscal year-end appears in the Annual Report to Shareholders,
incorporated by reference herein.
Variable Rate Demand Notes
The Board of Trustees has approved investments in floating and
variable rate demand notes upon the following conditions: the Fund has
right of demand, upon notice not to exceed thirty days, against the
issuer to receive payment; the issuer will be able to make payment upon
such demand, either from its own resources or through an unqualified
commitment from a third party; and the rate of interest payable is
calculated to ensure that the market value of such notes will
approximate par value on the adjustment dates. The remaining maturity of
such demand notes is deemed the period remaining until such time as the
Fund has the right to dispose of the notes at a price which approximates
par and market value.
<PAGE>
Municipal Leases
The Portfolio may invest in municipal leases, or structured instruments
where the underlying security is a municipal lease. 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. The Portfolio
may purchase unrated leases. The Fund's Advisor, under the supervision
of the Board of Trustees/Directors, is responsible for determining the
credit quality of such leases on an ongoing basis, including an
assessment of the likelihood that the lease will not be canceled.
Certain municipal leases may be considered illiquid and subject to the
Portfolio's limit on illiquid securities. The Board of
Trustees/Directors has directed the Advisor to treat a municipal lease
as a liquid security if it satisfies the following conditions: (A) such
treatment must be consistent with the Portfolio's investment
restrictions; (B) the Advisor should be able to conclude that the
obligation will maintain its liquidity throughout the time it is held by
the Portfolio, based on the following factors: (1) whether the lease may
be terminated by the lessee; (2) the potential recovery, if any, from a
sale of the leased property upon termination of the lease; (3) the
lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics and prospects); (4) the
likelihood that the lessee will discontinue appropriating funding for
the leased property because the property is no longer deemed essential
to its operations (e.g., the potential for an "event of
nonappropriation"), and (5) any credit enhancement or legal recourse
provided upon an event of nonappropriation or other termination of the
lease; (C) the Advisor should determine whether the obligation can be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Portfolio has valued it for
purposes of calculating the Portfolio's net asset value, taking into
account the following factors: (1) the frequency of trades and quotes;
(2) the volatility of quotations and trade prices; (3) the number of
dealers willing to purchase or sell the security and the number of
potential purchasers; (4) dealer undertakings to make a market in the
security; (5) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of the transfer); (6)
the rating of the security and the financial condition and prospects of
the issuer; and (7) other factors relevant to the Portfolio's ability to
dispose of the security; and (D) the Advisor should have reasonable
expectations that the municipal lease obligation will maintain its
liquidity throughout the time the instrument is held by the Portfolio.
Obligations with Puts Attached
The Fund has authority to purchase securities at a price which
would result in a yield to maturity lower than that generally offered by
the seller at the time of purchase when it can acquire at the same time
the right to sell the securities back to the seller at an agreed upon
price at any time during a stated period or on a certain date. Such a
right is generally denoted as a "put." A Portfolio may not acquire
obligations subject to puts if immediately thereafter, with respect to
75% of the total amortized cost value of its assets, that Portfolio
would have more than 5% of its assets invested in securities underlying
puts from the same institution. A Portfolio may, however, invest up to
10% of its assets in securities underlying unconditional puts from the
same institution. Unconditional puts are readily exercisable in the
event of a default in payment of principal or interest on the underlying
securities. The Money Market Portfolio must limit its portfolio
investments, including puts, to instruments of high quality as
determined by a nationally recognized statistical rating organization.
Temporary Investments
Short-term money market type investments consist of:
obligations of the U.S. Government, its agencies and instrumentalities;
certificates of deposit of banks with assets of one billion dollars or
more; commercial paper or other corporate notes of investment grade
quality; and any of such items subject to short-term repurchase
agreements.
The Fund intends to minimize taxable income through investment,
when possible, in short-term tax-exempt securities. To minimize taxable
income, the Fund may also hold cash which is not earning income. It is a
fundamental policy of the Fund that during normal market conditions the
Fund's assets be invested so that at least 80% of the Fund's annual
income will be tax-exempt.
When-Issued Purchases
Securities purchased on a when-issued basis and the securities
held in the Fund's Portfolios are subject to changes in market value
based upon the public's perception of the creditworthiness of the issuer
and changes in the level of interest rates (which will generally result
in both changing in value in the same way, i.e., both experiencing
appreciation when interest rates decline and depreciation when interest
rates rise). Therefore, if in order to achieve higher interest income,
the Fund remains substantially fully invested at the same time that it
has purchased securities on a when-issued basis, there will be a greater
possibility that the market value of the Fund's assets may vary. No new
when-issued commitments will be made by a Portfolio if more than 50% of
that Portfolio's net assets would become so committed.
When the time comes to pay for when-issued securities, the Fund
will meet its obligations from then available cash flow, sale of
securities or, although it would not normally expect to do so, from sale
of the when-issued securities themselves (which may have a market value
greater or less than the Fund's payment obligation). Sale of securities
to meet such obligations carries with it a greater potential for the
realization of capital losses and capital gains which are not exempt
from federal income tax.
==========================================================================
INVESTMENT RESTRICTIONS
==========================================================================
The foregoing investment objective and policies and the
following investment restrictions and fundamental policies may not be
changed without the consent of the holders of a majority of the Fund's
outstanding shares, including a majority of the shares of each
Portfolio. Shares have equal rights as to voting, except that only
shares of a Portfolio are entitled to vote on matters affecting only
that Portfolio (such as changes in investment objective, policies or
restrictions). A majority of the shares means the lesser of (i) 67% of
the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the
outstanding shares. Neither Portfolio may:
(1) Purchase common stocks, preferred stocks, warrants,
or other equity securities;
<PAGE>
(2) Issue senior securities, borrow money, or pledge,
mortgage, or hypothecate its assets, except as may be
necessary to secure borrowings from banks for temporary
or emergency (not leveraging) purposes and then in an
amount not greater than 10% of the value of the
Portfolio's total assets at the time of the borrowing.
Investment securities will not be purchased while any
borrowings are outstanding;
(3) Sell securities short, purchase securities on
margin, or write put or call options. The Fund reserves
the right to purchase securities with puts attached.
See "Obligations with Puts Attached";
(4) Underwrite the securities of other issuers, except
to the extent that the purchase of municipal
obligations in accordance with the Fund's investment
objective and policies, either directly from the
issuer, or from an underwriter for an issuer, may be
deemed an underwriting;
(5) Purchase securities which are subject to legal or
contractual restrictions on resale, i.e., restricted
securities, or other securities which are not readily
marketable assets, including repurchase agreements not
terminable within seven days, with respect to no more
than 10% of its total assets;
(6) Purchase or sell real estate, real estate
investment trust securities, commodities, or commodity
contracts, or oil and gas interests, but this shall not
prevent the Fund from investing in municipal
obligations secured by real estate or interests therein;
(7) Purchase or retain securities of an issuer if those
trustees of the Fund, each of whom owns more than 1/2
of 1% of the outstanding securities of such issuer,
together own more than 5% of such outstanding
securities;
(8) Make loans to others, except in accordance with the
Fund's investment objective and policies or pursuant to
contracts providing for the compensation of service
providers by compensating balances;
(9) Invest in companies for the purpose of exercising
control; or invest in securities of other investment
companies, except as they may be acquired as part of a
merger, consolidation or acquisition of assets, or in
connection with a trustee's/director's deferred
compensation plan, as long as there is no duplication
of advisory fees;
(10) Invest more than 25% of its assets in the
securities of any one issuer or of issuers located
within the same state, except that each Portfolio may
invest more than 25% of its assets in obligations
issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. For purposes of this
limitation, the entity which has the ultimate
responsibility for the payment of principal and
interest on a particular security will be treated as
its issuer;
(11) Invest more than 25% of its assets in any
particular industry or industries, except that either
Portfolio may invest more than 25% of its assets in
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Industrial development bonds, where the payment of
principal and interest is the responsibility of
companies within the same industry, are grouped
together as an "industry";
(12) Invest more than 5% of the value of its total
assets in securities where the payment of principal and
interest is the responsibility of a company or
companies with less than three years' operating history.
==========================================================================
PURCHASES AND REDEMPTIONS OF SHARES
==========================================================================
Share certificates will not be issued unless requested in
writing by the investor. No charge will be made for share certificate
requests. No certificates will be issued for fractional shares.
Draft writing is available for the Money Market Portfolio.
Shareholders wishing to use the draft writing service should complete
the signature card enclosed with the Investment Application. This
service will be subject to the customary rules and regulations governing
checking accounts, and the Portfolio reserves the right to change or
suspend the service. Generally, there is no charge to you for the
maintenance of this service or the clearance of drafts, but the
Portfolio reserves the right to charge a service fee for drafts returned
for insufficient funds. 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 account from any other of your
identically registered accounts in Calvert money market funds or Calvert
Insured Plus. The Portfolio may charge a fee for this service.
Drafts presented to the Custodian for payment which would
require the redemption of shares purchased by check or electronic funds
transfer within the previous 10 business days will not be honored.
When a payable through draft ("check") is presented for
payment, a sufficient number of full and fractional shares from the
shareholder's account to cover the amount of the draft will be redeemed
at the net asset value next determined. If there are insufficient shares
in the shareholder's account, the draft will be returned.
To change redemption instructions already given, shareholders
must send a written notice to Calvert Group, c/o NFDS, 6th Floor, 1004
Baltimore, Kansas City, MO 64105, with a voided copy of a check for the
bank wiring instructions to be added. If a voided check does not
accompany the request, then the request must be signature guaranteed by
a commercial bank, savings and loan association, trust company, member
firm of any national securities exchange, or credit union. Further
documentation may be required from corporations, fiduciaries, and
institutional investors.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is
closed (other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency exists, as
determined by the SEC, or if the Commission has ordered such a
suspension for the protection of shareholders. Redemption proceeds are
normally mailed or wired the next business day after a proper redemption
request has been received, unless redemptions have been suspended or
postponed as described above.
Redemption proceeds are normally paid in cash. However, the
Portfolio has the right to redeem shares in assets other than cash for
redemption amounts exceeding, in any 90-day period, $250,000 or 1% of
the net asset value of the Portfolio, whichever is less.
<PAGE>
==========================================================================
REDUCED SALES CHARGES (CLASS A)
==========================================================================
The Limited-Term Portfolio imposes reduced sales charges for
Class A shares in certain situations in which the Principal Underwriter
(which offers the Portfolio's shares continuously and on a "best
efforts" basis) and the dealers selling Limited-Term Portfolio shares
may expect to realize significant economies of scale with respect to
such sales. Generally, sales costs do not increase in proportion to the
dollar amount of the shares sold; the per-dollar transaction cost for a
sale to an investor of shares worth, say, $5,000 is generally much
higher than the per-dollar cost for a sale of shares worth $1,000,000.
Thus, the applicable sales charge declines as a percentage of the dollar
amount of shares sold as the dollar amount increases.
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter of
Intent, the Underwriter and selling dealers can expect to realize the
economies of scale applicable to that stated goal amount. Thus the
Portfolio imposes the sales charge applicable to the goal amount.
Similarly, the Underwriter and selling dealers also experience cost
savings when dealing with existing Portfolio shareholders, enabling the
Portfolio to afford existing shareholders the Right of Accumulation. The
Underwriter and selling dealers can also expect to realize economies of
scale when making sales to the members of certain qualified groups which
agree to facilitate distribution of Portfolio shares to their members.
See "Exhibit A - Reduced Sales Charges" in the Limited-Term Prospectus.
==========================================================================
DIVIDENDS AND DISTRIBUTIONS
==========================================================================
The Money Market Portfolio declares daily and pays monthly
dividends of its daily net income to shareholders of record as of the
close of business each business day, thus allowing daily compounding of
dividends. The Limited-Term Portfolio declares and pays monthly
dividends of its net income to shareholders of record as of the close of
business on each designated monthly record date. Dividends and
distributions paid by the Limited-Term Portfolio may differ among the
classes. Net investment income consists of the interest income earned on
investments (adjusted for amortization of original issue discounts or
premiums or market premiums), less estimated expenses. Capital gains, if
any, are normally paid once a year and will be automatically reinvested
at net asset value in additional shares. Dividends and any distributions
are automatically reinvested in additional shares of the Fund, unless
you elect to have the dividends of $10 or more paid in cash (by check or
by Calvert Money Controller). You may also request to have your
dividends and distributions from the Portfolio invested in shares of any
other Calvert Group Fund, subject to the applicable sales charge for
that Fund or Portfolio. 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.
Purchasers of shares of the Money Market Portfolio will begin
receiving dividends upon the date federal funds are received by the
Fund. Purchases by bank wire received by 12:30 p.m., Eastern time are
immediately available federal funds; purchases by domestic check may
take one day to convert into federal funds for the Money Market
Portfolio. Shareholders redeeming shares by telephone electronic funds
transfer or written request will receive dividends through the date that
the redemption request is received; Money Market Portfolio shareholders
redeeming shares by draft will receive dividends up to the date such
draft is presented to the Portfolio for payment.
==========================================================================
TAX MATTERS
==========================================================================
In 1995 the Portfolios did qualify and in 1996 the Portfolios
intend to qualify as a "regulated investment company" under Subchapter M
of the Internal Revenue Code as amended (the "Code"). By so qualifying,
the Fund will not be subject to federal income tax, nor to the federal
excise tax imposed by the Tax Reform Act of 1986 (the "Act"), to the
extent that it distributes its net investment income and realized
capital gains.
The Portfolio's dividends of net investment income constitute
exempt-interest dividends on which shareholders are not generally
subject to federal income tax; however under the Act, dividends
attributable to interest on certain private activity bonds must be
included in federal alternative minimum taxable income for the purpose
of determining liability (if any) for individuals and for corporations.
Each Portfolio's dividends derived from taxable interest and
distributions of net short-term capital gains, whether taken in cash or
reinvested in additional shares, are taxable to shareholders as ordinary
income and do not qualify for the dividends received deduction for
corporations.
<PAGE>
A shareholder may also be subject to state and local taxes on
dividends and distributions from the Fund. The Fund will notify
shareholders annually about the federal tax status of dividends and
distributions paid by the Fund and the amount of dividends withheld, if
any, during the previous year.
The Code provides that interest on indebtedness incurred or
continued in order to purchase or carry shares of a regulated investment
company which distributes exempt-interest dividends during the year is
not deductible. Furthermore, entities or persons who are "substantial
users" (or persons related to "substantial users") of facilities
financed by private activity bonds should consult their tax advisors
before purchasing shares of the Fund. "Substantial user" is generally
defined as including a "non-exempt person" who regularly uses in trade
or business a part of a facility financed from the proceeds of private
activity bonds.
Investors should note that the Code may require investors to
exclude the initial sales charge, if any, paid on the purchase of
Limited-Term Portfolio shares from the tax basis of those shares if the
shares are exchanged for shares of another Calvert Group Fund within 90
days of purchase. This requirement applies only to the extent that the
payment of the original sales charge on the shares of the Portfolio
causes a reduction in the sales charge otherwise payable on the shares
of the Calvert Group Fund acquired in the exchange, and investors may
treat sales charges excluded from the basis of the original sales as
incurred to acquire the new shares.
The Fund is required to withhold 31% of any long-term capital
gain dividends and 31% of each redemption transaction occurring in the
Limited-Term Portfolio if: (a) the shareholder's social security number
or other taxpayer identification number ("TIN") is not provided or an
obviously incorrect TIN is provided; (b) the shareholder does not
certify under penalties of perjury that the TIN provided is the
shareholder's correct TIN and that the shareholder is not subject to
backup withholding under section 3406(a)(1)(C) of the Code because of
underreporting (however, failure to provide certification as to the
application of section 3406(a)(1)(C) will result only in backup
withholding on capital gain dividends, not on redemptions); or (c) the
Fund is notified by the Internal Revenue Service that the TIN provided
by the shareholder is incorrect or that there has been underreporting of
interest or dividends by the shareholder. Affected shareholders will
receive statements at least annually specifying the amount withheld.
In addition, the Limited-Term Portfolio is required to report
to the Internal Revenue Service the following information with respect
to redemption transactions in the Portfolio: (a) the shareholder's name,
address, account number and taxpayer identification number; (b) the
total dollar value of the redemptions; and (c) the Portfolio's
identifying CUSIP number.
Certain shareholders are, however, exempt from the backup
withholding and broker reporting requirements. Exempt shareholders
include: corporations; financial institutions; tax-exempt organizations;
individual retirement plans; the U.S., a State, the District of
Columbia, a U.S. possession, a foreign government, an international
organization, or any political subdivision, agency, or instrumentality
of any of the foregoing; U.S. registered commodities or securities
dealers; real estate investment trusts; registered investment companies;
bank common trust funds; certain charitable trusts; and foreign central
banks of issue. Non-resident aliens also are generally not subject to
either requirement but, along with certain foreign partnerships and
foreign corporations, may instead be subject to withholding under
section 1441 of the Code. Shareholders claiming exemption from backup
withholding and broker reporting should call or write the Fund for
further information.
==========================================================================
VALUATION OF SHARES
==========================================================================
Money Market Portfolio
The Money Market Portfolio's assets, including commitments to
purchase securities on a when-issued basis, are normally valued at their
amortized cost, which does not take into account unrealized capital
gains or losses. This involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty
in valuation, it may result in periods during which value, as determined
by amortized cost, is higher or lower than the price that would be
received upon sale of the instrument. During periods of declining
interest rates, the daily yield on shares of the Money Market Portfolio
may tend to be higher than a like computation made by a fund with
identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by the Money Market
Portfolio resulted in a lower aggregate portfolio value on a particular
day, a prospective investor in the Portfolio would be able to obtain a
somewhat higher yield than would result from investment in a fund
utilizing solely market values, and existing investors in the Portfolio
would receive less investment income. The converse would apply in a
period of rising interest rates.
Rule 2a-7 under the Investment Company Act of 1940 permits the
Fund to value the assets of the Money Market Portfolio at amortized cost
if the Money Market Portfolio maintains a dollar-weighted average
maturity of 90 days or less and only purchases obligations having
remaining maturities of one year or less. Rule 2a-7 requires, as a
condition of its use, that the Money Market Portfolio invest only in
obligations determined by the Trustees to be of high quality with
minimal credit risks and further requires the Trustees to establish
procedures designed to stabilize, to the extent reasonably possible, the
Portfolio's price per share as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of the Portfolio's
investment holdings by the Trustees, at such intervals as they may deem
appropriate, to determine whether the Portfolio's net asset value
calculated by using available market quotations or equivalents deviates
from $1.00 per share based on amortized cost. If such deviation exceeds
0.50%, the Trustees will promptly consider what action, if any, will be
initiated. In the event the Trustees determine that a deviation exists
which may result in material dilution or other unfair results to
investors or existing shareholders, the Trustees will take such
corrective action as they regard as necessary and appropriate,
including: the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; the withholding of dividends or payment of distributions from
capital or capital gains; redemptions of shares in kind; or the
establishment of a net asset value per share based on available market
quotations.
<PAGE>
Limited-Term Portfolio
The Limited-Term Portfolio's assets are valued, utilizing the
average bid dealer market quotation as furnished by an independent
pricing service. Securities and other assets for which market quotations
are not readily available are valued based on the current market for
similar securities or assets, as determined in good faith by the Fund's
Advisor under the supervision of the Board of Trustees.
Valuations, market quotations and market equivalents are
provided the Portfolio by Kenny S&P Evaluation Services, a subsidiary of
McGraw-Hill. The use of Kenny as a pricing service by the Portfolio has
been approved by the Board of Trustees. Valuations provided by Kenny are
determined without exclusive reliance on quoted prices and take into
consideration appropriate factors such as institution-size trading in
similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics, and other market data.
Each Portfolio determines the net asset value of its shares
every business day at the close of the regular session of the New York
Stock Exchange (generally, 4:00 p.m. Eastern time), and at such other
times as may be necessary or appropriate. The Portfolios do not
determine net asset value on certain national holidays or other days on
which the New York Stock Exchange is closed: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
Net Asset Value and Offering Price Per Share
Money Market Portfolio
Class O ($1,740,838,877/1,740,947,970 shares) $1.00
Class MMP ($41,735,534/41,731,660 shares) $1.00
Limited-Term Portfolio
Class A net asset value per share
($457,706,997/42,689,940 shares) $10.72
Maximum sales charge
(2.00% of Class A offering price) 0.22
Offering price per Class A share $10.94
Class C net asset value and offering price per share
($30,056,626/2,813,640 shares) $10.68
==========================================================================
CALCULATION OF YIELD AND TOTAL RETURN
==========================================================================
Money Market Portfolio
From time to time the Money Market Portfolio advertises its
"yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance.
Yield is calculated separately by class. The "yield" of the Money Market
Portfolio refers to the income generated by an investment in the
Portfolio over a particular base period of time. The length and closing
date of the base period will be stated in the advertisement. If the base
period is less than one year, the yield is then "annualized." That is,
the net change, exclusive of capital changes, in the value of a share
during the base period is divided by the net asset value per share at
the beginning of the period, and the result is multiplied by 365 and
divided by the number of days in the base period. Capital changes
excluded from the calculation of yield are: (1) realized gains and
losses from the sale of securities, and (2) unrealized appreciation and
depreciation. The Money Market Portfolio's "effective yield" for a
seven-day period is its annualized compounded yield during the period
calculated according to the following formula:
Effective yield = (base period return + 1)365/7 - 1
For the seven-day period ended December 29, 1995, the Money Market
Portfolio's yield for Class O shares was 4.76% and its effective yield
was 4.87%. For the seven-day period ended December 29, 1995, the Money
Market Portfolio's yield for Class MMP shares was 4.18% and its
effective yield was 4.26%.
The Money Market Portfolio also may advertise, from time to
time, its "tax equivalent yield." The tax equivalent yield is the yield
an investor would be required to obtain from taxable investments to
equal the Portfolio's yield, all or a portion of which may be exempt
from federal income taxes. The tax equivalent yield is computed by
taking the portion of the Portfolio's effective yield exempt from
regular federal income tax and multiplying the exempt yield by a factor
based upon a stated income tax rate, then adding the portion of the
yield that is not exempt from regular federal income tax. The factor
which is used to calculate the tax equivalent yield is the reciprocal of
the difference between 1 and the applicable income tax rate, which will
be stated in the advertisement. For the seven-day period ended December
29, 1995, the Money Market Portfolio's Class O tax equivalent yield, for
an investor in the 36% federal income tax bracket was 7.60% and, for the
39.6% federal income tax bracket, 8.10%. For the seven-day period ended
December 29, 1995, the Money Market Portfolio's Class MMP tax equivalent
yield, for an investor in the 36% federal income tax bracket was 6.65%
and, for the 39.6% federal income tax bracket, 7.08%.
<PAGE>
Limited-Term Portfolio
From time to time, the Limited-Term Portfolio advertises its
"total return." Total return is calculated separately for each class.
Total return is historical in nature and is not intended to indicate
future performance. Total return will be quoted for the most recent
one-year period, five-year period, and period from inception of the
Portfolio's offering of shares. Total return quotations for periods in
excess of one year represent the average annual total return for the
period included in the particular quotation. Total return is a
computation of the Portfolio's dividend yield, plus or minus realized or
unrealized capital appreciation or depreciation, less fees and expenses.
All total return quotations reflect the deduction of the Portfolio's
maximum sales charge for Class A shares, except quotations of "return
without maximum load" which do not deduct the sales charge and "actual
return," which reflect deduction of the sales charge only for those
periods when a sales charge was actually imposed. Thus, in the formula
below, for return without maximum load, P = the entire $1,000
hypothetical initial investment and does not reflect the deduction of
any sales charge; for actual return, P = a hypothetical initial payment
of $1,000. Note: "Total Return" as quoted in the Financial Highlights
section of the Fund's Prospectus and Annual Report to Shareholders, per
SEC instructions, does not reflect deduction of the sales charge, and
corresponds to "return without maximum load" as referred to herein.
Return without maximum load should be considered only by investors, such
as participants in certain pension plans, to whom the sales charge does
not apply, or for purposes of comparison only with comparable figures
which also do not reflect sales charges, such as Lipper averages. Total
return is computed according to the following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $1,000; T = total return; n
= number of years; and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the 1, 5 or 10 year
periods at the end of such periods (or portions thereof, if applicable).
Returns for the periods indicated are as follows:
Class A Shares Class A Shares Class C Shares
With Max. Load W/O Max. Load
One Year 3.40% 5.55% 4.86%
Five Years 4.25% 4.68% N/A
Ten Years 5.37% 5.58% N/A
From Inception N/A N/A 3.42%(March 1, 1994)
The Limited-Term Portfolio also advertises, from time to time,
its "yield" and "tax equivalent yield." As with total return, both yield
figures are historical and are not intended to indicate future
performance.
Unlike the yield quotations for the Money Market Portfolio,
"yield" quotations for each class of the Limited-Term Portfolio refer to
the aggregate imputed yield-to-maturity of each of the Portfolio's
investments based on the market value as of the last day of a given
thirty-day or one-month period less accrued expenses (net of
reimbursement), divided by the average daily number of outstanding
shares entitled to receive dividends times the maximum offering price on
the last day of the period (so that the effect of the sales charge is
included in the calculation), compounded on a "bond equivalent," or
semi-annual, basis. The Limited-Term Portfolio's yield is computed
according to the following formula:
Yield = 2[(+1)6 - 1]
where a = dividends and interest earned during the period; b = expenses
accrued for the period (net of reimbursement); c = the average daily
number of shares outstanding during the period that were entitled to
receive dividends; and d = the maximum offering price per share on the
last day of the period.
<PAGE>
The tax equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal the Limited-Term
Portfolio's yield, all or a portion of which may be exempt from federal
income taxes. The tax equivalent yield is computed for each class by
taking the portion of the yield exempt from regular federal income tax
and multiplying the exempt yield by a factor based upon a stated income
tax rate, then adding the portion of the yield that is not exempt from
regular federal income tax. The factor which is used to calculate the
tax equivalent yield is the reciprocal of the difference between 1 and
the applicable income tax rate, which will be stated in the
advertisement. For the thirty-day period ended December 31, 1995, the
Portfolio's yield for Class A Shares was 4.16% and its tax equivalent
yield was 6.50% for an investor in the 36% federal income tax bracket,
and 6.92% for an investor in the 39.6% federal income tax bracket. For
the same period. the yield for Class C Shares was 3.63% and its tax
equivalent yield was 5.67% for an investor in the 36% federal income tax
bracket and 6.03% for an investor in the 39.6% federal income tax
bracket.
==========================================================================
ADVERTISING
==========================================================================
The Fund or its affiliates may provide information such as, but
not limited to, the economy, investment climate, investment principles,
sociological conditions and political ambiance. Discussion may include
hypothetical scenarios or lists of relevant factors designed to aid the
investor in determining whether the Fund is compatible with the
investor's goals. The Fund may list portfolio holdings or give examples
or securities that may have been considered for inclusion in the
Portfolio, whether held or not.
The Fund or its affiliates may supply comparative performance
data and rankings from independent sources such as Donoghue's Money Fund
Report, Bank Rate Monitor, Money, Forbes, Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Wiesenberger Investment
Companies Service, Russell 2000/Small Stock Index, Mutual Fund Values
Morningstar Ratings, Mutual Fund Forecaster, Barron's, The Wall Street
Journal, and Schabacker Investment Management, Inc. Such averages
generally do not reflect any front- or back-end sales charges that may
be charged by Funds in that grouping. The Fund may also cite to any
source, whether in print or on-line, such as Bloomberg, in order to
acknowledge origin of information. The Fund may compare itself or its
portfolio holdings to other investments, whether or not issued or
regulated by the securities industry, including, but not limited to,
certificates of deposit and Treasury notes. The Fund, its Advisor, and
its affiliates reserve the right to update performance rankings as new
rankings become available.
==========================================================================
TRUSTEES AND OFFICERS
==========================================================================
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Director of
Finance for the Family Health Council, Inc. in Pittsburgh, Pennsylvania,
a non-profit corporation which provides family planning services,
nutrition, maternal/child health care, and various health screening
services. Mr. Baird is a trustee/director of each of the investment
companies in the Calvert Group of Funds, except for Acacia Capital
Corporation, Calvert New World Fund and Calvert World Values Fund. Age:
47. Address: 211 Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in
the law firm of Snevily, Ely, Williams, Gurrieri & Blatz. He was
formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
Age: 59. Address: 308 East Broad Street, PO Box 2007, Westfield, New
Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist
with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem
Medical Imaging in Allentown, Pennsylvania. Age: 46. Address: 2040
Nuuanu Avenue #1805, Honolulu, Hawaii, 96817.
1 CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and
Treasurer Emeritus of the George Washington University, and has retired
from University Support Services, Inc. of Herndon, Virginia. He is also
a Director of Acacia Mutual Life Insurance Company. Age: 73. Address:
1658 Quail Hollow Court, McLean, Virginia 22101.
<PAGE>
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices head
and neck reconstructive surgery in the Washington, D.C., metropolitan
area. Age: 47. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian was a principal of
Gavian De Vaux Associates, an investment banking firm. He continues to
be President of with Corporate Finance of Washington, Inc. Age: 63.
Address: 3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial consultant
to various organizations. In addition, he is a Director of the Community
Bankers Mutual Fund of Denver, Colorado, and the Treasurer and Director
of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey is a
trustee/director of each of the other investment companies in the
Calvert Group of Funds, except for Acacia Capital Corporation and
Calvert New World Fund. Age: 47. Address: 7205 Pomander Lane, Chevy
Chase, Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of
Acacia Federal Savings Bank. Age: 58. Address: 4823 Prestwick Drive,
Fairfax, Virginia 22030.
1 DAVID R. ROCHAT, Senior Vice President and Trustee. Mr.
Rochat is Executive Vice President of Calvert Asset Management Company,
Inc., Director and Secretary of Grady, Berwald and Co., Inc., and
Director and President of Chelsea Securities, Inc. Age: 58. Address: Box
93, Chelsea, Vermont 05038.
1 D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Acacia Capital Corporation and Calvert New
World Fund. Mr. Silby is an officer, director and shareholder of Silby,
Guffey & Company, Inc., which serves as general partner of Calvert
Social Venture Partners ("CSVP"). CSVP is a venture capital firm
investing in socially responsible small companies. He is also a Director
of Acacia Mutual Life Insurance Company. Age: 47. Address: 1715 18th
Street, N.W., Washington, D.C. 20009.
