March 5, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Calvert Tax-Free Reserve Fund
File Numbers 811-3101 and 2-69565
Ladies and Gentlemen:
Pursuant to Rule 30b2-1 of the Investment Company Act of 1940, attached is
the Annual Report to Shareholders for the year ended December 31, 1996, for the
above-referenced Registrant.
Sincerely,
Nana Juarbe
Administrative Assistant
<PAGE>
CALVERT TAX-FREE RESERVES
Dear Investor:
Investors' changing outlook for Federal Reserve monetary policy caused
above-average volatility in the financial markets. In general, bond yields
trended higher during the first half of the year in anticipation of a Fed
tightening and then retraced a bit during the second half when Gross Domestic
Product and other indications of pricing pressures appeared to lessen.
Money market investments turned in modestly good returns, considering the
current low rates available on short-term securities. Most longer-term
fixed-income investments also managed to generate positive returns, but yields
covered a good bit of ground during the course of the year. The benchmark
30-year Treasury bond fluctuated within a fairly wide band of about 125 basis
points but closed 1996 just 60 basis points above its year-ago level. Stocks
posted very strong returns, for the second consecutive year. The Standard &
Poor's 500 Stock Index rose about 23%. Municipal securities outperformed
taxables, as the market recovered from fears that the introduction of a flat-tax
system would eliminate municipal securities' tax advantage.
Municipal Rates
(Graph appears here)
Graph shows municipal rates for 1, 7 and 20 year
AA General Obligations between 12/95 and 12/96
Fund Performance and Strategy Review
Money Market Portfolio
The Money Market Portfolio generated a competitive level of tax-free income
during this 12-month period, but the yield was below its year-ago level due to
the lower rates available on money market securities. We kept the Fund's
weighted average maturity near the low end of its target range for the first six
months of 1996, so that we could quickly roll assets into higher yielding
securities as they became available. We took advantage of the June/July note
season, when municipal governments bring new issues to market, to modestly
extend maturity. Greater supply puts upward pressure on yields.
Money Market Portfolio
Compound Dividend Yield
(Graph Appears Here)
Twelve
Months 4.02%
Ended 3.31%
12/31/95
Twelve
Months 3.33%
Ended 2.68%
12/31/96 2.93%
0.0% 1.0% 2.0% 3.0% 4.0%
0.5% 1.5% 2.5% 3.5% 4.5%
Limited-Term Portfolio
The Limited-Term Portfolio outperformed its benchmark for the 12-month
period but lagged for the six-month period covered by this report. This is
because the Limited-Term Portfolio seeks to maintain a fairly stable net asset
value and therefore limits the maturity of underlying securities to three years.
Other funds in this peer group may purchase longer term securities. Therefore,
when rates move higher, as they did during the first half of the year, our
shorter maturity boosts our relative performance, but when rates decline, as
they did in the second half, we do not benefit as fully from the resulting price
appreciation.
Limited-Term Portfolio
Investment Performance
(Graph appears here)
Periods Ended 12/31/96 6 Months 12 Months
Limited Term Portfolio 2.04% 3.94%
Lipper Short Muni
Debt Funds Avg. 4.73% 3.76%
Investment performance is for Class A Shares and does not
reflect the deduction of any front-end sales charge.
Long-Term Portfolio
The Long-Term Portfolio generated six- and 12-month returns in-line with
its peer group average. We kept maturity relatively constant and in-line with
that of the peer group average for most of the year and maintained our emphasis
on high credit quality.
Long-Term Portfolio
Investment Performance
Periods Ended 12/31/96 6 Months 12 Months
Long Term Portfolio 4.65% 2.89%
Lipper General Muni
Funds Avg. 4.73% 3.30%
Investment performance is for Class A Shares and does not
reflect the deduction of any front-end sales charge.
Outlook
Yields will likely continue to fluctuate during the first quarter of 1997,
but we don't expect to see a clear trend in place until after the next Federal
Reserve Open Market Committee meeting. The Fed might then adopt a bias toward a
tighter monetary policy, and rates might move a bit higher, but we are not
anticipating a steep increase. Our strategy is to keep the Portfolios at or near
their current maturity ranges until the interim volatility subsides and we can
better assess the direction of rates.
Sincerely,
David Rochat
Senior Vice President
January 21, 1997
Ratings Breakdown
Money Market Portfolio
(Graph appears here)
First Tier Second Tier
93% 7%
Limited-Term Portfolio
(Graph appears here)
AAA/Aaa AA/Aa A/a BBB/Baa Cash Equivalents
13% 7% 15% 28% 37%
Long-Term Portfolio
(Graph appears here)
AAA/Aaa AA/Aa A/A NR BBB/Baa
31% 28% 16% 10% 17%
NR: Obligation is not rated by a commercial rating service, such as Moody's
Investors Services, Inc., or Standard & Poor's Corporation; obligation has been
determined to be of approriate quality for the Portfolio by Calvert Asset
Management Company, Inc., the Investment Advisor.
All securities in Calvert Group money market funds are eligible securities
under rule 2a-7 of the Investment Company Act of 1940. First Tier Securities are
eligible securities rated in the highest rating category for short-term debt
obligations by at least two of the Nationally Recognized Statistical Ratings
Organizations. Second Tier Securities are eligible securities not in the First
Tier.
Portfolio Statistics
Weighted Average Maturity
6/30/96 12/31/96
Money Market Portfolio 21 days 42 days
Limited-Term Portfolio 331 days 319 days
Long-Term Portfolio 18 years 18 years
Money Market Yields
Seven-Day Compounded (Effective) 12/31/96
Money Market Portfolio (Class O) 3.65%
Money Market Portfolio (Class MMP) 2.95%
SEC Yields
Class A
Thirty Days Ended 12/31/96
Limited-Term Portfolio 3.79%
Long-Term Portfolio 4.84%
Yields assume reinvestment of dividends.
Average Annual Total Returns
Since
Periods Ended 12/31/96 1 Year 5 Year 10 Year Inception
Class A Shares
Limited-Term Portfolio (3/81) 2.88% 3.91% 4.99% 6.29%
Long-Term Portfolio (8/82) -.94% 5.97% 6.28% 8.17%
Portfolio Statistics
Performance Comparisons
Money Market Portfolio
Change in value of a hypothetical $10,000 investment.
(Graph appears here)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
CTFR M.M.(O) $15,242 $14,471 $14,181 $13,793 $13,469 $13,058
12/31/90 12/31/89 12/31/88 12/31/87 1/1/87
CTFR M.M.(0) $12,439 $11,730 $11,018 $10,462 $10,000
</TABLE>
Limited-Term Portfolio
Change in value of a hypothetical $10,000 investment.
(Graph appears here)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
CTFR LTD TERM $16,274 $15,648 $14,834 $14,524 $13,962 $13,299
LIPPER SHORT MUNI
DEBT AVGL $17,277 $16,651 $15,499 $15,255 $14,325 $13,460
12/31/90 12/31/89 12/31/88 12/31/87 1/1/87
CTFR LTD TERM $12,492 $11,729 $10,948 $10,249 $9,800
LIPPER SHORT MUNI
DEBT AVGL $12,414 $11,664 $10,901 $10,301 $10,000
</TABLE>
Long-Term Portfolio
Change in value of a hypothetical $10,000 investment.
(Graph appears here)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
CTFR LONG TERM $18,384 $17,867 $15,396 $15,831 $14,248 $13,241
12/31/90 12/31/89 12/31/88 12/31/87 1/1/87
CTFR LONG TERM $11,647 $11,310 $10,299 $9,339 $9,625
</TABLE>
*The Lehman Aggregate Municipal Bond Index has a maturity of approximately 20
years, which is comparable to that of the Long-Term Portfolio but much longer
than that of the Limited-Term Portfolio.
Total returns assume reinvestment of dividends and, for Class A shares, reflect
the deduction of each fund's maximum front-end sales charge of 2.00% (1.00%
effective 9/9/97) for the Limited-Term Portfolio and 3.75% for the Long-Term
Portfolio. No sales charge has been applied to the indices used for comparison.
The value of an investment in Class A (Class O for Money Market Portfolio)
shares is plotted in the line graphs. The value of an investment in Class C
(Class MMP for Money Market Portfolio) shares would be different. Past
performance is no guarantee of future returns.
Report of Independent Accountants
To the Board of Trustees and Shareholders of Calvert Tax-Free Reserves:
We have audited the accompanying statements of net assets of Calvert
Tax-Free Reserves (comprised of Money Market, Limited-Term, and Long-Term
Portfolios) as of December 31, 1996, and the related statements of operations
for the year then ended, statements of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the three
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for each of the preceding years
were audited by other auditors whose report dated January 31, 1994 expressed an
unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the Portfolios noted in the first paragraph as of December 31, 1996, the
results of their operations, the changes in their net assets and financial
highlights for the respective periods stated in the first paragraph in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
February 7, 1997
Money Market Portfolio
Statement of Net Assets
December 31, 1996
Principal
Amount Value
Municipal Obligations - 100.7%
Alabama - 1.5%
$6,000,000 Birmingham Adjustable Warrants VRDN, Series A, 4.20%,
6/1/18, LOC: Regions Bank $6,000,000
MFH Revenue VRDN,
3,490,000 4.30%, 12/1/03, LOC: Amsouth Bank 3,490,000
825,000 Series A, 4.25%, 4/1/14, LOC: Southtrust Bank, AL 825,000
3,600,000 Mobile Spring Hill Medical Clinic Revenue VRDN, 4.25%,
2/1/11, LOC: Amsouth Bank 3,600,000
5,775,000 Northpoint MFH Revenue VRDN, 4.25%, 7/1/18,
LOC: Amsouth Bank 5,775,000
4,000,000 Wynlakes Government Utility Authority Revenue VRDN,
4.50%, 5/1/06, LOC: Amsouth Bank 4,000,000
Arizona - 6.0%
14,500,000 Apache County IDA Revenue VRDN, 4.10%, 12/15/18,
LOC: Bank of New York 14,500,000
22,900,000 Apache County IDA Revenue VRDN, Series B, 4.10%,
10/1/21, LOC: Bank of Tokyo-Mitsubishi, Ltd. 22,900,000
2,050,000 Casa Grande IDA Revenue VRDN, 3.85%, 9/1/07,
LOC: Banque National De Paris 2,050,000
7,380,000 Glendale IDA Revenue VRDN, 4.65%, 1/1/20, LOC:
Sumitomo T&B 7,380,000
5,415,000 Maricopa County IDA Revenue VRDN, 4.45%,
10/1/08, C/LOC: Great American FSB 5,415,000
Maricopa County Pollution Control Revenue VRDN,
3,000,000 4.25%, 7/1/14, LOC: Citibank 3,000,000
10,100,000 4.15%, 12/1/14, LOC: Credit Suisse 10,100,000
6,300,000 5.00%, 5/1/29, LOC: Toronto-Dominion 6,300,000
Pinal County IDA Revenue VRDN,
9,900,000 4.25%, 12/1/05, LOC: Industrial Bank of Japan 9,900,000
6,000,000 Pollution Control, 5.00%, 12/1/09, LOC: National
Westminster Bank 6,000,000
8,300,000 Prescott IDA Revenue VRDN, 3.90%, 12/1/14,
GA: Household Finance Corp. 8,300,000
California - 20.5%
6,700,000 Fremont MFH Revenue VRDN, 4.20%, 9/1/07,
LOC: Industrial Bank of Japan 6,700,000
8,800,000 Fresno MFH Revenue VRDN, 5.60%, 5/1/15,
LOC: Tokai Bank, Ltd. 8,800,000
8,500,000 Hemet MFH Authority Revenue VRDN, 4.35%,
7/1/06, C/LOC: Mercury S&L 8,500,000
4,450,000 Huntington Beach Tax & Revenue Anticipation
Notes, 4.50%, 10/1/97 4,476,750
10,000,000 Kern County Superintendent of Schools Certificates of
Participation VRDN, Series A, 4.15%, 12/1/21,
BPA: Anchor National Life 10,000,000
Principal
Amount Value
California (Cont'd)
$500,000 Los Angeles Community Redevelopment Agency MFH
Revenue VRDN, 4.20%, 12/1/05, LOC: Industrial
Bank of Japan $500,000
8,800,000 Los Angeles County Convention Center Puttable Floating
Option VRDN, 4.20%, 8/15/18, INSUR: MBIA 8,800,000
4,181,000 Los Angeles County MFH Revenue VRDN, 4.20%, 5/1/07,
LOC: Industrial Bank of Japan 4,181,000
1,000,000 Los Angeles County Sales Tax Trust Receipts Revenue VRDN,
4.45%, 8/20/03, INSUR: MBIA 1,000,000
15,000,000 Los Angeles County Tax & Revenue Anticipation Notes,
Series A, 4.50%, 6/30/97, LOC: Bank of America 15,042,187