1 CLIFTON S. SORRELL, JR., President and Trustee. Mr. Sorrell
serves as President, Chief Executive Officer and Vice Chairman of
Calvert Group, Ltd. and as an officer and director of each of its
affiliated companies. He is a director of Calvert-Sloan Advisers,
L.L.C., and a trustee/director of each of the investment companies in
the Calvert Group of Funds. Age: 54.
1 RENO J. MARTINI, Senior Vice President. Mr. Martini is a
director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset Management
Company, Inc. Mr. Martini is also a director and President of
Calvert-Sloan Advisers, L.L.C., and a director and officer of Calvert
New World Fund. Age: 46.
1 RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is
Senior Vice President and Controller of Calvert Group, Ltd. and its
subsidiaries and an officer of each of the other investment companies in
the Calvert Group of Funds. Mr. Wolfsheimer is Vice President and
Treasurer of Calvert-Sloan Advisers, L.L.C., and a director of Calvert
Distributors, Inc. Age: 43.
1 WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant
Secretary. Mr. Tartikoff is an officer of each of the investment
companies in the Calvert Group of Funds, and is Senior Vice President,
Secretary, and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company. Age:
48.
1 EVELYNE S. STEWARD, Vice President. Ms. Steward is a director
and Senior Vice President of Calvert Group, Ltd., and a director of
Calvert-Sloan Advisers, L.L.C. She is the sister of Philip J. Schewetti,
the portfolio manager of the CSIF Equity Portfolio. Age: 43.
1 DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc., and is an officer of each of
the other investment companies in the Calvert Group of Funds, except for
Calvert New World Fund, Inc. Age: 45.
1 SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds. Age: 37.
___________
1Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of their affiliation
with the Fund's Advisor.
<PAGE>
Each of the above named trustees and officers is a trustee or
officer of each of the investment companies in the Calvert Group of
Funds with the exception of Calvert Social Investment Fund, of which
only Messrs. Baird, Guffey, Silby and Sorrell are among the Trustees,
Acacia Capital Corporation, of which only Messrs. Sorrell, Blatz, Diehl
and Pugh are among the Directors, Calvert World Values Fund, Inc., of
which only Messrs. Guffey, Silby, and Sorrell are among the Directors,
and Calvert New World Fund, Inc., of which only Messrs. Martini and
Sorrell are among the Directors. The address of Trustees and Officers,
unless otherwise noted, is 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814. Trustees and Officers as a group own less than
1% of the Portfolio's outstanding shares.
The Board's Audit Committee is composed of Messrs. Baird,
Blatz, Feldman, Guffey and Pugh. The Investment Policy Committee is
composed of Messrs. Borts, Diehl, Gavian, Rochat, Silby and Sorrell.
During 1995, Trustees of the Fund not affiliated with the
Fund's Advisor were paid $144,818 and $47,615 by the Money Market and
Limited-Term Portfolios, respectively. Trustees of the Fund not
affiliated with the Advisor currently receive an annual fee of $20,250
for service as a member of the Board of Trustees of the Calvert Group of
Funds plus a fee of $750 to $1200 for each Board and Committee meeting
attended; such fees are allocated among the Funds on the basis of their
net assets.
Trustees of the Fund not affiliated with the Fund's Advisor may
elect to defer receipt of all or a percentage of their fees and invest
them in any fund in the Calvert Family of Funds through the Trustees
Deferred Compensation Plan (shown as "Pension or Retirement Benefits
Accrued as part of Fund Expenses," below). Deferral of the fees is
designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees.
<TABLE>
<CAPTION>
Trustee Compensation Table
Aggregate Pension or Total Compensation
Fiscal Year 1995 Compensation Retirement Benefits from Registrant and
(unaudited numbers) from Registrant Accrued as part Fund Complex
for service of Registrant paid to Trustees<F2>
Name of Trustee as Trustee Expenses<F1>
<S> <C> <C> <C>
Richard L. Baird, Jr. $25,831 $0 $33,450
Frank H. Blatz, Jr. $26,042 $26,042 $36,801
Frederick T. Borts $20,135 $0 $25,050
Charles E. Diehl $25,058 $25,058 $35,101
Douglas E. Feldman $24,494 $0 $30,600
Peter W. Gavian $24,862 $7,458 $31,951
John G. Guffey, Jr. $24,861 $0 $40,450
Arthur J. Pugh $26,792 $0 $36,801
D. Wayne Silby $23,878 $0 $47,965
<FN>
<F1>Messrs. Blatz, Diehl, Gavian, and Pugh have chosen to defer a portion
of their compensation. As of December 31, 1995, total deferred
compensation, including dividends and capital appreciation, was
$415,719, $337,395, $89,054, and $150,841, for each trustee,
respectively.
<F2> As of December 31, 1995. The Fund Complex consists of eight (8)
registered investment companies.
</FN>
</TABLE>
<PAGE>
==========================================================================
INVESTMENT ADVISOR
==========================================================================
The Fund's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, a subsidiary of Calvert Group, Ltd., which is a subsidiary of
Acacia Mutual Life Insurance Company of Washington, D.C. ("Acacia
Mutual").
The Advisory Contract between the Fund and the Advisor will
remain in effect indefinitely, provided continuance is approved at least
annually by the vote of the holders of a majority of the outstanding
shares of the Fund, or by the Trustees of the Fund; and further provided
that such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to the Contract
or interested persons of such parties, cast in person at a meeting
called for the purpose of voting on such approval. The Contract may be
terminated without penalty by either party on 60 days' prior written
notice; it automatically terminates in the event of its assignment.
Under the Contract, the Advisor manages the investment and
reinvestment of the Fund's assets, subject to the direction and control
of the Fund's Board of Trustees. For its services, the Advisor receives
an annual fee of:
i) with respect to the Money Market Portfolio, 0.50% of the
first $500 million of such Portfolio's average daily net assets, 0.45%
of the next $500 million of such assets, and 0.40% of all such assets
over $1 billion; and
ii) with respect to the Limited-Term Portfolio, 0.60% of the
first $500 million of the Portfolio's average daily net assets, 0.50% of
the next $500 million of such assets, and 0.40% of all such assets over
$1 billion.
The advisory fee is payable monthly. The Advisor reserves the
right (i) to waive all or a part of its fee and (ii) to compensate, at
its expense, broker-dealers in consideration of their promotional and
administrative services.
The Advisor provides the Fund with investment advice and
research, pays the salaries and fees of all Trustees and executive
officers of the Fund who are principals of the Advisor, and pays certain
Fund advertising and promotional expenses. The Fund pays all other
administrative and operating expenses, including: custodial fees;
shareholder servicing, dividend disbursing and transfer agency fees;
administrative service fees; federal and state securities registration
fees; insurance premiums; trade association dues; interest, taxes and
other business fees; legal and audit fees; and brokerage commissions and
other costs associated with the purchase and sale of portfolio
securities.
The Advisor has agreed to reimburse the Money Market and
Limited-Term Portfolios for all expenses, excluding brokerage, taxes,
interest, and extraordinary items exceeding, on a pro rata basis, the
most restrictive expense limitation of those states in which the
Portfolios' shares are qualified for sale (currently, 2.50% of the first
$30 million of the Portfolio's average net assets, 2.0% of the next $70
million, and 1.50% of all such assets in excess of $100 million). The
advisory fees paid by the Money Market Portfolio to Calvert Asset
Management Company were $7,093,465, $6,636,334, and $7,481,925 for years
1993, 1994, and 1995, respectively. The advisory fees paid by the
Limited-Term Portfolio to Calvert Asset Management Company were
$3,527,101, $3,863,616, and $3,149,849 for years 1993, 1994, and 1995,
respectively.
==========================================================================
ADMINISTRATIVE SERVICES
==========================================================================
Calvert Shareholder Services, Inc., a wholly-owned subsidiary
of Calvert Group, Ltd., has been retained by the Fund to act as transfer
agent, dividend disbursing agent and shareholder servicing agent. These
responsibilities include: responding to shareholder inquiries and
instructions concerning their accounts; crediting and debiting
shareholder accounts for purchases and redemptions of Fund shares and
confirming such transactions; daily updating of shareholder accounts to
reflect declaration and payment of dividends; and preparing and
distributing quarterly statements to shareholders regarding their
accounts. For such services, Calvert Shareholder Services, Inc.,
receives compensation based on the number of shareholder accounts and
the number of transactions.
Calvert Administrative Services Company, a wholly-owned
subsidiary of Calvert Group, Ltd., has been retained by the Fund to
provide certain administrative services necessary to the conduct of the
Fund's affairs. Such services include the preparation of corporate and
regulatory reports and filings, portfolio accounting, and the daily
determination of net investment income and net asset value per share.
Calvert Administrative Services Company receives a fee of $200,000 per
year for providing such services, allocated among Portfolios based on
assets. The service fees paid by the Money Market Portfolio to Calvert
Administrative Services Company were $115,912, $110,396, $124,836 for
years 1993, 1994, and 1995, respectively. The service fees paid by the
Limited-Term Portfolio to Calvert Administrative Services Company were
$44,251, $50,942, and $39,445 for years 1993, 1994, and 1995,
respectively.
<PAGE>
==========================================================================
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
==========================================================================
Coopers & Lybrand, L.L.P. has been selected by the Board of
Trustees to serve as independent accountants for fiscal year 1996. State
Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, MA
02110, currently serves as custodian of the Portfolio's investments.
First National Bank of Maryland, 25 South Charles Street, Baltimore,
Maryland 21203 also serves as custodian of certain of the Portfolio's
cash assets. Neither custodian has any part in deciding the Portfolio's
investment policies or the choice of securities that are to be purchased
or sold for the Portfolio.
==========================================================================
METHOD OF DISTRIBUTION
==========================================================================
The Portfolios have entered into a principal underwriting
agreement with Calvert Distributors Inc. ("CDI"). Pursuant to the
agreement, CDI serves as distributor and principal underwriter for the
Portfolios. CDI bears all its expenses of providing services pursuant to
the agreement, including payment of any commissions and service fees.
CDI is entitled to receive, pursuant to the Money Market Portfolio's
Class MMP Shares Distribution Plan, a distribution service fee from the
Portfolio of 0.35% of the Class MMP Shares average daily net assets. CDI
is also entitled to receive a service fee and a distribution fee for
Class C shares, payable monthly pursuant to the Limited Term Portfolio's
Distribution Plan, of 0.25%, respectively, of the Portfolio's average
daily net assets. For the ten months ended December 31. 1995, the
Distribution Plan expenses totaled $168,467 for Class C Shares of the
Limited-Term Portfolio. CDI also receives all sales charges imposed on
Limited-Term Portfolio Class A shares and compensates broker-dealer
firms for sales of shares at a maximum commission rate of 1.50%, as
specified in the table of applicable sales charges (see "Alternative
Sales Options" in the Prospectus). For the fiscal years ended December
31, 1993, 1994, and 1995, CDI received sales charges in excess of the
dealer reallowance of $3,275, $0, and $10,900, respectively.
The Money Market Portfolio's Class MMP Shares Distribution Plan
and the Limited-Term Portfolio's Class C Distribution Plan were approved
by the Board of Trustees, including the Trustees who are not "interested
persons" of the Fund (as that term is defined in the Investment Company
Act of 1940) and who have no direct or indirect financial interest in
the operation of the Plans or in any agreements related to the Plans.
The selection and nomination of the Trustees who are not interested
persons of the Fund is committed to the discretion of such disinterested
Trustees. In establishing the Plans, the Trustees considered various
factors including the amount of the distribution fee. The Trustees
determined that there is a reasonable likelihood that the Plans will
benefit the Portfolios and its shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Trustees who have no direct or indirect financial
interest in the Plans, or by vote of a majority of the outstanding
shares of the Fund. Any change in the Plans that would materially
increase the distribution cost to the Fund requires approval of the
shareholders of the affected class; otherwise, the Plans may be amended
by the Trustees, including a majority of the non-interested Trustees as
described above.
The Plans will continue in effect indefinitely, if not sooner
terminated in accordance with its terms. Thereafter, the Plans will
continue in effect for successive one year periods provided that such
continuance is annually approved by (i) the vote of a majority of the
Trustees who are not parties to the Plans or interested persons of any
such party and who have no direct or indirect financial interest in the
Plans, and (ii) the vote of a majority of the entire Board of Trustees.
Apart from the Plans, the Advisor, at its expense, may incur
costs and pay expenses associated with the distribution of shares of the
Portfolios. The Portfolios paid no expenses pursuant to the Plans during
fiscal 1992, 1993, and 1994.
==========================================================================
PORTFOLIO TRANSACTIONS
==========================================================================
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and the
choice of brokers and dealers are made by the Fund's Advisor under the
direction and supervision of the Fund's Board of Trustees.
<PAGE>
For the fiscal years ended December 31, 1993, 1994, and 1995,
the portfolio turnover rates of the Limited-Term Portfolio were 14%,
27%, and 33%, respectively. Broker-dealers who execute portfolio
transactions on behalf of the Fund are selected on the basis of their
professional capability and the value and quality of their services. The
Advisor reserves the right to place orders for the purchase or sale of
portfolio securities with broker-dealers who have sold shares of the
Fund or who provide the Fund with statistical, research, or other
information and services. Although any statistical research or other
information and services provided by broker-dealers may be useful to the
Advisor, the dollar value of such information and services is generally
indeterminable, and its availability or receipt does not serve to
materially reduce the Advisor's normal research activities or expenses.
No brokerage commissions have been paid to any officer, trustee or
Advisory Council member of the Fund or any of their affiliates, or
broker-dealers for the years ended December 31, 1993, 1994, and 1995.
The Advisor may also execute portfolio transactions with or
through broker-dealers who have sold shares of the Fund. However, such
sales will not be a qualifying or disqualifying factor in a
broker-dealer's selection nor will the selection of any broker-dealer be
based on the volume of Fund shares sold. The Advisor may compensate, at
its expense, such broker-dealers in consideration of their promotional
and administrative services.
==========================================================================
GENERAL INFORMATION
==========================================================================
The Fund was organized as a Massachusetts business trust on
October 20, 1980. The other series of the Fund include the Long-Term
Portfolio, Money Management Plus Tax-Free Portfolio, California Money
Market Portfolio, New Jersey Money Market Portfolio, and the Vermont
Municipal Portfolio. The Fund's Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Fund.
The shareholders of a Massachusetts business trust might, however, under
certain circumstances, be held personally liable as partners for its
obligations. The Declaration of Trust provides for indemnification and
reimbursement of expenses out of Fund assets for any shareholder held
personally liable for obligations of the Fund. The Declaration of Trust
provides that the Fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Fund
and satisfy any judgment thereon. The Declaration of Trust further
provides that the Fund may maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection
of the Fund, its shareholders, Trustees, officers, employees, and agents
to cover possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which both inadequate insurance exists
and the Fund itself is unable to meet its obligations.
Each share of each series represents an equal proportionate
interest in that series with each other share and is entitled to such
dividends and distributions out of the income belonging to such series
as declared by the Board. The Portfolios offer two separate classes of
shares. The Money Market Portfolio offers Class O (offered in the
Calvert Tax-Free Reserves Money Market Prospectus) and Class MMP
(offered in the Calvert Tax-Free Reserves Money Market Prospectus Class
MMP). 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. Class A and
Class C is offered by the Limited-Term Portfolio. Each class represents
interests in the same portfolio of investments but, as further described
in the prospectus, each class is subject to differing sales charges and
expenses, which differences will result in differing net asset values
and distributions. Upon any liquidation of the Funds, shareholders of
each class are entitled to share pro rata in the net assets belonging to
that series available for distribution.
General costs, expenses, and liabilities of the Fund
attributable to a particular Portfolio are borne by that Portfolio;
costs, expenses, and liabilities not attributable to a particular
Portfolio are allocated between the Fund's Portfolios on the basis of
the respective net assets of each Portfolio.
The Portfolios will send their shareholders unaudited
semi-annual and audited annual reports that will include the Portfolios'
net asset value per share, portfolio securities, income and expenses,
and other financial information.
This Statement of Additional Information does not contain all
the information in the Fund's registration statement. The registration
statement is on file with the Securities and Exchange Commission and is
available to the public.
==========================================================================
FINANCIAL STATEMENTS
==========================================================================
The audited financial statements in the Portfolios' Annual
Report to Shareholders dated December 31, 1995, are expressly
incorporated by reference and made a part of this Statement of
Additional Information. A copy of the Annual Report may be obtained free
of charge by writing or calling the Portfolios.
<PAGE>
==========================================================================
APPENDIX
==========================================================================
Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for various
public purposes. Such purposes include the construction of a wide range
of public facilities, the refunding of outstanding obligations, the
obtaining of funds for general operating expenses, and the lending of
funds to other public institutions and facilities. In addition, certain
types of industrial development bonds are issued by or on behalf of
public authorities to obtain funds for many types of local, privately
operated facilities. Such debt instruments are considered municipal
obligations if the interest paid on them is exempt from federal income
tax in the opinion of bond counsel to the issuer. Although the interest
paid on the proceeds from private activity bonds used for the
construction, equipment, repair or improvement of privately operated
industrial or commercial facilities may be exempt from federal income
tax, current federal tax law places substantial limitations on the size
of such issues.
Municipal obligations are generally classified as either
"general obligation" or "revenue'' bonds. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable from
the revenues derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special excise tax or other
specific revenue source, but not from the general taxing power.
Tax-exempt industrial development bonds are in most cases revenue bonds
and do not generally carry the pledge of the credit of the issuing
municipality. There are, of course, variations in the security of
municipal obligations, both within a particular classification and among
classifications.
Municipal obligations are generally traded on the basis of a
quoted yield to maturity, and the price of the security is adjusted so
that relative to the stated rate of interest it will return the quoted
rate to the purchaser.
Short-term and limited-term municipal obligations include Tax
Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes,
Construction Loan Notes, and Discount Notes. The maturities of these
instruments at the time of issue generally will range between three
months and one year. Pre-Refunded Bonds with longer nominal maturities
that are due to be retired with the proceeds of an escrowed subsequent
issue at a date within one year and three years of the time of
acquisition are also considered short-term and limited-term municipal
obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other
short-term obligations are designated Moody's Investment Grade ("MIG").
This distinction is in recognition of the differences between short-term
credit risk and long-term risk.
MIG 1: Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market
for refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding
group.
MIG3: Notes bearing this designation are of favorable quality,
with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Market access for refinancing, in
particular, is likely to be less well established.
MIG4: Notes bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's
municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat larger than
in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which make the bond somewhat more susceptible to the adverse
effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in the
A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
<PAGE>
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the
Letter of Intent option on my Fund Account Application Form, I agree to
be bound by the terms and conditions applicable to Letters of Intent
appearing in the Prospectus and the Statement of Additional Information
for the Fund and the provisions described below as they may be amended
from time to time by the Fund. Such amendments will apply automatically
to existing Letters of Intent.
I intend to invest in the shares of: (Fund or Portfolio
name*) during the thirteen (13) month period from the date of my first
purchase pursuant to this Letter (which cannot be more than ninety (90)
days prior to the date of this Letter or my Fund Account Application
Form, whichever is applicable), an aggregate amount (excluding any
reinvestments of distributions) of at least fifty thousand dollars
($50,000) which, together with my current holdings of the Fund (at
public offering price on date of this Letter or my Fund Account
Application Form, whichever is applicable), will equal or exceed the
amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
Subject to the conditions specified below, including the terms
of escrow, to which I hereby agree, each purchase occurring after the
date of this Letter will be made at the public offering price applicable
to a single transaction of the dollar amount specified above, as
described in the Fund's prospectus. No portion of the sales charge
imposed on purchases made prior to the date of this Letter will be
refunded.
I am making no commitment to purchase shares, but if my
purchases within thirteen months from the date of my first purchase do
not aggregate the minimum amount specified above, I will pay the
increased amount of sales charges prescribed in the terms of escrow
described below. I understand that 4.75% of the minimum dollar amount
specified above will be held in escrow in the form of shares (computed
to the nearest full share). These shares will be held subject to the
terms of escrow described below.
From the initial purchase (or subsequent purchases if
necessary), 4.75% of the dollar amount specified in this Letter shall be
held in escrow in shares of the Fund by the Fund's transfer agent. For
example, if the minimum amount specified under the Letter is $50,000,
the escrow shall be shares valued in the amount of $2,375 (computed at
the public offering price adjusted for a $50,000 purchase). All
dividends and any capital gains distribution on the escrowed shares will
be credited to my account.
If the total minimum investment specified under the Letter is
completed within a thirteen month period, escrowed shares will be
promptly released to me. However, shares disposed of prior to completion
of the purchase requirement under the Letter will be deducted from the
amount required to complete the investment commitment.
Upon expiration of this Letter, the total purchases pursuant to
the Letter are less than the amount specified in the Letter as the
intended aggregate purchases, Calvert Distributors, Inc. ( "CDI") will
bill me for an amount equal to the difference between the lower load I
paid and the dollar amount of sales charges which I would have paid if
the total amount purchased had been made at a single time. If not paid
by the investor within 20 days, CDI will debit the difference from my
account. Full shares, if any, remaining in escrow after the
aforementioned adjustment will be released and, upon request, remitted
to me.
I irrevocably constitute and appoint CDI as my
attorney-in-fact, with full power of substitution, to surrender for
redemption any or all escrowed shares on the books of the Fund. This
power of attorney is coupled with an interest.
The commission allowed by Calvert Distributors, Inc. to the
broker-dealer named herein shall be at the rate applicable to the
minimum amount of my specified intended purchases.
<PAGE>
The Letter may be revised upward by me at any time during the
thirteen-month period, and such a revision will be treated as a new
Letter, except that the thirteen-month period during which the purchase
must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
In determining the total amount of purchases made hereunder,
shares disposed of prior to termination of this Letter will be deducted.
My broker-dealer shall refer to this Letter of Intent in placing any
future purchase orders for me while this Letter is in effect.
Dealer Name of Investor(s)
By
Authorized Signer Address
Date Signature of Investor(s)
Date Signature of Investor(s)
<PAGE>
Calvert Tax-Free Reserves
Long-Term Portfolio
Statement of Additional Information
April 30, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 5
Purchases and Redemptions of Shares 6
Reduced Sales Charges (Class A) 6
Dividends and Distributions 7
Tax Matters 8
Calculation of
Yield and Total Return 8
Advertising 9
Trustees and Officers 9
Investment Advisor 11
Administrative Services 12
Independent Accountants and Custodians 12
Method of Distribution 12
Portfolio Transactions 13
General Information 13
Financial Statements 13
Appendix 14
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1996
CALVERT TAX-FREE RESERVES
LONG-TERM PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
New Account (800) 368-2748 Shareholder (800) 368-2745
Information: (301) 951-4820 Services: (301) 951-4810
- --------------------------------------------------------------------------
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 Impaired: (800) 541-1524
==========================================================================
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in
conjunction with the Portfolio's Prospectus dated April 30, 1996, which
may be obtained free of charge by writing the Portfolio at the above
address or calling the Portfolio at the telephone numbers listed above.
==========================================================================
INVESTMENT OBJECTIVE
==========================================================================
The Long-Term Tax-Free Portfolio (the "Portfolio") is a series
of Calvert Tax-Free Reserves (the "Fund"). The Portfolio is designed to
provide individual and institutional investors in higher tax brackets
with 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. There is, of course, no assurance that the Portfolio will be
successful in meeting its investment objective because there are
inherent risks in the ownership of any investment.
Dividends paid by the Portfolio will fluctuate with income
earned on investments and will vary by class of shares. In addition, the
value of each class of the Portfolio's shares will fluctuate to reflect
changes in the market value of the Portfolio's investments. The
Portfolio will attempt, through careful management and diversification,
to reduce these risks and enhance the opportunities for higher income
and greater price stability.
==========================================================================
INVESTMENT POLICIES
==========================================================================
The Portfolio invests primarily in a diversified portfolio of
municipal obligations whose interest is exempt from federal income tax.
A complete explanation of municipal obligations and municipal bond and
note ratings is set forth in the Appendix.
The credit rating of the Portfolio's assets as of its most
recent fiscal year-end appears in the Annual Report to Shareholders,
incorporated by reference herein.
Variable Rate Demand Notes
The Board of Trustees has approved investments in floating and
variable rate demand notes upon the following conditions: the Portfolio
has right of demand, upon notice not to exceed thirty days, against the
issuer to receive payment; the issuer will be able to make payment upon
such demand, either from its own resources or through an unqualified
commitment from a third party; and the rate of interest payable is
calculated to ensure that the market value of such notes will
approximate par value on the adjustment dates. The remaining maturity of
such demand notes is deemed the period remaining until such time as the
Portfolio has the right to dispose of the notes at a price which
approximates par and market value.
Municipal Leases
The Portfolio may invest in municipal leases, or structured
instruments where the underlying security is a municipal lease. 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. The Portfolio may purchase unrated leases. The Fund's Advisor,
under the supervision of the Board of Trustees/Directors, is responsible
for determining the credit quality of such leases on an ongoing basis,
including an assessment of the likelihood that the lease will not be
canceled. Certain municipal leases may be considered illiquid and
subject to the Portfolio's limit on illiquid securities. The Board of
Trustees/Directors has directed the Advisor to treat a municipal lease
as a liquid security if it satisfies the following conditions: (A) such
treatment must be consistent with the Portfolio's investment
restrictions; (B) the Advisor should be able to conclude that the
obligation will maintain its liquidity throughout the time it is held by
the Portfolio, based on the following factors: (1) whether the lease may
be terminated by the lessee; (2) the potential recovery, if any, from a
sale of the leased property upon termination of the lease; (3) the
lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics and prospects); (4) the
likelihood that the lessee will discontinue appropriating funding for
the leased property because the property is no longer deemed essential
to its operations (e.g., the potential for an "event of
nonappropriation"), and (5) any credit enhancement or legal recourse
provided upon an event of nonappropriation or other termination of the
lease; (C) the Advisor should determine whether the obligation can be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Portfolio has valued it for
purposes of calculating the Portfolio's net asset value, taking into
account the following factors: (1) the frequency of trades and quotes;
(2) the volatility of quotations and trade prices; (3) the number of
dealers willing to purchase or sell the security and the number of
potential purchasers; (4) dealer undertakings to make a market in the
security; (5) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of the transfer); (6)
the rating of the security and the financial condition and prospects of
the issuer; and (7) other factors relevant to the Portfolio's ability to
dispose of the security; and (D) the Advisor should have reasonable
expectations that the municipal lease obligation will maintain its
liquidity throughout the time the instrument is held by the Portfolio.
<PAGE>
Obligations with Puts Attached
The Portfolio has authority to purchase securities at a price
which would result in a yield to maturity lower than that generally
offered by the seller at the time of purchase when it can acquire at the
same time the right to sell the securities back to the seller at an
agreed upon price at any time during a stated period or on a certain
date. Such a right is generally denoted as a "put." The Portfolio may
not acquire obligations subject to puts if immediately thereafter with
respect to 75% of the total amortized cost value of its short-term
assets, the Portfolio would have more than 5% of such assets invested in
securities underlying puts from the same institution. The Portfolio may,
however, invest up to 10% of its short-term assets in securities
underlying unconditional puts from the same institution. Unconditional
puts are readily exercisable in the event of a default in payment of
principal or interest on the underlying securities.
Temporary Investments
Short-term money market type investments consist of:
obligations of the U.S. Government, its agencies and instrumentalities;
certificates of deposit of banks with assets of one billion dollars or
more; commercial paper or other corporate notes of investment grade
quality; and any of such items subject to short-term repurchase
agreements.
The Portfolio intends to minimize taxable income through
investment, when possible, in short-term tax-exempt securities. 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 be invested so that at
least 80% of the Portfolio's annual income will be tax-exempt. While the
Portfolio has the authority to invest in short-term taxable obligations,
the Portfolio has not done so since its inception and, barring unusual
market conditions, does not expect in the future to invest in taxable
obligations.
When-Issued Purchases
Securities purchased on a when-issued basis and the securities
held in the Portfolio are subject to changes in market value based upon
the public's perception of the creditworthiness of the issuer and
changes in the level of interest rates (which will generally result in
both changing in value in the same way, i.e., both experiencing
appreciation when interest rates decline and depreciation when interest
rates rise). Therefore, if in order to achieve higher interest income,
the Portfolio remains substantially fully invested at the same time that
it has purchased securities on a when-issued basis, there will be a
greater possibility that the market value of the Portfolio's assets may
vary. No new when-issued commitments will be made by the Portfolio if
more than 50% of the Portfolio's net assets would become so committed.
When the time comes to pay for when-issued securities, the
Portfolio will meet its obligations from then available cash flow, sale
of securities or, although it would not normally expect to do so, from
sale of the when-issued securities themselves (which may have a market
value greater or less than the Portfolio's payment obligation). Sale of
securities to meet such obligations carries with it a greater potential
for the realization of capital losses and capital gains which are not
exempt from federal income tax.
Transactions in Futures Contracts
The Portfolio may engage in the purchase and sale of futures
contracts on an index of municipal bonds or on U.S. Treasury securities,
or options on such futures contracts, for hedging purposes only. The
Portfolio may sell such futures contracts in anticipation of a decline
in the cost of municipal bonds it holds or may purchase such futures
contracts in anticipation of an increase in the value of municipal bonds
the Portfolio intends to acquire. The Portfolio also is authorized to
purchase and sell other financial futures contracts which in the opinion
of the Investment Advisor provide an appropriate hedge for some or all
of the Portfolio's securities.
Because of low initial margin deposits made upon the opening of
a futures position, futures transactions involve substantial leverage.
As a result, relatively small movements in the price of the futures
contract can result in substantial unrealized gains or losses. Because
the Portfolio will engage in the purchase and sale of financial futures
contracts solely for hedging purposes, however, any losses incurred in
connection therewith should, if the hedging strategy is successful, be
offset in whole or in part by increases in the value of securities held
by the Portfolio or decreases in the price of securities the Portfolio
intends to acquire.
<PAGE>
Municipal bond index futures contracts commenced trading in
June 1985, and it is possible that trading in such futures contracts
will be less liquid than that in other futures contracts. The trading of
futures contracts and options thereon is subject to certain market
risks, such as trading halts, suspensions, exchange or clearing house
equipment failures, government intervention or other disruptions of
normal trading activity, which could at times make it difficult or
impossible to liquidate existing positions.
The liquidity of a secondary market in futures contracts may be
further adversely affected by "daily price fluctuation limits"
established by contract markets, which limit the amount of fluctuation
in the price of a futures contract or option thereon during a single
trading day. Once the daily limit has been reached in the contract, no
trades may be entered into at a price beyond the limit, thus preventing
the liquidation of open positions. Prices of existing contracts have in
the past moved the daily limit on a number of consecutive trading days.