15,000,000 Los Angeles Unified School District Tax & Revenue
Anticipation Notes, Series A, 4.50%, 6/30/97 15,045,248
Orange County Apartment Development Revenue VRDN,
17,750,000 4.35%, 11/1/05, LOC: Wells Fargo Bank, N.A. 17,750,000
18,050,000 4.65%, 3/1/07, LOC: Tokai Bank, Ltd. 18,050,000
10,800,000 4.15%, 10/1/07, LOC: Bank of Tokyo-Mitsubishi, Ltd. 10,800,000
7,000,000 4.30%, 11/1/08, LOC: Banque Paribas 7,000,000
12,250,000 Orange County Housing Authority Revenue VRDN,
4.25%, 12/1/07, LOC: Bank of Tokyo-Mitsubishi, Ltd. 12,250,000
2,500,000 Orange County Improvement Special Assessment VRDN,
4.85%, 9/2/18, LOC: Bank of Tokyo-Mitsubishi 2,500,000
4,000,000 Orange County Rental Housing Revenue VRDN, 4.25%,
5/1/22, LOC: Banque Paribas 4,000,000
4,517,857 Palmdale School District Project Lease VRDN,
4.40%, 12/13/10, LOC: National Westminster Bank 4,517,857
Riverside MFH Revenue VRDN,
3,200,000 5.50%, 6/1/05, LOC: Tokai Bank, Ltd. 3,200,000
1,065,000 4.75%, 6/1/09, LOC: Tokai Bank, Ltd. 1,065,000
5,330,000 Sacramento County MFH Revenue VRDN, 5.50%,
12/1/98, LOC: Tokai Bank, Ltd. 5,330,000
San Bernardino County MFH Revenue VRDN,
2,000,000 Series B, 4.125%, 6/1/05 2,000,000
4,000,000 4.25%, 8/1/05, LOC: Tokai Bank, Ltd. 4,000,000
28,000,000 5.55%, 5/1/15, IA: Escrowed/T-Bills 28,000,000
6,000,000 San Bernardino County Public Safety Authority Revenue
Bonds, 4.10%, 5/1/97 6,000,000
San Diego MFH Revenue VRDN,
8,550,000 4.20%, 8/1/15, LOC: Bank of Tokyo-Mitsubishi, Ltd. 8,550,000
2,690,000 6.50%, 12/1/08, LOC: Daiwa 2,690,000
34,860,000 San Francisco MFH Revenue VRDN, 4.60%, 10/1/00, LOC:
Mitsubishi T&B 34,860,000
4,900,000 Santa Ana Housing Authority Revenue VRDN, 4.50%,
12/1/07, C/LOC: Mercury S&L 4,900,000
1,200,000 Simi Valley MFH Revenue VRDN, 4.30%, 6/1/10,
LOC: Sumitomo T&B 1,200,000
State Revenue Anticipation Notes,
36,000,000 Series A, 4.50%, 6/30/97 36,090,483
4,000,000 Series C-1, 4.00%, 6/30/97 4,000,000
700,000 Stockton IDA Revenue VRDN, 4.295%, 12/1/16,
LOC: Union Bank of California 700,000
Principal
Amount Value
California (Cont'd)
$2,975,000 Union City Housing Mortgage Revenue VRDN, 4.60%, 10/1/11,
LOC: Mitsubishi T&B $2,975,000
16,600,000 Victor Valley Community College District Certificates
of Participation VRDN, 4.45%, 11/1/24,
GA: Anchor National Life 16,600,000
2,905,000 Victorville MFH Revenue VRDN, 4.55%, 12/1/15,
C/LOC: Redland S&L 2,905,000
Colorado - 0.7%
2,500,000 Arapahoe County MFH Revenue VRDN, 5.55%, 11/1/17,
LOC: Heller Financial 2,500,000
3,500,000 City and County of Denver MFH Revenue VRDN, 3.40%,
12/15/14, LOC: Sumitomo Bank Ltd 3,500,000
3,695,000 Denver City & County Airport Revenue VRDN, 4.35%,
11/15/25, INSUR: MBIA 3,695,000
2,120,000 Lakewood IDA Revenue VRDN, 4.75%, 8/1/07, LOC:
West One Bank 2,120,000
Connecticut - 0.1%
1,150,000 State Development Authority Revenue VRDN, 3.75%, 6/1/08,
LOC: Barclays Bank, Plc. 1,150,000
1,190,000 State Health and Education Facilities Authority Revenue
VRDN, 3.75%, 2/1/09, LOC: Barclays Bank, Plc. 1,190,000
District of Columbia - 2.2%
GO VRDN,
10,900,000 4.60%, 7/27/03, INSUR: AMBAC 10,900,000
7,710,000 4.60%, 6/1/05, INSUR: MBIA 7,710,000
5,300,000 4.60%, 6/1/03, INSUR: FSA 5,300,000
10,390,000 MFH Revenue VRDN, 4.30%, 12/1/05, LOC: Sumitomo
Bank, Ltd. 10,390,000
Florida - 6.1%
3,700,000 Dade County Aviation Revenue VRDN, Series A, 4.45%, 10/1/09,
LOC: Fuji Bank, Ltd. 3,700,000
6,750,000 Duval County MFH Revenue VRDN, 5.25%, 6/1/07,
LOC: Household Financial Corp. 6,750,000
8,800,000 Florida Housing Finance Agency Revenue VRDN, 4.25%,
7/1/23, LOC: Heller Financial 8,800,000
5,000,000 Gulf Breeze Revenue VRDN, Series A, 4.25%, 3/31/21,
LOC: Barnett Bank of South Florida 5,000,000
10,600,000 Lee County IDA Revenue VRDN, 4.125%, 4/1/10,
LOC: Banque Paribas 10,600,000
6,025,000 Manatee County Housing Finance Authority Revenue VRDN,
4.60%, 12/1/07, LOC: Marine Midland Bank 6,025,000
4,200,000 Pinellas County Health Facilities Authority Revenue VRDN,
4.35%, 11/1/15, LOC: First Union Bank, NC 4,200,000
Orange County Health Facilities Authority Revenue VRDN,
20,600,000 3.65%, 1/13/97, INSUR: MBIA 20,600,000
6,880,000 4.55%, 10/1/06, INSUR: MBIA 6,880,000
2,600,000 4.55%, 3/27/06, INSUR: MBIA 2,600,000
Principal
Amount Value
Florida (Cont'd)
Orange County Health Facilities Authority Revenue VRDN,
$4,000,000 4.55%, 10/1/08, INSUR: MBIA $4,000,000
9,455,000 4.20%, 12/1/25, INSUR: FGIC 9,455,000
150,000 Orange County MFH Revenue VRDN, 4.25%, 10/1/08,
LOC: NationsBank 150,000
4,720,000 Palm Beach County IDA Revenue VRDN, 4.045%, 5/5/10,
LOC: Union Bank of California 4,720,000
3,530,000 Volusia County MFH Revenue VRDN, 4.375%, 9/1/05, GA:
Household Finance Corp. 3,530,000
Georgia - 2.8%
2,000,000 Athens MFH Revenue VRDN, 4.375%, 8/1/05, LOC:
First Bank, N.A. 2,000,000
14,600,000 Atlanta Urban Residential MFH Revenue VRDN, 4.60%,
12/1/08, LOC: Marine Midland Bank 14,600,000
7,850,000 Columbus Downtown Development Authority Revenue
VRDN, 4.35%, 8/1/15, LOC: Columbus B&T 7,850,000
7,470,000 De Kalb County MFH Revenue VRDN, 4.30%, 11/1/15,
LOC: Amsouth Bank 7,470,000
Jackson County IDA Revenue VRDN,
7,000,000 4.50%, 12/1/15, LOC: Bank of Tokyo-Mitsubishi, Ltd. 7,000,000
2,585,000 4.50%, 12/1/24, LOC: Barclays Bank, Plc. 2,585,000
3,000,000 Macon Bibb County Urban Development Authority Revenue
VRDN, 4.20%, 3/1/05 3,000,000
Illinois - 6.9%
2,900,000 Chicago Municipal Trust Receipts VRDN, 4.55%, 1/1/18,
INSUR: AMBAC 2,900,000
20,000,000 Chicago MFH Revenue VRDN, 4.20%, 11/1/10, LOC:
Fleet National Bank 20,000,000
2,000,000 Chicago O'Hare International Airport Revenue VRDN,
5.00%, 12/1/17, LOC: Westdeutsche Landesbank 2,000,000
10,000,000 Decatur Water Treatment Revenue VRDN, 3.70%, 1/14/97,
LOC: Sumitomo Bank, Ltd. 10,000,000
Development Financial Authority Revenue VRDN,
2,250,000 4.10%, 9/1/26, LOC: Firstar Bank, Milwaukee 2,250,000
5,000,000 4.00%, 9/1/31, LOC: LaSalle Bank 5,000,000
Educational Facilities Authority Revenue VRDN,
15,705,000 4.25%, 12/1/05, INSUR: FGIC 15,705,000
13,400,000 4.50%, 1/1/18, LOC: Sumitomo Bank, Ltd. 13,400,000
1,500,000 Elgin Industrial Development Revenue VRDN, 4.40%,
9/1/16, LOC: LaSalle Bank 1,500,000
9,000,000 Galesburg Knox College Project Revenue VRDN, 4.10%,
3/1/31, LOC: LaSalle Bank 9,000,000
Health Facilities Authority Revenue VRDN,
7,765,000 4.50%, 7/1/12, LOC: First S&L of South Holland 7,765,000
4,000,000 4.20%, 9/15/20, LOC: LaSalle Bank 4,000,000
4,790,000 Housing Development Authority Revenue VRDN, 4.65%,
2/1/24, LOC: Sumitomo Bank, Ltd. 4,790,000
Principal
Amount Value
Illinois (Cont'd)
IDA Revenue VRDN,
$2,400,000 4.60%, 11/1/02, LOC: LaSalle Bank $2,400,000
2,600,000 4.60%, 9/2/05, LOC: American National B&T 2,600,000
2,000,000 4.50%, 1/1/09, LOC: Industrial Bank of Japan 2,000,000
2,225,000 Series B, 4.25%, 1/1/10, LOC: American National B&T 2,225,000
2,480,000 Rockford Economic Development Revenue Bonds, 4.45%,
12/2/97, LOC: Banque Paribas 2,480,000
Indiana - 0.5%
3,420,000 Lawrence Economic Development Revenue VRDN, 4.65%,
6/1/24, LOC: Heller Financial 3,420,000
4,500,000 South Bend MFH Revenue VRDN, 4.50%, 10/1/09, LOC:
Society Bank of Cleveland 4,500,000
Iowa - 0.5%
7,300,000 School Corps. Warrants, Series A, 4.75%, 6/27/97 7,349,567
Kansas - 1.1%
6,635,000 Kansas City MFH Revenue VRDN, 4.35%, 6/1/15,
LOC: Huntington National Bank 6,635,000
11,075,000 Shawnee MFH Revenue VRDN, 4.60%, 2/1/24, LOC:
Heller Financial 11,075,000
Kentucky - 1.4%
9,800,000 Mayfield Multi-City Lease Revenue VRDN, 4.30%, 7/1/26,
LOC: PNC Bank, N.A. 9,800,000
13,000,000 Ohio County Pollution Control Revenue VRDN, 4.90%,
10/1/15, LOC: Chemical Bank 13,000,000
Louisiana - 0.2%
3,000,000 Public Facilities Authority Revenue VRDN, 4.30%, 12/1/14,
LOC: Regions Bank 3,000,000
Maine - 0.4%
7,000,000 Orrington Resource Recovery Revenue VRDN, 4.125%, 5/1/03,
LOC: Bank of Nova Scotia 7,000,000
Maryland - 1.4%
3,041,260 Baltimore County Economic Development Authority Revenue
VRDN, 4.75%, 12/1/02, LOC: First National
Bank of Maryland 3,041,260
Economic Development Corporation Revenue VRDN,
1,200,000 4.75%, 11/1/02, LOC: First National Bank of Maryland 1,200,000
1,000,000 4.30%, 6/1/20, LOC: NationsBank 1,000,000
13,555,000 Health and Education Facilities Authority Revenue VRDN,
4.25%, 7/1/14, LOC: First National Bank of Maryland 13,555,000
3,000,056 Ocean City IDA Revenue VRDN, 5.3625%, 7/1/13, LOC:
First National Bank of Maryland 3,000,056
Massachusetts - 0.5%
1,175,000 Hudson IDA Revenue VRDN, 4.295%, 10/1/13,
LOC: FNB Boston 1,175,000
Principal
Amount Value
Massachusetts (Cont'd)
State Industrial Finance Authority Revenue VRDN,
$1,275,000 4.045%, 11/3/99, LOC: FNB Boston $1,275,000
4,900,000 4.295%, 8/1/14, LOC: FNB Boston 4,900,000
500,000 New Bedford IDA Revenue VRDN, 4.295%, 10/1/97,
LOC: CoreStates 500,000
Michigan - 1.2%
Housing Development Authority Limited Obligation Revenue VRDN,
2,675,000 4.29%, 11/1/14, LOC: Citibank 2,675,000
4,400,000 4.29%, 5/1/16, LOC: Citibank 4,400,000
5,100,000 State Hospital Financing Authority Revenue VRDN, Series A,
4.00%, 12/1/23, LOC: First American Bank, MI 5,100,000
7,425,000 Sault Sainte Marie Tribe Building Revenue VRDN, Series A, 4.22%,
6/1/03, LOC: First of America Bank, MI 7,425,000
Minnesota - 0.5%
1,100,000 Cottage Grove Pollution Control Board Revenue VRDN,
4.22%, 8/1/12, GA: Minnesota Mining
and Manufacturing 1,100,000
6,500,000 Minneapolis MFH Revenue VRDN, 4.25%, 12/1/14,
LOC: Citibank 6,500,000
Missouri - 0.3%
4,045,000 Kansas City MFH Revenue VRDN, 4.60%, 8/1/20,
LOC: Heller Financial 4,045,000
1,155,000 IDA Revenue VRDN, 4.295%, 3/1/01, LOC: FNB Boston 1,155,000
Nebraska - 0.3%
4,300,000 Investment Finance Authority MFH Revenue VRDN, 4.20%,
10/1/10, LOC: LaSalle Bank 4,300,000
New Hampshire - 1.2%
12,505,000 Manchester MFH Revenue VRDN, 6.00%, 6/15/15,
LOC: Daiwa Bank, Ltd. 12,505,000
5,945,000 Higher Education & Health Adjustable Trust Receipts,
Series SG19, 4.15%, 6/1/23, BPA: Societe Generale 5,945,000
New Jersey - 0.8%
Economic Development Authority Revenue VRDN,
2,350,000 4.25%, 3/1/98, LOC: Meridian Bank 2,350,000
1,240,000 4.25%, 1/1/00, LOC: Marine Midland Bank 1,240,000
1,500,000 4.625%, 12/1/14, LOC: Citibank 1,500,000
7,400,000 5.00%, 12/1/15, LOC: Asahi Bank, Ltd. 7,400,000
New York - 5.2%
Orange County IDA Revenue VRDN,
1,200,000 4.50%, 6/1/98, LOC: Sakura Bank 1,200,000
500,000 4.50%, 10/1/98, LOC: Sakura Bank 500,000
15,000,000 New York City GO Series J 2, 3.10%, 2/24/97 15,000,000
3,550,000 New York City GO VRDN, 5.00%, 8/1/20, LOC:
Morgan Guaranty Trust 3,550,000
62,000,000 New York City Revenue Anticipation Notes, Series B,
4.50%, 6/30/97, LOC: Bank of Nova Scotia,
Canadian Imperial, Commerzbank 62,294,362
Principal
Amount Value
Nevada - 0.1%
$1,900,000 Henderson Public Improvement Trust Revenue VRDN, 4.60%,
4/1/07, LOC: Barclays Bank, Plc. $1,900,000
North Carolina - 0.3%
5,000,000 Wake County Industrial Facilities & Pollution Financing Authority
Revenue Bonds, 3.55%, 2/10/97, LOC: Fuji Bank Ltd 5,000,000
Oklahoma - 1.1%
5,930,000 Cleveland MFH Revenue VRDN, 4.50%, 4/1/20, SURBD:
Continental Casualty Co. 5,930,000
5,900,000 Housing Finance Authority Revenue VRDN, 4.75%, 12/1/05,
C/LOC: Binghampton Savings Bank 5,900,000
5,000,000 Tulsa IDA Revenue VRDN, Series A, 4.05%, 11/1/14, LOC:
Sanwa Bank, Ltd. 5,000,000
Pennsylvania - 11.7%
2,600,000 Berks County IDA Revenue VRDN, 4.25%, 7/1/25,
LOC: CoreStates 2,600,000
8,500,000 Delaware County Authority Revenue VRDN, 4.00%, 7/1/14,
LOC: PNC Bank N.A. 8,500,000
Emmaus GO Revenue VRDN,
7,300,000 4.20%, 3/1/24, LOC: Fuji Bank, Ltd. 7,300,000
3,000,000 4.20%, 3/1/24, LOC: Midland Bank, Plc. 3,000,000
50,000,000 Harrisburg Mortgage Pool Financing Fund Authority Revenue VRDN,
4.55%, 7/1/21, GA: Anchor National Life 50,000,000
Philadelphia GO, Adjustable Coupon,