The Portfolio will enter into a futures position only if, in the
judgment of the Investment Advisor, there appears to be an actively
traded secondary market for such futures contracts.
The successful use of transactions in futures contracts and
options thereon depends on the ability of the Investment Advisor to
correctly forecast the direction and extent of price movements of these
instruments, as well as price movements of the securities held by the
Portfolio within a given time frame. To the extent these prices remain
stable during the period in which a futures or option contract is held
by the Portfolio, or move in a direction opposite to that anticipated,
the Portfolio may realize a loss on the hedging transaction which is not
fully or partially offset by an increase in the value of the Portfolio's
securities. As a result, the Portfolio's total return for such period
may be less than if it had not engaged in the hedging transaction.
Description of Financial Futures Contracts
Futures Contracts. A 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 called for in the contract or, in some
instances, to make a cash settlement, at a specified future time for a
specified price. Although the terms of a contract call for actual
delivery or acceptance of securities, or for a cash settlement, in most
cases the contracts are closed out before the delivery date without the
delivery or acceptance taking place. The Portfolio intends to close out
its futures contracts prior to the delivery date of such contracts.
The Portfolio may sell futures contracts in anticipation of a
decline in the value of its investments in municipal bonds. The loss
associated with any such decline could be reduced without employing
futures as a hedge by selling long-term securities and either
reinvesting the proceeds in securities with shorter maturities or by
holding assets in cash. This strategy, however, entails increased
transaction costs in the form of brokerage commissions and dealer
spreads and will typically reduce the Portfolio's average yields as a
result of the shortening of maturities.
The purchase or sale of a futures contract differs from the
purchase or sale of a security, in that no price or premium is paid or
received. Instead, an amount of cash or securities acceptable to the
Portfolio's futures commission merchant and the relevant contract
market, which varies but is generally about 5% or less of the contract
amount, must be deposited with the broker. This amount is known as
"initial margin," and represents a "good faith" deposit assuring the
performance of both the purchaser and the seller under the futures
contract. Subsequent payments to and from the broker, known as
"variation margin," are required to be made on a daily basis as the
price of the futures contract fluctuates, making the long or short
positions in the futures contract more or less valuable, a process known
as "marking to the market." Prior to the settlement date of the futures
contract, the position may be closed out by taking an opposite position
which will operate to terminate the position in the futures contract. A
final determination of variation margin is then made, additional cash is
required to be paid to or released by the broker, and the purchaser
realizes a loss or gain. In addition, a commission is paid on each
completed purchase and sale transaction.
The sale of financial futures contracts provides an alternative
means of hedging the Portfolio against declines in the value of its
investments in municipal bonds. As such values decline, the value of the
Portfolio's position in the futures contracts will tend to increase,
thus offsetting all or a portion of the depreciation in the market value
of the Portfolio's fixed income investments which are being hedged.
While the Portfolio will incur commission expenses in establishing and
closing out futures positions, commissions on futures transactions may
be significantly lower than transaction costs incurred in the purchase
and sale of fixed income securities. In addition, the ability of the
Portfolio to trade in the standardized contracts available in the
futures market may offer a more effective hedging strategy than a
program to reduce the average maturing of portfolio securities, due to
the unique and varied credit and technical characteristics of the
municipal debt instruments available to the Portfolio. Employing futures
as a hedge may also permit the Portfolio to assume a hedging posture
without reducing the yield on its investments, beyond any amounts
required to engage in futures trading.
The Portfolio may engage in the purchase and sale of futures
contracts on an index of municipal securities. These instruments provide
for the purchase or sale of a hypothetical portfolio of municipal bonds
at a fixed price in a stated delivery month. Unlike most other futures
contracts, however, a municipal bond index futures contract does not
require actual delivery of securities but results in a cash settlement
based upon the difference in value of the index between the time the
contract was entered into and the time it is liquidated.
<PAGE>
The municipal bond index underlying the futures contracts
traded by the Portfolio is The Bond Buyer Municipal Bond Index,
developed by The Bond Buyer and the Chicago Board of Trade ("CBT"), the
contract market on which the futures contracts are traded. As currently
structured, the index is comprised of 40 tax-exempt term municipal
revenue and general obligation bonds. Each bond included in the index
must be rated either A- or higher by Standard & Poor's or A or higher by
Moody's Investors Service and must have a remaining maturity of 19 years
or more. Twice a month new issues satisfying the eligibility
requirements are added to, and an equal number of old issues will be
deleted from, the index. The value of the index is computed daily
according to a formula based upon the price of each bond in the index,
as evaluated by four dealer-to-dealers brokers.
The Portfolio may also purchase and sell futures contracts on
U.S. Treasury bills, notes and bonds for the same types of hedging
purposes. Such futures contracts provide for delivery of the underlying
security at a specified future time for a fixed price, and the value of
the futures contract therefore generally fluctuates with movements in
interest rates.
The municipal bond index futures contract, futures contracts on
U.S. Treasury securities and options on such futures contracts are
traded on the CBT, which, like other contract markets, assures the
performance of the parties to each futures contract through a clearing
corporation, a nonprofit organization managed by the exchange
membership, which is also responsible for handling daily accounting of
deposits or withdrawals of margin.
The Portfolio may also purchase financial futures contracts
when it is not fully invested in municipal bonds in anticipation of an
increase in the cost of securities the Portfolio intends to purchase. As
such securities are purchased, an equivalent amount of futures contracts
will be closed out. In a substantial majority of these transactions, the
Portfolio will purchase municipal bonds upon termination of the futures
contracts. Due to changing market conditions and interest rate
forecasts, however, a futures position may be terminated without a
corresponding purchase of securities. Nevertheless, all purchases of
futures contracts by the Portfolio will be subject to certain
restrictions, described below.
Options on Futures Contracts. An option on a futures contract
provides the purchaser with the right, but not the obligation, to enter
into a long position in the underlying futures contract (that is,
purchase the futures contract), in the case of a "call" option, or a
short position (sell the futures contract), in the case of a "put"
option, for a fixed price up to a stated expiration date. The option is
purchased for a non-refundable fee, known as the "premium." Upon
exercise of the option, the contract market clearing house assigns each
party to the option an opposite position in the underlying futures
contract. In the event of exercise, therefore, the parties are subject
to all of the risks of futures trading, such as payment of initial and
variation margin. In addition, the seller, or "writer," of the option is
subject to margin requirements on the option position. Options on
futures contracts are traded on the same contract markets as the
underlying futures contracts.
The Portfolio may purchase options on futures contracts for the
same types of hedging purposes described above in connection with
futures contracts. For example, in order to protect against an
anticipated decline in the value of securities it holds, the Portfolio
could purchase put options on futures contracts, instead of selling the
underlying futures contracts. Conversely, in order to protect against
the adverse effects of anticipated increases in the costs of securities
to be acquired, the Portfolio could purchase call options on futures
contracts, instead of purchasing the underlying futures contracts. The
Portfolio generally will sell options on futures contracts only to close
out an existing position.
The Portfolio will not engage in transactions in such
instruments unless and until the Investment Advisor determines that
market conditions and the circumstances of the Portfolio warrant such
trading. To the extent the Portfolio engages in the purchase and sale of
futures contracts or options thereon, it will do so only at a level
which is reflective of the Investment Advisor's view of the hedging
needs of the Portfolio, the liquidity of the market for futures
contracts and the anticipated correlation between movements in the value
of the futures or option contract and the value of securities held by
the Portfolio.
Restrictions on the Use of Futures Contracts and Options on
Futures Contracts. Under regulations of the Commodity Futures Trading
Commission ("CFTC"), the futures trading activities described herein
will not result in the Portfolio being deemed to be a "commodity pool,"
as defined under such regulations, provided that certain trading
restrictions are adhered to. In particular, CFTC regulations require
that all futures and option positions entered into by the Portfolio
qualify as bona fide hedge transactions, as defined under CFTC
regulations, or, in the case of long positions, that the value of such
positions not exceed an amount of segregated funds determined by
reference to certain cash and securities positions maintained by the
Portfolio and accrued profits on such positions. In addition, the
Portfolio may not purchase or sell any such instruments if, immediately
thereafter, the sum of the amount of initial margin deposits on the
Portfolio's existing futures positions would exceed 5% of the market
value of its net assets.
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 amount so segregated 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 is unleveraged.
Risk Factors in Transactions in Futures Contracts. The
particular municipal bonds comprising the index underlying the municipal
bond index futures contract may vary from the bonds held by the
Portfolio. In addition, the securities underlying futures contracts on
U.S. Treasury securities will not be the same as securities held by the
Portfolio. As a result, the Portfolio's ability effectively to hedge all
or a portion of the value of its municipal bonds through the use of
futures contracts will depend in part on the degree to which price
movements in the index underlying the municipal bond index futures
contract, or the U.S. Treasury securities underlying other futures
contracts trade, correlate with price movements of the municipal bonds
held by the Portfolio.
<PAGE>
For example, where prices of securities in the Portfolio do not
move in the same direction or to the same extent as the values of the
securities or index underlying a futures contract, the trading of such
futures contracts may not effectively hedge the Portfolio's investments
and may result in trading losses. The correlation may be affected by
disparities in the average maturity, ratings, geographical mix or
structure of the Portfolio's investments as compared to those comprising
the index, and general economic or political factors. In addition, the
correlation between movements in the value of the index underlying a
futures contract may be subject to change over time, as additions to and
deletions from the index alter its structure. In the case of futures
contracts on U.S. Treasury securities and options thereon, the
anticipated correlation of price movements between the U.S. Treasury
securities underlying the futures or options and municipal bonds may be
adversely affected by economic, political, legislative or other
developments that have a disparate impact on the respective markets for
such securities. In the event that the Investment Advisor determines to
enter into transactions in financial futures contracts other than the
municipal bond index futures contract or futures on U.S. Treasury
securities, the risk of imperfect correlation between movements in the
prices of such futures contracts and the prices of municipal bonds held
by the Portfolio may be greater.
The trading of futures contracts on an index also entails the
risk of imperfect correlation between movements in the price of the
futures contract and the value of the underlying index. The anticipated
spread between the prices may be distorted due to differences in the
nature of the markets, such as margin requirements, liquidity and the
participation of speculators in the futures markets. The risk of
imperfect correlation, however, generally diminishes as the delivery
month specified in the futures contract approaches.
Prior to exercise or expiration, a position in futures
contracts or options thereon may be terminated only by entering into a
closing purchase or sale transaction. This requires a secondary market
on the relevant contract market. The Portfolio will enter into a futures
or option position only if there appears to be a liquid secondary market
therefor, although there can be no assurance that such a liquid
secondary market will exist for any particular contract at any specific
time. Thus, it may not be possible to close out a position once it has
been established. Under such circumstances, the Portfolio could be
required to make continuing daily cash payments of variation margin in
the event of adverse price movements. In such situation, if the
Portfolio has insufficient cash, it may be required to sell portfolio
securities to meet daily variation margin requirements at a time when it
may be disadvantageous to do so. In addition, the Portfolio may be
required to perform under the terms of the futures or option contracts
it holds. The inability to close out futures or options positions also
could have an adverse impact on the Portfolio's ability effectively to
hedge its portfolio.
When the Portfolio purchases an option on a futures contract,
its risk is limited to the amount of the premium, plus related
transaction costs, although this entire amount may be lost. In addition,
in order to profit from the purchase of an option on a futures contract,
the Portfolio may be required to exercise the option and liquidate the
underlying futures contract, subject to the availability of a liquid
secondary market. The trading of options on futures contracts also
entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option,
although the risk of imperfect correlation generally tends to diminish
as the maturity date of the futures contract or expiration date of the
option approaches.
"Trading Limits" or "Position Limits" may also be imposed on
the maximum number of contracts which any person may hold at a given
time. A contract market may order the liquidation of positions found to
be in violation of these limits and it may impose other sanctions or
restrictions. The Investment Advisor does not believe that trading
limits will have any adverse impact on the strategies for hedging the
Portfolio's investments.
Further, the trading of futures contracts is subject to the
risk of the insolvency of a brokerage firm or clearing corporation,
which could make it difficult or impossible to liquidate existing
positions or to recover excess variation margin payments.
In addition to the risks of imperfect correlation and lack of a
liquid secondary market for such instruments, transactions in futures
contracts involve risks related to leveraging and the potential for
incorrect forecasts of the direction and extent of interest rate
movements within a given time frame.
==========================================================================
INVESTMENT RESTRICTIONS
==========================================================================
The foregoing investment objective and policies and the
following investment restrictions and fundamental policies may not be
changed without the consent of the holders of a majority of outstanding
shares of the Portfolio. A majority of the shares means the lesser of
(i) 67% of the shares represented at a meeting at which more than 50% of
the outstanding shares are represented or (ii) more than 50% of the
outstanding shares. The Portfolio may not:
(1) Purchase common stocks, preferred stocks,
warrants or other equity securities;
(2) Issue senior securities, borrow money, or
pledge, mortgage, or hypothecate its assets, except as
may be necessary to secure borrowings from banks for
temporary or emergency (not leveraging) purposes and
then in an amount not greater than 10% of the value of
the Portfolio's total assets at the time of the
borrowing. Investment securities will not be purchased
while any borrowings are outstanding;
(3) Sell securities short, purchase securities on
margin, or write put or call options, except as
permitted in connection with transactions in futures
contracts and options thereon. See "Transactions in
Futures Contracts." The Portfolio reserves the right to
purchase securities with puts attached. See
"Obligations with Puts Attached";
(4) Underwrite the securities of other issuers,
except to the extent that the purchase of municipal
obligations in accordance with the Portfolio's
investment objective and policies, either directly from
the issuer, or from an underwriter for an issuer, may
be deemed an underwriting;
<PAGE>
(5) Purchase securities which are subject to legal
or contractual restrictions on resale, i.e., restricted
securities, or other securities which are not readily
marketable assets, including repurchase agreements not
terminable within seven days, with respect to no more
than 10% of its total assets;
(6) Purchase or sell real estate, real estate
investment trust securities, commodities or commodity
contracts, or oil and gas interests, but this shall not
prevent the Portfolio from investing in municipal
obligations secured by real estate or interests therein;
(7) Purchase or retain securities of an issuer if
those Trustees of Calvert Tax-Free Reserves, each of
whom owns more than 1/2 of 1% of the outstanding
securities of such issuer, together own more than 5% of
such outstanding securities;
(8 ) Make loans to others, except in accordance
with the Portfolio's investment objective and policies
or pursuant to contracts providing for the compensation
of service providers by compensating balances;
(9) Invest in companies for the purpose of
exercising control; or invest in securities of other
investment companies, except as they may be acquired as
part of a merger, consolidation or acquisition of
assets, or in connection with a trustee's/director's
deferred compensation plan, as long as there is no
duplication of advisory fees;
(10) Invest more than 25% of its assets in the
securities of any one issuer or of issuers located
within the same state, except that the Portfolio may
invest more than 25% of its assets in obligations
issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. For purposes of this
limitation, the entity which has the ultimate
responsibility for the payment of principal and
interest on a particular security will be treated as
its issuer;
(11) Invest more than 25% of its assets in any
particular industry or industries, except that the
Portfolio may invest more than 25% of its assets in
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Industrial development bonds, where the payment of
principal and interest is the responsibility of
companies within the same industry, are grouped
together as an "industry";
(12) Invest more than 5% of the value of its total
assets in securities where the payment of principal and
interest is the responsibility of a company or
companies with less than three years' operating history.
==========================================================================
PURCHASES AND REDEMPTIONS OF SHARES
==========================================================================
Share certificates will not be issued unless requested in
writing by the investor. No charge will be made for share certificate
requests. No certificates will be issued for fractional shares.
Amounts redeemed by check redemption may be mailed to the
investor without charge. Amounts of more than $50 and less than $300,000
may be transferred electronically at no charge to the investor. Amounts
of $1,000 or more will be transmitted by wire, without charge, to the
investor's account at a domestic commercial bank that is a member of the
Federal Reserve System or to a correspondent bank. A charge of $5 is
imposed on wire transfers of less than $1,000. If the investor's bank is
not a Federal Reserve System member, failure of immediate notification
to that bank by the correspondent bank could result in a delay in
crediting the funds to the investor's bank account.
Telephone redemption requests which would require the
redemption of shares purchased by check or electronic funds transfer
within the previous 10 business days may not be honored. The Fund
reserves the right to modify the telephone redemption privilege.
To change redemption instructions already given, shareholders
must send a written notice to Calvert Group, c/o NFDS, 6th Floor, 1004
Baltimore, Kansas City, MO, 64105, with a voided copy of a check for the
bank wiring instructions to be added. If a voided check does not
accompany the request, then the request must be signature guaranteed by
a commercial bank, savings and loan association, trust company, member
firm of any national securities exchange, or certain credit unions.
Further documentation may be required from corporations, fiduciaries,
and institutional investors.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is
closed (other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency exists, as
determined by the SEC, or if the Commission has ordered such a
suspension for the protection of shareholders. Redemption proceeds are
normally mailed or wired the next business day after a proper redemption
request has been received, unless redemptions have been suspended or
postponed as described above.
Redemption proceeds are normally paid in cash. However, the
Portfolio has the right to redeem shares in assets other than cash for
redemption amounts exceeding, in any 90-day period, $250,000 or 1% of
the net asset value of the Portfolio, whichever is less.
==========================================================================
REDUCED SALES CHARGES (CLASS A)
==========================================================================
The Portfolio imposes reduced sales charges for Class A shares
in certain situations in which the Principal Underwriter and the dealers
selling Portfolio shares may expect to realize significant economies of
scale with respect to such sales. Generally, sales costs do not increase
in proportion to the dollar amount of the shares sold; the per-dollar
transaction cost for a sale to an investor of shares worth, say, $5,000
is generally much higher than the per-dollar cost for a sale of shares
worth $1,000,000. Thus, the applicable sales charge declines as a
percentage of the dollar amount of shares sold as the dollar amount
increases.
<PAGE>
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter of
Intent, the Underwriter and selling dealers can expect to realize the
economies of scale applicable to that stated goal amount. Thus the
Portfolio imposes the sales charge applicable to the goal amount.
Similarly, the Underwriter and selling dealers also experience cost
savings when dealing with existing Fund shareholders, enabling the Fund
to afford existing shareholders the Right of Accumulation. The
Underwriter and selling dealers can also expect to realize economies of
scale when making sales to the members of certain qualified groups which
agree to facilitate distribution of Portfolio shares to their members.
See "Exhibit A - Reduced Sales Charges" in the Prospectus.
==========================================================================
DIVIDENDS AND DISTRIBUTIONS
==========================================================================
The Portfolio declares and pays monthly dividends of its net
income to shareholders of record as of the close of business on each
designated monthly record date. Net investment income consists of the
interest income earned on investments (adjusted for amortization of
original issue discounts or premiums or market premiums), less estimated
expenses. Dividends and distributions paid may differ among the classes.
Dividends are automatically reinvested at net asset value in
additional shares. Capital gains, if any, are normally paid once a year
and will be automatically reinvested at net asset value in additional
shares, unless you choose otherwise. You may elect to have their
dividends and distributions paid out monthly in cash. You may also
request to have your dividends and distributions from the Portfolio
invested in shares of any other Calvert Group Fund, to be invested in
that Fund or Portfolio without a sales charge. 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.
==========================================================================
TAX MATTERS
==========================================================================
In 1995 the Portfolio did qualify and in 1996 the Portfolio
intends to qualify as a "regulated investment company" under Subchapter
M of the Internal Revenue Code, as amended (the "Code"). By so
qualifying, the Portfolio will not be subject to federal income tax, nor
to the federal excise tax imposed by the Tax Reform Act of 1986 (the
"Act"), to the extent that it distributes its net investment income and
realized capital gains.
The Portfolio's dividends of net investment income constitute
exempt-interest dividends on which shareholders are not generally
subject to federal income tax; however, under the Act, dividends
attributable to interest on certain private activity bonds must be
included in federal alternative minimum taxable income for the purpose
of determining liability (if any) for individuals and for corporations.
The Portfolio's dividends derived from taxable interest and
distributions of net short-term capital gains whether taken in cash or
reinvested in additional shares, are taxable to shareholders as ordinary
income and do not qualify for the dividends received deduction for
corporations.
A shareholder may also be subject to state and local taxes on
dividends and distributions from the Portfolio. The Portfolio will
notify shareholders annually about the federal tax status of dividends
and distributions paid by the Portfolio and the amount of dividends
withheld, if any, during the previous year.
The Code provides that interest on indebtedness incurred or
continued in order to purchase or carry shares of a regulated investment
company which distributes exempt-interest dividends during the year is
not deductible. Furthermore, entities or persons who are "substantial
users" (or persons related to "substantial users") of facilities
financed by private activity bonds should consult their tax advisers
before purchasing shares of the Portfolio. "Substantial user" is
generally defined as including a "non-exempt person" who regularly uses
in trade or business a part of a facility financed from the proceeds of
private activity bonds.
Investors should note that the Code may require investors to
exclude the initial sales charge, if any, paid on the purchase of
Portfolio shares from the tax basis of those shares if the shares are
exchanged for shares of another Calvert Group Fund within 90 days of
purchase. This requirement applies only to the extent that the payment
of the original sales charge on the shares of the Portfolio causes a
reduction in the sales charge otherwise payable on the shares of the
Calvert Group Fund acquired in the exchange, and investors may treat
sales charges excluded from the basis of the original shares as incurred
to acquire the new shares.
The Portfolio is required to withhold 31% of any long-term
capital gain dividends and 31% of each redemption transaction occurring
in the Portfolio if: (a) the shareholder's social security number or
other taxpayer identification number ("TIN") is not provided, or an
obviously incorrect TIN is provided; (b) the shareholder does not
certify under penalties of perjury that the TIN provided is the
shareholder's correct TIN and that the shareholder is not subject to
backup withholding under section 3406(a)(1)(C) of the Code because of
underreporting (however, failure to provide certification as to the
application of section 3406(a)(1)(C) will result only in backup
withholding on capital gain dividends, not on redemptions); or (c) the
Fund is notified by the Internal Revenue Service that the TIN provided
by the shareholder is incorrect or that there has been underreporting of
interest or dividends by the shareholder. Affected shareholders will
receive statements at least annually specifying the amount withheld.
<PAGE>
In addition the Portfolio is required to report to the Internal
Revenue Service the following information with respect to redemption
transactions in the Portfolio: (a) the shareholder's name, address,
account number and taxpayer identification number; (b) the total dollar
value of the redemptions; and (c) the Portfolio's identifying CUSIP
number.
Certain shareholders are, however, exempt from the backup
withholding and broker reporting requirements. Exempt shareholders
include: corporations; financial institutions; tax-exempt organizations;
individual retirement plans; the U.S., a State, the District of
Columbia, a U.S. possession, a foreign government, an international
organization, or any political subdivision, agency or instrumentality of
any of the foregoing U.S. registered commodities or securities dealers;
real estate investment trusts; registered investment companies; bank
common trust funds; certain charitable trusts; and foreign central banks
of issue. Non-resident aliens also are generally not subject to either
requirement but, along with certain foreign partnerships and foreign
corporations, may instead be subject to withholding under section 1441
of the Code. Shareholders claiming exemption from backup withholding and
broker reporting should call or write the Portfolio for further
information.
==========================================================================
VALUATION OF SHARES
==========================================================================
The Portfolio's assets are normally valued utilizing the
average bid dealer market quotation as furnished by an independent
pricing service. Securities and other assets for which market quotations
are not readily available are valued based on the current market for
similar securities or assets, as determined in good faith by the
Portfolio's Advisor under the supervision of the Board of Trustees. The
Portfolio determines the net asset value of its shares every business
day at the close of the regular session of the New York Stock Exchange
(generally, 4:00 p.m. Eastern time), and at such other times as may be
necessary or appropriate. The Portfolio does not determine net asset
value on certain national holidays or other days on which the New York
Stock Exchange is closed: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Valuations, market quotations and market equivalents are
provided the Portfolio by Kenny S&P Evaluation Services, a subsidiary of
McGraw-Hill. The use of Kenny as a pricing service by the Portfolio has
been approved by the Board of Trustees. Valuations provided by Kenny are
determined without exclusive reliance on quoted prices and take into
consideration appropriate factors such as institution-size trading in
similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics, and other market data.
Net Asset Value and Offering Price Per Share
Class A net asset value per share
($57,358,592/3,313,537 shares) $17.31
Maximum sales charge
(3.75% of Class A offering price) 0.67
Offering price per Class A share $17.98
Class C net asset value and offering price per share
($1,678,174/97,939 shares) $17.13
==========================================================================
CALCULATION OF YIELD AND TOTAL RETURN
==========================================================================
From time to time, the Portfolio advertises its "total return."
Total return is calculated separately for each class. Total return is
historical in nature and is not intended to indicate future performance.
Total return will be quoted for the most recent one-year period,
five-year period and the period from inception of the Portfolio's
offering of shares. Total return quotations for periods in excess of one
year represent the average annual total return for the period included
in the particular quotation. Total return is a computation of the
Portfolio's dividend yield plus or minus realized or unrealized capital
appreciation or depreciation, less fees and expenses. All total return
quotations reflect the deduction of the Portfolio's maximum sales charge
for Class A shares, except quotations of "return without maximum load,"
which do not deduct the sales charge, and "actual return," which reflect
deduction of the sales charge only for those periods when a sales charge
was actually imposed. Thus, in the formula below, for return without
maximum load, P = the entire $1,000 hypothetical initial investment and
does not reflect the deduction of any sales charge; for actual return, P
= a hypothetical initial investment of $1,000 less any sales charge
actually imposed at the beginning of the period for which the
performance is being calculated. Note: "Total Return" as quoted in the
Financial Highlights section of the Fund's Prospectus and Annual Report
to Shareholders, however, per SEC instructions, does not reflect
deduction of the sales charge, and corresponds to "return without
maximum load" as referred to herein. Return without maximum load should
be considered only by investors, such as participants in certain pension
plans, to whom the sales charge does not apply, or for purposes of
comparison only with comparable figures which also do not reflect sales
charges, such as Lipper averages. Total return is computed according to
the following formula:
P(1 +T)n = ERV
<PAGE>
where P = a hypothetical initial payment of $1,000; T = average annual
total return; n = number of years and ERV = the ending redeemable value
of a hypothetical $1,000 payment made at the beginning of the 1, 5, or
10 year periods at the end of such periods (or portions thereof if
applicable).
Returns for the periods indicated are as follows:
Class A Shares Class A Shares Class C
Shares
With Max. Load W/O Max. Load
One Year 11.68% 16.05% 14.51%
Five Years 7.84% 8.67% N/A
Ten Years 7.74% 8.16% N/A
From Inception N/A N/A 6.14%
(March 1, 1994)
The Portfolio also advertises, from time to time, its "yield"
and "tax equivalent yield." As with total return, both yield figures are
historical and are not intended to indicate future performance. "Yield"
quotations for each class refer to the aggregate imputed
yield-to-maturity of each of the Portfolio's investments based on the
market value as of the last day of a given thirty-day or one-month
period, less expenses (net of reimbursement), divided by the average
daily number of outstanding shares entitled to receive dividends times
the maximum offering price on the last day of the period (so that the
effect of the sales charge is included in the calculation), compounded
on a "bond equivalent," or semi-annual, basis. The Portfolio's yield is
computed according to the following formula:
Yield = 2[(+1)6 - 1]
where a = dividends and interest earned during the period; b = expenses
accrued for the period (net of reimbursement); c = the average daily
number of shares outstanding during the period that were entitled to
receive dividends; and d = the maximum offering price per share on the
last day of the period.
The tax equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal the Portfolio's
yield, all or a portion of which may be exempt from federal income
taxes. The tax equivalent yield is computed per class by taking the
portion of the class' yield exempt from regular federal income tax and
multiplying the exempt yield by a factor based upon a stated income tax
rate, then adding the portion of the yield that is not exempt from
regular federal income tax. The factor which is used to calculate the
tax equivalent yield is the reciprocal of the difference between 1 and
the applicable income tax rate, which will be stated in the
advertisement. For the thirty-day period ended December 31, 1995, the
Portfolio yield for Class A shares was 4.85% and its federal tax
equivalent yield was 7.57% for an investor in the 36% federal income tax
bracket, and 8.06% for an investor in the 39.6% federal income tax
bracket. For the same period, the yield for Class C shares was 3.87% and
its federal tax equivalent yield was 6.04% for an investor in the 36%
federal income tax bracket, and 6.43% for an investor in the 39.6%
federal income tax bracket.
==========================================================================
ADVERTISING
==========================================================================
The Fund or its affiliates may provide information such as, but
not limited to, the economy, investment climate, investment principles,
sociological conditions and political ambiance. Discussion may include
hypothetical scenarios or lists of relevant factors designed to aid the
investor in determining whether the Fund is compatible with the
investor's goals. The Fund may list portfolio holdings or give examples
or securities that may have been considered for inclusion in the
Portfolio, whether held or not.
The Fund or its affiliates may supply comparative performance
data and rankings from independent sources such as Donoghue's Money Fund
Report, Bank Rate Monitor, Money, Forbes, Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Wiesenberger Investment
Companies Service, Russell 2000/Small Stock Index, Mutual Fund Values
Morningstar Ratings, Mutual Fund Forecaster, Barron's, The Wall Street
Journal, and Schabacker Investment Management, Inc. Such averages
generally do not reflect any front- or back-end sales charges that may
be charged by Funds in that grouping. The Fund may also cite to any
source, whether in print or on-line, such as Bloomberg, in order to
acknowledge origin of information. The Fund may compare itself or its
portfolio holdings to other investments, whether or not issued or
regulated by the securities industry, including, but not limited to,
certificates of deposit and Treasury notes. The Fund, its Advisor, and
its affiliates reserve the right to update performance rankings as new
rankings become available.
<PAGE>
==========================================================================
TRUSTEES AND OFFICERS
==========================================================================
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Director of
Finance for the Family Health Council, Inc. in Pittsburgh, Pennsylvania,
a non-profit corporation which provides family planning services,
nutrition, maternal/child health care, and various health screening
services. Mr. Baird is a trustee/director of each of the investment
companies in the Calvert Group of Funds, except for Acacia Capital
Corporation, Calvert New World Fund and Calvert World Values Fund. Age:
47. Address: 211 Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in
the law firm of Snevily, Ely, Williams, Gurrieri & Blatz. He was
formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
Age: 59. Address: 308 East Broad Street, PO Box 2007, Westfield, New
Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist
with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem
Medical Imaging in Allentown, Pennsylvania. Age: 46. Address: 2040
Nuuanu Avenue #1805, Honolulu, Hawaii, 96817.
1 CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and
Treasurer Emeritus of the George Washington University, and has retired
from University Support Services, Inc. of Herndon, Virginia. He is also
a Director of Acacia Mutual Life Insurance Company. Age: 73. Address:
1658 Quail Hollow Court, McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices head
and neck reconstructive surgery in the Washington, D.C., metropolitan
area. Age: 47. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian was a principal of
Gavian De Vaux Associates, an investment banking firm. He continues to
be President of with Corporate Finance of Washington, Inc. Age: 63.
Address: 3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial consultant
to various organizations. In addition, he is a Director of the Community
Bankers Mutual Fund of Denver, Colorado, and the Treasurer and Director
of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey is a
trustee/director of each of the other investment companies in the
Calvert Group of Funds, except for Acacia Capital Corporation and
Calvert New World Fund. Age: 47. Address: 7205 Pomander Lane, Chevy
Chase, Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of
Acacia Federal Savings Bank. Age: 58. Address: 4823 Prestwick Drive,
Fairfax, Virginia 22030.
1 DAVID R. ROCHAT, Senior Vice President and Trustee. Mr.
Rochat is Executive Vice President of Calvert Asset Management Company,
Inc., Director and Secretary of Grady, Berwald and Co., Inc., and
Director and President of Chelsea Securities, Inc. Age: 58. Address: Box
93, Chelsea, Vermont 05038.
1 D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Acacia Capital Corporation and Calvert New
World Fund. Mr. Silby is an officer, director and shareholder of Silby,
Guffey & Company, Inc., which serves as general partner of Calvert
Social Venture Partners ("CSVP"). CSVP is a venture capital firm
investing in socially responsible small companies. He is also a Director
of Acacia Mutual Life Insurance Company. Age: 47. Address: 1715 18th
Street, N.W., Washington, D.C. 20009.
1 CLIFTON S. SORRELL, JR., President and Trustee. Mr. Sorrell
serves as President, Chief Executive Officer and Vice Chairman of
Calvert Group, Ltd. and as an officer and director of each of its
affiliated companies. He is a director of Calvert-Sloan Advisers,
L.L.C., and a trustee/director of each of the investment companies in
the Calvert Group of Funds. Age: 54.
<PAGE>
1 RENO J. MARTINI, Senior Vice President. Mr. Martini is a
director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset Management
Company, Inc. Mr. Martini is also a director and President of
Calvert-Sloan Advisers, L.L.C., and a director and officer of Calvert
New World Fund. Age: 46.
1 RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is
Senior Vice President and Controller of Calvert Group, Ltd. and its
subsidiaries and an officer of each of the other investment companies in
the Calvert Group of Funds. Mr. Wolfsheimer is Vice President and
Treasurer of Calvert-Sloan Advisers, L.L.C., and a director of Calvert
Distributors, Inc. Age: 43.
1 WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant
Secretary. Mr. Tartikoff is an officer of each of the investment
companies in the Calvert Group of Funds, and is Senior Vice President,
Secretary, and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company. Age:
48.
1 EVELYNE S. STEWARD, Vice President. Ms. Steward is a director
and Senior Vice President of Calvert Group, Ltd., and a director of
Calvert-Sloan Advisers, L.L.C. She is the sister of Philip J. Schewetti,
the portfolio manager of the CSIF Equity Portfolio. Age: 43.
1 DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc., and is an officer of each of
the other investment companies in the Calvert Group of Funds, except for
Calvert New World Fund, Inc. Age: 45.
1 SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds. Age: 37.
______________
1Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of their affiliation
with the Fund's Advisor.
Each of the above directors/trustees and officers is a
director/trustee or officer of each of the investment companies in the
Calvert Group of Funds with the exception of Calvert Social Investment
Fund, of which only Messrs. Baird, Guffey, Silby and Sorrell are among
the trustees, Acacia Capital Corporation, of which only Messrs. Blatz,
Diehl, Pugh and Sorrell are among the directors, Calvert World Values
Fund, Inc., of which only Messrs. Guffey, Silby and Sorrell are among
the directors, and Calvert New World Fund, Inc., of which only Messrs.
Sorrell and Martini are among the directors. The address of directors
and officers, unless otherwise noted, is 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814. Trustees and officers of the Fund as a
group own less than 1% of each Fund's outstanding shares.
The Audit Committee of the Board is composed of Messrs. Baird,
Blatz, Feldman, Guffey and Pugh. The Board's Investment Policy Committee
is composed of Messrs. Borts, Diehl, Gavian, Rochat, Silby and Sorrell.
During fiscal 1995, trustees of the Fund not affiliated with
the Fund's Advisor were paid $4,495. Trustees of the Fund not affiliated
with the Advisor presently receive an annual fee of $20,250 for service
as a member of the Board of Trustees of the Calvert Group of Funds, and
a fee of $750 to $1200 for each regular Board or Committee meeting
attended; such fees are allocated among the respective Funds on the
basis of net assets.
Trustees of the Fund not affiliated with the Fund's Advisor may
elect to defer receipt of all or a percentage of their fees and invest
them in any fund in the Calvert Family of Funds through the Trustees
Deferred Compensation Plan (shown as "Pension or Retirement Benefits
Accrued as part of Fund Expenses," below). Deferral of the fees is
designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees.
<PAGE>
<TABLE>
<CAPTION>
Trustee Compensation Table
Aggregate Pension or Retirement Total Compensation
Fiscal Year Compensation Benefits Accrued from
1995 (unaudited from Registrant as part of Registrant and Fund
numbers) for service Registrant Complex paid to
as Trustee Expenses<F1> Trustees<F2>
Name of Trustee
<S> <C> <C> <C>
Richard L. Baird, Jr. $25,831 $0 $33,450
Frank H. Blatz, Jr. $26,042 $26,042 $36,801
Frederick T. Borts $20,135 $0 $25,050
Charles E. Diehl $25,058 $25,058 $35,101
Douglas E. Feldman $24,494 $0 $30,600
Peter W. Gavian $24,862 $7,458 $31,951
John G. Guffey, Jr. $24,861 $0 $40,450
Arthur J. Pugh $26,792 $0 $36,801
D. Wayne Silby $23,878 $0 $47,965
<FN>
<F1> Messrs. Blatz, Diehl, Gavian, and Pugh have chosen to defer a portion
of their compensation. As of December 31, 1995, total deferred
compensation, including dividends and capital appreciation, was
$415,719, $337,395, $89,054, and $150,841, for each trustee,
respectively.
<F2> As of December 31, 1995. The Fund Complex consists of eight (8)
registered investment companies.
</FN>
</TABLE>
==========================================================================
INVESTMENT ADVISOR
==========================================================================
The Fund's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, a subsidiary of Calvert Group, Ltd., which is a subsidiary of
Acacia Mutual Life Insurance Company of Washington, D.C.
The Advisory Contract between the Fund and the Advisor will
remain in effect indefinitely, provided continuance is approved at least
annually by the vote of the holders of a majority of the outstanding
shares of the Fund, or by the Trustees of the Fund; and further provided
that such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to the Contract
or interested persons of such parties, cast in person at a meeting
called for the purpose of voting on such approval. The Contract may be
terminated without penalty by either party on 60 days' prior written
notice; it automatically terminates in the event of its assignment.
Under the Contract, the Advisor manages the investment and
reinvestment of the Fund's assets, subject to the direction and control
of the Fund's Board of Trustees. For its services, the Advisor receives
from the Portfolio an annual fee of 0.60% of the first $500 million of
the Portfolio's average daily net assets, 0.50% of the next $500 million
of such assets, and 0.40% of all such assets over $1 billion.
The advisory fee is payable monthly. The Advisor reserves the
right (i) to waive all or a part of its fee and (ii) to compensate, at
its expense, broker-dealers in consideration of their promotional and
administrative services.
The Advisor provides the Fund with investment advice and
research, pays the salaries and fees of all Trustees and executive
officers of the Fund who are principals of the Advisor, and pays certain
Fund advertising and promotional expenses. The Fund pays all other
administrative and operating expenses, including: custodial fees;
shareholder servicing; dividend disbursing and transfer agency fees;
administrative service fees; federal and state securities registration
fees; insurance premiums; trade association dues; interest, taxes and
other business fees; legal and audit fees; and brokerage commissions and
other costs associated with the purchase and sale of portfolio
securities.
The Advisor has agreed to reimburse the Portfolio for all
expenses (exclusive of brokerage, taxes, interest and extraordinary
items) exceeding the most restrictive expense limitation of those states
in which the Portfolio's shares are qualified for sale (currently, 2.50%
of the first $30 million of the Portfolio's average net assets, 2.0% of
the next $70 million, and 1.50% of all such assets in excess of $100
million). The advisory fees paid by the Portfolio to Calvert Asset
Management Company for fiscal years 1993, 1994, and 1995 were $299,360,
$299,441, and $320,128, respectively.
<PAGE>
==========================================================================
ADMINISTRATIVE SERVICES
==========================================================================
Calvert Shareholder Services, Inc., a wholly-owned subsidiary
of Calvert Group, Ltd., has been retained by the Fund to act as transfer
agent, dividend disbursing agent and shareholder servicing agent. These
responsibilities include: responding to shareholder inquiries and
instructions concerning their accounts; crediting and debiting
shareholder accounts for purchases and redemptions of Portfolio shares
and confirming such transactions; daily updating of shareholder accounts
to reflect declaration and payment of dividends; and preparing and
distributing quarterly statements to shareholders regarding their
accounts. For such services, Calvert Shareholder Services, Inc.,
receives compensation based on the number of shareholder accounts and
the number of transactions. The fees paid by the Portfolio to Calvert
Shareholder Services, Inc. for fiscal years 1993, 1994, and 1995 were
$27,676, $26,917, and $31,611, respectively.
Calvert Administrative Services Company, a wholly-owned
subsidiary of Calvert Group, Ltd., has been retained by the Fund to
provide certain administrative services necessary to the conduct of the
Fund's affairs. Such services include the preparation of corporate and
regulatory reports and filings, portfolio accounting, and the daily
determination of net investment income and net asset value per share.
Calvert Administrative Services Company receives a fee of $200,000 per
year for providing such services to the Fund, allocated among the
Portfolios based on assets. The service fees paid by the Portfolio to
Calvert Administrative Services Company for fiscal years 1993, 1994, and
1995 were $3,646, $1,867, and $3,955 respectively.
==========================================================================
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
==========================================================================
Coopers & Lybrand, L.L.P. has been selected by the Board of
Trustees to serve as independent accountants for fiscal year 1996. State
Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, MA
02110, currently serves as custodian of the Portfolio's investments.
First National Bank of Maryland, 25 South Charles Street, Baltimore,
Maryland 21203 also serves as custodian of certain of the Portfolio's
cash assets. Neither custodian has any part in deciding the Portfolio's
investment policies or the choice of securities that are to be purchased
or sold for the Portfolio.
==========================================================================
METHOD OF DISTRIBUTION
==========================================================================
Put CSC back in for prior to 4/1/95.
The Portfolio has entered into a principal underwriting
agreement with Calvert Distributors, Inc. ("CDI"). Pursuant to the
agreement, CDI serves as distributor and principal underwriter for the
Portfolio. CDI bears all its expenses of providing services pursuant to
the agreement, including payment of any commissions and service fees.
CDI is entitled to receive a distribution service fee for Class C
shares, payable monthly pursuant to the Portfolio's Distribution Plans,
of 0.25% of the Portfolio's average daily net assets. CDI also receives
all sales charges imposed on Portfolio shares and compensates
broker-dealer firms for sales of shares at a maximum commission rate of
3.0%, as specified in the table of applicable sales charges (see
"Alternative Sales Options" in the Prospectus). For the fiscal years
ended December 31, 1993, 1994, and 1995, CDI received no distribution
service fees under the Distribution Plan for Class A shares and received
sales charges in excess of the dealer reallowance of $37,456, $1,813,
and $21,661, respectively. For the add 1994 back into the paragraph and
say that 1995 fiscal year is ending December 31, 1995, Distribution
Plan expenses totaled $12,079 for Class C Shares of the Portfolio.
The Portfolio's Distribution Plans were approved by the Board
of Trustees, including the Trustees who are not "interested persons" of
the Fund (as that term is defined in the Investment Company Act of 1940)
and who have no direct or indirect financial interest in the operation
of the Plans or in any agreements related to the Plans. The selection
and nomination of the Trustees who are not interested persons of the
Fund is committed to the discretion of such disinterested Trustees. In
establishing the Plans, the Trustees considered various factors
including the amount of the distribution fee. The Trustees determined
that there is a reasonable likelihood that the Plans will benefit the
Portfolio and its shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Trustees who have no direct or indirect financial
interest in the Plans or by vote of a majority of the outstanding shares
of the Portfolio. Any change in the Plans that would materially increase
the distribution cost to the Portfolio requires approval of the
shareholders of the affected class; otherwise, the Plans may be amended
by the Trustees, including a majority of the non-interested Trustees as
described above.
<PAGE>
The Plans will continue in effect indefinitely, if not sooner
terminated in accordance with its terms. Thereafter, the Plans will
continue in effect for successive one year periods provided that such
continuance is annually approved by (i) the vote of a majority of the
Trustees who are not parties to the Plans or interested persons of any
such party and who have no direct or indirect financial interest in the
Plans, and (ii) the vote of a majority of the entire Board of Trustees.
Apart from the Plan, the Advisor, at its expense, may incur
costs and pay expenses associated with the distribution of shares of the
Portfolio. The Portfolio paid no expenses pursuant to the Plan during
fiscal 1992, 1993, and 1994.
==========================================================================
PORTFOLIO TRANSACTIONS
==========================================================================
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and the
choice of brokers and dealers are made by the Fund's Advisor under the
direction and supervision of the Fund's Board of Trustees.
For the fiscal years ended December 31, 1993, 1994, and 1995,
the portfolio turnover was 97%, 98%, and 58%, respectively.
Broker-dealers who execute portfolio transactions on behalf of the Fund
are selected on the basis of their professional capability and the value
and quality of their services. The Advisor reserves the right to place
orders for the purchase or sale of portfolio securities with
broker-dealers who have sold shares of the Fund or who provide the Fund
with statistical, research, or other information and services. Although
any statistical research or other information and services provided by
broker-dealers may be useful to the Advisor, the dollar value of such
information and services is generally indeterminable, and its
availability or receipt does not serve to materially reduce the
Advisor's normal research activities or expenses. During the fiscal
years ended December 31, 1993, 1994, and 1995 no brokerage commissions
were paid by the Portfolio to broker-dealers. No brokerage commissions
were paid to any officer or trustee of the Fund or any of their
affiliates.
==========================================================================
GENERAL INFORMATION
==========================================================================
The Portfolio is a series of Calvert Tax-Free Reserves, which
was organized as a Massachusetts business trust on October 20, 1980. The
other series of the Fund include the Money Market Portfolio,
Limited-Term Portfolio, Money Management Plus Tax-Free Portfolio,
California Money Market Portfolio, New Jersey Money Market Portfolio,
and the Vermont Municipal Portfolio. The Fund's Declaration of Trust
contains an express disclaimer of shareholder liability for acts or
obligations of the Fund. The shareholders of a Massachusetts business
trust might, however, under certain circumstances, be held personally
liable as partners for its obligations. The Declaration of Trust
provides for indemnification and reimbursement of expenses out of Fund
assets for any shareholder held personally liable for obligations of the
Fund. The Declaration of Trust provides that the Fund shall, upon
request, assume the defense of any claim made against any shareholder
for any act or obligation of the Fund and satisfy any judgment thereon.
The Declaration of Trust further provides that the Fund may maintain
appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Fund, its shareholders,
Trustees, officers, employees, and agents to cover possible tort and
other liabilities. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in
which both inadequate insurance exists and the Fund itself is unable to
meet its obligations.
Each share of each series represents an equal proportionate
interest in that series with each other share and is entitled to such
dividends and distributions out of the income belonging to such series
as declared by the Board. The Funds offers two separate classes of
shares: Class A and Class C. Each class represents interests in the same
portfolio of investments but, as further described in the prospectus,
each class is subject to differing sales charges and expenses, which
differences will result in differing net asset values and distributions.
Upon any liquidation of the Funds, shareholders of each class are
entitled to share pro rata in the net assets belonging to that series
available for distribution.
General costs, expenses, and liabilities of the Fund
attributable to a particular Portfolio are borne by that Portfolio;
costs, expenses, and liabilities not attributable to a particular
Portfolio are allocated between the Fund's Portfolios on the basis of
the respective net assets of each Portfolio.
The Portfolio will send its shareholders unaudited semi-annual
and audited annual reports that will include the Portfolio's net asset
value per share, portfolio securities, income and expenses and other
financial information.
This Statement of Additional Information does not contain all
the information in the Fund's registration statement. The registration
statement is on file with the Securities and Exchange Commission and is
available to the public.
==========================================================================
FINANCIAL STATEMENTS
==========================================================================
The audited financial statements in the Portfolio's Annual
Report to Shareholders dated December 31, 1995, are expressly
incorporated by reference and made a part of this Statement of
Additional Information. A copy of the Annual Report may be obtained free
of charge by writing or calling the Fund.
<PAGE>
==========================================================================
APPENDIX
==========================================================================
Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for various
public purposes. Such purposes include the construction of a wide range
of public facilities, the refunding of outstanding obligations, the
obtaining of funds for general operating expenses, and the lending of
funds to other public institutions and facilities. In addition, certain
types of private activity bonds are issued by or on behalf of public
authorities to obtain funds for many types of local, privately operated
facilities. Such debt instruments are considered municipal obligations
if the interest paid on them is exempt from federal income tax in the
opinion of bond counsel to the issuer. Although the interest paid on the
proceeds from private activity bonds used for the construction,
equipment, repair or improvement of privately operated industrial or
commercial facilities may be exempt from federal income tax, current
federal tax law places substantial limitations on the size of such
issues.
Municipal obligations are generally classified as either
"general obligation" or "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable from
the revenues derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special excise tax or other
specific revenue source but not from the general taxing power.
Tax-exempt private activity bonds are in most cases revenue bonds and do
not generally carry the pledge of the credit of the issuing
municipality. There are, of course, variations in the security of
municipal obligations both within a particular classification and among
classifications.
Municipal obligations are generally traded on the basis of a
quoted yield to maturity, and the price of the security is adjusted so
that relative to the stated rate of interest it will return the quoted
rate to the purchaser.
Short-term and limited-term municipal obligations include Tax
Anticipation Notes, Revenue Anticipation Notes Bond Anticipation Notes,
Construction Loan Notes, and Discount Notes. The maturities of these
instruments at the time of issue generally will range between three
months and one year. Pre-Refunded Bonds with longer nominal maturities
that are due to be retired with the proceeds of an escrowed subsequent
issue at a date within one year and three years of the time of
acquisition are also considered short-term and limited-term municipal
obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other
short-term obligations are designated Moody's Investment Grade ("MIG").
This distinction is in recognition of the differences between short-term
credit risk and long-term risk.
MIG 1: Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market
for refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding
group.
MIG3: Notes bearing this designation are of favorable quality,
with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Market access for refinancing, in
particular, is likely to be less well established.
MIG4: Notes bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's
municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat larger than
in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which make the bond somewhat more susceptible to the adverse
effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in the
A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
<PAGE>
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the
Letter of Intent option on my Fund Account Application Form, I agree to
be bound by the terms and conditions applicable to Letters of Intent
appearing in the Prospectus and the Statement of Additional Information
for the Fund and the provisions described below as they may be amended
from time to time by the Fund. Such amendments will apply automatically
to existing Letters of Intent.
I intend to invest in the shares of: (Fund or Portfolio
name*) during the thirteen (13) month period from the date of my first
purchase pursuant to this Letter (which cannot be more than ninety (90)
days prior to the date of this Letter or my Fund Account Application
Form, whichever is applicable), an aggregate amount (excluding any
reinvestments of distributions) of at least fifty thousand dollars
($50,000) which, together with my current holdings of the Fund (at
public offering price on date of this Letter or my Fund Account
Application Form, whichever is applicable), will equal or exceed the
amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
Subject to the conditions specified below, including the terms
of escrow, to which I hereby agree, each purchase occurring after the
date of this Letter will be made at the public offering price applicable
to a single transaction of the dollar amount specified above, as
described in the Fund's prospectus. No portion of the sales charge
imposed on purchases made prior to the date of this Letter will be
refunded.
I am making no commitment to purchase shares, but if my
purchases within thirteen months from the date of my first purchase do
not aggregate the minimum amount specified above, I will pay the
increased amount of sales charges prescribed in the terms of escrow
described below. I understand that 4.75% of the minimum dollar amount
specified above will be held in escrow in the form of shares (computed
to the nearest full share). These shares will be held subject to the
terms of escrow described below.
From the initial purchase (or subsequent purchases if
necessary), 4.75% of the dollar amount specified in this Letter shall be
held in escrow in shares of the Fund by the Fund's transfer agent. For
example, if the minimum amount specified under the Letter is $50,000,
the escrow shall be shares valued in the amount of $2,375 (computed at
the public offering price adjusted for a $50,000 purchase). All
dividends and any capital gains distribution on the escrowed shares will
be credited to my account.
If the total minimum investment specified under the Letter is
completed within a thirteen month period, escrowed shares will be
promptly released to me. However, shares disposed of prior to completion
of the purchase requirement under the Letter will be deducted from the
amount required to complete the investment commitment.
Upon expiration of this Letter, the total purchases pursuant to
the Letter are less than the amount specified in the Letter as the
intended aggregate purchases, Calvert Distributors, Inc. ("CDI") will
bill me for an amount equal to the difference between the lower load I
paid and the dollar amount of sales charges which I would have paid if
the total amount purchased had been made at a single time. If not paid
by the investor within 20 days, CDI will debit the difference from my
account. Full shares, if any, remaining in escrow after the
aforementioned adjustment will be released and, upon request, remitted
to me.
I irrevocably constitute and appoint CDI as my
attorney-in-fact, with full power of substitution, to surrender for
redemption any or all escrowed shares on the books of the Fund. This
power of attorney is coupled with an interest.
The commission allowed by Calvert Distributors, Inc. to the
broker-dealer named herein shall be at the rate applicable to the
minimum amount of my specified intended purchases.
<PAGE>
The Letter may be revised upward by me at any time during the
thirteen-month period, and such a revision will be treated as a new
Letter, except that the thirteen-month period during which the purchase
must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
In determining the total amount of purchases made hereunder,
shares disposed of prior to termination of this Letter will be deducted.
My broker-dealer shall refer to this Letter of Intent in placing any
future purchase orders for me while this Letter is in effect.
Dealer Name of Investor(s)
By
Authorized Signer Address
Signature of Investor(s)
Date Signature of Investor(s)
<PAGE>
Calvert Tax-Free Reserves
California Money Market Portfolio
Statement of Additional Information
April 30, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 4
Purchases and
Redemptions of Shares 5
Dividends and
Distributions 6
Tax Matters 6
Valuation of Shares 7
Calculation of Yield 7
Advertising 8
Trustees and Officers 8
Investment Advisor 11
Administrative Services 12
Independent Accountants
and Custodians 12
Portfolio Transactions 12
General Information 13
Financial Statements 13
Appendix 13
Investors must reside in California to purchase shares of the Portfolio.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION - April 30, 1996
CALVERT TAX-FREE RESERVES
CALIFORNIA MONEY MARKET PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
- --------------------------------------------------------------------------
New Account (800) 368-2748
Shareholder (800) 368-2745
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Information: (301) 951-4820
Services: (301) 951-4810
- --------------------------------------------------------------------------
Broker (800) 368-2746 TDD for
the Hearing-
==========================================================================
Services: (301) 951-4850 Impaired:
(800) 541-1524
==========================================================================
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in
conjunction with the Portfolio's Prospectus, dated April 30, 1996, which
may be obtained free of charge by writing the Portfolio at the above
address or calling the telephone numbers listed above.
==========================================================================
INVESTMENT OBJECTIVE
==========================================================================
The California Money Market Portfolio (the "Portfolio") is a
series of Calvert Tax-Free Reserves (the "Fund"), designed to provide
individual and institutional investors in higher tax brackets with the
highest level of interest income exempt from federal and California
state income taxes as is consistent with prudent investment management,
preservation of capital, and the quality and maturity characteristics
prescribed for the Portfolio. The Portfolio invests in high quality
municipal obligations with maturities of one year or less and maintains
an average maturity of 90 days or less. The Portfolio further seeks to
maintain a constant net asset value of $1.00 per share. There is, of
course, no assurance that the Portfolio will be successful in meeting
its investment objective or maintaining the Portfolio's net asset value
constant at $1.00 per share because there are inherent risks in the
ownership of any investment. Dividends paid by the Portfolio will
fluctuate with income earned on investments.
==========================================================================
INVESTMENT POLICIES
==========================================================================
The Portfolio seeks to earn the highest level of interest
income exempt from federal and California state income taxes as is
consistent with prudent investment management, preservation of capital,
and the quality and maturity characteristics of the Portfolio.
The Portfolio invests primarily in a diversified portfolio of
municipal obligations whose interest is exempt from federal and
California state 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. Short-term obligations have
remaining maturities of one year or less. The Portfolio maintains an
average weighted maturity of 90 days or less.
Under normal market conditions, the Portfolio attempts to
invest 100%, and will invest at least 80%, of its total assets in debt
obligations issued by or on behalf of the State of California and its
political subdivisions ("California Municipal Obligations"). Dividends
paid by the Portfolio which are derived from interest attributable to
California Municipal Obligations will be exempt from federal and
California state income taxes. Dividends derived from interest on
tax-exempt obligations of other governmental issuers will be exempt from
federal income tax, but will be subject to California state income taxes.
The credit rating of the Portfolio's assets as of its most
recent fiscal year-end appears in the Annual Report to Shareholders,
incorporated by reference herein.
Variable Rate Demand Notes
The Board of Trustees has approved investments in floating and
variable rate demand notes upon the following conditions: the Portfolio
has right of demand, upon notice not to exceed thirty days, against the
issuer to receive payment; the issuer will be able to make payment upon
such demand, either from its own resources or through an unqualified
commitment from a third party; and the rate of interest payable is
calculated to ensure that the market value of such notes will
approximate par value on the adjustment dates. The remaining maturity of
such demand notes is deemed the period remaining until such time as the
Portfolio has the right to dispose of the notes at a price which
approximates par and market value.
Municipal Leases
The Portfolio may invest in municipal leases, or structured instruments
where the underlying security is a municipal lease. 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. The Portfolio
may purchase unrated leases. The Fund's Advisor, under the supervision
of the Board of Trustees/Directors, is responsible for determining the
credit quality of such leases on an ongoing basis, including an
assessment of the likelihood that the lease will not be canceled.
Certain municipal leases may be considered illiquid and subject to the
Portfolio's limit on illiquid securities. The Board of
Trustees/Directors has directed the Advisor to treat a municipal lease
as a liquid security if it satisfies the following conditions: (A) such
treatment must be consistent with the Portfolio's investment
restrictions; (B) the Advisor should be able to conclude that the
obligation will maintain its liquidity throughout the time it is held by
the Portfolio, based on the following factors: (1) whether the lease may
be terminated by the lessee; (2) the potential recovery, if any, from a
sale of the leased property upon termination of the lease; (3) the
lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics and prospects); (4) the
likelihood that the lessee will discontinue appropriating funding for
the leased property because the property is no longer deemed essential
to its operations (e.g., the potential for an "event of
nonappropriation"), and (5) any credit enhancement or legal recourse
provided upon an event of nonappropriation or other termination of the
lease; (C) the Advisor should determine whether the obligation can be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Portfolio has valued it for
purposes of calculating the Portfolio's net asset value, taking into
account the following factors: (1) the frequency of trades and quotes;
(2) the volatility of quotations and trade prices; (3) the number of
dealers willing to purchase or sell the security and the number of
potential purchasers; (4) dealer undertakings to make a market in the
security; (5) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of the transfer); (6)
the rating of the security and the financial condition and prospects of
the issuer; and (7) other factors relevant to the Portfolio's ability to
dispose of the security; and (D) the Advisor should have reasonable
expectations that the municipal lease obligation will maintain its
liquidity throughout the time the instrument is held by the Portfolio.
Obligations with Puts Attached
The Portfolio has authority to purchase securities at a price
which would result in a yield to maturity lower than that generally
offered by the seller at the time of purchase when it can acquire at the
same time the right to sell the securities back to the seller at an
agreed upon price at any time during a stated period or on a certain
date. Such a right is generally denoted as a "put." The Portfolio may
not acquire obligations subject to puts if immediately thereafter, with
respect to 75% of the total amortized cost value of its assets, the
Portfolio would have more than 5% of its assets invested in securities
underlying puts from the same institution. The Portfolio may, however,
invest up to 10% of its assets in securities underlying unconditional
puts from the same institution. Unconditional puts are readily
exercisable in the event of a default in payment of principal or
interest on the underlying securities. The Portfolio must limit its
portfolio investments, including puts, to instruments of high quality as
determined by a nationally recognized statistical rating organization.
Temporary Investments
Short-term money market type investments consist of:
obligations of the U.S. Government, its agencies and instrumentalities;
certificates of deposit of banks with assets of one billion dollars or
more; commercial paper or other corporate notes of investment grade
quality; and any of such items subject to short-term repurchase
agreements.
The Portfolio intends to minimize taxable income through
investment, when possible, in short-term tax-exempt securities. 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 be invested so that at
least 80% of the Portfolio's annual income will be tax-exempt. While the
Portfolio has the authority to invest in short-term taxable obligations,
the Portfolio has not done so since its inception and, barring unusual
market conditions, does not expect in the future to invest in taxable
obligations.
When-Issued Purchases
Securities purchased on a when-issued basis and the securities
held in the Portfolio are subject to changes in market value based upon
the public's perception of the creditworthiness of the issuer and
changes in the level of interest rates (which will generally result in
both changing in value in the same way-both experiencing appreciation
when interest rates decline and depreciation when interest rates rise).
Therefore, if in order to achieve higher interest income, the Portfolio
remains substantially fully invested at the same time that it has
purchased securities on a when-issued basis, there will be a greater
possibility that the market value of the Portfolio's assets may vary. No
new when-issued commitments will be made by the Portfolio if more than
50% of the Portfolio's net assets would become so committed.