15,000,000 3.70%, 1/13/97, LOC: Fuji Bank, Ltd. 15,000,000
12,000,000 3.70%, 1/14/97, LOC: Fuji Bank, Ltd. 12,000,000
13,600,000 3.70%, 1/16/97, LOC: Fuji Bank, Ltd. 13,600,000
4,000,000 3.55%, 2/10/97, LOC: Fuji Bank, Ltd. 4,000,000
44,000,000 Philadelphia Tax & Revenue Anticipation Notes, Series A,
4.50%, 6/30/97 44,114,643
3,000,000 Philadelphia MFH Redevelopment Authority Revenue VRDN,
4.60%, 12/1/09, LOC: Marine Midland Bank 3,000,000
1,910,000 West Cornwall Township Municipal Authority Revenue VRDN,
3.85%, 3/1/16, LOC: CoreStates 1,910,000
11,500,000 Westmoreland County IDA Revenue VRDN, 4.375%, 5/1/18,
LOC: Fleet National Bank 11,500,000
8,250,000 York County Hospital Authority Revenue VRDN, 4.43%, 1/1/15,
LOC: First National Bank of Maryland 8,250,000
Puerto Rico - 0.6%
9,000,000 Commonwealth Tax & Revenue Anticipation Notes,
Series A, 4.00%, 7/30/97 9,028,941
South Carolina - 2.2%
15,225,000 Berkeley County Pollution Control Facilities Revenue VRDN,
4.15%, 12/1/08, LOC: Royal Bank of Canada 15,225,000
5,100,000 Dorchester County Industrial Revenue VRDN, 4.464%, 10/1/24,
LOC: Bayerische Vereinsbank 5,100,000
Principal
Amount Value
South Carolina (Cont'd)
$4,860,000 Orangeburg IDA Revenue VRDN, 4.295%, 6/1/08,
LOC: FNB Boston $4,860,000
3,000,000 Jobs Economic Development Authority Revenue VRDN, 4.95%,
7/1/22, LOC: Chemical Bank 3,000,000
6,000,000 State Housing Finance and Development Authority Revenue
VRDN, 4.40%, 7/1/07, SURBD: Continental Casualty Co. 6,000,000
South Dakota - 1.5%
Housing Development Authority Puttable Floating Rate Notes,
11,000,000 4.30%, 5/1/13, TOA: Banco Santander 11,000,000
11,980,000 Series C, 4.30%, 5/1/19, BPA: Caisse des Depots 11,980,000
Tennessee - 0.4%
1,500,000 Metro Nashville Airport Authority Special Facilities Revenue VRDN,
Series B, 4.95%, 10/1/12, LOC: Bayerische Landesbank
Girozentrale 1,500,000
5,240,000 Housing Development Agency Revenue VRDN, 4.25%,
7/1/13, INSUR: FSA 5,240,000
Texas - 10.4%
2,525,000 Cleburne IDA Revenue VRDN, 4.50%, 2/1/04, LOC:
National City Bank 2,525,000
1,000,000 Grand Prairie IDA Revenue VRDN, 4.00%, 12/1/06, LOC:
PNC Bank, N.A. 1,000,000
3,150,000 Guadalupe Blanco River Authority Revenue VRDN, 3.85%,
3/1/08, LOC: Banque National De Paris 3,150,000
76,150,000 Harris County Health Facilities Development Authority Revenue
VRDN, 4.60%, 12/1/25, IA: Prudential Insurance Co. 76,150,000
3,200,000 Harris County IDA Revenue VRDN, 5.15%, 8/1/01, LOC:
Sakura Bank, Ltd. 3,200,000
78,850,000 State Tax & Revenue Anticipation Notes,
4.75%, 8/29/97 79,273,638
Utah - 0.3%
4,500,000 Provo City MFH Revenue VRDN, 4.35%, 12/15/10, LOC:
Dai-Ichi Kangyo Bank 4,500,000
Vermont - 0.2%
2,765,000 Educational & Health Buildings Financing Agency Revenue
VRDN, 4.30%, 6/1/05, LOC: FNB Boston 2,765,000
415,000 State IDA Revenue VRDN, 4.045%, 12/1/04,
LOC: FNB Boston 415,000
Virginia - 0.3%
4,500,000 Loudoun County IDA Revenue VRDN, 5.75%, 11/1/24, LOC:
Banque Paribas 4,500,000
Washington - 1.7%
6,200,000 King County Trust Receipts, Series SGA 19, 4.35%, 11/1/27,
INSUR: MBIA 6,200,000
2,285,000 Pierce County Economic Development Authority Revenue VRDN,
4.65%, 6/1/30, LOC: Bank of Tokyo-Mitsubishi, Ltd. 2,285,000
Principal
Amount Value
Washington (Cont'd)
$2,750,000 Port Everett Limited VRDN, 4.55%, 12/1/06, LOC:
Sumitomo Bank, Ltd. $2,750,000
3,000,000 Richland Golf Enterprise Revenue VRDN, 4.30%, 12/1/21,
LOC: Seattle First National Bank 3,000,000
12,000,000 Public Power Supply Revenue VRDN, 4.10%, 7/1/18,
LOC: Bank of America 12,000,000
Wisconsin - 0.8%
12,170,000 Housing and Economic Development Authority Revenue VRDN,
4.20%, 3/1/20, INSUR: FSA 12,170,000
Others - 6.8%
Capital Realty Investors Tax Exempt Certificates Revenue VRDN,
6,800,000 3.55%, 12/1/04, LOC: Swiss Bank Corp 6,800,000
18,205,000 Series 96-2, 3.55%, 2/1/04, LOC: Swiss Bank Corp 18,205,000
IBM Tax Exempt Grantor Trust VRDN,
5,555,000 4.35%, 7/1/04, LOC: Banco Santander 5,555,000
6,395,000 4.35%, 7/1/04, LOC: Credit Suisse 6,395,000
Koch Financial Corp. Tender Option VRDN,
13,150,000 5.30%, 10/20/00, TOA: Credit Suisse 13,150,000
12,445,000 4.35%, 10/20/20, TOA: Credit Suisse 12,445,000
10,414,186 LaSalle National Bank LeaseTOPS Trust, 4.35%, 5/1/02, BPA:
LaSalle Bank 10,414,186
Pitney Bowes Corporation LeaseTOPS Trust Certificates,
14,485,000 4.35%, 4/1/98 14,485,000
9,338,000 4.35%, 2/11/11, LOC: Landesbank Hessen-Thuringen 9,338,000
Puttable Floating Option Tax-Exempt Receipts,
1,880,000 Series PP2, 4.35%, 7/1/24, TOA: Merrill Lynch 1,880,000
2,265,000 Series PP5, 4.05%, 8/15/24, INSUR: AMBAC 2,265,000
6,100,000 Student Education Loan Marketing Corp. Revenue VRDN,
Series A, 4.20%, 11/1/02, LOC: Dresdner Bank AG 6,100,000
TOTAL INVESTMENTS (Cost $1,594,463,178) - 100.7% 1,594,463,178
Other assets and liabilities, net - (0.7%) (10,572,378)
Net Assets - 100.0% $1,583,890,800
Net Assets Consist of:
Paid-in capital applicable to the following shares of beneficial interest,
unlimited number of no par shares authorized:
Class O: 1,550,724,429 shares outstanding $1,550,612,019
Class MMP: 33,153,188 shares outstanding 33,150,365
Undistributed net investment income (loss) 128,416
Net assets $1,583,890,800
Net Asset Value per Share
Class O (based on net assets of $1,550,731,046) $1.00
Class MMP (based on net assets of $33,159,754) $1.00
Limited-Term Portfolio
Statement of Net Assets
December 31, 1996
Principal
Amount Value
Municipal Obligations - 102.9%
Alabama - 0.8%
$3,500,000 Athens IDA Revenue VRDN, 5.00%, 6/1/05,
LOC: Tokai Bank, Ltd. $3,500,000
500,000 Auburn IDA Revenue VRDN, 6.10%, 12/1/16, LOC:
Daiwa Bank, Ltd. 500,000
Arizona - 4.0%
11,920,000 Educational Loan Marketing Corporation Revenue
Bonds, 6.55%, 3/1/99 12,405,144
2,600,000 Glendale County IDA Revenue Bonds, 5.20%, 12/1/13, LOC:
Dresdner Bank (Tender 12/1/98 @ 100) 2,632,058
220,000 Glendale IDA Revenue VRDN, 4.65%, 1/1/20, LOC:
Sumitomo Trust & Banking 220,000
2,250,000 Maricopa County Pollution Control Revenue Bonds for El Paso
Electric, 5.125%, 6/1/97 2,263,275
2,900,000 State Certificates of Participation Revenue Bonds,
Series A, 5.20%, 5/1/97, INSUR: AMBAC 2,914,587
Arkansas - 0.2%
840,000 Student Loan Authority Revenue Bond, 6.40%, 6/1/97 849,131
California - 13.5%
8,085,000 California Valleys Housing Financial Authority Revenue VRDN,
4.75%, 7/1/25, LOC: Sumitomo Bank Ltd. 8,085,000
610,000 Chula Vista MFH, Eucalyptus Grove Project Revenue Bonds,
5.75%, 11/1/07, SURBD: Continental Casualty Co. 611,415
1,525,000 Compton Community Redevelopment Agency Tax Allocation
Notes, Series 1, 5.50%, 8/1/98 1,550,559
2,220,000 Health Facilities Financing, Downey Community Hospital Revenue
Bonds, 4.75%, 5/15/99 2,229,280
280,914 Palmdale School District Jupiter Land II Project Revenue
VRDN, 4.65%, 12/13/10, LOC: National Westminster Bank 280,914
3,750,000 Paramount MFH Authority Revenue VRDN, 4.17%, 10/1/18,
LOC: Heller Financial 3,750,000
1,800,000 Sacramento Yolo Port District Improvement Lease Revenue VRDN,
4.00%, 11/1/22, LOC: Wells Fargo Bank, N.A. 1,800,000
San Bernardino Public Safety Authority, Insurance Financing Project
Revenue Bonds, Series A,
8,000,000 4.50%, 5/1/98 8,056,240
8,400,000 4.50%, 11/1/98 8,456,868
2,800,000 4.60%, 5/1/99 2,820,160
8,815,000 San Diego MFH, La Cima Apartments Revenue VRDN, 6.50%,
12/1/08, LOC: Daiwa Bank, Ltd. 8,815,000
20,800,000 San Francisco City and County Redevelopment Agency MFH Revenue
VRDN, 5.914%, 3/1/18 20,800,000
Principal
Amount Value
California (Cont'd)
$575,000 San Jose Financing Authority, Convention Center Project Revenue
Bonds, Series C, 5.75%, 9/1/98 $590,473
700,000 Santa Ana MFH Authority Revenue VRDN, 4.50%, 12/1/07,
C/LOC: Mercury S & L 700,000
465,000 Tahoe City Public Utility District, Capital Facilities
Project Certificates of Participation, Series B,
5.60%, 6/1/98 472,054
Colorado - 1.9%
9,500,000 Denver City and County Airport Revenue Bonds, Series A,
6.60%, 11/15/97 9,721,065
Connecticut - 0.4%
1,945,000 State Recovery Authority Revenue Bond, 5.60%, 11/15/99 2,002,455
District of Columbia - 0.2%
Redevelopment Agency Sports Arena Revenue Bonds,
500,000 4.85%, 11/1/97 501,790
500,000 5.10%, 11/1/98 504,580
Florida - 4.0%
10,000,000 Jacksonville Hospital Revenue Bonds, 10.375%, 10/1/07
(Pre-Refunded 10/1/97 @ 100) 10,690,500
4,840,000 Palm Beach Housing Finance Authority Mallards Cove Revenue VRDN,
5.3625%, 3/1/22, INSUR: Fireman's Insurance Co. 4,840,000
5,000,000 State Board of Education Capital Outlay Trust Receipts VRDN,
Series SG-22, 4.10%, 6/1/20, BPA: Societe Generale 5,000,000
100,000 Volusia County Housing Financial Authority Revenue VRDN,
4.375%, 9/1/05, GA: Household Financial Corporation 100,000
Georgia - 0.2%
1,000,000 Tri-City Hospital Authority Revenue Bonds,
5.25%, 7/1/99 1,011,420
Guam - 0.8%
4,250,000 Guam Government GO Bonds, Series A, 5.75%, 8/15/99 4,338,655
Illinois - 4.5%
12,850,000 Carol Stream MFH Revenue VRDN, 4.85%, 8/1/23, LOC:
Heller Financial 12,850,000
8,000,000 Chicago Board of Education Certificates of Participation, 4.35%,
12/1/98, LOC: Canadian Imperial 8,021,600
2,000,000 Chicago Parking District General Obligation Refunding Bonds,
5.50%, 1/1/99, INSUR: FGIC 2,050,920
Indiana - 1.0%
5,000,000 Lawrence Industrial Economic Development Revenue Bonds, 4.65%,
6/1/24, LOC: Heller Financial 5,000,000
Kentucky - 0.8%
2,500,000 Glasgow IDA Revenue VRDN, 5.775%, 6/1/20, LOC : Bank of
Tokyo-Mitsubishi, Ltd. 2,500,000
1,800,000 State Turnpike Authority Economic Development Revenue Bonds,
5.00%, 1/1/98 1,823,814
Principal
Amount Value
Louisiana - 5.2%
Offshore Terminal Authority Deepwater Port Revenue Bonds,
$5,000,000 5.20%, 9/1/97 $5,046,750
2,535,000 6.35%, 9/1/97 2,576,523
2,780,000 6.45%, 9/1/98 2,872,213
Public Facilities Authority Revenue Bonds,
5,000,000 6.00%, 7/1/07, (Tender 7/1/97 @ 100), GA: Connecticut
General Life Insurance Co. 5,010,950
4,000,000 7.30%, 12/1/15, (Tender 6/1/97 @ 100), LOC:
Sumitomo Bank, Ltd. 4,061,560
7,000,000 State Recovery Sales Tax Revenue Bonds, 4.25%, 7/1/98,
INSUR: MBIA 7,038,430
Maryland - 1.2%
950,000 Montgomery County Economic Development Bonds, 6.375%,
11/1/09, LOC: First National Bank of Maryland 951,112
4,000,000 Montgomery County Housing Opportunities Commission
MFH Revenue Bonds, 6.00%, 2/1/07, (Tender 2/1/97 @ 100),
GA: New England Mutual Life 4,000,040
1,045,525 Ocean City Industrial Development Revenue VRDN, 5.3625%,
7/1/13, LOC: First National Bank of Maryland 1,045,525
Massachusetts - 1.5%
Housing Finance Agency MFH Revenue Bonds, Series A,
20,000 4.80%, 6/1/97, INSUR: AMBAC 20,080
485,000 4.80%, 12/1/97, INSUR: AMBAC 489,297
495,000 5.00%, 6/1/98, INSUR: AMBAC 500,237
505,000 5.00%, 12/1/98, INSUR: AMBAC 512,161
520,000 5.10%, 6/1/99, INSUR: AMBAC 527,166
5,240,000 Municipal Wholesale Electric Power Company Revenue Bonds,
6.10%, 7/1/98 5,386,353
Michigan - 4.1%
2,000,000 Detroit Distributable State Aid Revenue Bonds,
5.625%, 5/1/97 2,013,780
5,330,000 Detroit Limited GO Bonds, Series A, 5.20%, 5/1/98 5,385,699
3,525,000 Oakland County Economic Development Limited Obligation Revenue
Bonds, 5.25%, 11/1/14 (Put 11/1/97 @ 100) 3,563,740
6,950,000 Southfield Economic Development Corporation Revenue VRDN, 5.775%
5/15/11, INSUR: Firemans Insurance Co. 6,950,000
State Housing Development Authority Revenue Bonds,
325,000 VRDN, 4.29%, 11/1/14, LOC: Citibank 325,000
570,000 5.25%, 10/1/11 569,367
285,000 6.00%, 10/1/11, (Escrowed in U.S. Treasury
Obligations) 285,898
State Hospital Finance Authority Pontiac Osteopathic
Revenue Bonds,
1,000,000 4.90%, 2/1/98 1,002,370
1,000,000 5.10%, 2/1/99 999,170
150,000 State Strategic Limited Obligation Revenue VRDN,
5.00%, 11/1/09, LOC: Tokai Bank Ltd. 150,000
Minnesota - 1.3%
6,555,000 Edina MFH Vernon Terrace Revenue Bonds,
5.00%, 7/1/25 6,547,396
Principal
Amount Value
Mississippi - 0.9%
$3,675,000 Business Financial Corporation Industrial Development