When the time comes to pay for when-issued securities, the
Portfolio will meet its obligations from then available cash flow, sale
of securities or, although it would not normally expect to do so, from
sale of the when-issued securities themselves (which may have a market
value greater or less than the Portfolio's payment obligation). Sale of
securities to meet such obligations carries with it a greater potential
for the realization of capital losses and capital gains which are not
exempt from federal income tax.
Considerations for Investing in California
A broad economic base and moderate but growing debt levels
characterize the credit quality of the State of California. In addition
to general obligation bonds, the State builds and acquires capital
facilities through the use of lease-purchase borrowing. There are also
16 State agencies and authorities which issue revenue bonds payable from
State projects for transportation, educational facilities and various
public works. On a local level, cities, counties, and municipal entities
issue general obligation and revenue bonds for general public purposes.
As part of its cash management program, the State regularly issues
short-term obligations to meet cash flow requirements during the fiscal
year.
The State continues to grapple with a large general fund
accumulated deficit resulting from years of insufficient revenue
performance and increased expenditures. Although continued fiscal
pressure is expected, the State anticipates moderate economic growth
over the next few years. Despite the unfortunate and unique
circumstances surrounding the Orange County bankruptcy filing,
California's municipal obligations generally remain investment grade. An
investment in the Portfolio, however, bears the risk of a concentration
of investment in one geographic area and a single political jurisdiction.
==========================================================================
INVESTMENT RESTRICTIONS
==========================================================================
The foregoing investment objective and policies and the
following investment restrictions and fundamental policies may not be
changed without the consent of the holders of a majority of the
Portfolio's outstanding shares. Shares have equal rights as to voting. A
majority of the shares means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding
shares are represented or (ii) more than 50% of the outstanding shares.
The Portfolio may not:
(1) Purchase common stocks, preferred stocks,
warrants, or other equity securities;
(2) Issue senior securities, borrow money, or
pledge, mortgage, or hypothecate its assets, except as
may be necessary to secure borrowings from banks for
temporary or emergency (not leveraging) purposes and
then in an amount not greater than 10% of the value of
the Portfolio's total assets at the time of the
borrowing. Investment securities will not be purchased
while any borrowings are outstanding;
(3) Sell securities short, purchase securities on
margin, or write put or call options. The Portfolio
reserves the right to purchase securities with demand
features. See "Variable Rate Demand Notes" and
"Obligations with Puts Attached";
(4) Underwrite the securities of other issuers,
except to the extent that the purchase of municipal
obligations in accordance with the Portfolio's
investment objective and policies, either directly from
the issuer, or from an underwriter for an issuer, may
be deemed an underwriting;
(5) Purchase securities which are subject to legal
or contractual restrictions on resale, i.e., restricted
securities, or other securities which are not readily
marketable assets, including repurchase agreements not
terminable within seven days, with respect to no more
than 10% of its total assets;
(6) Purchase or sell real estate, real estate
investment trust securities, commodities or commodity
contracts, or oil and gas interests, but this shall not
prevent the Portfolio from investing in municipal
obligations secured by real estate or interests therein;
(7) Purchase or retain securities of an issuer if
those trustees of the Portfolio, each of whom owns more
than 1/2 of 1% of the outstanding securities of such
issuer, together own more than 5% of such outstanding
securities;
(8) Make loans to others, except in accordance
with the Portfolio's investment objective and policies
or pursuant to contracts providing for the compensation
of service providers by compensating balances;
(9) Invest in companies for the purpose of
exercising control; or invest in securities of other
investment companies, except as they may be acquired as
part of a merger, consolidation or acquisition of
assets, or in connection with a trustee's/director's
deferred compensation plan, as long as there is no
duplicaton of advisory fees;
(10) Invest more than 25% of its assets in the
securities of any one issuer, except that the Portfolio
may invest more than 25% of its assets in obligations
issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. For purposes of this
limitation, the entity which has the ultimate
responsibility for the payment of principal and
interest on a particular security will be treated as
its issuer;
(11) Invest more than 25% of its assets in any
particular industry or industries, except that the
Portfolio may invest more than 25% of its assets in
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. Private
activity bonds, where the payment of principal and
interest is the responsibility of companies within the
same industry, are grouped together as an "industry";
(12) Invest more than 5% of the value of its total
assets in securities where the payment of principal and
interest is the responsibility of a company or
companies with less than three years' operating history.
==========================================================================
PURCHASES AND REDEMPTIONS OF SHARES
==========================================================================
Share certificates will not be issued unless requested in
writing by the investor. No charge will be made for share certificate
requests. No certificates will be issued for fractional shares (see
Prospectus, "How to Sell Your Shares").
Shareholders wishing to use the draft writing service should
complete the signature card enclosed with the Investment Application.
This draft writing service will be subject to the customary rules and
regulations governing checking accounts, and the Portfolio reserves the
right to change or suspend the service. Generally, there is no charge to
you for the maintenance of this service or the clearance of drafts, but
the Portfolio reserves the right to charge a service fee for drafts
returned for uncollected or insufficient funds, and will charge $25 for
stop payments. As a service to shareholders, the Fund may automatically
transfer the dollar amount necessary to cover drafts you have written on
the Fund to your Fund account from any other of your identically
registered accounts in Calvert money market funds or Calvert Insured
Plus. The Fund may charge a fee for this service.
When a payable through draft is presented for payment, a
sufficient number of full and fractional shares from the shareholder's
account to cover the amount of the draft will be redeemed at the net
asset value next determined. If there are insufficient shares in the
shareholder's account, the draft will be returned. Drafts presented to
the bank for payment which would require the redemption of shares
purchased by check or electronic funds transfer within the previous 10
business days may not be honored.
Amounts redeemed by check redemption may be mailed to the
investor without charge. Amounts of more than $50 and less than $300,000
may be transferred electronically at no charge to the investor. Amounts
of $1,000 or more will be transmitted by wire, without charge, to the
investor's account at a domestic commercial bank that is a member of the
Federal Reserve System or to a correspondent bank. A charge of $5 is
imposed on wire transfers of less than $1,000. If the investor's bank is
not a Federal Reserve System member, failure of immediate notification
to that bank by the correspondent bank could result in a delay in
crediting the funds to the investor's bank account.
Telephone redemption requests which would require the
redemption of shares purchased by check or electronic funds transfer
within the previous 10 business days may not be honored. The Fund
reserves the right to modify the telephone redemption privilege.
To change redemption instructions already given, shareholders
must send a written notice to Calvert Group, P.O. Box 419544, Kansas
City, MO 64141-6544, with a voided copy of a check for the bank wiring
instructions to be added. If a voided check does not accompany the
request, then the request must be signature guaranteed by a commercial
bank, savings and loan association, trust company, member firm of any
national securities exchange, or certain credit unions. Further
documentation may be required from corporations, fiduciaries, and
institutional investors.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is
closed (other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency exists, as
determined by the SEC, or if the Commission has ordered such a
suspension for the protection of shareholders. Redemption proceeds are
normally mailed or wired the next business day after a proper redemption
request has been received, unless redemptions have been suspended or
postponed as described above.
==========================================================================
DIVIDENDS AND DISTRIBUTIONS
==========================================================================
Dividends from the Portfolio's net investment income are
declared daily and paid monthly. Net investment income consists of the
interest income earned on investments (adjusted for amortization of
original issue discounts or premiums or market premiums), less estimated
expenses. Capital gains, if any, are normally paid once a year and will
be automatically reinvested at net asset value in additional shares.
Dividends and any distributions are automatically reinvested in
additional shares of the Fund, unless you elect to have the dividends of
$10 or more paid in cash (by check or by Calvert Money Controller). You
may also request to have your dividends and distributions from the
Portfolio invested in shares of any other Calvert Group Fund, at no
additional charge. 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.
Purchasers of shares of the Portfolio will begin receiving
dividends upon the date federal funds are received by the Portfolio.
Purchases by bank wire received by 12:30 p.m., Eastern time are
immediately available federal funds; purchases by domestic check may
take one day to convert into federal funds. Shareholders redeeming
shares by telephone, electronic funds transfer, or written request will
receive dividends through the date that the redemption request is
processed; shareholders redeeming shares by draft will receive dividends
up to the date such draft is presented to the Portfolio for payment.
==========================================================================
TAX MATTERS
==========================================================================
The Portfolio intends to qualify and has, since inception, so
qualified, as a "regulated investment company" under Subchapter M of the
Internal Revenue Code (the "Code"), as amended. By so qualifying, the
Portfolio will not be subject to federal income tax, nor to the federal
excise tax imposed by the Tax Reform Act of 1986 (the "Act"), to the
extent that it distributes its net investment income and realized
capital gains.
The Portfolio's dividends of net investment income constitute
exempt-interest dividends on which shareholders are not generally
subject to federal income tax; in addition, to the extent that income
dividends are derived from earnings attributable to obligations of
California and its political subdivisions, they will also be exempt from
state and local personal income tax in California.
However, under the Act, dividends attributable to interest on
certain private activity bonds must be included in federal alternative
minimum taxable income for the purpose of determining liability (if any)
for individuals and for corporations. The Portfolio's dividends derived
from taxable interest and distributions of net short-term capital gains,
whether taken in cash or reinvested in additional shares, are taxable to
shareholders as ordinary income and do not qualify for the dividends
received deduction for corporations.
The Portfolio will notify shareholders annually about the
federal tax status of dividends and distributions paid by the Portfolio
and the amount of dividends withheld, if any, during the previous year.
The Code provides that interest on indebtedness incurred or
continued in order to purchase or carry shares of a regulated investment
company which distributes exempt-interest dividends during the year is
not deductible. Furthermore, entities or persons who are "substantial
users" (or persons related to "substantial users") of facilities
financed by private activity bonds should consult their tax advisors
before purchasing shares of the Portfolio. "Substantial user" is
generally defined as including a "non-exempt person" who regularly uses
in trade or business a part of a facility financed from the proceeds of
private activity bonds.
==========================================================================
VALUATION OF SHARES
==========================================================================
The Portfolio's assets, including commitments to purchase
securities on a when-issued basis, are valued at their amortized cost
which does not take into account unrealized capital gains or losses.
This involves valuing an instrument at its cost and thereafter assuming
a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price that would be received
upon sale of the instrument. During periods of declining interest rates,
the daily yield on shares of the Portfolio may tend to be higher than a
like computation made by a fund with identical investments utilizing a
method of valuation based upon market prices and estimates of market
prices for all of its portfolio instruments. Thus, if the use of
amortized cost by the Portfolio resulted in a lower aggregate portfolio
value on a particular day, a prospective investor in the Portfolio would
be able to obtain a somewhat higher yield than would result from
investment in a fund utilizing solely market values, and existing
investors in the Portfolio would receive less investment income. The
converse would apply in a period of rising interest rates.
Rule 2a-7 under the Investment Company Act of 1940 permits the
Portfolio to value its assets at amortized cost if the Portfolio
maintains a dollar-weighted average maturity of 90 days or less and only
purchases obligations having remaining maturities of one year or less.
Rule 2a-7 requires, as a condition of its use, that the Portfolio invest
only in obligations determined by the Trustees to be of high quality
with minimal credit risks and further requires the Trustees to establish
procedures designed to stabilize, to the extent reasonably possible, the
Portfolio's price per share as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of the Portfolio's
investment holdings by the Trustees, at such intervals as they may deem
appropriate, to determine whether the Portfolio's net asset value
calculated by using available market quotations or equivalents deviates
from $1.00 per share based on amortized cost. If such deviation exceeds
0.50%, the Trustees will promptly consider what action, if any, will be
initiated. In the event the Trustees determine that a deviation exists
which may result in material dilution or other unfair results to
investors or existing shareholders, the Trustees will take such
corrective action as they regard as necessary and appropriate,
including: the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; the withholding of dividends or payment of distributions from
capital or capital gains; redemptions of shares in kind; or the
establishment of a net asset value per share based on available market
quotations.
The Portfolio determines the net asset value of its shares
every business day at the close of the regular session of the New York
stock exchange (generally, 4:00 p.m. Eastern time), and at such other
times as may be necessary or appropriate. The Portfolio does not
determine net asset value on certain national holidays or other days on
which the New York Stock Exchange is closed: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
==========================================================================
CALCULATION OF YIELD
==========================================================================
From time to time the Portfolio advertises its "yield" and
"effective yield." Both yield figures are based on historical earnings
and are not intended to indicate future performance. The "yield" of the
Portfolio refers to the income generated by an investment in the
Portfolio over a particular base period of time. The length and closing
date of the base period will be stated in the advertisement. If the base
period is less than one year, the yield is then "annualized." That is,
the net change, exclusive of capital changes, in the value of a share
during the base period is divided by the net asset value per share at
the beginning of the period, and the result is multiplied by 365 and
divided by the number of days in the base period. Capital changes
excluded from the calculation of yield are: (1) realized gains and
losses from the sale of securities, and (2) unrealized appreciation and
depreciation. The Portfolio's "effective yield" for a seven-day period
is its annualized compounded yield during the period, calculated
according to the following formula:
Effective yield = (base period return + 1)365/7 -1
For the seven-day period ended December 29, 1995, the yield was 4.73%
and its effective yield 4.85%.
The Portfolio also may advertise, from time to time, its "tax
equivalent yield." The tax equivalent yield is the yield an investor
would be required to obtain from taxable investments to equal the
Portfolio's yield, all or a portion of which may be exempt from federal
income taxes. The tax equivalent yield is computed by taking the portion
of the Portfolio's effective yield exempt from federal income taxes and
multiplying the exempt yield by a factor based upon a stated income tax
rate, then adding the portion of the yield that is not exempt from
federal income taxes. The factor which is used to calculate the tax
equivalent yield is the reciprocal of the difference between 1 and the
applicable income tax rates, which will be stated in the advertisement.
For the seven-day period ended December 29, 1995, the federal tax
equivalent yield for an investor in the 36% income tax bracket was
8.51%, and 9.01% for an investor in the 39.6% tax bracket.
==========================================================================
ADVERTISING
==========================================================================
The Fund or its affiliates may provide information such as, but
not limited to, the economy, investment climate, investment principles,
sociological conditions and political ambiance. Discussion may include
hypothetical scenarios or lists of relevant factors designed to aid the
investor in determining whether the Fund is compatible with the
investor's goals. The Fund may list portfolio holdings or give examples
or securities that may have been considered for inclusion in the
Portfolio, whether held or not.
The Fund or its affiliates may supply comparative performance
data and rankings from independent sources such as Donoghue's Money Fund
Report, Bank Rate Monitor, Money, Forbes, Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Wiesenberger Investment
Companies Service, Russell 2000/Small Stock Index, Mutual Fund Values
Morningstar Ratings, Mutual Fund Forecaster, Barron's, The Wall Street
Journal, and Schabacker Investment Management, Inc. Such averages
generally do not reflect any front- or back-end sales charges that may
be charged by Funds in that grouping. The Fund may also cite to any
source, whether in print or on-line, such as Bloomberg, in order to
acknowledge origin of information. The Fund may compare itself or its
portfolio holdings to other investments, whether or not issued or
regulated by the securities industry, including, but not limited to,
certificates of deposit and Treasury notes. The Fund, its Advisor, and
its affiliates reserve the right to update performance rankings as new
rankings become available.
==========================================================================
TRUSTEES AND OFFICERS
==========================================================================
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Director of
Finance for the Family Health Council, Inc. in Pittsburgh, Pennsylvania,
a non-profit corporation which provides family planning services,
nutrition, maternal/child health care, and various health screening
services. Mr. Baird is a trustee/director of each of the investment
companies in the Calvert Group of Funds, except for Acacia Capital
Corporation, Calvert New World Fund and Calvert World Values Fund. Age:
47. Address: 211 Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in
the law firm of Abrams, Blatz, Gran, Hendricks & Reina, P.A. Age: 59.
Address: 900 Oak Tree Road, South Plainfield, New Jersey 07080.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist
with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem
Medical Imaging in Allentown, Pennsylvania. Age: 46. Address: 2040
Nuuanu Avenue #1805, Honolulu, Hawaii, 96817.
1 CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and
Treasurer Emeritus of the George Washington University, and has retired
from University Support Services, Inc. of Herndon, Virginia. He is also
a Director of Acacia Mutual Life Insurance Company. Age: 73. Address:
1658 Quail Hollow Court, McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices head
and neck reconstructive surgery in the Washington, D.C., metropolitan
area. Age: 47. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is a principal of
Gavian De Vaux Associates, an investment banking firm. He was formerly
President of Corporate Finance of Washington, Inc. Age: 63. Address:
1953 Gallows Road, Suite 130, Vienna, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial consultant
to various organizations. In addition, he is a Director of the Community
Bankers Mutual Fund of Denver, Colorado, and the Treasurer and Director
of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey is a
trustee/director of each of the other investment companies in the
Calvert Group of Funds, except for Acacia Capital Corporation and
Calvert New World Fund. Age: 47. Address: 7205 Pomander Lane, Chevy
Chase, Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of
Acacia Federal Savings Bank. Age: 58. Address: 4823 Prestwick Drive,
Fairfax, Virginia 22030.
1 DAVID R. ROCHAT, Senior Vice President and Trustee. Mr.
Rochat is Executive Vice President of Calvert Asset Management Company,
Inc., Director and Secretary of Grady, Berwald and Co., Inc., and
Director and President of Chelsea Securities, Inc. Age: 58. Address: Box
93, Chelsea, Vermont 05038.
1 D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Acacia Capital Corporation and Calvert New
World Fund. Mr. Silby is an officer, director and shareholder of Silby,
Guffey & Company, Inc., which serves as general partner of Calvert
Social Venture Partners ("CSVP"). CSVP is a venture capital firm
investing in socially responsible small companies. He is also a Director
of Acacia Mutual Life Insurance Company. Age: 47. Address: 1715 18th
Street, N.W., Washington, D.C. 20009.
1 CLIFTON S. SORRELL, JR., President and Trustee. Mr. Sorrell
serves as President, Chief Executive Officer and Vice Chairman of
Calvert Group, Ltd. and as an officer and director of each of its
affiliated companies. He is a director of Calvert-Sloan Advisers,
L.L.C., and a trustee/director of each of the investment companies in
the Calvert Group of Funds. Age: 54.
1 RENO J. MARTINI, Senior Vice President. Mr. Martini is Senior
Vice President of Calvert Group, Ltd., and Senior Vice President and
Chief Investment Officer of Calvert Asset Management Company, Inc. Mr.
Martini is also a director and President of Calvert-Sloan Advisers,
L.L.C., and a director and officer of Calvert New World Fund. Age: 46.
1 RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is
Senior Vice President and Controller of Calvert Group, Ltd. and its
subsidiaries and an officer of each of the other investment companies in
the Calvert Group of Funds. Mr. Wolfsheimer is Vice President and
Treasurer of Calvert-Sloan Advisers, L.L.C., and a director of Calvert
Distributors, Inc. Age: 43.
1 WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant
Secretary. Mr. Tartikoff is an officer of each of the investment
companies in the Calvert Group of Funds, and is Senior Vice President,
Secretary, and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company. Age:
48.
1 EVELYNE S. STEWARD, Vice President. Ms. Steward is Senior
Vice President of Calvert Group, Ltd., and a director of Calvert-Sloan
Advisers, L.L.C. She is the sister of Philip J. Schewetti, the portfolio
manager of the CSIF Equity Portfolio. Age: 43.
1 DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc., and is an officer of each of
the other investment companies in the Calvert Group of Funds, except for
Calvert New World Fund, Inc. Age: 45.
1 SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds. Age: 37.
__________
1Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of of their
affiliation with the Fund's Advisor.
Each of the above directors/trustees and officers is a
director/trustee or officer of each of the investment companies in the
Calvert Group of Funds with the exception of Calvert Social Investment
Fund, of which only Messrs. Baird, Guffey, Silby and Sorrell are among
the trustees, Acacia Capital Corporation, of which only Messrs. Blatz,
Diehl, Pugh and Sorrell are among the directors, Calvert World Values
Fund, Inc., of which only Messrs. Guffey, Silby and Sorrell are among
the directors, and Calvert New World Fund, Inc., of which only Messrs.
Sorrell and Martini are among the directors. The address of directors
and officers, unless otherwise noted, is 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814. Trustees and officers of the Fund as a
group own less than 1% of each Fund's outstanding shares.
The Audit Committee of the Board is composed of Messrs. Baird,
Blatz, Feldman, Guffey and Pugh. The Board's Investment Policy Committee
is composed of Messrs. Borts, Diehl, Gavian, Rochat, Silby and Sorrell.
During fiscal 1995, trustees of the Fund not affiliated with
the Fund's Advisor were paid $24,432. Trustees of the Fund not
affiliated with the Advisor presently receive an annual fee of $20,250
for service as a member of the Board of Trustees of the Calvert Group of
Funds, and a fee of $750 to $1200 for each regular Board or Committee
meeting attended; such fees are allocated among the respective Funds on
the basis of net assets.
Trustees of the Fund not affiliated with the Fund's Advisor may
elect to defer receipt of all or a percentage of their fees and invest
them in any fund in the Calvert Family of Funds through the Trustees
Deferred Compensation Plan (shown as "Pension or Retirement Benefits
Accrued as part of Fund Expenses," below). Deferral of the fees is
designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees.
<PAGE>
<TABLE>
<CAPTION>
Trustee Compensation Table
Aggregate Pension or Retirement Total Compensation
Fiscal Year Compensation Benefits Accrued from
1995 (unaudited from Registrant as part of Registrant and Fund
numbers) for service Registrant Complex paid to
as Trustee Expenses<F1> Trustees<F2>
Name of Trustee
<S> <C> <C> <C>
Richard L. Baird, Jr. $25,831 $0 $33,450
Frank H. Blatz, Jr. $26,042 $26,042 $36,801
Frederick T. Borts $20,135 $0 $25,050
Charles E. Diehl $25,058 $25,058 $35,101
Douglas E. Feldman $24,494 $0 $30,600
Peter W. Gavian $24,862 $7,458 $31,951
John G. Guffey, Jr. $24,861 $0 $40,450
Arthur J. Pugh $26,792 $0 $36,801
D. Wayne Silby $23,878 $0 $47,965
<FN>
<F1> Messrs. Blatz, Diehl, Gavian, and Pugh have chosen to defer a portion
of their compensation. As of December 31, 1995, total deferred
compensation, including dividends and capital appreciation, was
$415,719, $337,395, $89,054, and $150,841, for each trustee,
respectively.
<F2> As of December 31, 1995. The Fund Complex consists of eight (8)
registered investment companies.
</FN>
</TABLE>
==========================================================================
INVESTMENT ADVISOR
==========================================================================
The Portfolio's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, a subsidiary of Calvert Group, Ltd., which is a subsidiary of
Acacia Mutual Life Insurance Company of Washington, D.C. ("Acacia
Mutual").
The Advisory Contract between the Portfolio and the Advisor
will remain in effect indefinitely, provided continuance is approved at
least annually by the vote of the holders of a majority of the
outstanding shares of the Portfolio, or by the Trustees of the
Portfolio; and further provided that such continuance is also approved
annually by the vote of a majority of the Trustees of the Portfolio who
are not parties to the Contract or interested persons of such parties,
cast in person at a meeting called for the purpose of voting on such
approval. The Contract may be terminated without penalty by either party
on 60 days' prior written notice; it automatically terminates in the
event of its assignment. Under the Contract, the Advisor manages the
investment and reinvestment of the Portfolio's assets, subject to the
direction and control of the Portfolio's Board of Trustees. For its
services, the Advisor receives an annual fee of 0.50% of the first $500
million of such Portfolio's average daily net assets, 0.45% of the next
$500 million of such assets, and 0.40% of all such assets over $1
billion.
The advisory fee is payable monthly. The Advisor reserves the
right (i) to waive all or a part of its fee and (ii) to compensate, at
its expense, broker-dealers in consideration of their promotional and
administrative services.
The Advisor provides the Portfolio with investment advice and
research, pays the salaries and fees of all Trustees and executive
officers of the Portfolio who are principals of the Advisor, and pays
certain Portfolio advertising and promotional expenses. The Portfolio
pays all other administrative and operating expenses, including:
custodial fees; shareholder servicing, dividend disbursing and transfer
agency fees; administrative service fees; federal and state securities
registration fees; insurance premiums; trade association dues; interest,
taxes and other business fees; legal and audit fees; and brokerage
commissions and other costs associated with the purchase and sale of
portfolio securities. The advisory fees paid to the Advisor under the
advisory contract for the 1993, 1994, and 1995 fiscal years were
$1,532,416, $1,472,373, and $1,426,938, respectively.
However, the Advisor has agreed to reimburse the Portfolio for
all expenses, excluding brokerage, taxes, interest, and extraordinary
items exceeding, on a pro rata basis, the most restrictive expense
limitation of those states in which the Portfolio's shares are qualified
for sale (currently, 2.50% of the first $30 million of the Portfolio's
average net assets, 2.0% of the next $70 million, and 1.50% of all such
assets in excess of $100 million). For 1993, 1994, and 1995, there was
no reimbursement of expenses.
==========================================================================
ADMINISTRATIVE SERVICES
==========================================================================
Calvert Shareholder Services, Inc., a wholly-owned subsidiary
of Calvert Group, Ltd., has been retained by the Portfolio to act as
transfer agent, dividend disbursing agent and shareholder servicing
agent. These responsibilities include: responding to shareholder
inquiries and instructions concerning their accounts; crediting and
debiting shareholder accounts for purchases and redemptions of Portfolio
shares and confirming such transactions; daily updating of shareholder
accounts to reflect declaration and payment of dividends; and preparing
and distributing quarterly statements to shareholders regarding their
accounts. For such services, Calvert Shareholder Services, Inc. receives
compensation based on the number of shareholder accounts and the number
of transactions. For its 1993, 1994, and 1995 fiscal years, the
Portfolio paid Calvert Shareholder Services, Inc. fees of $342,220,
$353,054, and $396,857, respectively.
Calvert Administrative Services Company, a wholly-owned
subsidiary of Calvert Group, Ltd., has been retained by the Fund to
provide certain administrative services necessary to the conduct of the
Fund's affairs. Such services include the preparation of corporate and
regulatory reports and filings, portfolio accounting, and the daily
determination of net investment income and net asset value per share.
Calvert Administrative Services Company receives a total fee of $200,000
per year for providing such services to the Fund, allocated among the
Portfolios based on assets. The service fees paid by the Portfolio to
Calvert Administrative Services Company for 1993, 1994, and 1995 were
$23,698, $22,411, $22,097, and $21,183, respectively.
The Portfolio has entered into a principal underwriting
agreement with Calvert Distributors, Inc. ("CDI"). Pursuant to the
agreement, CDI serves as distributor and principal underwriter for the
Portfolio, offering shares on a continuous, "best efforts" basis. CDI
bears all its expenses of providing services pursuant to the agreement,
including payment of any commissions and service fees.
==========================================================================
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
==========================================================================
Coopers & Lybrand, L.L.P. has been selected by the Board of
Trustees to serve as independent auditors for fiscal year 1996. State
Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, MA
02110, currently serves as custodian of the Portfolio's investments.
First National Bank of Maryland, 25 South Charles Street, Baltimore,
Maryland 21203 also serves as custodian of certain of the Portfolio's
cash assets. Neither custodian has any part in deciding the Portfolio's
investment policies or the choice of securities that are to be purchased
or sold for the Portfolio.
==========================================================================
PORTFOLIO TRANSACTIONS
==========================================================================
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and the
choice of brokers and dealers are made by the Fund's Advisor under the
direction and supervision of the Fund's Board of Trustees.
Broker-dealers who execute portfolio transactions on behalf of
the Fund are selected on the basis of their professional capability and
the value and quality of their services. The Advisor reserves the right
to place orders for the purchase or sale of portfolio securities with
broker-dealers who have sold shares of the Fund or who provide the Fund
with statistical, research, or other information and services. Although
any statistical research or other information and services provided by
broker-dealers may be useful to the Advisor, the dollar amount of such
information and services is generally indeterminable, and its
availability or receipt does not serve to materially reduce the
Advisor's normal research activities or expenses. No brokerage
commissions have been paid to any officer, trustee or Advisory Council
member of the Fund or any of their affiliates.
The Advisor may also execute portfolio transactions with or
through broker-dealers who have sold shares of the Fund. However, such
sales will not be a qualifying or disqualifying factor in a
broker-dealer's selection nor will the selection of any broker-dealer be
based on the volume of Fund shares sold. The Advisor may compensate, at
its expense, such broker-dealers in consideration of their promotional
and administrative services.
==========================================================================
GENERAL INFORMATION
==========================================================================
The Portfolio is a series of Calvert Tax-Free Reserves, an
open-end diversified investment management company which was 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, Money Management Plus Tax-Free Portfolio, New
Jersey Money Market Portfolio, and the Vermont Municipal Portfolio. The
Fund's Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Fund. The
shareholders of a Massachusetts business trust might, however, under
certain circumstances, be held personally liable as partners for its
obligations. The Declaration of Trust provides for indemnification and
reimbursement of expenses out of Fund assets for any shareholder held
personally liable for obligations of the Fund. The Declaration of Trust
provides that the Fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Fund
and satisfy any judgment thereon. The Declaration of Trust further
provides that the Fund may maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection
of the Fund, its shareholders, Trustees, officers, employees, and agents
to cover possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which both inadequate insurance exists
and the Fund itself is unable to meet its obligations.
General costs, expenses, and liabilities of the Fund
attributable to a particular Portfolio are borne by that Portfolio;
costs, expenses, and liabilities not attributable to a particular
Portfolio are allocated between the Fund's Portfolios on the basis of
the respective net assets of each Portfolio.
The Fund will send its shareholders unaudited semi-annual and
audited annual reports that will include the Fund's net asset value per
share, portfolio securities, income and expenses, and other financial
information.
This Statement of Additional Information does not contain all
the information in the Fund's registration statement. The registration
statement is on file with the Securities and Exchange Commission and is
available to the public.
==========================================================================
FINANCIAL STATEMENTS
==========================================================================
The audited financial statements in the Portfolio's Annual Report
to Shareholders dated December 31, 1995, are expressly incorporated by
reference and made a part of this Statement of Additional Information. A
copy of the Annual Report may be obtained free of charge by writing or
calling the Portfolio.
==========================================================================
APPENDIX
==========================================================================
Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for various
public purposes. Such purposes include the construction of a wide range
of public facilities, the refunding of outstanding obligations, the
obtaining of funds for general operating expenses, and the lending of
funds to other public institutions and facilities. In addition, certain
types of private activity bonds are issued by or on behalf of public
authorities to obtain funds for many types of local, privately operated
facilities. Such debt instruments are considered municipal obligations
if the interest paid on them is exempt from federal income tax in the
opinion of bond counsel to the issuer. Although the interest paid on the
proceeds from private activity bonds used for the construction,
equipment, repair or improvement of privately operated industrial or
commercial facilities may be exempt from federal income tax, current
federal tax law places substantial limitations on the size of such
issues.
Municipal obligations are generally classified as either
"general obligation" or "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable from
the revenues derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special excise tax or other
specific revenue source, but not from the general taxing power.
Tax-exempt private activity bonds are in most cases revenue bonds and do
not generally carry the pledge of the credit of the issuing
municipality. There are, of course, variations in the security of
municipal obligations, both within a particular classification and among
classifications.
Municipal obligations are generally traded on the basis of a
quoted yield to maturity, and the price of the security is adjusted so
that relative to the stated rate of interest it will return the quoted
rate to the purchaser.
Short-term and limited-term municipal obligations include Tax
Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes,
Construction Loan Notes, and Discount Notes. The maturities of these
instruments at the time of issue generally will range between three
months and one year. Pre-Refunded Bonds with longer nominal maturities
that are due to be retired with the proceeds of an escrowed subsequent
issue at a date within one year and three years of the time of
acquisition are also considered short-term and limited-term municipal
obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other
short-term obligations are designated Moody's Investment Grade ("MIG").
This distinction is in recognition of the differences between short-term
credit risk and long-term risk.
MIG 1: Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market
for refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding
group.
MIG3: Notes bearing this designation are of favorable quality,
with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Market access for refinancing, in
particular, is likely to be less well established.
MIG4: Notes bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's
municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat larger than
in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which make the bond somewhat more susceptible to the adverse
effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in the
A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
<PAGE>
Calvert Tax-Free Reserves
Vermont Municipal Portfolio
Statement of Additional Information
April 30, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand, L.L.P. Calvert Distributors, Inc.
217 Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 6
Considerations for Investing in Vermont 7
Purchases and Redemptions of Shares 7
Reduced Sales Charges (Class A) 7
Dividends and Distributions 8
Tax Matters 8
Valuation of Shares 9
Calculation of Yield and Total Return 9
Advertising 10
Trustees and Officers 11
Investment Advisor 12
Administrative Services 13
Independent Accountants and Custodians 13
Method of Distribution 13
Portfolio Transactions 14
General Information 14
Financial Statements 15
Appendix 15
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1996
CALVERT TAX-FREE RESERVES
VERMONT MUNICIPAL PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
- --------------------------------------------------------------------------
New Account (800) 368-2748 Shareholder (800) 368-2745
Information: (301) 951-4820 Services: (301) 951-4810
- --------------------------------------------------------------------------
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 Impaired: (800) 541-1524
==========================================================================
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in
conjunction with the Portfolio's Prospectus, dated April 30, 1996, which
may be obtained free of charge by writing the Portfolio at the above
address or calling the telephone numbers listed above.
==========================================================================
INVESTMENT OBJECTIVE
==========================================================================
The Vermont Municipal Portfolio (the "Portfolio") is a series
of Calvert Tax-Free Reserves (the "Fund"). It is a nondiversified bond
fund designed to provide individual and institutional investors in
higher tax brackets with 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 the quality
and maturity characteristics of the Portfolio. It 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 is, of course, no assurance that
the Portfolio will be successful in meeting its investment objective
because there are inherent risks in the ownership of any investment.
Dividends paid by the Portfolio will fluctuate with income
earned on investments, and will vary by class of shares. In addition,
the value of each class of the Portfolio's shares will fluctuate to
reflect changes in the market value of the Portfolio's investments. The
Portfolio will attempt, through careful management, to reduce these
risks and enhance the opportunities for higher income and greater price
stability.
==========================================================================
INVESTMENT POLICIES
==========================================================================
The Portfolio invests primarily in a nondiversified portfolio
of municipal obligations of the state of Vermont and its political
subdivisions ("Vermont Municipal Obligations"). 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 recieve 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.
Since the Portfolio is nondiversified, it may invest its assets
in fewer issuers than if it were diversified. As a result, the
Portfolio's performance may be more directly impacted by changes in
conditions affecting those issuers than it would be if the Portfolio
were investing in a greater number of issuers. A complete explanation of
municipal obligations and municipal bond and note ratings is set forth
in the Appendix. Also see "Considerations for Investing in Vermont."
The credit rating of the Portfolio's assets as of its most
recent fiscal year-end appears in the Annual Report to Shareholders,
incorporated by reference herein.
Variable Rate Demand Notes
The Board of Trustees has approved investments in floating and
variable rate demand notes upon the following conditions: the Portfolio
has right of demand, upon notice not to exceed thirty days, against the
issuer to receive payment; the issuer will be able to make payment upon
such demand, either from its own resources or through an unqualified
commitment from a third party; and the rate of interest payable is
calculated to ensure that the market value of such notes will
approximate par value on the adjustment dates. The remaining maturity of
such demand notes is deemed the period remaining until such time as the
Portfolio has the right to dispose of the notes at a price which
approximates par and market value.
Municipal Leases
The Portfolio may invest in municipal leases, or structured
instruments where the underlying security is a municipal lease. 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. The Portfolio may purchase unrated leases. The Fund's Advisor,
under the supervision of the Board of Trustees/Directors, is responsible
for determining the credit quality of such leases on an ongoing basis,
including an assessment of the likelihood that the lease will not be
canceled. Certain municipal leases may be considered illiquid and
subject to the Portfolio's limit on illiquid securities. The Board of
Trustees/Directors has directed the Advisor to treat a municipal lease
as a liquid security if it satisfies the .following conditions: (A) such
treatment must be consistent with the Portfolio's investment
restrictions; (B) the Advisor should be able to conclude that the
obligation will maintain its liquidity throughout the time it is held by
the Portfolio, based on the following factors: (1) whether the lease may
be terminated by the lessee; (2) the potential recovery, if any, from a
sale of the leased property upon termination of the lease; (3) the
lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics and prospects); (4) the
likelihood that the lessee will discontinue appropriating funding for
the leased property because the property is no longer deemed essential
to its operations (e.g., the potential for an "event of
nonappropriation"), and (5) any credit enhancement or legal recourse
provided upon an event of nonappropriation or other termination of the
lease; (C) the Advisor should determine whether the obligation can be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Portfolio has valued it for
purposes of calculating the Portfolio's net asset value, taking into
account the following factors: (1) the frequency of trades and quotes;
(2) the volatility of quotations and trade prices; (3) the number of
dealers willing to purchase or sell the security and the number of
potential purchasers; (4) dealer undertakings to make a market in the
security; (5) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of the transfer); (6)
the rating of the security and the financial condition and prospects of
the issuer; and (7) other factors relevant to the Portfolio's ability to
dispose of the security; and (D) the Advisor should have reasonable
expectations that the municipal lease obligation will maintain its
liquidity throughout the time the instrument is held by the Portfolio.
Obligations with Puts Attached
The Portfolio has authority to purchase securities at a price
which would result in a yield to maturity lower than that generally
offered by the seller at the time of purchase when it can acquire at the
same time the right to sell the securities back to the seller at an
agreed upon price at any time during a stated period or on a certain
date. Such a right is generally denoted as a "put." The Portfolio may
not acquire obligations subject to puts if immediately thereafter with
respect to 75% of the total amortized cost value of its short-term
assets, the Portfolio would have more than 5% of such assets invested in
securities underlying puts from the same institution. The Portfolio may,
however, invest up to 10% of its short-term assets in securities
underlying unconditional puts from the same institution. Unconditional
puts are readily exercisable in the event of a default in payment of
principal or interest on the underlying securities.
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 to investors as ordinary income unless the investors are
otherwise exempt from taxation.
The Portfolio intends to minimize taxable income through
investment, when possible, in short-term tax-exempt securities. 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 be invested so that at
least 80% of the Portfolio's annual income will be tax-exempt. While the
Portfolio has the authority to invest in short-term taxable obligations,
the Portfolio has not done so since its inception and, barring unusual
market conditions, does not expect in the future to invest in taxable
obligations.
When-Issued Purchases
Securities purchased on a when-issued basis and the securities
held in the Portfolio are subject to changes in market value based upon
the public's perception of the creditworthiness of the issuer and
changes in the level of interest rates (which will generally result in
both changing in value in the same way, i.e., both experiencing
appreciation when interest rates decline and depreciation when interest
rates rise). Therefore, if in order to achieve higher interest income,
the Portfolio remains substantially fully invested at the same time that
it has purchased securities on a when-issued basis, there will be a
greater possibility that the market value of the Portfolio's assets may
vary. No new when-issued commitments will be made by the Portfolio if
more than 50% of the Portfolio's net assets would become so committed.
When the time comes to pay for when-issued securities, the
Portfolio will meet its obligations from then available cash flow, sale
of securities or, although it would not normally expect to do so, from
sale of the when-issued securities themselves (which may have a market
value greater or less than the Portfolio's payment obligation). Sale of
securities to meet such obligations carries with it a greater potential
for the realization of capital losses and capital gains which are not
exempt from federal income tax.
Transactions in Futures Contracts
The Portfolio may engage in the purchase and sale of futures
contracts on an index of municipal bonds or on U.S. Treasury securities,
or options on such futures contracts, for hedging purposes only. The
Portfolio may sell such futures contracts in anticipation of a decline
in the cost of municipal bonds it holds or may purchase such futures
contracts in anticipation of an increase in the value of municipal bonds
the Portfolio intends to acquire. The Portfolio also is authorized to
purchase and sell other financial futures contracts which in the opinion
of the Investment Advisor provide an appropriate hedge for some or all
of the Portfolio's securities.
Because of low initial margin deposits made upon the opening of
a futures position, futures transactions involve substantial leverage.
As a result, relatively small movements in the price of the futures
contract can result in substantial unrealized gains or losses. Because
the Portfolio will engage in the purchase and sale of financial futures
contracts solely for hedging purposes, however, any losses incurred in
connection therewith should, if the hedging strategy is successful, be
offset in whole or in part by increases in the value of securities held
by the Portfolio or decreases in the price of securities the Portfolio
intends to acquire.
Municipal bond index futures contracts commenced trading in
June 1985, and it is possible that trading in such futures contracts
will be less liquid than that in other futures contracts. The trading of
futures contracts and options thereon is subject to certain market
risks, such as trading halts, suspensions, exchange or clearing house
equipment failures, government intervention or other disruptions of
normal trading activity, which could at times make it difficult or
impossible to liquidate existing positions.
The liquidity of a secondary market in futures contracts may be
further adversely affected by "daily price fluctuation limits"
established by contract markets, which limit the amount of fluctuation
in the price of a futures contract or option thereon during a single
trading day. Once the daily limit has been reached in the contract, no
trades may be entered into at a price beyond the limit, thus preventing
the liquidation of open positions. Prices of existing contracts have in
the past moved the daily limit on a number of consecutive trading days.
The Portfolio will enter into a futures position only if, in the
judgment of the Investment Advisor, there appears to be an actively
traded secondary market for such futures contracts.
The successful use of transactions in futures contracts and
options thereon depends on the ability of the Investment Advisor to
correctly forecast the direction and extent of price movements of these
instruments, as well as price movements of the securities held by the
Portfolio within a given time frame. To the extent these prices remain
stable during the period in which a futures or option contract is held
by the Portfolio, or move in a direction opposite to that anticipated,
the Portfolio may realize a loss on the hedging transaction which is not
fully or partially offset by an increase in the value of the Portfolio's
securities. As a result, the Portfolio's total return for such period
may be less than if it had not engaged in the hedging transaction.
Description of Financial Futures Contracts
Futures Contracts. A 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 called for in the contract or, in some
instances, to make a cash settlement, at a specified future time for a
specified price. Although the terms of a contract call for actual
delivery or acceptance of securities, or for a cash settlement, in most
cases the contracts are closed out before the delivery date without the
delivery or acceptance taking place. The Portfolio intends to close out
its futures contracts prior to the delivery date of such contracts.
The Portfolio may sell futures contracts in anticipation of a
decline in the value of its investments in municipal bonds. The loss
associated with any such decline could be reduced without employing
futures as a hedge by selling long-term securities and either
reinvesting the proceeds in securities with shorter maturities or by
holding assets in cash. This strategy, however, entails increased
transaction costs in the form of brokerage commissions and dealer
spreads and will typically reduce the Portfolio's average yields as a
result of the shortening of maturities.
The purchase or sale of a futures contract differs from the
purchase or sale of a security, in that no price or premium is paid or
received. Instead, an amount of cash or securities acceptable to the
Portfolio's futures commission merchant and the relevant contract
market, which varies but is generally about 5% or less of the contract
amount, must be deposited with the broker. This amount is known as
"initial margin," and represents a "good faith" deposit assuring the
performance of both the purchaser and the seller under the futures
contract. Subsequent payments to and from the broker, known as
"variation margin," are required to be made on a daily basis as the
price of the futures contract fluctuates, making the long or short
positions in the futures contract more or less valuable, a process known
as "marking to the market." Prior to the settlement date of the futures
contract, the position may be closed out by taking an opposite position
which will operate to terminate the position in the futures contract. A
final determination of variation margin is then made, additional cash is
required to be paid to or released by the broker, and the purchaser
realizes a loss or gain. In addition, a commission is paid on each
completed purchase and sale transaction.
The sale of financial futures contracts provides an alternative
means of hedging the Portfolio against declines in the value of its
investments in municipal bonds. As such values decline, the value of the
Portfolio's position in the futures contracts will tend to increase,
thus offsetting all or a portion of the depreciation in the market value
of the Portfolio's fixed income investments which are being hedged.
While the Portfolio will incur commission expenses in establishing and
closing out futures positions, commissions on futures transactions may
be significantly lower than transaction costs incurred in the purchase
and sale of fixed income securities. In addition, the ability of the
Portfolio to trade in the standardized contracts available in the
futures market may offer a more effective hedging strategy than a
program to reduce the average maturing of portfolio securities, due to
the unique and varied credit and technical characteristics of the
municipal debt instruments available to the Portfolio. Employing futures
as a hedge may also permit the Portfolio to assume a hedging posture
without reducing the yield on its investments, beyond any amounts
required to engage in futures trading.
The Portfolio may engage in the purchase and sale of futures
contracts on an index of municipal securities. These instruments provide
for the purchase or sale of a hypothetical portfolio of municipal bonds
at a fixed price in a stated delivery month. Unlike most other futures
contracts, however, a municipal bond index futures contract does not
require actual delivery of securities but results in a cash settlement
based upon the difference in value of the index between the time the
contract was entered into and the time it is liquidated.
The municipal bond index underlying the futures contracts
traded by the Portfolio is The Bond Buyer Municipal Bond Index,
developed by The Bond Buyer and the Chicago Board of Trade ("CBT"), the
contract market on which the futures contracts are traded. As currently
structured, the index is comprised of 40 tax-exempt term municipal
revenue and general obligation bonds. Each bond included in the index
must be rated either A- or higher by Standard & Poor's or A or higher by
Moody's Investors Service and must have a remaining maturity of 19 years
or more. Twice a month new issues satisfying the eligibility
requirements are added to, and an equal number of old issues will be
deleted from, the index. The value of the index is computed daily
according to a formula based upon the price of each bond in the index,
as evaluated by four dealer-to-dealers brokers.
The Portfolio may also purchase and sell futures contracts on
U.S. Treasury bills, notes and bonds for the same types of hedging
purposes. Such futures contracts provide for delivery of the underlying
security at a specified future time for a fixed price, and the value of
the futures contract therefore generally fluctuates with movements in
interest rates.
The municipal bond index futures contract, futures contracts on
U.S. Treasury securities and options on such futures contracts are
traded on the CBT, which, like other contract markets, assures the
performance of the parties to each futures contract through a clearing
corporation, a nonprofit organization managed by the exchange
membership, which is also responsible for handling daily accounting of
deposits or withdrawals of margin.
The Portfolio may also purchase financial futures contracts
when it is not fully invested in municipal bonds in anticipation of an
increase in the cost of securities the Portfolio intends to purchase. As
such securities are purchased, an equivalent amount of futures contracts
will be closed out. In a substantial majority of these transactions, the
Portfolio will purchase municipal bonds upon termination of the futures
contracts. Due to changing market conditions and interest rate
forecasts, however, a futures position may be terminated without a
corresponding purchase of securities. Nevertheless, all purchases of
futures contracts by the Portfolio will be subject to certain
restrictions, described below.
Options on Futures Contracts. An option on a futures contract
provides the purchaser with the right, but not the obligation, to enter
into a long position in the underlying futures contract (that is,
purchase the futures contract), in the case of a "call" option, or a
short position (sell the futures contract), in the case of a "put"
option, for a fixed price up to a stated expiration date. The option is
purchased for a non-refundable fee, known as the "premium." Upon
exercise of the option, the contract market clearing house assigns each
party to the option an opposite position in the underlying futures
contract. In the event of exercise, therefore, the parties are subject
to all of the risks of futures trading, such as payment of initial and
variation margin. In addition, the seller, or "writer," of the option is
subject to margin requirements on the option position. Options on
futures contracts are traded on the same contract markets as the
underlying futures contracts.
The Portfolio may purchase options on futures contracts for the
same types of hedging purposes described above in connection with
futures contracts. For example, in order to protect against an
anticipated decline in the value of securities it holds, the Portfolio
could purchase put options on futures contracts, instead of selling the
underlying futures contracts. Conversely, in order to protect against
the adverse effects of anticipated increases in the costs of securities
to be acquired, the Portfolio could purchase call options on futures
contracts, instead of purchasing the underlying futures contracts. The
Portfolio generally will sell options on futures contracts only to close
out an existing position.
The Portfolio will not engage in transactions in such
instruments unless and until the Investment Advisor determines that
market conditions and the circumstances of the Portfolio warrant such
trading. To the extent the Portfolio engages in the purchase and sale of
futures contracts or options thereon, it will do so only at a level
which is reflective of the Investment Advisor's view of the hedging
needs of the Portfolio, the liquidity of the market for futures
contracts and the anticipated correlation between movements in the value
of the futures or option contract and the value of securities held by
the Portfolio.
Restrictions on the Use of Futures Contracts and Options on
Futures Contracts. Under regulations of the Commodity Futures Trading
Commission ("CFTC"), the futures trading activities described herein
will not result in the Portfolio being deemed to be a "commodity pool,"
as defined under such regulations, provided that certain trading
restrictions are adhered to. In particular, CFTC regulations require
that all futures and option positions entered into by the Portfolio
qualify as bona fide hedge transactions, as defined under CFTC
regulations, or, in the case of long positions, that the value of such
positions not exceed an amount of segregated funds determined by
reference to certain cash and securities positions maintained by the
Portfolio and accrued profits on such positions. In addition, the
Portfolio may not purchase or sell any such instruments if, immediately
thereafter, the sum of the amount of initial margin deposits on the
Portfolio's existing futures positions would exceed 5% of the market
value of its net assets.
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 amount so segregated 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 is unleveraged.
Risk Factors in Transactions in Futures Contracts. The
particular municipal bonds comprising the index underlying the municipal
bond index futures contract may vary from the bonds held by the
Portfolio. In addition, the securities underlying futures contracts on
U.S. Treasury securities will not be the same as securities held by the
Portfolio. As a result, the Portfolio's ability effectively to hedge all
or a portion of the value of its municipal bonds through the use of
futures contracts will depend in part on the degree to which price
movements in the index underlying the municipal bond index futures
contract, or the U.S. Treasury securities underlying other futures
contracts trade, correlate with price movements of the municipal bonds
held by the Portfolio.
For example, where prices of securities in the Portfolio do not
move in the same direction or to the same extent as the values of the
securities or index underlying a futures contract, the trading of such
futures contracts may not effectively hedge the Portfolio's investments
and may result in trading losses. The correlation may be affected by
disparities in the average maturity, ratings, geographical mix or
structure of the Portfolio's investments as compared to those comprising
the index, and general economic or political factors. In addition, the
correlation between movements in the value of the index underlying a
futures contract may be subject to change over time, as additions to and
deletions from the index alter its structure. In the case of futures
contracts on U.S. Treasury securities and options thereon, the
anticipated correlation of price movements between the U.S. Treasury
securities underlying the futures or options and municipal bonds may be
adversely affected by economic, political, legislative or other
developments that have a disparate impact on the respective markets for
such securities. In the event that the Investment Advisor determines to
enter into transactions in financial futures contracts other than the
municipal bond index futures contract or futures on U.S. Treasury
securities, the risk of imperfect correlation between movements in the
prices of such futures contracts and the prices of municipal bonds held
by the Portfolio may be greater.
The trading of futures contracts on an index also entails the
risk of imperfect correlation between movements in the price of the
futures contract and the value of the underlying index. The anticipated
spread between the prices may be distorted due to differences in the
nature of the markets, such as margin requirements, liquidity and the
participation of speculators in the futures markets. The risk of
imperfect correlation, however, generally diminishes as the delivery
month specified in the futures contract approaches.
Prior to exercise or expiration, a position in futures
contracts or options thereon may be terminated only by entering into a
closing purchase or sale transaction. This requires a secondary market
to the relevant contract market. The Portfolio will enter into a futures
or option position only if there appears to be a liquid secondary market
therefor, although there can be no assurance that such a liquid
secondary market will exist for any particular contract at any specific
time. Thus, it may not be possible to close out a position once it has
been established. Under such circumstances, the Portfolio could be
required to make continuing daily cash payments of variation margin in
the event of adverse price movements. In such situation, if the
Portfolio has insufficient cash, it may be required to sell portfolio
securities to meet daily variation margin requirements at a time when it
may be disadvantageous to do so. In addition, the Portfolio may be
required to perform under the terms of the futures or option contracts
it holds. The inability to close out futures or options positions also
could have an adverse impact on the Portfolio's ability effectively to
hedge its portfolio.
When the Portfolio purchases an option on a futures contract,
its risk is limited to the amount of the premium, plus related
transaction costs, although this entire amount may be lost. In addition,
in order to profit from the purchase of an option on a futures contract,
the Portfolio may be required to exercise the option and liquidate the
underlying futures contract, subject to the availability of a liquid
secondary market. The trading of options on futures contracts also
entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option,
although the risk of imperfect correlation generally tends to diminish
as the maturity date of the futures contract or expiration date of the
option approaches.
"Trading Limits" or "Position Limits" may also be imposed on
the maximum number of contracts which any person may hold at a given
time. A contract market may order the liquidation of positions found to
be in violation of these limits and it may impose other sanctions or
restrictions. The Investment Advisor does not believe that trading
limits will have any adverse impact on the strategies for hedging the
Portfolio's investments.
Further, the trading of futures contracts is subject to the
risk of the insolvency of a brokerage firm or clearing corporation,
which could make it difficult or impossible to liquidate existing
positions or to recover excess variation margin payments.
In addition to the risks of imperfect correlation and lack of a
liquid secondary market for such instruments, transactions in futures
contracts involve risks related to leveraging and the potential for
incorrect forecasts of the direction and extent of interest rate
movements within a given time frame.
==========================================================================
INVESTMENT RESTRICTIONS
==========================================================================
Fundamental Investment Restrictions
The foregoing investment objective and policies and the
following investment restrictions and fundamental policies may not be
changed without the consent of the holders of a majority of outstanding
shares of the Vermont Municipal Portfolio. A majority of the shares
means the lesser of (i) 67% of the shares represented at a meeting at
which more than 50% of the outstanding shares are represented or (ii)
more than 50% of the outstanding shares. The Vermont Municipal Portfolio
may not:
(1) Purchase common stocks, preferred stocks, warrants
or other equity securities;
(2) Issue senior securities, borrow money, or pledge,
mortgage, or hypothecate its assets, except as may be
necessary to secure borrowings from banks for temporary
or emergency (not leveraging) purposes and then in an
amount not greater than 10% of the value of the
Portfolio's total assets at the time of the borrowing.
Investment securities will not be purchased while any
borrowings are outstanding;
(3) Sell securities short, purchase securities on
margin, or write put or call options, except as
permitted in connection with transactions in futures
contracts and options thereon. See "Transactions in
Futures Contracts." The Portfolio reserves the right to
purchase securities with puts attached. See
"Obligations with Puts Attached";
(4) Underwrite the securities of other issuers, except
to the extent that the purchase of municipal
obligations in accordance with the Portfolio's
investment objective and policies, either directly from
the issuer, or from an underwriter for an issuer, may
be deemed an underwriting;
(5) Borrow money, except from banks for temporary or
emergency purposes and then only in an amount up to 10%
of the value of the Portfolio's total assets and except
by engaging in reverse repurchase agreements; provided,
however, that the Portfolio may only engage in reverse
repurchase agreements so long as, at the time it enters
into a reverse repurchase agreement, the aggregate
proceeds from outstanding reverse repurchase
agreements, when added to other outstanding borrowings
permitted by this section, do not exceed 33 1/3% of the
Portfolio's total assets. In order to secure any
permitted borrowings and reverse repurchase agreements
under this section, the Portfolio may pledge, mortgage
or hypothecate its assets;
(6) Purchase or sell real estate, real estate
investment trust securities, commodities or commodity
contracts, or oil and gas interests, but this shall not
prevent the Portfolio from investing in municipal
obligations secured by real estate or interests therein;
(7) Make loans to others, except in accordance with the
Portfolio's investment objective and policies or
pursuant to contracts providing for the compensation of
service providers by compensating balances;
(8) Invest in companies for the purpose of exercising
control; or invest in securities of other investment
companies, except as they may be acquired as part of a
merger, consolidation or acquisition of assets, or in
connection with a trustee's/director's deferred
compensation plan, as long as there is no duplication
of advisory fees;
(9) Invest more than 25% of its assets in any
particular industry or industries, except that the
Portfolio may invest more than 25% of its assets in
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Industrial development bonds, where the payment of
principal and interest is the responsibility of
companies within the same industry, are grouped
together as an "industry";
(10) Invest more than 5% of the value of its total
assets in securities where the payment of principal and
interest is the responsibility of a company or
companies with less than three years' operating history.
Non-Fundamental Investment Restrictions
The following operating (i.e., non-fundamental) investment
policies and restrictions may be changed by the Board
of Trustees without shareholder approval. The Portfolio may not:
(1) Purchase or retain securities of any issuer if the
officers, directors or trustees of Calvert Tax-Free
Reserves or its Advisor, owning beneficially more than
1/2 of 1% of the outstanding securities of such issuer,
together own beneficially more than 5% of such
outstanding securities;
(2) Purchase illiquid securities if more than 10% of
the value of the Portfolio's net assets would be
invested in such securities.
==========================================================================
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. The state has
experienced recession with the national economy, and took strong
measures (raising taxes and cutting spending) two years ago to deal with
the deficit. Good progress has been made in reducing the continuing
deficit. The Vermont economy has now started a gradual recovery,
although it lags behind the national economy and continues to face
revenue shortfalls. The state is now addressing the issues of education
and health care reform and will most likely be seeking additional
revenues. Still, most analysts believe the state's credit rating is
stable. As with any small state, there is less flexibility in selecting
investments, since there are only a few municipal issuers. Thus, in
order to meet the Portfolio's diversification requirements, the Advisor
may have to purchase eligible investments it otherwise would not, or
sell investments it would prefer to keep.
==========================================================================
PURCHASES AND REDEMPTIONS OF SHARES
==========================================================================
Share certificates will not be issued unless requested in
writing by the investor. No charge will be made for share certificate
requests. No certificates will be issued for fractional shares.
Amounts redeemed by check redemption may be mailed to the
investor without charge. Amounts of more than $50 and less than $300,000
may be transferred electronically at no charge to the investor. Amounts
of $1,000 or more will be transmitted by wire, without charge, to the
investor's account at a domestic commercial bank that is a member of the
Federal Reserve System or to a correspondent bank. A charge of $5 is
imposed on wire transfers of less than $1,000. If the investor's bank is
not a Federal Reserve System member, failure of immediate notification
to that bank by the correspondent bank could result in a delay in
crediting the funds to the investor's bank account.
Telephone redemption requests which would require the
redemption of shares purchased by check or electronic funds transfer
within the previous 10 business days may not be honored. The Fund
reserves the right to modify the telephone redemption privilege.
To change redemption instructions already given, shareholders
must send a written notice to Calvert Group, c/o NFDS, 6th Floor, 1004
Baltimore, Kansas City, MO 64105, with a voided copy of a check for the
bank wiring instructions to be added. If a voided check does not
accompany the request, then the request must be signature guaranteed by
a commercial bank, savings and loan association, trust company, member
firm of any national securities exchange, or certain credit unions.
Further documentation may be required from corporations, fiduciaries,
and institutional investors.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is
closed (other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency exists, as
determined by the SEC, or if the Commission has ordered such a
suspension for the protection of shareholders. Redemption proceeds are
normally mailed or wired the next business day after a proper redemption
request has been received, unless redemptions have been suspended or
postponed as described above.
Redemption proceeds are normally paid in cash. However, the
Portfolio has the right to redeem shares in assets other than cash for
redemption amounts exceeding, in any 90-day period, $250,000 or 1% of
the net asset value of the Portfolio, whichever is less.
==========================================================================
REDUCED SALES CHARGES (CLASS A)
==========================================================================
The Portfolio imposes reduced sales charges for Class A shares
in certain situations in which the Principal Underwriter and the dealers
selling Portfolio shares may expect to realize significant economies of
scale with respect to such sales. Generally, sales costs do not increase
in proportion to the dollar amount of the shares sold; the per-dollar
transaction cost for a sale to an investor of shares worth, say, $5,000
is generally much higher than the per-dollar cost for a sale of shares
worth $1,000,000. Thus, the applicable sales charge declines as a
percentage of the dollar amount of shares sold as the dollar amount
increases.
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter of
Intent, the Underwriter and selling dealers can expect to realize the
economies of scale applicable to that stated goal amount. Thus the
Portfolio imposes the sales charge applicable to the goal amount.
Similarly, the Underwriter and selling dealers also experience cost
savings when dealing with existing Fund shareholders, enabling the Fund
to afford existing shareholders the Right of Accumulation. The
Underwriter and selling dealers can also expect to realize economies of
scale when making sales to the members of certain qualified groups which
agree to facilitate distribution of Portfolio shares to their members.
See "Exhibit A - Reduced Sales Charges" in the Prospectus.
==========================================================================
DIVIDENDS AND DISTRIBUTIONS
==========================================================================
The Portfolio declares and pays monthly dividends of its net
income to shareholders of record as of the close of business on each
designated monthly record date. Net investment income consists of the
interest income earned on investments (adjusted for amortization of
original issue discounts or premiums or market premiums), less estimated
expenses. Dividends and distributions paid may differ among the classes.