Revenue VRDN, 4.50%, 1/1/06, LOC: National Bank
of Canada $3,675,000
1,000,000 Higher Education Student Loan Revenue Bonds,
Series C, 6.05%, 1/1/99 1,023,000
Missouri - 1.8%
9,300,000 St. Louis IDA Revenue VRDN, 4.65%, 1/1/21, LOC: Banca
Naz Del Lavoro 9,300,000
Nebraska - 1.0%
5,245,000 Higher Education Loan Program P-Floats, 4.30%, 6/1/12, BPA:
Banque National de Paris 5,245,000
Nevada - 1.6%
8,150,000 Sparks Redevelopment Agency Tax Allocation Bond
Anticipation Notes, 5.00%, 9/1/97 8,153,830
New Hampshire - 0.1%
340,000 Higher Education & Health Revenue Bonds, 7.50%, 12/1/00,
INSUR: FGIC 344,383
New Jersey - 0.1%
700,000 Economic Development Authority Revenue VRDN, 4.30%,
8/1/01, LOC: CoreStates 700,000
New York - 18.7%
New York City University Certificates of Participation,
2,785,000 4.40%, 8/15/97 2,795,694
4,970,000 4.65%, 8/15/98 4,989,781
Dormitory Authority Revenue Bonds,
7,385,000 Series A, 4.375%, 7/1/97 7,410,848
1,165,000 Series A, 4.75%, 7/1/97 1,171,221
1,155,000 Series B, 4.375%, 7/1/97 1,159,042
Energy Research and Development Authority State Service
Contract Revenue Bonds,
575,000 5.00%, 4/1/97 576,754
595,000 5.00%, 4/1/98 599,974
New York City GO Bonds,
1,940,000 Series D, 6.80%, 2/1/97 1,944,753
1,000,000 Series E, 5.50%, 8/1/97 1,009,810
2,035,000 Series K, 5.00%, 4/1/99 2,051,199
Orange County IDA Revenue VRDN,
1,470,000 5.445%, 12/1/05, LOC: United Jersey Bank 1,470,000
6,190,000 4.50%, 6/1/98, LOC: Sakura Bank 6,190,000
110,000 4.50%, 10/1/98, LOC: Sakura Bank 110,000
5,400,000 Port Authority New York and New Jersey, 1st
Installment KIAC Project Special Obligation
Revenue Bonds, 6.25%, 10/1/99 5,488,992
Principal
Amount Value
New York (Cont'd)
State Certificate of Participation Revenue Bonds,
$3,000,000 5.75%, 3/1/97 $3,008,730
5,335,000 4.75%, 9/1/97 5,368,130
5,775,000 4.90%, 3/1/98 5,822,413
9,465,000 4.40%, 8/1/98 9,474,749
5,920,000 4.90%, 9/1/98 5,965,762
12,710,000 4.60%, 2/1/99 12,729,573
13,915,000 4.75%, 2/1/00 13,878,960
2,800,000 State Thruway Authority Highway and Bridge Trust Fund Revenue
Bonds, Series A, 4.10%, 4/1/97 2,803,332
Ohio - 7.5%
1,060,000 Cleveland Motor Vehicle Motorized Equipment Certificates of
Participation, 6.50%, 1/1/98 1,083,352
2,450,000 Cleveland School District GO Bonds, 7.25%, 6/15/98 2,488,073
5,000,000 Franklin County Hospital Revenue VRDN, 4.10%, 12/1/11, LOC:
Morgan Guarantee Trust 5,000,000
3,195,000 Lucas IDA Revenue VRDN, 4.27%, 9/1/14, LOC: Bank of Tokyo-
Mitsubishi, Ltd. 3,195,000
1,175,000 Marion County Hospital Revenue Bonds, 5.25%,
5/15/99 1,179,077
25,600,000 Water Development Authority Solid Waste
Anticipation Notes, 5.15%, 1/1/99 25,600,000
Pennsylvania - 6.6%
8,500,000 Beaver County IDA Pollution Control Revenue Bonds,
4.30%, 10/1/32, (Tender 10/1/97 @ 100),
LOC: Barclay's Bank, Plc. 8,552,615
7,000,000 Intergovernmental Cooperative Authority Special Tax Revenue
Notes, 5.40%, 6/15/97 7,059,360
Philadelphia Hospitals & Higher Education Revenue Bonds,
1,200,000 5.05%, 7/1/98 1,203,600
1,335,000 5.35%, 7/1/99 1,349,284
Philadelphia Municipal Authority, Gas Works
Equipment Certificates of Participation, INSUR: Asset Guaranty
1,500,000 5.95%, 4/1/97 1,508,145
1,500,000 5.95%, 10/1/97 1,523,610
1,600,000 5.95%, 4/1/98 1,632,448
1,600,000 5.95%, 10/1/98 1,640,656
1,600,000 5.95%, 4/1/99 1,644,848
100,000 Philadelphia Redevelopment MFH Revenue VRDN,
4.60%, 12/1/09, LOC: Marine Midland Bank 100,000
4,400,000 Philadelphia Water and Sewer Revenue Bonds,
7.30%, 8/1/98 4,584,668
2,630,000 Philadelphia Water and Wastewater Revenue Bonds,
4.50%, 6/15/97 2,639,152
200,000 Sharon Regional Health System Authority Hospital
Revenue Bonds, 5.50%, 12/1/97 202,044
Puerto Rico - 0.8%
2,750,000 Highway and Transportation Revenue VRDN, Series W,
4.10%, 1/6/97 2,750,000
1,350,000 Infrastructure Financing Authority Revenue Bonds,
Series A, 7.40%, 7/1/98 1,412,977
Principal
Amount Value
South Dakota - 0.2%
$1,000,000 Housing Development Authority, Home Ownership Mortgage
Revenue Bonds, Series A, 4.60%, 5/1/99 $1,005,220
Tennessee - 2.6%
11,000,000 Roane County Industrial Board and Solid Waste
Disposal Revenue VRDN, 5.00%, 11/1/20,
LOC: Long Term Credit Bank of Japan 11,000,000
2,160,000 Smith County Industrial Development Board Revenue
VRDN, 4.52%, 1/1/10, LOC: First National
Bank of Maryland 2,160,000
Texas - 7.1%
1,590,000 Brazos County Health Facilities Development,
St. Joseph Hospital and Health Center Revenue
Bonds, 4.875%, 1/1/98 1,599,985
1,000,000 GO Bonds, Series A, 4.625%, 10/1/97 1,008,520
1,490,000 Irving Hospital Authority Healthcare System Revenue
Bonds, Series A, 4.50%, 7/1/98, INSUR: FSA 1,499,447
7,100,000 Orange County Navigation and Port District Horsehead
Reservoir Development Project Revenue VRDN, 5.00%,
10/1/22, LOC: Long Term Credit Bank of Japan 7,100,000
25,000,000 State Tax and Revenue Anticipation Notes,
4.75%, 8/29/97 25,224,000
Vermont - 0.4%
1,750,000 IDA Revenue VRDN, 5.775%, 12/1/01, LOC:
Vermont National Bank 1,750,000
250,000 Municipal Bond Banks, Series 1, 6.75%, 12/1/97 257,180
Virginia - 0.9%
2,500,000 Henrico County IDA Revenue Bonds, 5.00%, 10/1/00, LOC:
Tokai Bank, Ltd. 2,500,000
1,940,000 State Housing Development Authority Construction
Loan Notes, 6.875%, 1/1/17 (Tender at any
interest payment date) 1,943,046
Washington - 2.4%
4,500,000 Pierce County Economic Development Corporation Dock
& Wharf Facility Revenue VRDN, 4.65%, 6/1/30,
LOC: Bank of Tokyo-Mitsubishi 4,500,000
8,000,000 State GO Bonds, Series R, 4.20%, 8/1/98 8,036,320
Wisconsin - 0.8%
4,050,000 State Certificates of Participation, Series B,
4.25%, 9/1/97 4,067,536
West Virginia - 2.2%
11,295,000 School Building Authority Revenue Bonds,
7.00%, 7/1/97 11,478,996
Principal
Amount Value
Other - 1.6%
$2,000,000 Absaloka Casino Enterprise Bond Anticipation Notes,
8.50%, 12/1/97 $2,011,980
4,320,180 Fort Mojave Indian Tribe of Arizona, California
and Nevada Public Facilities Combined Limited
Obligation and Revenue Bonds Adjustable Rate
and Tender, Series A of 1993, 11.25%, 12/1/18 4,320,180
2,000,000 IBM Tax Exempt Grantor Trust, 4.35%, 7/1/04,
LOC: Credit Suisse 2,000,000
TOTAL INVESTMENTS (Cost $525,649,249) - 102.9% 527,362,023
Other assets and liabilities, net - (2.9%) (15,020,370)
Net Assets - 100.0% $512,341,653
Net Assets Consist of:
Paid-in capital applicable to 47,922,142 Class A shares of beneficial interest,
unlimited number of no par shares authorized: $510,810,263
Undistributed net investment income 154,923
Accumulated realized gain (loss) on investments (336,307)
Net unrealized appreciation (depreciation) on investments 1,712,774
Net assets $512,341,653
Net Asset Value per Share $10.69
Long-Term Portfolio
Statement of Net Assets
December 31, 1996
Principal
Amount Value
Municipal Obligations - 101.2%
Arizona - 3.4%
$2,000,000 Salt River Project Revenue Bonds, Series B,
5.00%, 1/1/29 $1,787,000
California - 4.0%
1,000,000 Montebello Unified School District Certificate of
Participation Revenue Bonds, 6.30%, 6/1/11 1,034,210
1,000,000 Walnut Valley School District GO Bonds, 6.10%, 8/1/08,
INSUR: AMBAC 1,099,480
Colorado - 2.7%
1,300,000 Denver City and County Airport Revenue Bonds, Series A,
7.20%, 11/15/02 1,428,089
Delaware - 0.2%
80,000 Dover Electric Power Revenue Bonds, 7.00%, 7/1/15 87,208
Florida - 20.3%
1,000,000 Brevard County School Board Certificates of
Participation, Series A, 5.40%, 7/1/10 1,018,060
1,700,000 Dade County Educational Facilities Authority
Revenue Bonds, 6.00%, 4/1/08 1,829,591
2,000,000 Dade County IDA Revenue Bonds, 8.00%, 6/1/22 2,017,160
1,000,000 Flagler County Special Assessment Revenue Bonds,
7.20%, 7/1/14 1,105,830
2,500,000 Tampa Capital Improvement Program Revenue Bonds,
Series B, 8.375%, 10/1/18, IA: Den Danske Bank 2,638,525
2,000,000 Tampa Palms Community Development Special Assessment Revenue
Bonds, 5.90%, 5/1/08, INSUR: MBIA 2,156,300
Georgia - 1.9%
1,000,000 DeKalb County MFH Revenue Bonds, 6.50%, 1/1/26 1,011,750
Hawaii - 1.8%
1,000,000 Honolulu City & County GO Bonds, 5.00%, 10/1/13 957,250
Illinois - 4.6%
2,500,000 Chicago GO Bonds, Series B, 5.00%, 1/1/11 2,407,400
Indiana - 2.2%
1,000,000 Indianapolis Local Public Improvement Bond Bank Revenue
Bonds, 6.75%, 2/1/14 1,143,270
Louisiana - 6.9%
Louisiana Public Finance Agency MFH Revenue Bonds,
1,690,000 7.75%, 11/1/16, INSUR: Asset Guaranty 1,809,010
1,715,000 7.00%, 6/1/24 1,856,950
Principal
Amount Value
Maryland - 6.1%
$2,100,000 Cambridge Economic Development Revenue Bonds, 8.50%,
4/1/14 $2,282,469
885,000 Maryland State Community Development Authority
Mortgage Revenue Bonds, 7.70%, 4/1/15 921,073
Massachusetts - 1.8%
1,000,000 State GO Bonds, Series A, 5.00%, 7/1/12 965,480
Michigan - 2.1%
1,000,000 State Hospital Finance Authority Revenue Bonds,
7.00%, 11/1/21 1,083,520
New Jersey - 4.1%
2,000,000 Jersey City GO Bonds, Series A, 6.25%, 10/1/10 2,198,060
New York - 6.9%
1,000,000 New York City GO Bonds, Series E, 5.75%, 2/15/09 993,900
2,500,000 New York and New Jersey Port Authority, Ninety-Third
Series Consolidated Revenue Bonds, 6.125%,
6/1/2094 2,660,775
Ohio - 5.8%
1,000,000 Cleveland Waterworks Revenue Bonds, 5.50%, 1/1/21,
INSUR: MBIA 1,009,330
1,000,000 Dayton Special Facilities Revenue Bonds,
6.05%, 10/1/09 1,023,110
1,000,000 State Department of Transportation Certificates
of Participation, 6.125%, 4/15/15, INSUR: MBIA 1,030,030
Pennsylvania - 6.6%
1,305,000 Northeastern Pennsylvania Hospital Authority
Revenue Bonds, 7.65%, 7/1/10,
(Pre-refunded 7/1/99 @ 102) 1,425,699
2,000,000 Philadelphia Airport Revenue Bonds, 9.00%, 6/15/15 2,048,400
Rhode Island - 2.1%
500,000 Port Authority & Economic Development Corp. Airport
Revenue Bonds, Series A, 7.00%, 7/1/14,
INSUR: FSA 577,450
500,000 State Housing & Mortgage Finance Corp. Revenue Bonds,
Series B, 7.95%, 10/1/30 533,200
Texas - 2.0%
1,000,000 Houston Water Conveyance System Contract Certificates of
Participation, 6.125%, 12/15/09, INSUR: AMBAC 1,087,360
Vermont - 2.4%
1,250,000 Vermont Educational and Health Buildings Finance Agency Hospital
Revenue Bonds, 6.00%, 9/1/06 1,267,263
Virginia - 7.9%
1,000,000 Arlington County GO Bonds, Series 1993,
6.00%, 6/1/11 1,085,700
1,000,000 Chesapeake IDA Public Facilities Lease Revenue
Bonds, 6.00%, 6/1/08 1,082,520
1,000,000 Henrico County IDA Revenue Bonds, 5.45%, 1/1/14 989,850
1,000,000 State Housing Development Authority Revenue Bonds,
6.00%, 7/1/03 1,043,090
Principal
Amount Value
Washington - 3.5%
$1,915,000 State Public Power Supply Revenue Bonds, Series B, 5.50%, 7/1/17,
INSUR: MBIA $1,855,539
Other - 1.9%
1,000,000 Oneida Utility Community Government Lease Revenue Bonds,
6.25%, 7/1/97 1,007,510
Total Municipal Obligations (Cost $50,834,974) 53,558,411
Contracts
Options Purchased - 0.0%
80 Call Options on March 1997 U.S. Treasury Bond Futures,
Expiration 2/22/97, Strike Price 118 16,250
TOTAL INVESTMENTS (Cost $50,905,774) - 101.2% 53,574,661
Other assets and liabilities, net - (1.2%) (629,463)
Net Assets 100.0% $52,945,198
Net Assets Consist of:
Paid-in capital applicable to the following 3,149,224 Class A
shares of beneficial interest, unlimited number of no par
value shares authorized $50,379,342
Undistributed net investment income 74,260
Accumulated net realized gain (loss) on investments (177,291)
Net unrealized appreciation (depreciation) on investments 2,668,887
Net assets $52,945,198
Net Asset Value per Share $16.81
Explanation of Guarantees: Abbreviations:
BPA: Bond-Purchase Agreement IDA: Industrial Development Authority
GA: Guaranty Agreement MFH: Multi-Family Housing
LOC: Letter of Credit VRDN: Variable Rate Demand Notes
C/LOC: Collateralized LOC GO: General Obligation
INSUR: Insurance
SURBD: Surety Bond
TOA: Tender Option Agreement
IA: Investment Agreement
Certain securities have optional or mandatory tender features which give them a
shorter effective maturity date.