Dividends are automatically reinvested at net asset value in
additional shares. Shareholders may elect to have their dividends and
distributions paid out monthly in cash. Capital gains, if any, are
normally paid once a year and will be automatically reinvested at net
asset value in additional shares, unless you choose otherwise. You may
elect to have your dividends and distributions paid out monthly in cash.
You may also request to have your dividends and distributions from the
Portfolio invested in shares of any other Calvert Group Fund, to be
invested in that Fund or Portfolio without a sales charge. 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.
==========================================================================
TAX MATTERS
==========================================================================
In 1995 the Portfolio did qualify and in 1996 the Portfolio
intends to qualify as a "regulated investment company" under Subchapter
M of the Internal Revenue Code, as amended (the "Code"). By so
qualifying, the Portfolio will not be subject to federal income tax, nor
to the federal excise tax imposed by the Code, to the extent that it
distributes its net investment income and realized capital gains.
The Portfolio's dividends of net investment income constitute
exempt-interest dividends on which shareholders are not generally
subject to federal or Vermont state income tax; however, under the Code,
dividends attributable to interest on certain private activity bonds
must be included in federal alternative minimum taxable income for the
purpose of determining liability (if any) for individuals and for
corporations. The Portfolio's dividends derived from taxable interest
and distributions of net short-term capital gains whether taken in cash
or reinvested in additional shares, are taxable to shareholders as
ordinary income and do not qualify for the dividends received deduction
for corporations.
The Code provides that interest on indebtedness incurred or
continued in order to purchase or carry shares of a regulated investment
company which distributes exempt-interest dividends during the year is
not deductible. Furthermore, entities or persons who are "substantial
users" (or persons related to "substantial users") of facilities
financed by private activity bonds should consult their tax advisers
before purchasing shares of the Portfolio. "Substantial user" is
generally defined as including a "non-exempt person" who regularly uses
in trade or business a part of a facility financed from the proceeds of
private activity bonds.
Investors should note that the Code may require investors to
exclude the initial sales charge, if any, paid on the purchase of
Portfolio shares from the tax basis of those shares if the shares are
exchanged for shares of another Calvert Group Fund within 90 days of
purchase. This requirement applies only to the extent that the payment
of the original sales charge on the shares of the Portfolio causes a
reduction in the sales charge otherwise payable on the shares of the
Calvert Group Fund acquired in the exchange, and investors may treat
sales charges excluded from the basis of the original shares as incurred
to acquire the new shares.
The Portfolio is required to withhold 31% of any long-term
capital gain dividends and 31% of each redemption transaction occurring
in the Portfolio if: (a) the shareholder's social security number or
other taxpayer identification number ("TIN") is not provided, or an
obviously incorrect TIN is provided; (b) the shareholder does not
certify under penalties of perjury that the TIN provided is the
shareholder's correct TIN and that the shareholder is not subject to
backup withholding under section 3406(a)(1)(C) of the Code because of
underreporting (however, failure to provide certification as to the
application of section 3406(a)(1)(C) will result only in backup
withholding on capital gain dividends, not on redemptions); or (c) the
Fund is notified by the Internal Revenue Service that the TIN provided
by the shareholder is incorrect or that there has been underreporting of
interest or dividends by the shareholder. Affected shareholders will
receive statements at least annually specifying the amount withheld.
In addition, the Portfolio is required to report to the
Internal Revenue Service the following information with respect to
redemption transactions in the Portfolio: (a) the shareholder's name,
address, account number and taxpayer identification number; (b) the
total dollar value of the redemptions; and (c) the Portfolio's
identifying CUSIP number.
Certain shareholders are, however, exempt from the backup
withholding and broker reporting requirements. Exempt shareholders
include: corporations; financial institutions; tax-exempt organizations;
individual retirement plans; the U.S., a State, the District of
Columbia, a U.S. possession, a foreign government, an international
organization, or any political subdivision, agency or instrumentality of
any of the foregoing U.S. registered commodities or securities dealers;
real estate investment trusts; registered investment companies; bank
common trust funds; certain charitable trusts; and foreign central banks
of issue. Non-resident aliens also are generally not subject to either
requirement but, along with certain foreign partnerships and foreign
corporations, may instead be subject to withholding under section 1441
of the Code. Shareholders claiming exemption from backup withholding and
broker reporting should call or write the Portfolio for further
information.
==========================================================================
VALUATION OF SHARES
==========================================================================
The Portfolio's assets are normally valued utilizing the
average bid dealer market quotation as furnished by an independent
pricing service. Securities and other assets for which market quotations
are not readily available are valued based on the current market for
similar securities or assets, as determined in good faith by the
Portfolio's Advisor under the supervision of the Board of Trustees. The
Portfolio determines the net asset value of its shares every business
day at the close of the regular session of the New York Stock Exchange
(generally, 4:00 p.m. Eastern time), and at such other times as may be
necessary or appropriate. The Portfolio does not determine net asset
value on certain national holidays or other days on which the New York
Stock Exchange is closed: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Valuations, market quotations and market equivalents are
provided the Portfolio by Kenny S&P Evaluation Services, a subsidiary of
McGraw-Hill. The use of Kenny as a pricing service by the Portfolio has
been approved by the Board of Trustees. Valuations provided by Kenny are
determined without exclusive reliance on quoted prices and take into
consideration appropriate factors such as institution-size trading in
similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics, and other market data.
Net Asset Value and Offering Price Per Share
Class A net asset value per share
($60,203,303/3,621,399 shares) $16.62
Maximum sales charge
(3.75% of Class A offering price) 0.65
Offering price per Class A share $17.27
Class C net asset value and offering price per share
($394,404/24,027 shares) $16.42
==========================================================================
CALCULATION OF YIELD AND TOTAL RETURN
==========================================================================
From time to time, the Portfolio advertises its "total return."
Total return is calculated separately for each class. Total return is
historical in nature and is not intended to indicate future performance.
Total return will be quoted for the most recent one-year period and the
period from inception of the Portfolio's offering of shares. Total
return quotations for periods in excess of one year represent the
average annual total return for the period included in the particular
quotation. Total return is a computation of the Portfolio's dividend
yield plus or minus realized or unrealized capital appreciation or
depreciation, less fees and expenses. All total return quotations
reflect the deduction of the Portfolio's maximum sales charge for Class
A shares, except quotations of "return without maximum load," which do
not deduct the sales charge. Thus, in the formula below, for return
without maximum load, P = the entire $1,000 hypothetical initial
investment and does not reflect the deduction of any sales charge. Note:
"Total Return" as quoted in the Financial Highlights section of the
Fund's Prospectus and Annual Report to Shareholders, however, per SEC
instructions, does not reflect deduction of the sales charge, and
corresponds to "return without maximum load" as referred to herein.
Return without maximum load should be considered only by investors, such
as participants in certain pension plans, to whom the sales charge does
not apply, or for purposes of comparison only with comparable figures
which also do not reflect sales charges, such as Lipper averages. Total
return is computed according to the following formula:
P(1 +T)n = ERV
where P = a hypothetical initial payment of $1,000 (less the maximum
sales charge imposed during the period); T = average annual total
return; n = number of years and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the 1, 5, or 10
year periods at the end of such periods (or portions thereof if
applicable).
Returns for the one year period and period from inception
(Class A, April 1, 1991; Class C, March 1, 1994) are as follows:
Class A Shares Class A Shares Class C
Shares
With Max. Load W/O Max. Load
One Year 10.54% 14.86% 12.88%
From Inception 7.19% 8.05% 5.07%
The Portfolio also advertises, from time to time, its "yield"
and "tax equivalent yield." As with total return, both yield figures are
historical and are not intended to indicate future performance. "Yield"
quotations for each class refer to the aggregate imputed
yield-to-maturity of each of the Portfolio's investments based on the
market value as of the last day of a given thirty-day or one-month
period, less expenses (net of reimbursement), divided by the average
daily number of outstanding shares entitled to receive dividends times
the maximum offering price on the last day of the period (so that the
effect of the sales charge is included in the calculation), compounded
on a "bond equivalent," or semi-annual, basis. The Portfolio's yield is
computed according to the following formula:
Yield = 2[(+1)6 - 1]
where a = dividends and interest earned during the period; b = expenses
accrued for the period (net of reimbursement); c = the average daily
number of shares outstanding during the period that were entitled to
receive dividends; and d = the maximum offering price per share on the
last day of the period.
The tax equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal the Portfolio's
yield, all or a portion of which may be exempt from federal income
taxes. The tax equivalent yield is computed per class by taking the
portion of the yield exempt from federal income tax and multiplying the
exempt yield by a factor based upon a stated income tax rate, then
adding the portion of the yield that is not exempt from federal income
taxes. The factor which is used to calculate the tax equivalent yield is
the reciprocal of the difference between 1 and the applicable income tax
rates, which will be stated in the advertisement. For the thirty-day
period ended December 31, 1995, the Portfolio yield for Class A Shares
was 4.60% and its federal tax equivalent yield was 7.18% for an investor
in the 36% federal income tax bracket, and 7.65% for an investor in the
39.6% federal income tax bracket. For the same period, the yield for
Class C Shares was 3.49% and its federal tax equivalent yield was 5.45%
for an investor in the 36% federal income tax bracket, and 5.80% for an
investor in the 39.6% federal income tax bracket.
==========================================================================
ADVERTISING
==========================================================================
The Fund or its affiliates may provide information such as, but
not limited to, the economy, investment climate, investment principles,
sociological conditions and political ambiance. Discussion may include
hypothetical scenarios or lists of relevant factors designed to aid the
investor in determining whether the Fund is compatible with the
investor's goals. The Fund may list portfolio holdings or give examples
or securities that may have been considered for inclusion in the
Portfolio, whether held or not.
The Fund or its affiliates may supply comparative performance
data and rankings from independent sources such as Donoghue's Money Fund
Report, Bank Rate Monitor, Money, Forbes, Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Wiesenberger Investment
Companies Service, Russell 2000/Small Stock Index, Mutual Fund Values
Morningstar Ratings, Mutual Fund Forecaster, Barron's, The Wall Street
Journal, and Schabacker Investment Management, Inc. Such averages
generally do not reflect any front- or back-end sales charges that may
be charged by Funds in that grouping. The Fund may also cite to any
source, whether in print or on-line, such as Bloomberg, in order to
acknowledge origin of information. The Fund may compare itself or its
portfolio holdings to other investments, whether or not issued or
regulated by the securities industry, including, but not limited to,
certificates of deposit and Treasury notes. The Fund, its Advisor, and
its affiliates reserve the right to update performance rankings as new
rankings become available.
==========================================================================
TRUSTEES AND OFFICERS
==========================================================================
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Director of
Finance for the Family Health Council, Inc. in Pittsburgh, Pennsylvania,
a non-profit corporation which provides family planning services,
nutrition, maternal/child health care, and various health screening
services. Mr. Baird is a trustee/director of each of the investment
companies in the Calvert Group of Funds, except for Acacia Capital
Corporation, Calvert New World Fund and Calvert World Values Fund. Age:
47. Address: 211 Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in
the law firm of Snevily, Ely, Williams, Gurrieri & Blatz. He was
formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
Age: 59. Address: 308 East Broad Street, PO Box 2007, Westfield, New
Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist
with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem
Medical Imaging in Allentown, Pennsylvania. Age: 46. Address: 2040
Nuuanu Avenue #1805, Honolulu, Hawaii, 96817.
1 CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and
Treasurer Emeritus of the George Washington University, and has retired
from University Support Services, Inc. of Herndon, Virginia. He is also
a Director of Acacia Mutual Life Insurance Company. Age: 73. Address:
1658 Quail Hollow Court, McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices head
and neck reconstructive surgery in the Washington, D.C., metropolitan
area. Age: 47. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian was a principal of
Gavian De Vaux Associates, an investment banking firm. He continues to
be President of with Corporate Finance of Washington, Inc. Age: 63.
Address: 3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial consultant
to various organizations. In addition, he is a Director of the Community
Bankers Mutual Fund of Denver, Colorado, and the Treasurer and Director
of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey is a
trustee/director of each of the other investment companies in the
Calvert Group of Funds, except for Acacia Capital Corporation and
Calvert New World Fund. Age: 47. Address: 7205 Pomander Lane, Chevy
Chase, Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of
Acacia Federal Savings Bank. Age: 58. Address: 4823 Prestwick Drive,
Fairfax, Virginia 22030.
1 DAVID R. ROCHAT, Senior Vice President and Trustee. Mr.
Rochat is Executive Vice President of Calvert Asset Management Company,
Inc., Director and Secretary of Grady, Berwald and Co., Inc., and
Director and President of Chelsea Securities, Inc. Age: 58. Address: Box
93, Chelsea, Vermont 05038.
1 D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Acacia Capital Corporation and Calvert New
World Fund. Mr. Silby is an officer, director and shareholder of Silby,
Guffey & Company, Inc., which serves as general partner of Calvert
Social Venture Partners ("CSVP"). CSVP is a venture capital firm
investing in socially responsible small companies. He is also a Director
of Acacia Mutual Life Insurance Company. Age: 47. Address: 1715 18th
Street, N.W., Washington, D.C. 20009.
1 CLIFTON S. SORRELL, JR., President and Trustee. Mr. Sorrell
serves as President, Chief Executive Officer and Vice Chairman of
Calvert Group, Ltd. and as an officer and director of each of its
affiliated companies. He is a director of Calvert-Sloan Advisers,
L.L.C., and a trustee/director of each of the investment companies in
the Calvert Group of Funds. Age: 54.
1 RENO J. MARTINI, Senior Vice President. Mr. Martini is a
director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset Management
Company, Inc. Mr. Martini is also a director and President of
Calvert-Sloan Advisers, L.L.C., and a director and officer of Calvert
New World Fund. Age: 46.
1 RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is
Senior Vice President and Controller of Calvert Group, Ltd. and its
subsidiaries and an officer of each of the other investment companies in
the Calvert Group of Funds. Mr. Wolfsheimer is Vice President and
Treasurer of Calvert-Sloan Advisers, L.L.C., and a director of Calvert
Distributors, Inc. Age: 43.
1 WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant
Secretary. Mr. Tartikoff is an officer of each of the investment
companies in the Calvert Group of Funds, and is Senior Vice President,
Secretary, and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company. Age:
48.
1 EVELYNE S. STEWARD, Vice President. Ms. Steward is a director
and Senior Vice President of Calvert Group, Ltd., and a director of
Calvert-Sloan Advisers, L.L.C. She is the sister of Philip J. Schewetti,
the portfolio manager of the CSIF Equity Portfolio. Age: 43.
1 DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc., and is an officer of each of
the other investment companies in the Calvert Group of Funds, except for
Calvert New World Fund, Inc. Age: 45.
1 SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each
of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds. Age: 37.
___________
1Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of their affiliation
with the Fund's Advisor.
Each of the above directors/trustees and officers is a
director/trustee or officer of each of the investment companies in the
Calvert Group of Funds with the exception of Calvert Social Investment
Fund, of which only Messrs. Baird, Guffey, Silby and Sorrell are among
the trustees, Acacia Capital Corporation, of which only Messrs. Blatz,
Diehl, Pugh and Sorrell are among the directors, Calvert World Values
Fund, Inc., of which only Messrs. Guffey, Silby and Sorrell are among
the directors, and Calvert New World Fund, Inc., of which only Messrs.
Sorrell and Martini are among the directors. The address of directors
and officers, unless otherwise noted, is 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814. Trustees and officers of the Fund as a
group own less than 1% of each Fund's outstanding shares.
The Audit Committee of the Board is composed of Messrs. Baird,
Blatz, Feldman, Guffey and Pugh. The Board's Investment Policy Committee
is composed of Messrs. Borts, Diehl, Gavian, Rochat, Silby and Sorrell.
During fiscal 1995, trustees of the Fund not affiliated with
the Fund's Advisor were paid $5,493 by the Portfolio. Trustees of the
Fund not affiliated with the Advisor presently receive an annual fee of
$20,250 for service as a member of the Board of Trustees of the Calvert
Group of Funds, and a fee of $750 to $1200 for each regular Board or
Committee meeting attended; such fees are allocated among the respective
Funds on the basis of net assets.
Trustees of the Fund not affiliated with the Fund's Advisor may
elect to defer receipt of all or a percentage of their fees and invest
them in any fund in the Calvert Family of Funds through the Trustees
Deferred Compensation Plan (shown as "Pension or Retirement Benefits
Accrued as part of Fund Expenses," below). Deferral of the fees is
designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees.
<PAGE>
<TABLE>
<CAPTION>
Trustee Compensation Table
Aggregate Pension or Retirement Total Compensation
Fiscal Year Compensation Benefits Accrued from
1995 (unaudited from Registrant as part of Registrant and Fund
numbers) for service Registrant Complex paid to
as Trustee Expenses<F1> Trustees<F2>
Name of Trustee
<S> <C> <C> <C>
Richard L. Baird, Jr. $25,831 $0 $33,450
Frank H. Blatz, Jr. $26,042 $26,042 $36,801
Frederick T. Borts $20,135 $0 $25,050
Charles E. Diehl $25,058 $25,058 $35,101
Douglas E. Feldman $24,494 $0 $30,600
Peter W. Gavian $24,862 $7,458 $31,951
John G. Guffey, Jr. $24,861 $0 $40,450
Arthur J. Pugh $26,792 $0 $36,801
D. Wayne Silby $23,878 $0 $47,965
<FN>
<F1> Messrs. Blatz, Diehl, Gavian, and Pugh have chosen to defer a portion
of their compensation. As of December 31, 1995, total deferred
compensation, including dividends and capital appreciation, was
$415,719, $337,395, $89,054, and $150,841, for each trustee,
respectively.
<F2> As of December 31, 1995. The Fund Complex consists of eight (8)
registered investment companies.
</FN>
</TABLE>
==========================================================================
INVESTMENT ADVISOR
==========================================================================
The Fund's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, a subsidiary of Calvert Group, Ltd., which is a subsidiary of
Acacia Mutual Life Insurance Company of Washington, D.C.
The Advisory Contract between the Fund and the Advisor will
remain in effect indefinitely, provided continuance is approved at least
annually by the vote of the holders of a majority of the outstanding
shares of the Fund, or by the Trustees of the Fund; and further provided
that such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to the Contract
or interested persons of such parties, cast in person at a meeting
called for the purpose of voting on such approval. The Contract may be
terminated without penalty by either party on 60 days' prior written
notice; it automatically terminates in the event of its assignment.
Under the Contract, the Advisor manages the investment and
reinvestment of the Fund's assets, subject to the direction and control
of the Fund's Board of Trustees. For its services, the Advisor receives
from the Portfolio an annual fee of 0.60% of the first $500 million of
the Portfolio's average daily net assets, 0.50% of the next $500 million
of such assets, and 0.40% of all such assets over $1 billion.
The advisory fee is payable monthly. The Advisor reserves the
right (i) to waive all or a part of its fee and (ii) to compensate, at
its expense, broker-dealers in consideration of their promotional and
administrative services.
The Advisor provides the Fund with investment advice and
research, pays the salaries and fees of all Trustees and executive
officers of the Fund who are principals of the Advisor, and pays certain
Fund advertising and promotional expenses. The Fund pays all other
administrative and operating expenses, including: custodial fees;
shareholder servicing; dividend disbursing and transfer agency fees;
administrative service fees; federal and state securities registration
fees; insurance premiums; trade association dues; interest, taxes and
other business fees; legal and audit fees; and brokerage commissions and
other costs associated with the purchase and sale of portfolio
securities. The gross advisory fees paid to the Advisor under the
advisory contract for the 1993, 1994, and 1995 fiscal years were
$362,425, $403,442, and $374,867, respectively.
The Advisor has agreed to reimburse the Portfolio for all
expenses (exclusive of brokerage, taxes, interest and extraordinary
items) exceeding the most restrictive expense limitation of those states
in which the Portfolio's shares are qualified for sale. For the 1993,
1994, and 1995 fiscal periods, the reimbursement was $0, $2,771, and
$4,473, respectively.
==========================================================================
ADMINISTRATIVE SERVICES
==========================================================================
Calvert Shareholder Services, Inc., a wholly-owned subsidiary
of Calvert Group, Ltd., has been retained by the Fund to act as transfer
agent, dividend disbursing agent and shareholder servicing agent. These
responsibilities include: responding to shareholder inquiries and
instructions concerning their accounts; crediting and debiting
shareholder accounts for purchases and redemptions of Portfolio shares
and confirming such transactions; daily updating of shareholder accounts
to reflect declaration and payment of dividends; and preparing and
distributing monthly and/or quarterly statements to shareholders
regarding their accounts. For such services, Calvert Shareholder
Services, Inc., receives compensation based on the number of shareholder
accounts and the number of transactions. The fees paid by the Portfolio
to Calvert Shareholder Services, Inc. for fiscal periods 1993, 1994, and
1995 were $16,449, $25,933, and $28,325, respectively.
Calvert Administrative Services Company, a wholly-owned
subsidiary of Calvert Group, Ltd., has been retained by the Fund to
provide certain administrative services necessary to the conduct of the
Fund's affairs. Such services include the preparation of corporate and
regulatory reports and filings, portfolio accounting, and the daily
determination of net investment income and net asset value per share.
Calvert Administrative Services Company receives a fee of $200,000 per
year for providing such services to the Fund, allocated among the
Portfolios based on assets. The service fees paid by the Portfolio to
Calvert Administrative Services Company for fiscal periods 1993, 1994,
and 1995 were $4,413, $5,059, and $4,648, respectively.
==========================================================================
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
==========================================================================
Coopers & Lybrand, L.L.P. has been selected by the Board of
Trustees to serve as independent accountants of the Fund for fiscal year
1996. The Merchants Trust Company, 164 College Street, Burlington,
Vermont 08401, acts as custodian of the Portfolio's investments. First
National Bank of Maryland, 25 South Charles Street, Baltimore, Maryland
21203 also serves as custodian of certain of the Fund's cash assets.
Neither custodian has any part in deciding the Portfolio's investment
policies or the choice of securities that are to be purchased or sold by
the Portfolio.
==========================================================================
METHOD OF DISTRIBUTION
==========================================================================
The Portfolio has entered into a principal underwriting
agreement with Calvert Distributors, Inc. ("CDI"). CDI serves as
distributor and principal underwriter for the Portfolio. CDI bears all
its expenses of providing services pursuant to the agreement, including
payment of any commissions and service fees. CDI also receives all sales
charges imposed on Portfolio shares and compensates broker-dealer firms
for sales of shares at a maximum commission rate of 3.0%, as specified
in the table of applicable sales charges (see "Alternative Sales
Options" in the Prospectus). For the fiscal periods ended December 31,
1993, 1994, and 1995 CDI received no distribution service fees under the
Distribution Plan for Class A shares and received sales charges in
excess of the dealer reallowance of $82,319, $67,238, and $16,150,
respectively. CDI is entitled to receive a distribution service fee for
Class C shares, payable monthly pursuant to the Portfolio's Distribution
Plans, of 0.25% of the Portfolio's average daily net assets. Insert
fiscal periods 1994 and 1995 fiscal info for class c into this section.
The Portfolio's Distribution Plans were approved by the Board
of Trustees, including the Trustees who are not "interested persons" of
the Fund (as that term is defined in the Investment Company Act of 1940)
and who have no direct or indirect financial interest in the operation
of the Plans or in any agreements related to the Plans. The selection
and nomination of the Trustees who are not interested persons of the
Fund is committed to the discretion of such disinterested Trustees. In
establishing the Plans, the Trustees considered various factors
including the amount of the distribution fee. The Trustees determined
that there is a reasonable likelihood that the Plans will benefit the
Portfolio and its shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Trustees who have no direct or indirect financial
interest in the Plans or by vote of a majority of the outstanding shares
of the Portfolio. Any change in the Plans that would materially increase
the distribution cost to the Portfolio requires approval of the
shareholders of the affected class; otherwise, the Plans may be amended
by the Trustees, including a majority of the non-interested Trustees as
described above.
The Plans will continue in effect indefinitely, if not sooner
terminated in accordance with its terms. Thereafter, the Plans will
continue in effect for successive one year periods provided that such
continuance is annually approved by (i) the vote of a majority of the
Trustees who are not parties to the Plans or interested persons of any
such party and who have no direct or indirect financial interest in the
Plans, and (ii) the vote of a majority of the entire Board of Trustees.
Apart from the Plan, the Advisor, at its expense, may incur
costs and pay expenses associated with the distribution of shares of the
Portfolio. The Portfolio paid no expenses pursuant to the Plan for Class
A Shares during fiscal 1993, 1994, and 1995.
==========================================================================
PORTFOLIO TRANSACTIONS
==========================================================================
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and the
choice of brokers and dealers are made by the Fund's Advisor under the
direction and supervision of the Fund's Board of Trustees.
For the 1993, 1994, and 1995 fiscal periods, the portfolio
turnover rates were 5%, 11%, and 12%, respectively. Broker-dealers who
execute portfolio transactions on behalf of the Fund are selected on the
basis of their professional capability and the value and quality of
their services. The Advisor reserves the right to place orders for the
purchase or sale of portfolio securities with broker-dealers who have
sold shares of the Fund or who provide the Fund with statistical,
research, or other information and services. Although any statistical
research or other information and services provided by broker-dealers
may be useful to the Advisor, the dollar value of such information and
services is generally indeterminable, and its availability or receipt
does not serve to materially reduce the Advisor's normal research
activities or expenses. During the fiscal year ended December 31, 1995,
no brokerage commissions were paid by the Portfolio to broker-dealers.
No brokerage commissions were paid to any officer, trustee or Advisory
Council member of the Fund or any of their affiliates.
==========================================================================
GENERAL INFORMATION
==========================================================================
The Portfolio is a series of Calvert Tax-Free Reserves (the
"Fund") which was 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, Money Management
Plus Tax-Free Portfolio, California Money Market Portfolio, and the New
Jersey Money Market Portfolio. The Fund's Declaration of Trust contains
an express disclaimer of shareholder liability for acts or obligations
of the Fund. The shareholders of a Massachusetts business trust might,
however, under certain circumstances, be held personally liable as
partners for its obligations. The Declaration of Trust provides for
indemnification and reimbursement of expenses out of Fund assets for any
shareholder held personally liable for obligations of the Fund. The
Declaration of Trust provides that the Fund shall, upon request, assume
the defense of any claim made against any shareholder for any act or
obligation of the Fund and satisfy any judgment thereon. The Declaration
of Trust further provides that the Fund may maintain appropriate
insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Fund, its shareholders, Trustees,
officers, employees, and agents to cover possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which
both inadequate insurance exists and the Fund itself is unable to meet
its obligations.
Each share of each series represents an equal proportionate
interest in that series with each other share and is entitled to such
dividends and distributions out of the income belonging to such series
as declared by the Board. The Funds offers two separate classes of
shares: Class A and Class C. Each class represents interests in the same
portfolio of investments but, as further described in the prospectus,
each class is subject to differing sales charges and expenses, which
differences will result in differing net asset values and distributions.
Upon any liquidation of the Funds, shareholders of each class are
entitled to share pro rata in the net assets belonging to that series
available for distribution.
General costs, expenses, and liabilities of the Fund
attributable to a particular Portfolio are borne by that Portfolio;
costs, expenses, and liabilities not attributable to a particular
Portfolio are allocated between the Fund's Portfolios on the basis of
the respective net assets of each Portfolio.
The Portfolio will send its shareholders unaudited semi-annual
and audited annual reports that will include the Portfolio's net asset
value per share, portfolio securities, income and expenses and other
financial information.
This Statement of Additional Information does not contain all
the information in the Fund's registration statement. The registration
statement is on file with the Securities and Exchange Commission and is
available to the public.
==========================================================================
FINANCIAL STATEMENTS
==========================================================================
The audited financial statements in the Portfolio's Annual
Report to Shareholders dated December 31, 1995, are expressly
incorporated by reference and made a part of this Statement of
Additional Information. A copy of the Annual Report may be obtained free
of charge by writing or calling the Fund.
==========================================================================
APPENDIX
==========================================================================
Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for various
public purposes. Such purposes include the construction of a wide range
of public facilities, the refunding of outstanding obligations, the
obtaining of funds for general operating expenses, and the lending of
funds to other public institutions and facilities. In addition, certain
types of private activity bonds are issued by or on behalf of public
authorities to obtain funds for many types of local, privately operated
facilities. Such debt instruments are considered municipal obligations
if the interest paid on them is exempt from federal income tax in the
opinion of bond counsel to the issuer. Although the interest paid on the
proceeds from private activity bonds used for the construction,
equipment, repair or improvement of privately operated industrial or
commercial facilities may be exempt from federal income tax, current
federal tax law places substantial limitations on the size of such
issues.
Municipal obligations are generally classified as either
"general obligation" or "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable from
the revenues derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special excise tax or other
specific revenue source but not from the general taxing power.
Tax-exempt private activity bonds are in most cases revenue bonds and do
not generally carry the pledge of the credit of the issuing
municipality. There are, of course, variations in the security of
municipal obligations both within a particular classification and among
classifications.
Municipal obligations are generally traded on the basis of a
quoted yield to maturity, and the price of the security is adjusted so
that relative to the stated rate of interest it will return the quoted
rate to the purchaser.
Short-term and limited-term municipal obligations include Tax
Anticipation Notes, Revenue Anticipation Notes Bond Anticipation Notes,
Construction Loan Notes, and Discount Notes. The maturities of these
instruments at the time of issue generally will range between three
months and one year. Pre-Refunded Bonds with longer nominal maturities
that are due to be retired with the proceeds of an escrowed subsequent
issue at a date within one year and three years of the time of
acquisition are also considered short-term and limited-term municipal
obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other
short-term obligations are designated Moody's Investment Grade ("MIG").
This distinction is in recognition of the differences between short-term
credit risk and long-term risk.
MIG 1: Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market
for refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding
group.
MIG3: Notes bearing this designation are of favorable quality,
with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Market access for refinancing, in
particular, is likely to be less well established.
MIG4: Notes bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's
municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat larger than
in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which make the bond somewhat more susceptible to the adverse
effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in the
A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
<PAGE>
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the
Letter of Intent option on my Fund Account Application Form, I agree to
be bound by the terms and conditions applicable to Letters of Intent
appearing in the Prospectus and the Statement of Additional Information
for the Fund and the provisions described below as they may be amended
from time to time by the Fund. Such amendments will apply automatically
to existing Letters of Intent.
I intend to invest in the shares of: (Fund or Portfolio name*)
during the thirteen (13) month period from the date
of my first purchase pursuant to this Letter (which cannot be more than
ninety (90) days prior to the date of this Letter or my Fund Account
Application Form, whichever is applicable), an aggregate amount
(excluding any reinvestments of distributions) of at least fifty
thousand dollars ($50,000) which, together with my current holdings of
the Fund (at public offering price on date of this Letter or my Fund
Account Application Form, whichever is applicable), will equal or exceed
the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the terms
of escrow, to which I hereby agree, each purchase occurring after the
date of this Letter will be made at the public offering price applicable
to a single transaction of the dollar amount specified above, as
described in the Fund's prospectus. No portion of the sales charge
imposed on purchases made prior to the date of this Letter will be
refunded.
I am making no commitment to purchase shares, but if my
purchases within thirteen months from the date of my first purchase do
not aggregate the minimum amount specified above, I will pay the
increased amount of sales charges prescribed in the terms of escrow
described below. I understand that 4.75% of the minimum dollar amount
specified above will be held in escrow in the form of shares (computed
to the nearest full share). These shares will be held subject to the
terms of escrow described below.
From the initial purchase (or subsequent purchases if
necessary), 4.75% of the dollar amount specified in this Letter shall be
held in escrow in shares of the Fund by the Fund's transfer agent. For
example, if the minimum amount specified under the Letter is $50,000,
the escrow shall be shares valued in the amount of $2,375 (computed at
the public offering price adjusted for a $50,000 purchase). All
dividends and any capital gains distribution on the escrowed shares will
be credited to my account.
If the total minimum investment specified under the Letter is
completed within a thirteen month period, escrowed shares will be
promptly released to me. However, shares disposed of prior to completion
of the purchase requirement under the Letter will be deducted from the
amount required to complete the investment commitment.
Upon expiration of this Letter, the total purchases pursuant to
the Letter are less than the amount specified in the Letter as the
intended aggregate purchases, Calvert Distributors, Inc. ("CDI") will
bill me for an amount equal to the difference between the lower load I
paid and the dollar amount of sales charges which I would have paid if
the total amount purchased had been made at a single time. If not paid
by the investor within 20 days, CDI will debit the difference from my
account. Full shares, if any, remaining in escrow after the
aforementioned adjustment will be released and, upon request, remitted
to me.
I irrevocably constitute and appoint CDI as my
attorney-in-fact, with full power of substitution, to surrender for
redemption any or all escrowed shares on the books of the Fund. This
power of attorney is coupled with an interest.
The commission allowed by Calvert Distributors, Inc. to the
broker-dealer named herein shall be at the rate applicable to the
minimum amount of my specified intended purchases.
The Letter may be revised upward by me at any time during the
thirteen-month period, and such a revision will be treated as a new
Letter, except that the thirteen-month period during which the purchase
must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
In determining the total amount of purchases made hereunder,
shares disposed of prior to termination of this Letter will be deducted.
My broker-dealer shall refer to this Letter of Intent in placing any
future purchase orders for me while this Letter is in effect.
Dealer Name of Investor(s)
By
Authorized Signer Address
Signature of Investor(s)
Date Signature of Investor(s)
Date Signature of Investor(s)
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements
Financial statements incorporated by reference
to:
All financial statements for Calvert Tax-Free Reserves
Money Market, Limited-Term, and Long-Term Portfolios
incorporated by reference to Registrant's Annual Report
to Shareholders dated December 31, 1995, and filed
March 11, 1996.
All financial statements for Calvert Tax-Free Reserves
California and New Jersey Money Market Portfolios
incorporated by reference to Registrant's Annual Report
to Shareholders dated December 31, 1995, and filed
March 11, 1996.
All financial statements for Calvert Tax-Free Reserves
Vermont Municipal Portfolio incorporated by reference
to Registrant's Annual Report to Shareholders dated
December 31, 1995, and filed March 11, 1996.
Schedules II-VII, inclusive, for which provision is
made in the applicable accounting regulation of the
Securities and Exchange Commission, are omitted because
they are not required under the related instructions,
or they are inapplicable, or the required information
is presented in the financial statements or notes
thereto.
(b) Exhibits:
1.Declaration of Trust (incorporated by reference to
Registrant's Initial Registration Statement,
October 20, 1980).
2.By-Laws (incorporated by reference to Registrant's
Initial Registration Statement, October 20,
1980).
4.Specimen Stock Certificate for the Vermont Municipal
Portfolio (incorporated by reference to
Registrant's Post-Effective Amendment No. 29,
August 30, 1991); for the Limited-Term
Portfolio, Long-Term Portfolio, and all other
Portfolios (except Vermont Municipal),
(incorporated by reference to Registrant's
Post-Effective Amendment No. 32, January 29,
1993).
5.Advisory Contract (incorporated by reference to
Registrant's Post-Effective Amendment No. 29,
August 30, 1991).
Item 24. Financial Statements and Exhibits, continued
6.Underwriting Agreement, incorporated by reference to
Registrant's Post-Effective Amendment No. 40,
February 8, 1995.
7.Trustees' Deferred Compensation Agreement (incorporated
by reference to Registrant's Post-Effective
Amendment No. 30, January 31, 1992).
8.Custodial Contract (with respect to all Portfolios
except Vermont Municipal Portfolio,
(incorporated by reference to Registrant's
Post-Effective Amendment No. 34, November 30,
1993); with respect to Vermont Municipal
Portfolio, (incorporated by reference to
Registrant's Post-Effective Amendment No. 31,
April 30, 1992).
9.a. Transfer Agency Contract (incorporated by
reference to Registrant's Post-Effective
Amendment No. 6, March 2, 1984).
9.b. Administrative Services Agreement
(incorporated by reference to Registrant's
Post-Effective Amendment No. 15, January 30,
1989).
10. Opinion and Consent of Counsel as to Legality
of Shares Being Registered (Filed herewith).
11. Consent of Independent Auditors to Use of
Report (Filed herewith).
15. Plan of Distribution for the Class A Shares of
the Long-Term Portfolio, incorporated by
reference to Registrant's Post-Effective
Amendment No. 5, September 13, 1983; with
respect to Class A Shares of the Vermont
Municipal Portfolio, the Plan of Distribution
was terminated, and the termination was
ratified by the Fund Trustees on November 6,
1991; for the Class B and C shares of the
Limited-Term, Long-Term, and Vermont
Portfolios, incorporated by reference to
Registrant's Post-Effective Amendment No. 40,
February 8, 1995.
16. Schedule for Computation of Performance
Quotation (with respect to the Money Market,
Limited-Term and Long-Term Portfolios,
incorporated by reference to Registrant's
Post-Effective Amendment No. 14, filed March
1, 1988; with respect to the Money Management
Plus Tax-Free Portfolio, incorporated by
reference to Registrant's Post-Effective
Amendment No. 15, filed January 30, 1989; with
respect to the California Money Market
Portfolio, incorporated by reference to
Registrant's Post-Effective Amendment No. 22,
filed October 29, 1990; with respect to the
New Jersey Money Market Portfolio and Vermont
Municipal Portfolio, incorporated by reference
to Registrant's Post-Effective Amendment No.
29, August 30, 1991).
17. (i) Financial Data Schedule for
18. Funds Multiple Class Plan under Rule 18f-3
dated January 25, 1996 (filed herewith).
Exhibits 3 and 12 through 14 are omitted because they are
inapplicable.
Item 25. Persons Controlled By or Under Common Control With Registrant
Registrant is controlled by its Board of Trustees, which is a
common Board with five registered investment companies, First Variable
Rate Fund for Government Income, Calvert Tax-Free Reserves, Calvert Cash
Reserves (doing business as Money Management Plus), The Calvert Fund,
and Calvert Municipal Fund, Inc. In addition, members of Registrant's
Board of Trustees may also serve on the Boards of Calvert Social
Investment Fund, Acacia Capital Corporation, Calvert New World Fund,
Inc., and Calvert World Values Fund, Inc.
Item 26. Number of Holders of Securities
As of March 31, 1996 there were 43,707 holders of record of
Registrant's shares of beneficial interest for Calvert Tax-Free Reserves
Money Market Portfolio.
As of March 31, 1996 there were 2,674 holders of record of
Registrant's Tax-Free MMP Shares of beneficial interest for the Calvert
Tax-Free Reserves Money Market Portfolio.
As of March 31, 1996 there were 9,695 holders of record of
Registrant's Class A shares of beneficial interest for Calvert Tax-Free
Reserves Limited-Term Portfolio.
As of March 31, 1996 there were 1,311 holders of record of
Registrant's Class C shares of beneficial interest for Calvert Tax-Free
Reserves Limited-Term Portfolio.
As of March 31, 1996 there were 1,528 holders of record
of Registrant's Class A shares of beneficial interest for Calvert
Tax-Free Reserves Long-Term Portfolio.
As of March 31, 1996 there were 99 holders of record
of Registrant's Class C shares of beneficial interest for Calvert
Tax-Free Reserves Long-Term Portfolio.
As of March 31, 1996 there were 10,075 holders of record
of Registrant's shares of beneficial interest for Calvert Tax-Free
Reserves California Portfolio.
As of March 31, 1996 there were 1,213 holders of record of
Registrant's Class A shares of beneficial interest for Calvert Tax-Free
Reserves Vermont Municipal Portfolio.
As of March 31, 1996 there were 29 holders of record of
Registrant's Class C shares of beneficial interest for Calvert Tax-Free
Reserves Vermont Municipal Portfolio.
Item 27. Indemnification
Registrant's Declaration of Trust, which Declaration is Exhibit
1 of this Registration Statement, provides, in summary, that officers,
trustees, employees, and agents shall be indemnified by Registrant
against liabilities and expenses incurred by such persons in connection
with actions, suits, or proceedings arising out of their offices or
duties of employment, except that no indemnification can be made to such
a person if he has been adjudged liable of willful misfeasance, bad
faith, gross negligence, or reckless disregard of his duties. In the
absence of such an adjudication, the determination of eligibility for
indemnification shall be made by independent counsel in a written
opinion or by the vote of a majority of a quorum of trustees who are
neither "interested persons" of Registrant, as that term is defined in
Section 2(a)(19) of the Investment Company Act of 1940, nor parties to
the proceeding.
Registrant's Declaration of Trust also provides that Registrant
may purchase and maintain liability insurance on behalf of any officer,
trustee, employee or agent against any liabilities arising from such
status. In this regard, Registrant maintains a Directors & Officers
(Partners) Liability Insurance Policy with Chubb Group of Insurance
Companies, 15 Mountain View Road, Warren, New Jersey 07061, providing
Registrant with $5 million in directors and officers liability coverage,
plus $3 million in excess directors and officers liability coverage for
the independent trustees/directors only. Registrant also maintains a $8
million Investment Company Blanket Bond issued by ICI Mutual Insurance
Company, P.O. Box 730, Burlington, Vermont, 05402.
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Clifton S.
Sorrell, Jr. Acacia Capital Corporation Officer
Calvert Municipal Fund, Inc. and
Calvert World Values Fund, Inc. Director
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc. and
Investment Advisor Director
4550 Montgomery Avenue
Bethesda, MD 20814
----------------
Calvert Group, Ltd. Officer
Holding Company and
4550 Montgomery Avenue Director
Bethesda, MD 20814
----------------
Calvert Shareholder Officer
Services, Inc. and
Transfer Agent Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company and
Service Company Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund for Officer
Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Social Investment Fund
Money Management Plus
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
-----------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Md. 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company
4550 Montgomery Avenue
Bethesda, Md. 20814
--------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Clifton S. Calvert Shareholder Officer
Sorrell, Jr. Services, Inc. and
(continued) Transfer Agent Director
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Administrative Officer
Services Company and
Service Company Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, L.L.C. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund Officer
for Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Social Investment Fund
Money Management Plus
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Ronald M. First Variable Rate Fund Officer
Wolfsheimer for Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Officer
Services, Inc.
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company and
Service Company Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Md. 20814
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
David R. Rochat First Variable Rate Fund Officer
for Government Income and
The Calvert Fund Trustee
Calvert Tax-Free Reserves
Money Management Plus
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Municipal Fund, Inc. Officer
Investment Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc. and
Investment Advisor Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Chelsea Securities, Inc. Officer
Securities Firm and
Post Office Box 93 Director
Chelsea, Vermont 05038
---------------
Grady, Berwald & Co Officer
Holding Company and
43A South Finley Avenue Director
Basking Ridge, NJ 07920
-------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Reno J. Martini Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor and
4550 Montgomery Avenue Officer
Bethesda, Md. 20814
---------------
Charles T. Nason Acacia Mutual Life Insurance Officer
Acacia National Life Insurance and
Insurance Companies Director
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Financial Corporation Officer
Holding Company and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
---------------
Gardner Montgomery CompanyDirector
Tax Return Preparation Services
51 Louisiana Avenue, NW
Washington, D.C. 20001
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Charles T. Nason Acacia Federal Savings Bank Director
(continued) Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc.Director
Business Support Services
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Administrative Director
Services Co.
Service Company
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Asset Management Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Social Investment Fund Trustee
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
-----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
51 Louisiana Avenue, NW
Washington, D.C. 20001
------------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Robert-John H. Acacia National Life Insurance Officer
Sands Insurance Company and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
----------------
Acacia Mutual Life Insurance Officer
Insurance Company
51 Louisiana Avenue, NW
Washington, D.C. 20001
----------------
Acacia Financial Corporation Officer
Holding Company and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
----------------
Acacia Federal Savings Bank Officer
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Realty Corporation Officer
Real Estate Investments
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
---------------
Gardner Montgomery Company Officer
Tax Return Preparation Services and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Robert-John H. Calvert Group, Ltd. Director
Sands Holding Company
(continued) 4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Administrative Director
Services, Co.
Service Company
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Asset Management Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
William M. Tartikoff Acacia National Life Insurance Officer
Insurance Company
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
William M. Tartikoff First Variable Rate Fund Officer
(continued) for Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Officer
Services, Inc.
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, L.L.C. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Item 28. Business and Other Connections of Investment Adviser
Name of Company, Principal Capacity
Business and Address
Susan Walker Calvert Group, Ltd. Officer
Bender Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Officer
Services, Inc.
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, L.L.C. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for
Government Income
Calvert Tax-Free Reserves Officer
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Daniel K. Hayes Calvert Asset Management Officer
Company, Inc.
Investment Advisor
550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
First Variable Rate Fund
for Government Income
Calvert Tax-Free Reserves Officer
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Steve Van Order Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Item 29. Principal Underwriters
(a) Registrant's principal underwriter also underwrites the securities
of each of Registrant's series, as well as the securities of First Variable
Rate Fund for Government Income, Calvert Social Investment Fund, Calvert Cash
Reserves (d/b/a Money Management Plus), Calvert Municipal Fund, Inc., Calvert
Word Values Fund, Inc., Calvert New World Fund, Inc., and Acacia Capital
Corporation.
(b) Positions of Underwriter's Officers and Directors
Name and Principal Position(s) with Position(s) with
Business Address Underwriter Registrant
Clifton S. Sorrell, Jr. Director President and Trustee
Ronald M. Wolfsheimer Director, Senior Vice Treasurer
President
and Controller
William M. Tartikoff Director, Senior Vice Vice President and
President and Secretary
Steven J. Schueth President None
Robert Knaus Regional Vice President None
Lee Mahfouz Regional Vice President None
Item 29. Principal Underwriter (continued)
(b) Positions of Underwriter's Officers and Directors
(continued)
Name and Principal Position(s) with Position(s) with
Business Address Underwriter Registrant
Susan Walker Bender Assistant Secretary Assistant Secretary
Katherine Stoner Assistant Secretary None
Lisa Crossley Compliance Officer None
The principal business address of the above individuals is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
(c) Inapplicable.
Item 30. Location of Accounts and Records
Ronald M. Wolfsheimer, Treasurer
and
William M. Tartikoff, Secretary
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a) Not Applicable
b) Not Applicable
c) The Registrant undertakes to furnish to each person to
whom a Prospectus is delivered, a copy of the
Registrant's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it
meets all of the requirements for effectiveness of this registration
statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this registration statement to be signed on its behalf
by the undersigned, thereto duly authorized in the City of Bethesda, and
State of Maryland, on the 25th day of April, 1995.
CALVERT TAX-FREE RESERVES
By:____________________________
Clifton S. Sorrell, Jr.
President and Trustee
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons in the capacities indicated.
Signature Title Date
04/24/96
________________________ Trustee and
Clifton S. Sorrell, Jr. Principal Executive
Officer
______________________ Principal Accounting 04/24/96
Ronald M. Wolfsheimer Officer
__________**____________ Trustee 04/24/96
Richard L. Baird, Jr.
__________**____________ Trustee 04/24/96
Frank H. Blatz, Jr., Esq.
__________**____________ Trustee 04/24/96
Frederick T. Borts, M.D.
__________**____________ Trustee 04/24/96
Charles E. Diehl
__________**____________ Trustee 04/24/96
Douglas E. Feldman
__________**____________ Trustee 04/24/96
Peter W. Gavian
__________**____________ Trustee 04/24/96
John G. Guffey, Jr.
__________**____________ Trustee 04/24/96
Arthur J. Pugh
________________________ Trustee 04/24/96
David R. Rochat
__________**____________ Trustee 04/24/96
D. Wayne Silby
** Signed by Katherine (Thomas) Stoner pursuant to power of attorney,
attached hereto.
/s/Katherine Stoner
<PAGE>
EXHIBIT INDEX
Form N-1A
Item No.
Ex-23
24(b)(10) Form of Opinion and Consent of Counsel
Ex-23
24(b)(11) Independent Auditors' Consent
Ex-24 Power of Attorney
Ex-27
24(17) Financial Data Schedules
Ex-99
24(18) Rule 18f-3 Multiple Class Plan
Exhibit 10
April 24, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Exhibit 10, Form N-1A
Calvert Tax-Free Reserves
File numbers 2-69565 and 811-3101
Ladies and Gentlemen:
As counsel to Calvert Group, Ltd., it is my opinion that the
securities being registered by this Post-Effective Amendment No. 42 will
be legally issued, fully paid and non-assessable when sold. My opinion
is based on an examination of documents related to Calvert Tax-Free
Reserves (the "Trust"), including its Declaration of Trust, its By-Laws,
other original or photostatic copies of Trust records, certificates of
public officials, documents, papers, statutes, and authorities as I
deemed necessary to form the basis of this opinion.
I therefore consent to filing this opinion of counsel with the
Securities and Exchange Commission as an Exhibit to the Trust's
Post-Effective Amendment No. 42 to its Registration Statement.
Sincerely,
/s/Katherine Stoner
Katherine Stoner
Assistant Counsel
COOPERS Coopers & Lybrand L.L.P.
&LYBRAND a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Calvert Tax-Free Reserves
We consent to the incorporation by reference in Post-Effective Amendment
No. 42 to the Registration Statement of Calvert Tax-Free Reserves (comprised
of the Money Market, Limited-Term, Long Term, Vermont, and California Money
Market Portfolios) on Form N-1A (File Numbers 2-69565 and 811-3101) of our
reports dated February 9, 1996, on our audits of the financial statements and
financial highlights of the Portfolios, which reports are included in the
Annual Reports to Shareholders for the year ended December 31, 1995, which are
incorporated by reference in the Registration Statement. We also consent to
the reference to our Firm under the caption "Independent Accountants and
Custodians" in the Statement of Additional Information.
COOPERS & LYBRAND, L.L.P.
/Coopers & Lybrand, L.L.P./
Baltimore, Maryland
April 17, 1996
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First
Variable Rate Fund for Government Income, Calvert Tax-Free Reserves,
Calvert Cash Reserves (doing business as Money Management Plus), The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the
"Funds"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Funds with any federal or state agency, and to
do all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Funds
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Richard L. Baird, Jr.
Witness Name of
Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Frank H. Blatz, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Frederick T. Borts
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Charles E. Diehl
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Douglas E. Feldman
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Peter W. Gavian
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
John G. Guffey, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Arthur J. Pugh
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
David R. Rochat
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
D. Wayne Silby
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Clifton S. Sorrell, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Officer of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
William M. Tartikoff, Susan Walker Bender, Beth-ann Roth, and Katherine
Stoner my true and lawful attorneys, with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
registration statements and amendments filed by the Funds with any
federal or state agency, and to do all such things in my name and behalf
necessary for registering and maintaining registration or exemptions
from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
March 1, 1995
Date Signature
Ronald M. Wolfsheimer
Witness Name of Officer
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<PAID-IN-CAPITAL-COMMON> 29042
<SHARES-COMMON-STOCK> 29044
<SHARES-COMMON-PRIOR> 32473
<ACCUMULATED-NII-CURRENT> (7)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 29035
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1254
<OTHER-INCOME> 0
<EXPENSES-NET> 283
<NET-INVESTMENT-INCOME> 971
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 971
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (978)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 31012
<NUMBER-OF-SHARES-REDEEMED> (35408)
<SHARES-REINVESTED> 966
<NET-CHANGE-IN-ASSETS> 3437
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 160
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 289
<AVERAGE-NET-ASSETS> 32038
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .031
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.031)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000319676
<NAME> CALVERT TAX-FREE RESERVES
<SERIES>
<NUMBER> 061
<NAME> VERMONT MUNICIPAL, CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 55508
<INVESTMENTS-AT-VALUE> 59447
<RECEIVABLES> 1080
<ASSETS-OTHER> 117
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60644
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46
<TOTAL-LIABILITIES> 46
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56073
<SHARES-COMMON-STOCK> 3621
<SHARES-COMMON-PRIOR> 4185
<ACCUMULATED-NII-CURRENT> 160
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 52
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3918
<NET-ASSETS> 60206
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3786
<OTHER-INCOME> 0
<EXPENSES-NET> 465
<NET-INVESTMENT-INCOME> 3321
<REALIZED-GAINS-CURRENT> 824
<APPREC-INCREASE-CURRENT> 4478
<NET-CHANGE-FROM-OPS> 8623
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3270)
<DISTRIBUTIONS-OF-GAINS> (337)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4860
<NUMBER-OF-SHARES-REDEEMED> (16080)
<SHARES-REINVESTED> 2192
<NET-CHANGE-IN-ASSETS> (4012)
<ACCUMULATED-NII-PRIOR> 110
<ACCUMULATED-GAINS-PRIOR> (435)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 372
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 469
<AVERAGE-NET-ASSETS> 62047
<PER-SHARE-NAV-BEGIN> 15.34
<PER-SHARE-NII> .87
<PER-SHARE-GAIN-APPREC> 1.35
<PER-SHARE-DIVIDEND> (.85)
<PER-SHARE-DISTRIBUTIONS> (.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.62
<EXPENSE-RATIO> .77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000319676
<NAME> CALVERT TAX-FREE RESERVES
<SERIES>
<NUMBER> 062
<NAME> VERMONT MUNICIPAL - CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 55508
<INVESTMENTS-AT-VALUE> 59447
<RECEIVABLES> 1080
<ASSETS-OTHER> 117
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60644
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46
<TOTAL-LIABILITIES> 46
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 377
<SHARES-COMMON-STOCK> 24
<SHARES-COMMON-PRIOR> 24
<ACCUMULATED-NII-CURRENT> (4)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20
<NET-ASSETS> 395
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26
<OTHER-INCOME> 0
<EXPENSES-NET> 11
<NET-INVESTMENT-INCOME> 15
<REALIZED-GAINS-CURRENT> 6
<APPREC-INCREASE-CURRENT> 27
<NET-CHANGE-FROM-OPS> 48
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (18)
<DISTRIBUTIONS-OF-GAINS> (2)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 430
<NUMBER-OF-SHARES-REDEEMED> (306)
<SHARES-REINVESTED> 19
<NET-CHANGE-IN-ASSETS> 171
<ACCUMULATED-NII-PRIOR> (1)
<ACCUMULATED-GAINS-PRIOR> (1)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11
<AVERAGE-NET-ASSETS> 430
<PER-SHARE-NAV-BEGIN> 15.26
<PER-SHARE-NII> .58
<PER-SHARE-GAIN-APPREC> 1.35
<PER-SHARE-DIVIDEND> (.68)
<PER-SHARE-DISTRIBUTIONS> (.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.42
<EXPENSE-RATIO> 2.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Rule 18f-3 Multiple Class Plan
Calvert Tax-Free Reserves Money Market Portfolio
Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), requires that an investment company desiring to offer
multiple classes of shares pursuant to the Rule adopt a plan setting
forth the differences among the classes with respect to shareholder
services, distribution arrangements, expense allocations and any related
conversion features or exchange privileges. Any material amendment to
the plan must be approved by the investment company's Board of Trustees,
including a majority of the disinterested Board members, who must find
that the plan is in the best interests of each class individually and
the investment company as a whole.
1. Class Designation. Fund shares shall be designated
either Class O or Class MMP.
2. Differences in Availability. Class O shares and Class
MMP shares shall both be available through the same distribution
channels, except that some dealers may offer only Class O or Class MMP.
3. Differences in Services. The services offered to
shareholders of each MMP Class shall be substantially the same, except
that certain Class MMP holders may receive additional services from
their dealer such as a consolidated account statement.
4. Differences in Distribution Arrangements. Class O
shares shall be subject to neither a front-end sales charge nor a
contingent deferred sales charge (CDSC). Class O shares are not subject
to any Distribution Plan pursuant to Rule 12b-1 under the 1940 Act.
Class MMP shares shall be subject to neither a front-end sales
charge, nor a (CDSC). Class MMP shares shall be subject to a
Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act.
The Class MMP Distribution Plan shall pay at a maximum annual rate of
0.35% of the value of the average daily net assets of Class MMP. The
Class MMP Distribution Plan pays the Fund's Distributor for distributing
the Fund's Class MMP shares. This amount includes a service fee at the
annual rate of .25 of 1% of the value of the average daily net assets of
Class MMP.
5. Expense Allocation. The following expenses shall be
allocated, to the extent practicable, on a Class-by-Class basis: (a)
Distribution Plan fees; (b) transfer agent fees and expenses; (c)
printing and postage expenses payable by the Fund relating to preparing
and distributing materials, such as proxies, to current shareholders of
a specific Class; (d) class specific state registration fees; (e) class
specific litigation or other legal expenses; (f) certain class specific
reimbursement from the investment advisor; (g) certain class specific
contract services (e.g., proxy solicitation); and (h) any other expenses
subsequently identified that, in the opinion of counsel, or the Fund's
independent public accountants are properly allocated by Class.
6. Conversion Features. No Class shall be subject to any
automatic conversion feature.
7. Exchange Privileges. Both Class O and Class MMP shall
be exchangeable into (a) Class A shares of other funds managed,
administered or underwritten by Calvert Group; if the front-end load on
the Class A shares is paid at the time of the exchange; (b) Class C
shares of funds managed, administered or underwritten by Calvert Group;
(c) shares of funds managed, administered or underwritten by Calvert
Group which do not have separate share classes; or (d) shares of certain
other funds specified from time to time.
Dated: January 25, 1996
<PAGE>
EXHIBIT I
Calvert Tax-Free Reserves (CTFR)
Maximum Class A Maximum
Class A Maximum Class C
Front-End Sales 12b-1 Fee
12b-1 fee
Charge
CTFR Long-Term 3.75% 0.35%
1.00%
CTFR Vermont Municipal 3.75% None
1.00%
CTFR Limited-Term 2.00% None
0.55%
Rule 18f-3 Multiple Class Plan
Calvert Tax-Free Reserves
Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), requires that an investment company desiring to offer
multiple classes of shares pursuant to the Rule adopt a plan setting
forth the differences among the classes with respect to shareholder
services, distribution arrangements, expense allocations and any related
conversion features or exchange privileges. Any material amendment to
the plan must be approved by the investment company's Board of
Trustees/Directors, including a majority of the disinterested Board
members, who must find that the plan is in the best interests of each
class individually and the investment company as a whole.
1. Class Designation. Fund shares shall be designated
either Class A or Class C.
2. Differences in Availability. Class A shares and Class
C shares shall both be available through the same distribution channels,
except that Class C shares; (1) may not be available through some
dealers, and, (2) are not available for purchases of $1 million or more.
3. Differences in Services. The services offered to
shareholders of each Class shall be substantially the same, except that
Rights of Accumulation, Letters of Intent and Reinvestment Privileges
shall be available only to holders of Class A shares.
4. Differences in Distribution Arrangements. Class A
shares shall be offered with a front-end sales charge, as such term is
defined in Article III, Section 26(b), of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. The amount of the
front-end sales charge on Class A shares is set forth at Exhibit I.
Class A shares shall be subject to a Distribution Plan adopted pursuant
to Rule 12b-1 under the 1940 Act. The amount of the Distribution Plan
expenses for Class A shares, as set forth at Exhibit I, are used to pay
the Fund's Distributor for distributing the Fund's Class A shares. This
amount includes a service fee at the annual rate of .25 of 1% of the
value of the average daily net assets of Class A.
Class C shares shall be subject to neither a front-end sales
charge, nor a contingent deferred sales charge (CDSC). Class C shares
shall be subject to a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The amount of the Distribution Plan expenses for
Class C shares is set forth at Exhibit I. The Class C Distribution Plan
pays the Fund's Distributor for distributing the Fund's Class C shares.
This amount includes a service fee at the annual rate of .25 of 1% of
the value of the average daily net assets of Class C.
5. Expense Allocation. The following expenses shall be
allocated, to the extent practicable, on a Class-by-Class basis: (a)
Distribution Plan fees; (b) transfer agent fees and expenses; (c)
printing and postage expenses payable by the Fund relating to preparing
and distributing materials, such as proxies, to current shareholders of
a specific Class; (d) class specific state registration fees; (e) class
specific litigation or other legal expenses; (f) certain class specific
reimbursement from the investment advisor ; (g) certain class specific
contract services (e.g., proxy solicitation); and (h) any other expenses
subsequently identified that, in the opinion of counsel, or the Fund's
independent public accountants are properly allocated by Class.
6. Conversion Features. No Class shall be subject to any
automatic conversion feature.
7. Exchange Privileges. Class A shares shall be
exchangeable only for (a) Class A shares of other funds managed,
administered, or underwritten by Calvert Group; (b) shares of funds
managed, administered or underwritten by Calvert Group which do not have
separate share classes; and (c) shares of certain other funds specified
from time to time.
Class C shares shall be exchangeable only for (a) Class C
shares of other funds managed, administered or underwritten by Calvert
Group; (b) Class A shares of other funds managed, administered or
underwritten by Calvert Group, if the front-end load on the Class A
shares is paid at the time of the exchange; and (c) shares of certain
other funds specified from time to time.
Dated: January 25, 1996