See notes to financial statements.
Statements of Operations
Year Ended December 31, 1996
Money Limited- Long-
Market Term Term
Net Investment Income Portfolio Portfolio Portfolio
Investment Income
Interest income $68,770,212 $25,181,125 $3,423,847
Expenses
Investment advisory fee 7,766,716 3,110,764 322,713
Transfer agency fees and expenses 2,322,509 226,235 30,424
Distribution Plan expenses:
Class MMP 136,801 -- --
Class A -- -- 47,172
Class C -- 135,476 13,720
Trustees' fees and expenses 175,891 51,380 5,402
Administrative fees 128,255 38,242 3,934
Custodian fees 111,799 53,853 14,804
Registration fees 132,701 52,594 33,643
Reports to shareholders 552,463 96,970 12,780
Professional fees 105,276 27,083 3,304
Miscellaneous 231,377 79,452 12,857
Reimbursement from Advisor -- -- (237)
Total expenses 11,663,788 3,872,049 500,516
Fees paid indirectly (111,799) (53,853) (14,804)
Net expenses 11,551,989 3,818,196 485,712
Net Investment Income 57,218,223 21,362,929 2,938,135
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain (loss) 33,590 109,135 (180,586)
Change in unrealized appreciation
or depreciation -- (1,443,220) (1,414,590)
Net Realized and
Unrealized Gain (Loss)
on Investments 33,590 (1,334,085) (1,595,176)
Increase (Decrease) in
Net Assets Resulting
from Operations $57,251,813 $20,028,844 $1,342,959
Money Market Portfolio
Statements of Changes in Net Assets
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1966 1995
Operations
Net investment income $57,218,223 $66,038,822
Net realized gain (loss) 33,590 (8,789)
Increase (Decrease) in Net Assets
Resulting from Operations 57,251,813 66,030,033
Distributions to shareholders from
Net investment income:
Class O shares (56,093,159) (65,599,120)
Class MMPshares (1,031,769) (339,143)
Total distributions (57,124,928) (65,938,263)
Capital share transactions
Shares sold:
Class O shares 4,893,871,993 6,744,165,972
Class O shares issued from merger (Note A) 25,561,370 --
Class MMP shares 49,376,871 57,608,751
Reinvestment of distributions:
Class O shares 53,590,469 63,374,528
Class MMP shares 1,008,296 332,568
Shares redeemed:
Class O shares (5,163,255,645) (6,411,381,797)
Class MMP shares (58,963,850) (16,212,303)
Total capital share transactions (198,810,496) 437,887,719
Total Increase (Decrease) in Net Assets (198,683,611) 437,979,489
Net Assets
Beginning of year 1,782,574,411 1,344,594,922
End of year (including undistributed net investment income of
$128,416 and $103,075, respectively) $1,583,890,800 $1,782,574,411
Capital Share Activity
Shares sold:
Class O shares 4,893,872,122 6,744,165,972
Class O shares issued from merger (Note A) 25,561,370 --
Class MMP shares 49,376,871 57,608,751
Reinvestment of distributions:
Class O shares 53,590,469 63,374,528
Class MMP shares 1,008,296 332,568
Shares redeemed:
Class O shares (5,163,247,502) (6,411,381,797)
Class MMP shares (58,963,639) (16,212,303)
Total capital share activity (198,802,013) 437,887,719
See Notes to financial statements.
Limited-Term Portfolio
Statements of Changes in Net Assets
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1966 1995
Operations
Net investment income $21,362,929 $22,125,945
Net realized gain (loss) 109,135 (7,886)
Change in unrealized appreciation or
depreciation (1,443,220) 6,379,282
Increase (Decrease) in Net Assets
Resulting from Operations 20,028,844 28,497,341
Distributions to shareholders from
Net investment income:
Class A shares (20,638,063) (20,871,817)
Class C shares (860,629) (1,108,847)
Total distributions (21,498,692) (21,980,664)
Capital share transactions
Shares sold:
Class A shares 281,591,729 116,789,453
Class C shares 18,545,971 19,784,285
Reinvestment of distributions:
Class A shares 16,001,306 18,399,341
Class C shares 829,298 1,059,645
Shares redeemed:
Class A shares (241,582,307)(228,473,875)
Class C shares (49,338,119) (22,214,540)
Total capital share transactions 26,047,878 (94,655,691)
Total Increase (Decrease) in Net Assets 24,578,030 (88,139,014)
Net Assets
Beginning of year 487,763,623 575,902,637
End of year (including undistributed net investment income of
$154,923 and $282,318, respectively) $512,341,653 $487,763,623
Capital Share Activity
Shares sold:
Class A shares 26,296,141 10,928,746
Class C shares 1,738,075 1,858,790
Reinvestment of distributions:
Class A shares 1,496,514 1,722,285
Class C shares 77,843 99,532
Shares redeemed:
Class A shares (22,560,453) (21,385,078)
Class C shares (4,629,558) (2,086,783)
Total capital share activity 2,418,562 (8,862,508)
See notes to financial statements.
Long-Term Portfolio
Statements of Changes in Net Assets
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1966 1995
Operations
Net investment income $2,938,135 $3,028,694
Net realized gain (loss) (180,586) 772,934
Change in unrealized appreciation or
depreciation (1,414,590) 4,039,827
Increase (Decrease) in Net Assets
Resulting from Operations 1,342,959 7,841,455
Distributions to shareholders from
Net investment income:
Class A shares (2,985,717) (2,815,221)
Class C shares (53,884) (53,252)
Net realized gain on investments:
Class A shares (35,067) (300,655)
Class C shares -- (8,878)
Total distributions (3,074,668) (3,178,006)
Capital share transactions
Shares sold:
Class A shares 7,505,675 11,805,684
Class C shares 846,535 947,016
Reinvestment of distributions:
Class A shares 2,461,574 2,727,932
Class C shares 52,534 59,797
Shares redeemed:
Class A shares (12,713,133) (9,010,280)
Class C shares (2,513,044) (293,958)
Total capital share transactions (4,359,859) 6,236,191
Total Increase (Decrease) in Net Assets (6,091,568) 10,899,640
Net Assets
Beginning of year 59,036,766 48,137,126
End of year (including undistributed net investment income of
$74,260 and $185,973, respectively) $52,945,198 $59,036,766
Capital Share Activity
Shares sold:
Class A shares 447,469 707,071
Class C shares 50,957 56,987
Reinvestment of distributions:
Class A shares 146,928 163,655
Class C shares 3,173 3,580
Shares redeemed:
Class A shares (758,710) (542,469)
Class C shares (152,069) (18,019)
Total capital share activity (262,252) 370,805
See notes to financial statements.
Notes To Financial Statements
Note A-Significant Accounting Policies
General: The Calvert Tax-Free Reserves (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund is comprised of six separate portfolios, three of which are
reported herein; Money Market, Limited-Term and Long-Term. The operations of
each series are accounted for separately. Each Portfolio offers shares of
beneficial interest. Money Market Class O and Class MMP shares are sold without
a sales charge. Shares of Limited-Term and Long-Term are sold with a maximum
front-end sales charge of 1.00% for Limited-Term and 3.75% for Long-Term. On
October 29, 1996, all outstanding Class C shares of Limited-Term and Long-Term
were converted into an equivalent value of Class A shares. This transaction was
a tax-free exchange and no sales charge was applied to the Class A shares
issued.
On April 26, 1996, the net assets of Calvert Tax-Free Reserves New Jersey
Money Market Portfolio ("New Jersey") were merged into Money Market Portfolio.
The acquisition was accomplished by a tax-free exchange of 25,561,370 shares of
Money Market Portfolio (valued at $25,561,370) for the 25,561,370 shares of New
Jersey outstanding at April 26, 1996. New Jersey's net assets at that date were
combined with those of Money Market Portfolio. The aggregate net assets of Money
Market Portfolio and New Jersey immediately before the acquisition were
$1,721,364,392 and $25,552,886, respectively.
Security Valuation: Municipal securities are valued utilizing the average
of bid prices or at bid prices based on a matrix system (which considers such
factors as security prices, yields, maturities and ratings) furnished by dealers
through an independent pricing service. Securities listed or traded on a
national securities exchange are valued at the last reported sale price. All
securities for Money Market are valued at amortized cost which approximates
market. Other securities and assets for which market quotations are not
available or deemed inappropriate are valued in good faith under the direction
of the Board of Trustees.
Options: Long-Term may write or purchase option securities. The option
premium is the basis for recognition of unrealized or realized gain or loss on
the option. The cost of securities acquired or the proceeds from securities sold
through the exercise of the option is adjusted by the amount of the premium.
Futures Contracts: Long-Term may enter into futures contracts agreeing to
buy or sell a financial instrument for a set price at a future date. The
Portfolio maintains securities with a value equal to its obligation under each
contract. Initial margin deposits of either cash or securities are made upon
entering into futures contracts; thereafter, variation margin payments are made
or received daily reflecting the change in market value. Unrealized or realized
gains and losses are recognized based on the change in market value. Risks of
futures contracts arise from the possible illiquidity of the futures markets and
the movement in the value of the investment or in interest rates.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Interest income, accretion of discount and amortization
of premium are recorded on an accrual basis. Distributions to Shareholders:
Distributions to shareholders are recorded by the Fund on ex-dividend date.
Dividends from net investment income are accrued daily and paid monthly for
Money Market; dividends from net investment income are declared and paid monthly
for Limited-Term and Long-Term. Distributions from net realized capital gains,
if any, are paid at least annually. Distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles, accordingly, periodic reclassifications are made within the Fund's
capital accounts to reflect income and gains available for distribution under
income tax regulations.
The Fund designates $28,716 as capital gain dividends for taxable year
ended December 31, 1996 for Long-Term Portfolio.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Expense Offset Arrangements: The Fund has an arrangement with its custodian
bank whereby the custodian's fees are paid indirectly by credits earned on the
Fund's cash on deposit with the bank. Such deposit arrangement is an alternative
to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code and to distribute substantially all of
its earnings.
Note B-Related Party Transactions Calvert Asset Management Company, Inc.
(the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is
indirectly wholly-owned by Acacia Mutual Life Insurance Company. The Advisor
provides investment advisory services and pays the salaries and fees of officers
and affiliated Trustees of the Fund. For its services, the Advisor receives
monthly fees based on the following annual rates of average daily net assets:
First $500 Next $500 Over
Million Million $1 Billion
Money Market .50% .45% .40%
Limited-Term .60% .50% .40%
Long-Term .60% .50% .40%
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Fund for an annual fee, payable monthly
of $200,000, which is allocated to all of the Portfolios of the Fund based on
their relative net assets.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor
and principal underwriter for the Fund. Distribution Plans, adopted by Class MMP
of Money Market, Class A of Long-Term and Class C of both Limited-Term and
Long-Term, allow the Portfolios to pay the distributor for expenses and services
associated with distribution of shares. The expenses paid may not exceed an
annual rate of average daily net assets of: .35% on Class MMP and Class A, and
.55% and 1% on Class C of Limited-Term and Long-Term, respectively. (See Note A
regarding the elimination of Class C shares.)
The Distributor paid $48,520 in addition to the commissions charged on
sales of Limited-Term A shares, and received $12,538 as its portion of
commissions charged on sales of Long-Term Class A shares.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Fund.
Each Trustee who is not affiliated with the Advisor received an annual fee
of $20,250 plus up to $1,200 for each Board and Committee meeting attended.
Trustee's fees are allocated to each of the funds served. Effective August 1,
1996, annual fees and meeting fees were increased to $20,500 and $1,500,
respectively.
Note-Investment Activity During the year, purchases and sales of
investments, other than short-term securities, were:
Limited-Term Long-Term
Purchases $154,027,059 $22,979,835
Sales 142,509,816 20,982,011
Money Market held only short-term investments.
The cost of investments owned at December 31, 1996 was substantially the
same for federal income tax and financial reporting purposes for each Portfolio.
The following table presents the components of net unrealized appreciation
(depreciation) as of December 31, 1996 and the net realized capital loss
carryforward as of December 31, 1996 with expiration dates:
Limited-Term Long-Term
Unrealized appreciation -- $1,789,240 $2,745,857
Unrealized depreciation -- (76,466) (76,970)
Net -- $1,712,774 $2,668,887
Capital loss carry forward -- $336,307 $223,896
Expiration dates -- 2002 2004
Capital losses may be utilized to offset current and future capital gains
until expiration.
As a cash management practice, Portfolios may sell or purchase short-term
variable rate demand notes from other Portfolios managed by the Advisor. All
transactions are executed at independently derived prices.
Financial Highlights
Money Market Portfolio
Class O Shares
Years Ended
December 31,
1996 1995 1994 1993
Net asset value, beginning $1.00 $1.00 $1.00 $1.00
Income from investment operations
Net investment income .033 .040 .028 .024
Distributions from
Net investment income (.033) (.040) (.028) (.024)
Net asset value, ending $1.00 $1.00 $1.00 $1.00
Total return* 3.33% 4.02% 2.81% 2.41%
Ratios to average net assets:
Net investment income 3.28% 3.93% 2.75% 2.37%
Total expenses .65% .62% -- --
Net expenses .64% .61% .62% .60%
Net assets, ending
(in thousands) $1,550,731 $1,740,839 $1,344,595 $1,500,614
Number of shares outstanding,
ending (in thousands) 1,550,724 1,740,948 1,344,668 1,500,557
Class O Shares Class MMP Shares
Periods Ended Periods Ended
December 31, December 31,
1992 1996 1995
Net asset value, beginning $1.00 $1.00 $1.00
Income from investment operations
Net investment income .031 .030 .008
Distributions from
Net investment income (.031) (.030) (.008)
Net asset value, ending $1.00 $1.00 $1.00
Total return* 3.18% 2.68% .79%
Ratios to average net assets:
Net investment income 3.10% 2.65%(a) 3.19%(a)
Total expenses -- 1.29%(a) 1.35%(a)
Net expenses .59% 1.28%(a) 1.34%(a)
Net assets, ending (in thousands) $1,552,106 $33,160 $41,736
Number of shares outstanding,
ending (in thousands) 1,552,061 33,153 41,732
Financial Highlights
Limited-Term Portfolio (Class A Shares)
Years Ended
December 31,
1996 1995 1994
Net asset value, beginning $10.72 $10.59 $10.72
Income from investment operations
Net investment income .44 .45 .39
Net realized and unrealized gain (loss) (.03) .13 (.13)
Total from investment operations .41 .58 .26
Distributions from
Net investment income (.44) (.45) (.39)
Total increase (decrease) in net
asset value (.03) .13 (.13)
Net asset value, ending $10.69 $10.72 $10.59
Total return* 3.94% 5.55% 2.42%
Ratios to average net assets:
Net investment income 4.12% 4.21% 3.60%
Total expenses .71% .71% --
Net expenses .70% .70% .66%
Portfolio turnover 45% 33% 27%
Net assets, ending (in thousands) $512,342 $457,707 $544,822
Number of shares outstanding,
ending (in thousands) 47,922 42,690 51,424
Years Ended
December 31,
1993 1992
Net asset value, beginning $10.68 $10.65
Income from investment operations
Net investment income .38 .49
Net realized and unrealized gain (loss) .04 .03
Total from investment operations .42 .52
Distributions from
Net investment income (.38) (.49)
Total increase (decrease) in net asset value .04 .03
Net asset value, ending $10.72 $10.68
Total return* 4.02% 4.99%
Ratios to average net assets:
Net investment income 3.59% 4.58%
Total expenses -- --
Net expenses .67% .71%
Portfolio turnover 14% 5%
Net assets, ending (in thousands) $663,305 $567,419
Number of shares outstanding,
ending (in thousands) 61,861 53,140
Financial Highlights
Limited-Term Portfolio (Class C Shares)
Periods Ended
October 29, December 31,
1996 1995 1994
Net asset value, beginning $10.68 $10.56 $10.70
Income from investment operations
Net investment income .30 .38 .27
Net realized and unrealized gain (loss) (.02) .13 (.12)
Total from investment operations .28 .51 .15
Distributions from
Net investment income (.31) (.39) (.29)
Total increase (decrease) in net
asset value (.03) .12 (.14)
Net asset value, ending $10.65 $10.68 $10.56
Total return* 2.63% 4.86% 1.43%
Ratios to average net assets:
Net investment income 3.45%(a) 3.57% 3.05%(a)
Total expenses 1.43%(a) 1.35% --
Net expenses 1.42%(a) 1.34% 1.38%(a)
Portfolio turnover 27% 33% 27%
Net assets, ending (in thousands) $29,215 $30,057 $31,081
Number of shares outstanding,
ending (in thousands) 2,744 2,814 2,942
Financial Highlights
Long-Term Portfolio (Class A Shares)
Years Ended
December 31,
1996 1995 1994
Net asset value, beginning $17.31 $15.83 $17.15
Income from investment operations
Net investment income .93 .95 .93
Net realized and unrealized gain (loss) (.46) 1.53 (1.33)
Total from investment operations .47 2.48 (.40)
Distributions from
Net investment income (.95) (.91) (.92)
Net realized gains (.02) (.09) --
Total distributions (.97) (1.00) (.92)
Total increase (decrease) in net
asset value (.50) 1.48 (1.32)
Net asset value, ending $16.81 $17.31 $15.83
Total return * 2.89% 16.05% (2.30%)
Ratios to average net assets:
Net investment income 5.50% 5.71% 5.73%
Total expenses .89% .87% --
Net expenses .86% .85% .81%
Portfolio turnover 41% 58% 98%
Net assets, ending (in thousands) $52,945 $57,359 $47,267
Number of shares outstanding,
ending (in thousands) 3,149 3,314 2,985
Years Ended
December 31,
1993 1992
Net asset value, beginning $16.32 $16.11
Income from investment operations
Net investment income .94 .98
Net realized and unrealized gain (loss) .83 .20
Total from investments 1.77 1.18
Distributions from
Net investment income (.94) (.97)
Net realized gains --
Total distributions (.94) (.97)
Total increase (decrease) in net asset value .83 .21
Net asset value, ending $17.15 $16.32
Total return * 11.12% 7.60%
Ratios to average net assets:
Net investment income 5.59% 6.06%
Total expenses -- --
Net expenses .78% .82%
Portfolio turnover 97% 196%
Net assets, ending (in thousands) $55,204 $45,665
Number of shares outstanding,
ending (in thousands) 3,219 2,799
Financial Highlights
Long-Term Portfolio (Class A Shares)
Periods Ended
October 29, December 31,
1996 1995 1994
Net asset value, beginning $17.13 $15.72 $16.86
Income from investment operations
Net investment income .52 .78 .58
Net realized and unrealized gain (loss) (.56) 1.46 1.04)
Total from investment operations (.04) 2.24 (.46)
Distributions from
Net investment income (.54) (.74) (.68)
Net realized gains -- (.09) --
Total distributions (.54) .83 (.68)
Total increase (decrease) in
net asset value (.58) 1.41 (1.14)
Net asset value, ending $16.55 $17.13 $15.72
Total return * (.17%) 14.51% (2.24%)
Ratios to average net assets:
Net investment income 3.89%(a) 4.34% 3.57%(a)
Total expenses 2.52%(a) 2.19% --
Net expenses 2.49%(a) 2.17% 2.55%(a)
Expenses reimbursed (.02%)(a) -- 3.06%(a)
Portfolio turnover 30% 58% 98%
Net assets, ending (in thousands) $1,307 $1,678 $871
Number of shares outstanding,
ending (in thousands) 79 98 55
* Total return does not reflect deduction of Class A front-end sales charge.
(a) Annualized
+ 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.
^ From October 2, 1995, inception.
# From March 1, 1994, inception.
<PAGE>
CALVERT TAX-FREE RESERVES
CALIFORNIA MONEY MARKET PORTFOLIO
Dear Investor:
Investors' changing outlook for Federal Reserve monetary policy caused
above-average volatility in the financial markets. In general, bond yields
trended higher during the first half of the year in anticipation of a Fed
tightening and then retraced a bit during the second half when Gross Domestic
Product and other indications of pricing pressures appeared to lessen.
Money market investments turned in modestly good returns, considering the
current low rates available on short-term securities. Most longer-term
fixed-income investments also managed to generate positive returns, but yields
covered a good bit of ground during the course of the year. The benchmark
30-year Treasury bond fluctuated within a fairly wide band of about 125 basis
points but closed 1996 just 60 basis points above its year-ago level. Stocks
posted very strong returns, for the second consecutive year. The Standard &
Poor's 500 Stock Index rose about 23%. Municipal securities outperformed
taxables, as the market recovered from fears that the introduction of a flat-tax
system would eliminate municipal securities' tax advantage.
Municipal Rates
(Graph appears here)
Graph shows municipal rates for 1, 7 and 20 year
AA General Obligations between 12/95 and 12/96
Fund Performance and Strategy Review
The anticipated rise in short-term rates did not materialize during 1996.
Despite wide-spread expectations that the Federal Reserve would step in and
tighten monetary policy to slow economic growth, the Fed took no action after a
January rate cut.
Compound Dividend Yield
(Graph Appears Here)
Twelve
Months 3.78%
Ended 3.29%
12/31/95
Twelve
Months 3.17%
Ended 2.87%
12/31/96
0.0% 1.0% 2.0% 3.0% 4.0%
The yield on the Calvert Tax-Free Reserves California Money Market
Portfolio generated a competitive level of tax-free income during this 12-month
period, but the yield was below its year-ago level due to the lower rates now
available on money market securities. We kept the Fund's weighted average
maturity near the low end of its target range for the first six months of 1996,
so that we could quickly roll assets into higher yielding securities as they
became available. We took advantage of the June/July note season, when municipal
governments bring new issues to market, to modestly extend maturity. Greater
supply puts upward pressure on yields.
Outlook
Yields will likely continue to fluctuate during the first quarter of 1997,
but we don't expect to see a clear trend in place until after the next Federal
Reserve Open Market Committee meeting. The Fed might then adopt a bias toward a
tighter monetary policy, and rates might move a bit higher. This would be good
news for money market investors who have endured two years of very low interest
rates.
Sincerely,
David Rochat
Senior Vice President
January 21, 1997
Ratings Breakdown
(Graph appears here)
All services in Calvert Group money market fund are eligible securities under
rule 2a-7 of the Investment Company Act of 1940. First Tier Securities are
eligible securities rated in the highest rating category for short-term debt
obligations by at least two of the Nationally Recognized Statistical Ratings
Organizations. Second Tier Securities are eligible securities not in the
First Tier.
Portfolio Statistics
Maturity Schedule
6/30/96 12/31/96
1-60 Days 96% 77%
61-120 Days -- --
121-180 Days 1% 4%
181-360 Days 3% 19%
Weighted Average 15 Days 46 Days
Average Annual Total Returns
for periods ended 12/31/96
One Year 3.15%
Five Year 2.98%
Since Inception (10/89) 3.74%
Hypothetical Performance
Change in value of a hypothetical $10,000 investment.
(Graph appears here)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
CA TRF M.M. $13,024 $12,623 $12,163 $11,852 $11,590 $11,245
12/31/90 12/31/89 12/31/88
CA TFR M.M. $10,746 $10,133 $10,000
</TABLE>
Total returns assume reinvestment of dividends. Past performance is no
guarantee of future results.
Report of Independent Accountants
To the Board of Trustees of Calvert Tax-Free Reserves and Shareholders of
California Money Market Portfolio:
We have audited the accompanying statements of net assets of the California
Money Market Portfolio (one of the portfolios comprising Calvert Tax-Free
Reserves) as of December 31, 1996, and the related statements of operations for
the year then ended, statement of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the three
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for each of the preceding years
were audited by other auditors whose report dated January 31, 1994 expressed an
unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
California Money Market Portfolio as of December 31, 1996, the results of its
operations, the changes in its net assets and financial highlights for the
respective periods stated in the first paragraph in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
February 7, 1997
Statement of Net Assets
December 31, 1996
Principal
Amount Value
California Municipal Obligations - 98.4%
$3,550,000 Alameda-Contra Costa Revenue Anticipation Notes, 3.75%,
1/30/97, LOC: Sumitomo Bank, Ltd. $3,551,357
4,225,000 Auburn Unified School District Certificates of
Participation VRDN, 4.30%, 12/1/19,
LOC: Union Bank of California 4,225,000
5,100,000 Barstow Multi-Family Housing Revenue VRDN, 4.45%,
4/1/18, C/LOC: Mercury S&L 5,100,000
6,800,000 California Buena Park Community Development Authority VRDN,
5.1975%, 12/28/99, GA: Mass Mutual
Life Insurance 6,800,000
2,410,000 California Housing Finance Agency Revenue VRDN,
3.96%, 8/1/10, INSUR: MBIA 2,410,000
750,000 California Pollution Control Financing Authority
Revenue VRDN, 3.85%, 3/1/08, LOC: Banque
National de Paris 750,000
4,825,000 California State Custodial Receipts 1992 Series A VRDN,
4.45%, 10/1/07, INSUR: MBIA 4,825,000
17,000,000 California Revenue Anticipation Notes,
4.50%, 6/30/97 17,045,883
5,285,000 California State General Obligation Tender Option
Custodial Receipts, 3.60%, 11/1/17,
INSUR: FGIC 5,285,000
14,000,000 California Valleys Housing Finance Authority Revenue Bonds,
4.75%, 7/1/25, LOC: Sumitomo Bank, Ltd. 14,000,000
4,650,000 City of Palmdale Community Redevelopment Agency VRDN,
5.3625%, 12/1/05, LOC: National Bank of Canada 4,650,000
1,200,000 Fresno Multi-Family Housing VRDN, 5.60%, 5/1/15, LOC:
Tokai Bank Ltd. 1,200,000
3,025,000 Glendora Industrial Development Authority VRDN, 4.295%,
12/1/16, LOC: Union Bank of California 3,025,000
3,550,000 Hemet Multi-Family Housing Authority VRDN, 4.35%, 7/1/06,
C/LOC: Mercury S&L 3,550,000
15,000,000 Huntington Beach CA Tax and Revenue Anticipation Notes,
4.50%, 10/1/97 15,090,167
10,000,000 Kern County CA Superintendent VRDN, 4.15%, 12/1/21,
BPA: Anchor National Life 10,000,000
8,700,000 Lancaster Multi-Family Housing Authority VRDN, 3.55%,
11/1/04, LOC: Household Finance Corp. 8,700,000
6,500,000 Los Angeles Community Redevelopment Agency Revenue VRDN,
4.20%, 12/1/05, LOC: Industrial Bank of Japan, Ltd. 6,500,000
13,500,000 Los Angeles Convention & Exhibition Center Revenue VRDN,
4.20%, 8/15/18, INSUR: MBIA 13,500,000
3,400,000 Los Angeles Industrial Development Revenue Authority VRDN,
4.80%, 7/1/14, LOC: Tokai Bank, Ltd. 3,400,000
Los Angeles Multi-Family Housing Revenue VRDN:
9,600,000 4.20%, 5/1/07, LOC: Industrial Bank of Japan, Ltd. 9,600,000
8,600,000 4.30%, 8/1/19, LOC: Fuji Bank Ltd. 8,600,000
10,800,000 Los Angeles Tax & Revenue Anticipation Notes, 4.50%, 6/30/97,
LOC: Credit Suisse 10,830,540
5,000,000 Los Angeles Transportation Community Sales Tax Revenue Bonds,
4.45%, 8/20/03, LOC: Credit Suisse 5,000,000
Principal
Amount Value
$5,000,000 Los Angeles Unified School Districts Tax & Revenue
Anticipation Notes, 4.50%, 6/30/97 $5,015,083
4,965,000 Midway School District Certificates of Participation,
3.50%, 2/1/23, LOC: Union Bank of California 4,965,000
6,540,000 Oceanside Multi-Family Housing VRDN, 4.40%, 8/1/17,
SURBD: Continental Casualty 6,540,000
Orange County Apartment Development Revenue VRDN:
4,200,000 4.35%, 11/1/05, LOC: Wells Fargo Bank 4,200,000
7,000,000 4.35%, 11/1/05, LOC: Wells Fargo Bank 7,000,000
7,400,000 4.15%, 4/1/06, LOC: Bank of Tokyo-Mitsubishi, Ltd. 7,400,000
450,000 4.65%, 3/1/07, LOC: Tokai Bank Ltd. 450,000
600,000 4.15%, 11/1/08, LOC: Bank of Tokyo-Mitsubishi, Ltd. 600,000
2,400,000 4.30%, 11/1/08, LOC: Banque Paribas 2,400,000
500,000 Orange County Certificates of Participation,
Florence Crittendon Services VRDN, 4.05%,
3/1/16, LOC: Swiss Bank Corp. 500,000
5,500,000 Orange County Housing Authority Revenue VRDN, 4.25%,
12/1/07, LOC: Bank of Tokyo-Mitsubishi, Ltd. 5,500,000
1,000,000 Orange County Multi-Family Housing Authority VRDN, 4.25%,
5/1/22, LOC: Banque Paribas 1,000,000
2,000,000 Orange County Water District Certificates of
Participation, 4.75%, 8/15/15,
LOC: National Westminster Bank 2,000,000
Palmdale School District Project Lease VRDN:
5,444,086 4.65%, 12/13/10, LOC: National Westminster Bank 5,444,086
1,807,143 4.40%, 12/13/10, LOC: National Westminster Bank 1,807,143
500,000 Paramount Multi-Family Housing Authority VRDN, 4.17%,
10/1/18, LOC: Heller Financial 500,000
Pitney Bowes Credit Corporation LeaseTOPS Trust Certificates:
11,000,000 4.35%, 4/1/98, BPA: Pitney Bowes Credit
Corporation 11,000,000
3,000,000 4.35%, 2/11/11, BPA: Pitney Bowes Credit
Corporation 3,000,000
17,000,000 Puerto Rico Commonwealth Tax & Revenue Anticipation Notes,
4.00%, 7/30/97 17,054,666
1,000,000 Riverside Multi-Family Housing VRDN, 4.75%, 6/1/09,
LOC: Tokai Bank Ltd. 1,000,000
2,335,000 Sacramento Yolo CA Port District VRDN, 4.00%, 10/1/22,
LOC: Wells Fargo Bank 2,335,000
5,000,000 San Bernardino Multi-Family Housing Revenue VRDN,
5.55%, 5/1/15 5,000,000
2,400,000 San Bernardino Public Safety Authority Revenue Bonds,
4.10%, 5/1/97 2,400,000
San Diego Multi-Family Housing VRDN:
1,100,000 6.50%, 12/1/08, LOC: Daiwa Bank, Ltd. 1,100,000
1,500,000 4.20%, 8/1/15, LOC: Bank of Tokyo-Mitsubishi, Ltd. 1,500,000
5,000,000 San Francisco Multi-Family Housing VRDN, 4.60%,
10/1/00, LOC: Mitsubishi Trust & Banking 5,000,000
3,500,000 San Marcos Industrial Development Authority VRDN,
4.07%, 12/1/20, LOC: Union Bank of California 3,500,000
1,900,000 San Marcos Redevelopment VRDN, 3.795%,
12/1/10, LOC: Bank of America 1,900,000
3,893,000 Santa Ana Industrial Development VRDN, 5.00%,
10/1/15, LOC: Wells Fargo Bank 3,893,000
Principal
Amount Value
$800,000 Santa Ana Multi-Family Housing VRDN, 4.50%,
12/1/07, C/LOC: Mercury S&L $800,000
7,000,000 Santa Paula Public Financing Authority Revenue VRDN,
4.40%, 2/1/26, LOC: Sumitomo Trust & Banking 7,000,000
2,800,000 Simi Valley Multi-Family Housing Revenue Authority VRDN,
4.30%, 6/1/10, LOC: Sumitomo Trust & Banking 2,800,000
2,500,000 Stockton County Multi-Family Housing VRDN, 4.00%,
9/1/18, LOC: Bank of America 2,500,000
2,680,000 Stockton County Nursing Home VRDN, 4.295%, 12/1/16,
LOC: Union Bank of California 2,680,000
1,265,000 Stockton Heritage Convalescent Center Project VRDN,
5.775%, 12/1/05, LOC: Tokai Bank Ltd. 1,265,000
8,000,000 Union City Housing Mortgage Revenue VRDN, 4.60%,
10/1/11, LOC: Mitsubishi Trust & Banking 8,000,000
5,000,000 Union City Multi-Family Housing Authority Revenue VRDN,
2.85%, 10/1/07, LOC: Sumitomo Trust & Banking 5,000,000
16,000,000 Victor Valley Community College Revenue VRDN, 4.45%,
11/1/24, GA: Anchor National Life 16,000,000
6,300,000 Victor Valley Community College Certificates of Participation
VRDN, 4.30%, 8/01/26, LOC: Banque National de Paris 6,300,000
3,830,000 Victorville Multi-Family Housing Revenue VRDN,
4.55%, 12/1/15, C/LOC: Redlands S&L 3,830,000
2,600,000 West Sacramento Financing Authority Special Tax Revenue VRDN,
4.00%, 8/01/21, LOC: Wells Fargo Bank, NA 2,600,000
TOTAL INVESTMENTS (Cost $340,416,925) - 98.4% 340,416,925
Other assets and liabilities, net 1.6% 5,590,647
Net Assets - 100% $346,007,572
Net Assets Consist of:
Paid-in capital applicable to 346,124,321 shares of beneficial interest,
unlimited number of no par shares authorized $346,124,362
Undistributed net investment income 26,943
Accumulated realized gain/(loss) on investments (143,733)
Net Assets $346,007,572
Net Asset Value per Share $1.00
Explanation of Guarantees:
BPA: Bond-Purchase Agreement
GA: Guaranty Agreement
INSUR: Insurance
LOC: Letter of Credit
C/LOC: Collaterized LOC
SURBD: Surety Bond
Abbreviations:
VRDN: Variable Rate Demand Note
See Notes to financial statements.
Statement of Operations
Year Ended December 31, 1996
Net Investment Income
Investment Income
Interest income $12,911,054
Expenses
Investment advisory fee 1,691,140
Transfer agency fees and expenses 462,279
Trustees' fees and expenses 33,059
Administrative fees 24,770
Custodian fees 25,823
Registration fees 3,218
Reports to shareholders 132,661
Professional fees 18,899
Miscellaneous 49,454
Reimbursement from Advisor (117,823)
Total expenses 2,323,480
Fees paid indirectly (25,823)
Net expenses 2,297,657
Net Investment Income 10,613,397
Realized Gain (Loss) on Investments
Net realized gain (loss) (351)
Increase (Decrease) in Net Assets
Resulting from Operations $10,613,046
See notes to financial statements.
Statements of Changes in Net Assets
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1996 1995
Operations
Net investment income $10,613,397 $10,530,697
Net realized gain (loss) on securities (351) (143,382)
Net realized gain (loss) on Tender Option
Agreement - Note B -- (600,000)
Change in unrealized appreciation
or depreciation -- 600,000
Increase (Decrease) in Net Assets
Resulting from Operations 10,613,046 10,387,315
Distributions to shareholders from
Net investment income (10,536,345) (10,583,766)
Capital share transactions
Shares sold 459,651,341 377,023,687
Reinvestment of distributions 10,313,443 10,452,688
Shares redeemed (424,384,914)(347,647,512)
Total capital share transactions 45,579,870 39,828,863
Total Increase (Decrease) in Net Assets 45,656,571 39,632,412
Net Assets
Beginning of year 300,351,001 260,718,589
End of year (including undistributed net
investment income (loss) of $26,943
and ($50,109), respectively) $346,007,572 $300,351,001
Share Activity
Shares sold 459,651,341 377,023,687
Reinvestment of distributions 10,313,443 10,452,688
Shares redeemed (424,384,914) (347,647,512)
Net share activity 45,579,870 39,828,863
See notes to financial statements.
Notes To Financial Statements
Note-Significant Accounting Policies
General: The California Money Market Portfolio (the "Portfolio"), a series
of Calvert Tax-Free Reserves (the "Fund"), is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The operations of each series are accounted for separately. The Portfolio offers
shares of beneficial interest to the public with no sales charges.
Security Valuation: Securities are valued at amortized cost which
approximates market.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Interest income, accretion of discount and amortization
of premium are recorded on an accrual basis.
Distributions to Shareholders: Distributions to shareholders are recorded
by the Portfolio on ex-dividend date. Dividends from net investment income are
earned daily and paid monthly. Distributions from net realized capital gains, if
any, are paid at least annually. Distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles, accordingly, periodic reclassifications are made within the
Portfolio's capital accounts to reflect income and gains available for
distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its
custodian bank whereby the custodian's fees are paid indirectly by credits
earned on the Portfolios' cash on deposit with the bank. Such deposit
arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Portfolio intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note B-Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Trustees of the Fund.
For its services, the Advisor receives a monthly fee based on the following
annual rates of average daily net assets: .50% on the first $500 million, .45%
on the next $500 million and .40% on the excess of $1 billion.
On December 15, 1994, the Portfolio entered into a Tender Option Agreement
with the Advisor valued at $600,000 to secure payment of an "at risk"
investment. On June 30, 1995 the investment paid the Portfolio in full and the
Option expired unused. The expiration loss was applied against the Advisor's
capital contribution of the Option.
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Fund for an annual fee, payable monthly,
of $200,000 which is allocated to all of the Portfolios of the Fund based on
their relative net assets.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor
and principal underwriter for the Portfolio.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Fund.
Each Trustee who is not affiliated with the Advisor received an annual fee
of $20,250 plus up to $1,200 for each Board and Committee meeting attended.
Trustee's fees are allocated to each of the funds served. Effective August 1,
1996, annual fees and meeting fees were increased to $20,500 and $1,500,
respectively.
Note C-Investment Activity
The cost of investments owned at December 31, 1996 was substantially the
same for federal income tax and financial reporting purposes. Net realized
capital loss carryforwards, for federal income tax purposes, of $143,733 at
December 31, 1996 may be utilized to offset current and future capital gains
until expiration through 2004.
As a cash management practice, the Portfolio may sell or purchase
short-term variable rate demand notes from other Portfolios managed by the
Advisor. All transactions are executed at independently derived prices.
Financial Highlights
Years Ended
December 31,
1996 1995 1994
Net asset value, beginning $1.00 $1.00 $1.00
Income from investment operations
Net investment income .031 .037 .026
Distributions from
Net investment income (.031) (.037) (.026)
Net asset value, ending $1.00 $1.00 $1.00
Total return 3.17% 3.78%* 2.62%*
Ratios to average net assets:
Net investment income 3.14% 3.69% 2.55%
Total expenses .69% .76% --
Net expenses .68% .75% .69%
Expenses reimbursed .03% -- --
Net assets, ending (in thousands) $346,008 $300,351 $260,719
Number of shares outstanding,
ending (in thousands) 346,124 300,544 260,716
Years Ended
December 31,
1993 1992
Net asset value, beginning $1.00 $1.00
Income from investment operations
Net investment income .022 .030
Distributions from
Net investment income (.022) (.030)
Net asset value, ending $1.00 $1.00
Total return 2.26% 3.08%
Ratios to average net assets:
Net investment income 2.22% 3.01%
Total expenses -- --
Net expenses .69% .68%
Net assets, ending (in thousands) $296,984 $323,928
Number of shares outstanding,
ending (in thousands) 296,984 323,928
* Total return numbers do not reflect Tender Option Agreement (see Note B).
+ Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
<PAGE>
CALVERT TAX-FREE RESERVES
VERMONT MUNICIPAL PORTFOLIO
Dear Investor:
Investors' changing outlook for the Federal Reserve's monetary policy
caused above-average volatility in the financial markets. In general, bond
yields trended higher during the first half of the year in anticipation of a Fed
tightening and then retraced a bit during the second half when Gross Domestic
Product and other indications of pricing pressures appeared benign.
Most bond investments managed to generate positive returns, but yields
covered a good bit of ground during the course of the year. The benchmark
30-year Treasury bond fluctuated within a fairly wide band of about 125 basis
points but closed 1996 just 60 basis points above its year-ago level. Stocks
posted very strong returns, for the second consecutive year. The Standard &
Poor's 500 Stock Index rose about 23%.
Municipal Rates
(Graph appears here)
Graph shows municipal rates for 1, 7 and 20 year
AA General Obligations between 12/95 and 12/96
Fund Performance and Strategy Review
The Calvert Tax-Free Reserves Vermont Municipal Portfolio generated a six-
month return in-line with its peer group average and a 12-month return that was
considerably above this benchmark. We kept maturity relatively constant for most
of the year and maintained our emphasis on high credit quality.
Investment Performance
(Graph appears here)
Periods Ended 12/31/96 6 Months 12 Months
Vermont Municipal Portfolio 4.59% 3.98%
Lipper Other States
Muni Fund Avg. 4.49% 3.48%
Investment performance is for Class A Shares and does not
reflect the deduction of any front-end sales charge.
Outlook
Yields will likely continue to fluctuate during the first quarter of 1997,
but we don't expect to see a clear trend in place until after the next Federal
Reserve Open Market Committee meeting. The Fed might then adopt a bias toward a
tighter monetary policy, and rates might move a bit higher, but we are not
anticipating a steep increase. Our strategy is to keep the Vermont Portfolio at
or near its current maturity range until the interim volatility subsides and we
can better assess the direction of rates.
Sincerely,
David Rochat
Senior Vice President
January 21, 1997
Ratings Breakdown
(Graph appears here)
AAA/Aaa AA/Aa A/a BBB/Baa NR
54% 28% 5% 10% 3%
NR: Obligation is not rated by a commercial credit rating service, such as
Moody's Investors Services, Inc., or Standard & Poor's Corporation; obligation
has been determined to be of appropriate quality for the Portfolio by Calvert
Asset Management Company, Inc., the Investment Advisor.
Portfolio Statistics
Weighted Average Maturity
6/30/96 12/31/96
13 years 15 years
SEC Yields
Class A
Thirty Days Ended 12/31/96
4.66%
Yields assume reinvestment of dividends.
Average Annual Total Returns
for periods ended 12/31/96
Class A Shares
One Year .06%
Since Inception 6.55%
Performance Comparison
Comparison of change in value of a hypothetical $10,000 investment.
(Graph appears here)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
12/31/96 12/31/95 12/31/94 12/31/93
CTFR VERMONT $14,399 $13,909 $12,109 $12,468
LEHMAN AGGREGATE BD $15,466 $14,924 $12,706 $13,399
</TABLE>
<TABLE>
<C> <C> <C>
12/31/92 12/31/91 4/1/91
CTFR VERMONT $11,248 $10,453 $9,625
LEHMAN AGGREGATE BD $11,933 $10,966 $10,000
</TABLE>
Total returns assume reinvestment of dividends and, for Class A shares, reflect
the deduction of the fund's maximum sales charge of 3.75%. No sales charge has
been applied to the index used for comparison. The value of an investment in
Class A shares is plotted in the line graph. The value of an investment in
Class C shares would be different. Past performance is no guarantee of future
returns.
Report of Independent Accountants
To the Board of Directors of Calvert Tax-Free Reserves and Shareholders of
Vermont Municipal Portfolio:
We have audited the accompanying statement of net assets of Vermont
Municipal Portfolio (one of the portfolios comprising Calvert Tax-Free Reserves)
as of December 31, 1996, and the related statement of operations for the year
then ended, statement of changes in net assets for each of the two years in the
period then ended and financial highlights for each of the three years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the preceding years were audited by
other auditors whose report dated January 31, 1994 expressed an unqualified
opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Vermont Municipal Portfolio as of December 31, 1996, the results of its
operations, the changes in its net assets and financial highlights for the
respective periods stated in the first paragraph in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
February 7, 1997
Statement of Net Assets
December 31, 1996
Principal
Amount Value
Vermont Municipal Obligations - 97.8%
$2,000,000 Burlington Electric Revenue Bonds, 6.25%, 7/1/14,
MBIA Insured $2,127,780
700,000 Burlington VT General Obligation Bond,
6.50%, 5/1/20 732,998
2,000,000 Chittenden Solid Waste District General Obligation Bond,
6.60%, 1/1/12, Asset Guaranty Insured 2,172,140
Rutland County Solid Waste General Obligation Bonds:
110,000 5.80%, 11/1/99 113,993
110,000 5.95%, 11/1/00 115,117
110,000 6.10%, 11/1/01 116,445
110,000 6.25%, 11/1/02 117,695
110,000 6.35%, 11/1/03 118,913
110,000 6.45%, 11/1/04 119,926
105,000 6.50%, 11/1/05 115,106
100,000 6.55%, 11/1/06 110,184
100,000 6.60%, 11/1/07 110,688
100,000 6.70%, 11/1/08 111,342
200,000 6.75%, 11/1/09 111,487
100,000 6.80%, 11/1/10 111,396
100,000 6.80%, 11/1/11 111,394
100,000 6.85%, 11/1/12 111,678
1,800,000 Vermont Education and Health - Central Vermont Hospital,
7.00%, 10/1/22 2,050,020
2,000,000 Vermont Education and Health - Central Vermont Hospital,
5.00%, 11/15/15, AMBAC Insured 1,876,660
1,000,000 Vermont Education and Health - Lyndon Institute Project,
6.60%, 12/1/14 1,024,810
3,000,000 Vermont Education and Health - Middlebury College,
5.50%, 11/1/16 2,972,610
2,000,000 Vermont Education and Health - Northwestern Medical Center,
6.25%, 9/1/18 1,980,360
580,000 Vermont Education and Health - Norwich University,
5.75%, 9/1/05 602,806
1,500,000 Vermont Education and Health - Norwich University,
6.00%, 9/1/13 1,482,750
1,000,000 Vermont Education and Health - Southwest Medical Center,
5.625%, 10/1/25, FSA Insured 976,920
750,000 Vermont Education and Health - Vermont Medical Center Bonds,
6.00%, 9/1/22, FGIC Insured 764,640
1,200,000 Vermont Housing Finance Authority Single Family Series 2
Housing Bonds, 7.20%, 11/1/11 1,243,536
Vermont Municipal Bond Bank Revenue Bonds:
1,000,000 5.375%, 12/1/13 976,620
4,000,000 5.50%, 12/1/22, AMBAC Insured 3,929,320
Vermont State General Obligation Bonds:
1,500,000 5.70%, 1/15/00 1,563,975
1,740,000 6.50%, 2/1/01 1,877,826
Principal
Amount Value
2,500,000 6.30%, 1/15/06 $2,768,475
500,000 6.50%, 2/1/07, (Prerefunded) 547,400
1,000,000 6.40%, 2/1/08, (Prerefunded) 1,102,730
400,000 Zero Coupon, 8/1/08 218,228
300,000 Zero Coupon, 8/1/09 153,438
1,000,000 4.90%, 2/1/10 962,370
1,000,000 6.45%, 2/1/11, (Prerefunded) 1,104,980
1,950,000 6.45%, 2/1/12, (Prerefunded) 2,154,711
1,360,000 Vermont State Colleges Revenue Bond, 5.13%, 7/1/18,
MBIA Insured 1,279,665
2,440,000 Vermont State Lease Certificates of Participation, 6.50%,
7/1/11, MBIA Insured 2,647,595
2,000,000 Vermont Student Assistance Corporation Education Loan Series A
Revenue Bonds, 6.50%, 6/15/00, AMBAC Insured 2,103,120
2,240,000 Vermont Student Assistance Corporation Education Loan Series A-3
Revenue Bonds, 6.50%, 12/15/05, FSA Insured 2,428,384
1,000,000 Vermont Student Assistance Corporation Education Loan Series B
Revenue Bonds, 6.70%, 12/15/12, FSA Insured 1,065,220
200,000 Windham County Solid Waste General Obligation
Bonds, 6.40%, 12/1/97 199,770
Total Municipal Obligations (Cost $46,191,340) 48,687,221
Contracts
Options Purchased - 0.0%
71 Call Options on U.S. Treasury Bond Futures,
Expiration 2/22/97, Strike Price 118 14,422
Total Options (Cost $62,835) 14,422
TOTAL INVESTMENTS (Cost $46,254,175) - 97.8% 48,701,643
Other assets and liabilities, net - 2.2% 1,072,440
Net Assets - 100% $49,774,083
Net Assets Consist of:
Paid-in capital applicable to 3,048,362 Class A shares of beneficial interest,
unlimited number of no par shares authorized: $46,644,935
Undistributed net investment income 200,009
Accumulated net realized gain (loss) on investments 481,671
Net unrealized appreciation (depreciation) on investments 2,447,468
Net assets $49,774,083
Net Asset Value per Share $16.33
Abbreviations:
AMBAC - AMBAC Indemnity Corporation
FGIC - Financial Guaranty Insurance Company
FSA - Financial Security Assurance
MBIA - MBIA Insurance Corporation
See notes to financial statements.
Statement of Operations
Year Ended December 31, 1996
Net Investment Income
Investment Income
Interest income $3,412,664
Expenses
Investment advisory fee 340,885
Transfer agency fees and expenses 25,633
Distribution plan expenses of Class C 3,690
Trustees' fees and expenses 5,677
Administrative fees 4,156
Custodian fees 18,498
Registration fees 6,251
Reports to shareholders 21,526
Professional fees 3,729
Miscellaneous 13,184
Total expenses 443,229
Fees paid indirectly (18,498)
Net expenses 424,731
Net Investment Income 2,987,933
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) on:
Securities 802,614
Futures (161,144)
641,470
Change in unrealized appreciation or depreciation (1,491,128)
Net Realized and Unrealized Gain (Loss)
on Investments (849,658)
Increase (Decrease) in Net Assets
Resulting From Operations $2,138,275
See notes to financial statements.
Statements of Changes in Net Assets
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1996 1995
Operations
Net investment income $2,987,933 $3,335,609
Net realized gain (loss) 641,470 829,370
Change in unrealized appreciation
or depreciation (1,491,128) 4,506,456
Increase (Decrease) in Net Assets
Resulting From Operations 2,138,275 8,671,435
Distributions to shareholders from
Net investment income:
Class A shares (2,916,946) (3,270,290)
Class C shares (12,173) (18,419)
Net realized gain:
Class A shares (230,374) (336,995)
Class C shares -- (2,227)
Total distributions (3,159,493) (3,627,931)
Capital share transactions
Shares sold:
Class A shares 5,207,872 4,860,473
Class C shares 253,726 430,193
Reinvestment of distributions:
Class A shares 1,422,158 2,192,127
Class C shares 11,686 19,158
Shares redeemed:
Class A shares (16,048,921) (16,079,754)
Class C shares (648,927) (306,328)
Total capital share transactions (9,802,406) (8,884,131)
Total Increase (Decrease) in Net Assets (10,823,624) (3,840,627)
Net Assets
Beginning of year 60,597,707 64,438,334
End of year (including undistributed net investment income of
$200,009 and $184,905, respectively) $49,774,083 $60,597,707
Capital Share Activity
Shares sold:
Class A shares 319,474 302,854
Class C shares 15,797 27,415
Reinvestment of distributions:
Class A shares 87,429 136,701
Class C shares 729 1,195
Shares redeemed:
Class A shares (979,940) (1,003,353)
Class C shares (40,553) (19,207)
Total capital share activity (597,064) (554,395)
See notes to financial statements.
Notes To Financial Statements
Note A-Significant Accounting Policies
General: The Vermont Municipal Portfolio (the "Portfolio"), a series of
Calvert Tax-Free Reserves (the "Fund"), is registered under the Investment
Company Act of 1940 as a nondiversified, open-end management investment company.
The operations of each series are accounted for separately. Shares of the
Portfolio are sold with a maximum front-end sales charge of 3.75%. On October
29, 1996, all outstanding Class C shares in the Portfolio were converted into an
equivalent value of Class A shares. This transaction was a non-taxable exchange
and no sales charge was applied to the Class A shares issued.
Security Valuation: Municipal securities are valued utilizing the average
of bid prices or at bid prices based on a matrix system (which considers such
factors as security prices, yields, maturities and ratings) furnished by dealers
through an independent pricing service. Securities listed or traded on a
national securities exchange are valued at the last reported sale price. Other
securities and assets for which market quotations are not available or deemed
inappropriate are valued in good faith under the direction of the Board of
Trustees.
Options: The Portfolio may write or purchase option securities. The option
premium is the basis for recognition of unrealized or realized gain or loss on
the option. The cost of securities acquired or the proceeds from securities sold
through the exercise of the option is adjusted by the amount of the premium.
Futures Contracts: The Portfolio may enter into futures contracts agreeing
to buy or sell a financial instrument for a set price at a future date. The
Portfolio maintains securities with a value equal to its obligation under each
contract. Initial margin deposits of either cash or securities are made upon
entering into futures contracts; thereafter, variation margin payments are made
or received daily reflecting the change in market value. Unrealized or realized
gains and losses are recognized based on the change in market value. Risks of
futures contracts arise from the possible illiquidity of the futures markets and
the movement in the value of the investment or in interest rates.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Interest income, accretion of discount and amortization
of premium are recorded on an accrual basis.
Distributions to Shareholders: Distributions to shareholders are recorded
by the Portfolio on ex-dividend date. Dividends from net investment income are
paid monthly. Distributions from net realized capital gains, if any, are paid at
least annually. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles;
accordingly, periodic reclassifications are made within the Portfolio's capital
accounts to reflect income and gains available for distribution under income tax
regulations.
The Fund designates $230,374 as capital gain dividends for taxable year
ended December 31, 1996.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. Expense Offset
Arrangements: The Portfolio has an arrangement with its custodian bank whereby
the custodian's fees are paid indirectly by credits earned on the Portfolio's
cash on deposit with the bank. Such deposit arrangement is an alternative to
overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Portfolio intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note B-Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Trustees of the
Portfolio. For its services, the Advisor receives a monthly fee based on an
annual rate of .60% of the Portfolio's average daily net assets.
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Fund for an annual fee, payable monthly,
of $200,000 which is allocated to all of the Portfolios of the Fund based on
their relative net assets.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor
and principal underwriter for the Portfolio. A Distribution Plan, adopted by
Class C shareholders, allows the Portfolio to pay the distributor for expenses
and services associated with distribution of shares. The expenses paid may not
exceed 1.0% annually of average daily net assets of Class C. (See Note A
regarding the elimination of Class C shares.)
The Distributor received $28,339 as its portion of commissions charged on
sales of the Portfolio's Class A shares.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Portfolio.
Each Trustee who is not affiliated with the Advisor received an annual fee
of $20,250 plus up to $1,200 for each Board and Committee meeting attended.
Trustee"s fees are allocated to each of the funds served. Effective August 1,
1996, annual fees and meeting fees were increased to $20,500 and $1,500,
respectively.
Note C-Investment Activity
During the year, purchases and sales of investments, other than short-term,
were $13,334,789 and $23,434,311, respectively.
The cost of investments owned at December 31, 1996 was substantially the
same for federal income tax and financial reporting purposes. Net unrealized
appreciation aggregated $2,447,468, of which $2,565,399 related to appreciated
securities and $117,931 related to depreciated securities.
As a cash management practice, the Portfolio may sell or purchase
short-term variable rate demand notes from other Portfolios managed by the
Advisor. All transactions are executed at independently derived prices.
Financial Highlights
Years Ended
December 31,
Class A Shares 1996 1995 1994
Net asset value, beginning $16.62 $15.34 $16.66
Income from investment operations
Net investment income .88 .87 .87
Net realized and unrealized gain (loss) (.25) 1.35 (1.35)
Total from investment operations .63 2.22 (.48)
Distributions from
Net investment income (.85) (.85) (.84)
Net realized gains (.07) (.09) --
Total distributions (.92) (.94) (.84)
Total increase (decrease) in
net asset value (.29) 1.28 (1.32)
Net asset value, ending $16.33 $16.62 $15.34
Total return* 3.98% 14.86% (2.88%)
Ratios to average net assets:
Net investment income 5.27% 5.35% 5.47%
Total expenses .77% .76% --
Net expenses .73% .75% .73%
Portfolio turnover 24% 12% 11%
Net assets, ending (in thousands) $49,774 $60,203 $64,215
Number of shares outstanding,
ending (in thousands) 3,048 3,621 4,185
Years Ended
December 31,
Class A Shares 1993 1992
Net asset value, beginning $15.83 $15.58
Income from investment operations
Net investment income .86 .84
Net realized and unrealized gain (loss) .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, ending $16.66 $15.83
Total return* 10.84% 4.99%
Ratios to average net assets:
Net investment income 5.25% 5.41%
Total expenses -- --
Net expenses .72% .62%
Expenses reimbursed -- --
Portfolio turnover 5% 11%
Net assets, ending (in thousands) $67,634 $53,179
Number of shares outstanding,
ending (in thousands) 4,060 3,359
Financial Highlights
Years Ended
December 31,
Class A Shares 1996 1995 1994
Net asset value, beginning $16.42 $15.26 $16.40
Income from investment operations
Net investment income .45 .58 .51
Net realized and unrealized gain (loss) (.39) 1.35 (1.06)
Total from investment operations .06 1.93 (.55)
Distributions from
Net investment income (.44) (.68) (.59)
Net realized gains -- (.09) --
Total distributions (.44) (.77) (.59)
Total increase (decrease) in
net asset value (.38) 1.16 (1.14)
Net asset value, ending $16.04 $16.42 $15.26
Total return* .41% 12.88% (2.94%)
Ratios to average net assets:
Net investment income 3.26%(a) 3.61% 3.87%(a)
Total expenses 2.78%(a) 2.47% --
Net expenses 2.74%(a) 2.46% 2.41%(a)
Expenses reimbursed -- -- 1.85%(a)
Portfolio turnover 19% 12% 11%
Net assets, ending (in thousands) $432 $394 $223
Number of shares outstanding,
ending (in thousands) 27 24 15
* Total return does not reflect deduction of Class A front-end sales charge.
(a) Annualized
+ 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.
# From March 1, 1994, inception.
